General Counsel Employment Agreement

Exhibit 10.2
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EXECUTION COPY


FORM OF AMENDED AND RESTATED


EMPLOYMENT AGREEMENT


EMPLOYMENT AGREEMENT (this "Agreement"), dated as of April __, 2005, by and between FRIEDMAN'S INC., a Delaware corporation (the "Company"), and C. STEVEN MOORE, an individual residing in the State of Tennessee (the "Executive").


W I T N E S S E T H :
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WHEREAS, the Executive is currently employed pursuant to an Employment Agreement by and between the Company and the Executive dated June 29, 2004 (the "Prior Agreement");


WHEREAS, on January 14, 2005 the Company filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code (the "Bankruptcy") in the United States Bankruptcy Court for the Southern District of Georgia, Savannah District (the "Bankruptcy Court");


WHEREAS, in conjunction with the Bankruptcy, the Company intends to implement, upon approval of the Bankruptcy Court, a Key Employee Compensation Program (the "KECP") pursuant to which the Executive will be entitled to receive certain bonuses and severance benefits; and


WHEREAS, the Company and the Executive wish to amend the Employment Agreement as set forth in this Amended and Restated Employment Agreement to incorporate those payments and benefits under the KECP to which the Executive is entitled;


NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein and for good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto, each intending to be legally bound hereby, agree as follows:


1. Employment. On the terms and subject to the conditions set forth herein, the Company hereby agrees to employ the Executive as the General Counsel and Chief Administrative Officer of the Company, and the Executive hereby agrees to accept such employment, for the Employment Term (as defined in Section 3). During the Employment Term, the Executive shall serve as the General Counsel and Chief Administrative Officer of the Company and shall report to the Chief Executive Officer of the Company and the Board of Directors of the Company (the "Board"), and shall have such responsibilities, duties and authority as are generally consistent and customary with the positions of General Counsel and Chief Administrative Officer including, but not limited to, managing major corporate functions such as legal, regulatory, human resources, loss prevention, real estate development, purchasing and administration, as appropriate, subject to the oversight of the Chief Executive Officer and the Board, and shall have such other powers and perform such other duties as may from time to time be assigned to him by the Chief Executive Officer and the Board. If requested, the Executive shall serve as an executive, officer and/or director of the Company's subsidiaries without additional compensation.


2. Performance; Place of Employment. The Executive will serve the Company faithfully and to the best of his ability and will devote his full business time, energy, experience and talents to the business of the Company and its ubsidiaries and affiliates; provided, however, that it shall not be a violation of this Agreement for the Executive to (a) manage his personal investments, (b) with the prior consent of the Board (not to be unreasonably withheld or conditioned) serve on for-profit corporate boards, other than those of the Company and its subsidiaries, or, (c) with prior notice to the Board, to serve on industry, civic, community, charitable, educational, or religious boards so long, in the case of clause (b) and (c), as such service does not interfere with the Executive's performance of his duties hereunder. The Executive will maintain his principal office, and his principal place of work shall be, at the Company's primary executive offices in Savannah, Georgia.


3. Employment Term/Prior Agreement. Subject to earlier termination pursuant to Section 6, the term of employment of the Executive hereunder shall begin on June 29, 2004 (the "Commencement Date"), and shall continue through the date which is two (2) years following the Commencement Date (the "Initial Term"); provided, however, that upon the failure of the Company to give timely notice of non-renewal, such term of employment shall be automatically extended by an additional one (1) year beyond the end of the then-current term, unless, at least one hundred twenty (120) days before the expiration of the Initial Term, or one hundred twenty (120) days before any such subsequent anniversary thereof, as the case may be, the Company gives notice to the Executive that the Company does not desire to extend the term of this Agreement, in which case the term of employment hereunder shall terminate as of the end of the Initial Term or the end of the then-current one-year extension term, as applicable (the term of employment hereunder, including any extensions, in accordance with this Section 3, shall be referred to herein as the "Employment Term"). From and after the date hereof, the terms of this Agreement shall supersede in all respects the terms of any prior arrangement or agreement, if any, dealing with the matters herein, including the Employment Agreement.


