<PAGE>

                                                                   EXHIBIT 10.1


                              EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT ("Agreement"), dated as of August 3, 1995 is
made and entered into by and between HINES NURSERIES INC., a California
corporation ("Hines"), having its principal office at 12621 Jeffrey Road,
Irvine, California 92720, and ROBERT A. FERGUSON, an individual ("Employee").

         A. Madison Dearborn Capital Partners, L.P. has recently acquired a
majority of the voting common stock of Macluan Capital (Nevada) Inc., which in
turn owns all of the stock of Hines (the "Acquisition");

         B. Employee has been and on the date hereof continues to be a valued
executive employee of Hines, pursuant to that certain EMPLOYMENT AGREEMENT dated
July 16, 1990 as amended by AMENDMENT NO. 1 to EMPLOYMENT AGREEMENT (such
agreement as amended is referred to herein as the "Prior Employment Agreement");

         C. Prior to the Acquisition, Hines maintained certain employee benefit
programs which Hines has agreed to continue with certain modifications agreeable
to Employee;

         D. Hines desires to continue the employment of Employee and Employee
desires to continue to perform the duties and obligations hereinafter described
for Hines upon the terms and conditions hereinafter set forth; and

         E. The purpose of this Agreement is to supersede the Prior Employment
Agreement from and after the date hereof.

         NOW, THEREFORE, in consideration of the mutual covenants and conditions
herein contained and their performance, Hines and Employee agree as follows:

         1. EMPLOYMENT. Hines hereby continues the employment of Employee and
Employee agrees to serve Hines in the capacity of General Manager, Houston (or
in such other capacity as may be assigned to Employee by the Board, provided
that such other capacity is at least equal to or greater in rank and
responsibility), subject to the direction of the Board of Directors of Hines
(the "Board") and the further terms and conditions of this Agreement. Employee
shall, during the term of this Agreement, in good faith perform such duties as
may be assigned to him by the Board and shall implement the policies of Hines
and directions provided by the Board from time to time.

         2. EMPLOYMENT TERM. Commencing as of the date first written above, this
Agreement is on an "at-will" basis and may be terminated by either party in
accordance with the provisions of Section 7.

         3. COMPENSATION AND BENEFITS. From and after the date first written
above and so long as Employee is employed by Hines, Employee shall be entitled
to the following compensation and benefits:

                  (a) SALARY. Employee shall continue to receive an annual
salary from Hines at his current salary rate or such greater amount as may be
determined by the Board from time to time (but no less frequently than
annually), the same to be paid in periodic, but not less than monthly,
installments in accordance with Hines' standard payroll practice. Such amount,
as may be increased from time to time, shall be referred to herein as the "base
salary."

                  (b) ADDITIONAL COMPENSATION. In addition to the salary
provided in Section 3(a) above, Employee shall participate in Hines' Executive
Variable Compensation Plan (the "Bonus Plan"). The Bonus Plan and Employee's
participation therein shall be an amount determined and paid by the Board
annually no later than April 30 of each year (the "Bonus Date") after
consultation with senior management, under which Bonus Plan an amount equal to
six percent (6%) of Hines' Annual Net Cash Flow (as defined in the Bonus Plan
and which shall not include the earnings of Agri Holdings Inc. and its
subsidiaries) shall be available for bonuses to the Bonus Plan participants. A
copy of the current Bonus Plan is attached hereto as Exhibit A. Hines reserves
the right to modify or amend the Bonus Plan or substitute therefore other bonus
compensation arrangements as shall be approved by the Board from time to time.

<PAGE>

                  (c) SENIOR MANAGEMENT EQUITY INCENTIVE PLAN. Employee shall
participate in any stock option, stock purchase, or other equity ownership or
incentive plan which Hines may adopt for senior management, but not including
the sale to certain employees of an aggregate of up to $1,000,000 of Junior
Preferred Stock and Class B Common Stock.

                  (d) DEATH BENEFITS. Employee shall be entitled to participate
in Hines employee's life insurance program to an extent appropriate for his
level of employment.

                  (e) DISABILITY. In the event of a disability not constituting
a Long-Term Disability as defined in Section 7(c), Hines shall pay to Employee
any difference between the actual receipts from disability insurance paid for by
Hines and Employee's base salary as set forth in Section 3(a) above for a
maximum period of three hundred sixty-five (365) days (whether or not
consecutive) after the commencement of Employee's disability.

                  (f) VACATION. Employee shall receive vacation in accordance
with Hines's standard vacation policy for executives employed at Employee's
facility; provided, however, in no event shall Employee receive less than the
greater of (i) three (3) weeks, or (ii) an amount in excess of three (3) weeks
as may be granted from time to time and deemed "earned" pursuant to the Hines
vacation policy in effect as of the date of this Agreement. Employee shall not
be permitted to accumulate vacation from year to year but instead must use all
vacation time during the year in which it is first accrued.

