Employment Offer Letter and Leadership Incentive Plan for Jeffrey Dunbar as VP Supply Chain at Hines Horticulture, Inc.

Summary

Hines Horticulture, Inc. offers Jeffrey Dunbar the position of Vice President of Supply Chain, starting May 30, 2006, with an annual salary of $180,000, relocation assistance, stock options, and benefits. The offer includes a leadership incentive bonus based on company performance, with specific eligibility and payout conditions. The agreement is contingent on a background check and must be accepted by May 16, 2006. Key terms include bonus eligibility criteria, vesting schedule for stock options, and conditions for relocation repayment if employment ends within a year.

EX-10.1 2 hines_8k-ex1001.txt OFFER LETTER EXHIBIT 10.1 Hines Horticulture, Inc. 12621 Jeffrey Road Irvine, CA 92620 April 27, 2006 Dear Jeff, I am pleased to extend an offer of employment to you for the position of Vice President of Supply Chain. You will report directly to me as a team member of the Hines Executive Leadership Team. This is a strategic position that will implement integrated supply chain management principals as a competitive weapon for Hines. You will be immediately responsible for the ongoing Sales and Operations Project implementation at all 13 sites. I have summarized the following compensation and benefits package for your review. >> Start Date May 30, 2006 or sooner >> Annual base salary $180,000 >> Relocation assistance(1) $40,000 >> Leadership Incentive Bonus(2) 50% of base annual salary >> Stock Options(3) 80,000 shares at a $4.55 strike price >> Leased vehicle Lease amount to be determined according to policy >> Vacation Benefits 4 weeks per year >> Sick Days 5 days per year >> 401k eligibility After 1,000 hours and 12 months of service >> 401k Entry dates are January 1, April 1, July 1 or October 1 >> Medical, Dental & Life You will be eligible for medical benefits on the first of the month following thirty days of service. Your annual salary will be reviewed for a potential increase on January 1, 2007, based on your performance and the company's financial results achieved in 2006. Specific Key Result Areas will be defined during the first 60 days of your new position. - ----------------- (1) Amount will be paid upon relocation contingent on the relocation occurs within 12 months of start of employment. A relocation expense repayment agreement will require repayment of the relocation amount on a sliding-scale reduction if you leave the company within 12 months from receiving the relocation assistance. Additionally, the company will pay for you and your wife's travel, lodging and meal expenses to make up to three visits to the Houston, Texas community to support your relocation efforts. (2) Prorated from your date of hire in 2006 (See schedule attached). (3) Vesting at 50% June 1, 2006, 25% December 31, 2006 and 25% December 31, 2007 1 I look forward to your response and acceptance for this position. This offer is valid for your acceptance until May 16, 2006 and contingent upon satisfactory results from a pre-employment background investigation and review of your personal references. If you have any questions please don't hesitate to me at ###-###-####. Sincerely yours, /s/ Robert Ferguson Robert Ferguson President and Chief Executive Officer Offer Accepted by: /s/ Jeffrey Dunbar Date: 4/29/06 - -------------------------------------------------------------------------------- 2 - -------------------------------------------------------------------------------- 2006 Leadership Incentive Plan CORPORATE RESOURCES PARTICIPANT SUMMARY - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Employee Name: Jeff Dunbar Title: VP Supply Chain 2006 Base Salary: $180,000 Bonus Target as a Percent of Salary: 50% - -------------------------------------------------------------------------------- 2006 LEADERSHIP INCENTIVE PLAN HIGHLIGHTS: - ------------------------------------------ o Plan participants are eligible for the Leadership Incentive payout if the following occur. o Total Company achievement of 90% or greater of the approved 2006 Free Cash Flow Budget o The 2006 Performance metrics are as follows: o Free Cash Flow with a range of 90% to 120% of budget o Net Sales with a range of 95% to 120% of budget o Return on sales percentage within .50% of last year's ROS % o Weighting for the 2006 plan is as follows o 100% Company Results o Free Cash Flow = 70% o Net Sales = 20% o Key Result Areas = 10% o The Leadership Incentive Plan will remain in place unless cancelled or amended by the Compensation Committee and approved by the Board of Directors o The Compensation Committee will be responsible for overall Plan approval, for approving performance goals (as recommended by ELT), and approving bonus payments based on financial results and calculated payments. o Eligibility will be approved by the Compensation Committee based on ELT's recommendation and will be limited to key leadership positions that have a significant impact on the success of the organization. o Only eligible participants who are actively employed on the last day of the fiscal calendar year will be eligible for a bonus payment. o Bonus payments will be made no later than March 15th following the plan year o Employees who terminate during the plan year for reasons of death, disability, retirement or job elimination may receive a pro-rated bonus share no later than March 15th following the plan year. o Employees who terminate for any other reason (voluntary or involuntary) forfeit rights to a bonus payments for that year. - -------------------------------------------------------------------------------- Reviewed by: /s/ Robert Ferguson Date:4/27/06 Employee Signature: /s/ Jeffrey Dunbar Date:5/17/06 - -------------------------------------------------------------------------------- 3