4. Compensation and Benefits.


(a) Base Salary. As compensation for his services hereunder and in consideration of the Executive's other agreements hereunder, during the Employment Term, the Company shall pay the Executive a base salary, payable in equal installments in accordance with the Company's payroll procedures, at an annual rate of Three Hundred Thousand Dollars ($300,000), subject to annual review by the the Chief Executive Officer of the Company (which amount shall not be decreased except upon mutual consent of the Executive and the Company).


(b) Signing Bonus. In consideration of the Executive's agreements hereunder, the Company shall pay the Executive a signing bonus of One Hundred Thousand Dollars ($100,000), payable as follows: Twenty Thousand Dollars ($20,000) on the date of execution of this Agreement, and Twenty Thousand Dollars ($20,000) on each of July 30, 2004, August 31, 2004, September 30, 2004, and October 29, 2004.


(c) Bonus; Stock Options.


(1) Annual Incentive Plan. During the Employment Term, the Executive shall be entitled to participate in the Company's incentive bonus plan, the terms and conditions of which shall be determined by the Board or a committee thereof. Such incentive bonus (the "Incentive Bonus Plan") will have a target amount of forty percent (40%) of the Executive's annual Base Salary and may be up to seventy-five percent (75%) of the Executive's annual Base Salary, at the rate of Base Salary in effect in accordance with Section 4(a) during the period with respect to which such Incentive Bonus is payable, if all performance targets are fully satisfied at the highest level; provided, however, that the Incentive Bonus to which the Executive may otherwise become entitled for calendar year 2004 shall be a minimum of One Hundred Thousand Dollars ($100,000), separate and apart from the signing bonus in Section 4(b), and the Incentive Bonus to which the Executive may otherwise become entitled for calendar year 2005 shall vest on December 31, 2005 and be paid to the Executive no later than March 15, 2006. In the event that the Executive's employment is terminated by the Company without Cause or by the Executive for Good Reason, then the Executive shall be entitled to receive a full Incentive Bonus at the target amount payable at the time when annual incentive bonuses are paid to other executives of the Company and payable only if target performance goals are achieved. In the event that the Executive's employment is terminated by reason of the Executive's death or Disability, then the Executive (or his estate, as applicable) shall be entitled to receive a pro rata portion of the Incentive Bonus at the target amount based on the number of days the Executive was employed during the calendar year for which such Incentive Bonus was to be earned payable at the time when annual incentive bonuses are paid to other executives of the Company and payable only if target performance goals are achieved.


(2) Equity Grants.


A. Initial Grant. The Executive shall also be entitled
to participate in the stock option plan established
by the Company, pursuant to which the Executive
shall receive options, granted on the date of
execution of this Agreement at the market price of
the Company's stock at the close of business on the
date immediately preceding execution of this
Agreement, to purchase an aggregate of one hundred
thousand (100,000) shares of Class A Common Stock of
the Company, with twenty thousand (20,000) shares
vesting immediately and twenty thousand (20,000)
vesting annually, on the anniversary date of this
Agreement, over the next four years (collectively,
the "Initial Grant").


B. Emergence Equity Grant. Upon the effective date of a
plan of reorganization under chapter 11 of the
United States Bankruptcy Code as approved by the
Bankruptcy Court of (the "Plan of Reorganization)
(the "Emergence"), the Executive shall be entitled
to receive a grant of stock options equal to 1.375%
of the total amount of New Friedman's Common Stock
(as defined the Company's Plan of Reorganization)
(the "Emergence Grant"). Subject to accelerated
vesting as described below, such Emergence Grant
shall vest and become exercisable as follows (i)
fifty percent (50%) of the stock options on the date
of Emergence (the "Emergence Date"), (ii)
twenty-five percent (25%) on the first anniversary
of the Emergence Date and (iii) twenty-five percent
(25%) on the second anniversary of the Emergence
Date. Notwithstanding the foregoing, upon the
issuance of the Emergence Grant, the Initial Grant
shall immediately expire.


