UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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): June 6, 2005
-----------------------
TRUE VALUE COMPANY
--------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Delaware 2-20910 36-2099896
-------- ------- ----------
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
8600 West Bryn Mawr Avenue, Chicago, Illinois 60631-3505
--------------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (773) 695-5000
--------------
Not Applicable
--------------
(Former name or former address, if changed since last report.)
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 (see General Instruction A.2. below):
[ ] 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))
EXHIBIT 10.1
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
The True Value Company (the "Company") and Mr. Lyle G. Heidemann entered into an
Employment Agreement dated May 25, 2005, with an effective date of June 6, 2005,
for Mr. Heidemann to be employed as the Company's President and Chief Executive
Officer. He will also be appointed to the Board of Directors of the Company. The
Company announced Mr. Heidemann's employment on June 6, 2005.
Under the employment agreement, Mr. Heidemann will receive an annualized base
salary of $725,000 and a one-time signing bonus of $250,000. The initial signing
bonus must be repaid to the Company if he fails to remain employed for one year,
except that, if he is terminated without cause, he will only be required to
repay a prorated portion of this signing bonus, and if he is terminated as a
result of his death or disability, he will not have to repay any portion. The
agreement also provides for retention bonuses on the first and second
anniversaries of his employment in the amount of $250,000 and $200,000,
respectively, provided he remains employed by the Company at such dates. Mr.
Heidemann will also receive a one-time payment during the third quarter of 2005,
equal to the fair market value (as defined in the Agreement) of 1,630 shares of
Sears Holding Corp.
Mr. Heidemann will also be eligible for an annual bonus and a long-term bonus
subject to achievement of specific goals and objectives established by the Board
and subject to terms and conditions determined by the Company. For years after
2005, neither the long-term bonus nor the annual bonus are guaranteed and
payment is subject to approval by the Board. For 2005, the annual bonus is
guaranteed at 70% of Mr. Heidemann's prorated base salary. The 2005 portion of
the long-term bonus for Performance Period Three under the Company's Long Term
Incentive Plan is equal to 100% of Mr. Heidemann's prorated base salary. Both
bonuses will be paid contemporaneously with the Company's other executive
bonuses.
The agreement provides Mr. Heidemann with four weeks paid vacation per calendar
year. He will also be entitled to retirement benefits and welfare benefits as
applicable to senior executives of the Company who commence employment on and
after April 1, 2005. In addition, Mr. Heidemann will be entitled to fringe
benefits including an annualized car allowance of $10,500, annualized
reimbursement for personal financial services in the amount of $2,500, and an
annual executive physical.
Pursuant to the agreement, if the Company terminates Mr. Heidemann's employment
for any reason other than for Cause or Disability, or if he resigns for Good
Reason (as defined in the Agreement), the Company will pay him (i) any unpaid
amounts of his base salary as of the date of termination, (ii) his salary for 12
months following the date of termination, (subject to set-off for amounts earned
during the period by subsequent employment), and (iii) if the termination occurs
within one year following a change in control of the Company, an amount equal to
his most recent payment made under the Company's annual Executive Incentive
plan, subject to set-off for subsequent employment during such period.
Additionally, the Company will provide medical benefits for a period of 12
months, with Mr. Heidemann paying the employee paid portion subject to earlier
termination if a subsequent employer provides comparable benefits. If Mr.
Heidemann is terminated with Cause, or if he resigns without Good Reason, the
Company need only pay him any unpaid amounts of his base salary as of the date
of termination.
Mr. Heidemann also has a two year non-competition and non-solicitation
restriction following his termination of employment with the Company for any
reason.
ITEM 1.02. TERMINATION OF A MATERIAL DEFINITIVE AGREEMENT.
Mr. Hanemann's Consulting Agreement with the Company will terminate on June 11,
2005 pursuant to a notice of termination delivered on June 6, 2005 in connection
with Mr. Heidemann's acceptance of the position of President and Chief Executive
Officer. Mr. Hanemann will retain his position as a Director of the Company.
ITEM 5.02 DEPARTURE OF DIRECTORS OR PRINCIPLE OFFICERS; ELECTION OF DIRECTORS;
APPOINTMENT OF PRINCIPLE OFFICERS.
Mr. Lyle G. Heidemann will be employed on or about June 6, 2005 as President and
Chief Executive Officer of the Company. Mr. Heidemann will also be appointed to
the Board of Directors of the Company.
Mr. Heidemann is 60 years old. From 1999 to 2003, he was the Executive Vice
President of Home and Off Mall Stores, Sears Roebuck and Co. From 1997 to 1999
Mr. Heidemann served as Senior Vice President, Appliances and Electronics, for
Sears. He retired from Sears in 2003.
Mr. Thomas Hanemann, who has been serving as interim CEO of the Company, stepped
down from that position upon Mr. Heidemann's employment.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
Exhibit No. Description
----------- -----------
10.1 Employment Agreement between True Value Company and
Lyle G. Heidemann, dated May 25, 2005
Matters discussed in the attached press release may contain forward-looking
statements within the meaning of the safe-harbor provisions of the Securities
Exchange Act of 1934. These forward-looking statements are subject to various
risks and uncertainties. Actual results may vary materially from the
expectations contained therein. The factors that could cause actual results to
differ materially from the projections, forecasts, estimates and expectations
discussed therein may include factors that are beyond the company's ability to
control or estimate precisely, such as the ultimate requirements of the
company's lenders, projections about the efficiencies that may be achieved by
the company's initiatives, expectations about member response to the company
initiatives, estimates of future market conditions in the hardware industry, the
behavior of other market participants in the industry and the actions and
economic conditions in the service territories of the company's members. Other
risk factors are detailed from time to time in the company's SEC reports.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as to the date of this document. The company does
not undertake any obligation to publicly release any revisions to these
forward-looking statements to reflect events or circumstances after the date of
this letter.
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.
True Value Company
Dated: June 6, 2005 By /s/ David A. Shadduck
-------------------------------
Name: David A. Shadduck
Title: Senior Vice President and
Chief Financial Officer