                  (g) AUTOMOBILE. Hines shall provide Employee an automobile
under the Hines automobile policy as established by the Board from time to time.

                  (h) EXPENSES. In addition to the base salary provided in
Section 3(a) above, Employee shall be entitled to reimbursement for necessary
and reasonable business expenses incurred in connection with the performance of
his duties hereunder pursuant to procedures and policies adopted by the Board.

                  (i) SEVERANCE BENEFITS. Employee shall receive certain
severance benefits upon the termination of his employment hereunder in
accordance with the provisions of Section 7 below ("Termination and Severance
Benefits").

         4. OTHER OBLIGATIONS OF HINES.

                  (a) Hines shall provide for Employee workspace, equipment and
supplies generally reasonable and sufficient for performance of the tasks
assigned to Employee.

                  (b) Hines shall provide Employee with all such additional
benefits as are generally provided to employees of Hines.

         5. RELOCATION. If Hines requires Employee to relocate to a metropolitan
area outside the area in which he now lives, Hines will pay all reasonable
relocation expenses incurred by Employee, including real estate broker's fees,
costs of moving household goods and personal effects to a new residence, and
travel, lodging and meal costs incurred while searching for a new residence.

         6. DUTIES. Employee shall (i) faithfully devote full-time attention,
skill and ability to discharge the duties assigned to him by the Board from time
to time, (ii) use best efforts to promote and protect the interests of Hines,
(iii) comply with all reasonable and lawful instructions that the Board gives
from time to time, and (iv) provide information and assistance as requested by
the Board. During the term of this Agreement Employee shall not engage in any
work, enterprise or activity which is, in the opinion of the Board, not in the
best interests of Hines, or contrary to, or detracting from the due performance
of the business of Hines or the discharge of Employee's duties for Hines.

<PAGE>

         7. TERMINATION AND SEVERANCE BENEFITS.

                  (a) GENERAL. Commencing as of the date first written above,
continued employment pursuant to this Agreement shall be on a "at-will" basis,
meaning that Hines may terminate Employee at any time for any reason with or
without Cause (as defined below), and Employee may terminate his employment with
Hines at any time for any reason with or without Cause, in either case upon 30
days advance written notice; PROVIDED HOWEVER, that Employee shall be entitled
to the Severance benefits specified in Section 7(d).

                  In addition to termination of the "at-will" employment
relationship as provided above, Employee's employment hereunder shall terminate
upon the occurrence of any of the following: (i) the death of Employee; (ii)
termination of Employee by the Board for Long-Term Disability (as defined
below); or (iii) termination of Employee by the Board for Cause. Employee shall
have the option, but shall not be required, to consider his employment hereunder
terminated other than for Cause (as defined below) in the event that (i) he is
required to accept a diminution in base salary or material diminution of other
benefits described herein, or an assignment of employment duties which are not
commensurate with his office as specified above and (ii) he has notified Hines
in writing of his intention to terminate his employment on account of such
diminution or assignment and Hines has failed to cure the situation within 15
days of receipt of such notice.

                  (b) DEFINITION OF LONG-TERM DISABILITY. As used herein, the
term "Long-Term Disability" shall mean a physical or mental illness or other
condition which prevents Employee from performing his material duties hereunder
for a period of six (6) consecutive months or two hundred forty (240)
nonconsecutive days in any three hundred sixty-five (365) day period. Any
shorter period of disability shall be deemed short-term disability.

                  (c) DEFINITION OF CAUSE. As used herein, the term "Cause"
shall mean (i) willful and habitual breach of the duties in effect on the date
first written above or otherwise required of him pursuant to Section 1 of this
Agreement, (ii) habitual neglect of the duties in effect on the date first
written above or obligations required of him by the terms of this Agreement,
(iii) commission of fraud, embezzlement or misappropriation, or other willful
acts of dishonesty or willful misconduct, or commission of a crime of moral
turpitude involving Hines whether or not a criminal or civil charge is filed in
connection therewith, or (iv) information or trade secrets of Hines.

                  (d) SEVERANCE PAYMENTS AND BENEFITS.

                           (i) If Employee's employment with Hines is terminated
for any reason (including Long-Term Disability) other than Employee's voluntary
"at-will" termination, termination by Hines for Cause or death (for 3(e)
hereof), then Hines shall pay to Employee (1) a lump sum cash payment within
thirty (30) days of Employee's termination equal to two times Employee's annual
base salary as of the date of such termination ("Base Salary Payment") and (2) a
lump sum cash payment delivered by the Bonus Date equal to a pro rata portion of
Employee's bonus for the fiscal year in which such termination occurs
(determined upon the basis of the pro rata portion of Hines' sales to the date
of termination as compared to the sales for the full fiscal year) (clauses (1)
and (2), collectively, the "Severance Payment").

                           (ii) If Employee terminates his "at-will" employment
or if Hines terminates Employee for Cause, then Employee shall not receive the
Severance Payment.

