UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
_________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): April 14, 2005 (April 8, 2005)
Friedman's Inc.
(Exact Name of Registrant as Specified in its Charter)
Delaware 0-22356 58-20583
(State or Other Jurisdiction (Commission File (IRS Employer
of Incorporation) Number) Identification No.)
171 Crossroads Parkway
Savannah, Georgia 31422
(Address of Principal Executive Offices)
(912) 233-9333
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of
the following provisions:
|_| Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement.
Amended and Restated Employment Agreements
------------------------------------------
Friedman's Inc. ("Friedman's" or the "Company") has entered into
Amended and Restated Employment Agreements with each of Sam Cusano, Steven
Moore, Steven Zeringue and Eric Kovats (collectively, the "Amended
Agreements") to reflect the payments to which the executives are each entitled
to receive under a Key Employee Compensation Program (the "Plan") as described
below. The Amended Agreements became effective pursuant to an order entered by
the United States Bankruptcy Court for the Southern District of Georgia,
Savannah Division (the "Bankruptcy Court") on April 8, 2005.
Under the Amended Agreements and the Plan, Messrs. Cusano, Moore,
Kovats and Zeringue (collectively, the "Executives") are entitled to receive
cash payments under the exit compensation plan described below in amounts of
167%, 125%, 83% and 50% of their base salaries, respectively, and stock
options to purchase 3.25%, 1.375%, 0.875% and 0.25% of the Company's common
stock at emergence, respectively. The vesting schedule of the stock options is
described below, subject to accelerated vesting upon the occurrence of certain
events.
If the Company liquidates its business operations in the chapter 11
cases pending in the Bankruptcy Court at any time prior to December 31, 2006,
then the Executive shall be entitled to receive a severance payment equal to a
multiple of his salary and no incentive bonus amount will be included in the
calculation. In addition, the Amended Agreements provide clarification that
the Company's emergence from chapter 11 and any transactions contemplated by
the Company's plan of reorganization will not constitute a change in control
for purposes of any change in control benefits under the Amended Agreements.
Forms of the Amended Agreements are filed as Exhibits 10.1 through 10.4
hereto.
Key Employee Compensation Program
---------------------------------
In conjunction with the Bankruptcy Court's approval of the Amended
Agreements, the Bankruptcy Court previously issued a memorandum opinion and
order approving the Plan on April 4, 2005. The Plan covers two groups of the
Company's employees, one of which is comprised of approximately 83 persons, as
of the motion date, who are predominantly management-level employees who work
at the Company's headquarters in Savannah, Georgia (collectively, "Support
Center Management") and a second, which is comprised of approximately 3,000
employees, including regional vice presidents, district managers, store
managers, assistant store managers, sales personnel, and collections personnel
and supervisors. The following summary of the Plan contained in this Item 1.01
describes only the Plan as it relates to Support Center Management. The Plan
as it relates to other employees was implemented in the ordinary course of
business and therefore is not required to be described pursuant to this Item.
For this reason also, such portion of the Plan was not required to be approved
by the Bankruptcy Court and was not included in the order of the Bankruptcy
Court issued in connection with the Plan (but was disclosed to the Bankruptcy
Court and notice parties in the pleadings in connection therewith).
The Plan as it relates to Support Center Management has three
components (i) an annual incentive plan, (ii) a severance plan and (iii) an
exit compensation plan. Under the annual incentive plan, employees'
eligibility to receive annual bonuses is dependent upon the Company achieving
certain projected business plan target levels for the calendar year.
Generally, bonuses earned under the annual incentive plan vest on December 31,
2005 and be paid to the employee on or before March 15, 2006. Under the
severance plan, an employee who is terminated by the Company without cause is
entitled to receive a lump sum cash payment. The stock options will be awarded
upon emergence from chapter 11 and will be vested at grant with respect to
fifty percent of the options. The remaining options will vest with respect to
twenty-five percent of the total grant on each of the first and second
anniversaries of emergence.
The Plan as it relates to Support Center Management is described
below and is attached as Exhibit 10.5 hereto. The Plan as it relates to
non-management employees is attached as Exhibit 10.6 hereto.
Item 8.01 Other Events.
On April 8, 2005, the Bankruptcy Court entered orders which (a)
extended Friedman's exclusivity periods to file and solicit acceptances of a
plan of reorganization, to February 28, 2006 and May 30, 2006, respectively,
and (b) extended the date by which the Company must assume or reject leases
for closing stores to August 31, 2005, and for initial go-forward stores to
February 28, 2006, subject to limited relief granted by the Bankruptcy Court
to certain objecting lessors.
Item 9.01. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit
Number Description
------ -----------
Exhibit 10.1 Form of Amended and Restated Employment Agreement with
Sam Cusano
Exhibit 10.2 Form of Amended and Restated Employment Agreement with C.
Steven Moore
Exhibit 10.3 Form of Amended and Restated Employment Agreement with
Eric Kovats
Exhibit 10.4 Form of Amended and Restated Employment Agreement with
Steven Zeringue
Exhibit 10.5 Key Employee Compensation Program for Management
Employees
Exhibit 10.6 Key Employee Compensation Program for Non-management
Employees
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 hereunto duly authorized.
FRIEDMAN'S INC.
Date: April 14, 2005 By: /s/ C. Steven Moore
----------------------------
C. Steven Moore
Chief Administrative Officer
and General Counsel
EXHIBIT INDEX
Exhibit
Number Description
------ -----------
Exhibit 10.1 Form of Amended and Restated Employment Agreement with
Sam Cusano
Exhibit 10.2 Form of Amended and Restated Employment Agreement with C.
Steven Moore
Exhibit 10.3 Form of Amended and Restated Employment Agreement with
Eric Kovats
Exhibit 10.4 Form of Amended and Restated Employment Agreement with
Steven Zeringue
Exhibit 10.5 Key Employee Compensation Program for Management
Employees
Exhibit 10.6 Key Employee Compensation Program for Non-management
Employees