C. Accelerated Vesting. All stock options held by the
Executive shall be accelerated and vest immediately
upon a Change of Control (as defined below), upon
the Executive's death or Disability, as hereinafter
defined, upon termination of employment by the
Company for other than Cause, as hereinafter
defined, or upon termination by the Executive for
Good Reason, as hereinafter defined. Upon such
cessation of the Executive's employment, the
Executive shall have until the later of (i) one
hundred twenty (120) days following the date of
termination of Executive's employment or (ii) the
second (2nd) anniversary of the Emergence Date, to
exercise or forfeit such fully vested option shares;
provided, however, that the Executive shall have not
less than one (1) year following the date of
termination of employment in the event such
termination of employment is as a result of the
Executive's death or Disability.


(3) Emergence Payments. Upon Emergence, the Executive shall be entitled to receive a cash bonus equal to one hundred twenty-five percent (125%) of the Executive's Base Salary, which payments shall become payable as follows (A) fifty percent (50%) on the date of Emergence (the "Emergence Date"), (ii) twenty-five percent (25%) on the six-month anniversary of the Emergence Date and (iii) twenty-five percent (25%) on the one-year anniversary of the Emergence Date.


(d) Retirement, Medical, Dental and Other Benefits. During the Employment Term, the Executive shall, in accordance with the terms and conditions of the applicable plan documents and all applicable laws, be eligible to participate in the various retirement, medical, dental and other employee benefit plans made available by the Company, from time to time, for its senior executive officers.


(e) Vacation; Sick Leave. During the Employment Term, the Executive shall be entitled to four (4) weeks of vacation per year, and to sick leave in accordance with the Company's policies and practices with respect to its senior executive officers.


(f) Expenses. The Executive shall be reimbursed by the Company for all reasonable business expenses, including travel costs, actually incurred by him in connection with the performance of his duties hereunder in accordance with policies established by the Company from time to time and upon receipt by the Company of appropriate documentation. In addition, the Company shall reimburse the Executive for reasonable housing expenses and travel to and from Savannah, Georgia and the Executive's primary residence in Brentwood, Tennessee. The Company further agrees that reasonable moving and relocation expenses as incurred by the Executive will be paid by the Company.


(g) Indemnification; D&O Insurance. The Company shall indemnify the Executive for any liability he incurs arising from his actions within the scope and course of his employment hereunder in accordance with the form of Indemnity Agreement to be executed herewith and to be applicable during the term hereof and the Company's Certificate of Incorporation and By-laws, provided that (i) the Executive conducted himself in good faith, and (ii) the Executive reasonably believed that his actions were in the best interests of the Company. During the Employment Term, the Company shall maintain a directors' and officers' liability insurance policy covering the Executive in an amount and on terms customary for similarly situated companies and with coverage and on other terms reasonably determined by the Board.


(h) Legal Fees. The Company shall reimburse the Executive for reasonable attorney's fees the Executive incurs in connection with the negotiation, preparation and/or execution of this Agreement up to Seven Thousand Five Hundred Dollars ($7,500), subject to the receipt by the Company of a statement from such attorney including rates and hours. If it becomes necessary for either party to file a lawsuit to enforce this Agreement, and if a final judgment is rendered by the court in such a lawsuit, the non-prevailing party shall pay the reasonable attorney's fees and costs incurred by the prevailing party.


(i) Automobile. The Company shall pay to the Executive a car allowance of Five Hundred Dollars ($500) per month and shall promptly reimburse the Executive for any expenses incurred by the Executive to maintain the car.


(j) Services Furnished. The Company shall furnish the Executive with office space, secretarial and/or administrative assistance, office supplies, support services and such other facilities and services as shall be suitable to the Executive's position and adequate for the performance of his duties hereunder.


5. Covenants of the Executive. The Executive acknowledges that in the course of his employment with the Company he has and will become familiar with the Company's and its subsidiaries' and affiliates' trade secrets and with other confidential information concerning the Company and its subsidiaries and affiliates, and that his services are of special, unique and extraordinary value to the Company and its subsidiaries and affiliates. Therefore, the Compa ...