                           (iii) Employee agrees that the Severance Payment
shall fully compensate him for, and he agrees fully and forever to release any
and all claims, if any then exist, arising out of his employment and the
termination thereof with the sole exception of any alleged violation(s) of
applicable state or federal employment statutes, and upon payment of the
Severance Payment Hines shall be fully released and discharged as to any and all
such claims.

                           (iv) Upon Employee's termination for any reason other
than Employee's own voluntary "at-will" termination, Hines shall continue to pay
Employee's health insurance benefits for a one-year period following such
termination.

<PAGE>

         8. GENERAL PROVISIONS.

                  (a) NOTICES. All notices and other communications hereunder
shall be in writing and, unless otherwise provided herein

<TABLE>
<S>     <C>
                           (i) If to Hines:                   Hines Nurseries, Inc.
                                                              12621 Jeffrey Road
                                                              Irvine, CA 92720

                               With a copy to:                Paul R. Wood
                                                              Madison Dearborn Capital Partners, L.P.
                                                              Three First National Plaza
                                                              Suite 1330
                                                              Chicago, Illinois 60602
                                                              Telephone:  (312) 732-5405
                                                              Facsimile:  (312) 732-4098

                           (ii) If to Employee:               To the address listed below Employee's
                                                              name on the signature page of this
                                                              Agreement.

                                With a copy to:               William J. Simpson, Esq.
                                                              Paul, Hastings, Janofsky & Walker
                                                              695 Town Center Drive
                                                              17th Floor
                                                              Costa Mesa, CA 92626
                                                              Telephone:  (714) 668-6200
                                                              Facsimile:  (714) 979-1921
</TABLE>

                  (b) ASSIGNMENT. The rights and duties of Employee under this
Agreement shall not be subject to alienation, assignment or transfer, whether
voluntary or involuntary.

                  (c) ENTIRE AGREEMENT.This Agreement constitutes the entire
agreement between the parties pertaining to the subject matter hereof, and no
changes in, additions to or modifications of this Agreement shall be valid
unless set forth in writing and signed by each of the parties.

                  (d) SUPERSEDES PRIOR AGREEMENTS. This Agreement supersedes all
prior employment agreements, understandings, oral or written between Hines and
Employee, specifically including, without limitation, the Prior Employment
Agreement.

                  (e) CAPTIONS. The captions used in this Agreement are intended
solely for convenience of reference and shall not in any manner amplify, limit,
modify or otherwise be used in the construction or interpretation of any of the
provisions hereof.

                  (f) SEVERITY. If any term of this Agreement or any application
thereof shall be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining terms contained herein and any
other application of said terms shall not in any way be affected or impaired
thereby.

                  (g) APPLICABLE LAW. This Agreement shall be construed and
enforced in accordance with and governed by the laws of the State of California.
In the event of litigation arising out of this Agreement, jurisdiction shall be
proper either in the State of California or in the State in which Employee is
employed.

                  (h) ARBITRATION. All disputes under or relating to this
Agreement or to Employee's employment by Hines shall be resolved by and through
an arbitration proceeding to be conducted under the auspices of and in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association (or any like organization successor thereto) at Santa Ana,
California, except that the parties and arbitrators will also have all of the
rights and duties provided by Section 1283.05 of the California Code of Civil

<PAGE>

Procedure, which is hereby made a part of this Agreement. Both the foregoing
agreement of Employee and Hines to arbitrate any and all such claims, and the
results, determination, finding, judgment and/or award rendered through such
arbitration, shall be final and binding on each of Employee and Hines.

                  (i) PROCEDURE. Such arbitration may be initiated by written
notice from either Employee or Hines to the other, which shall be compulsory and
binding proceeding on each of Employee and Hines. The arbitration shall be
conducted before a panel of three arbitrators. Each of Employee and Hines shall
select from a list of arbitrators provided by the American Arbitration
Association one arbitrator; the two arbitrators so selected shall appoint the
third arbitrator from said list. The costs of said arbitrators and the
arbitration shall be borne equally by Employee and Hines. Each of Employee and
Hines shall bear separately the cost of respective attorneys, witnesses and
experts in connection with such arbitration. Time is of the essence of this
arbitration procedure, and the arbitrators shall be instructed and required to
render their decision within 30 days of completion of the arbitration.







                            [SIGNATURE PAGE FOLLOWS]

<PAGE>

         IN WITNESS WHEREOF, the undersigned have executed this Agreement on the
date first above written.

                                                  EMPLOYER:

                                                  HINES NURSERIES, INC.,
                                                  a California corporation


                                                  By: /S/ DOUGLAS D. ALLEN
                                                      -------------------------
                                                  Title:
                                                        -----------------------


                                                  EMPLOYEE:

                                                  /S/ ROBERT A. FERGUSON
                                                  -----------------------------
                                                  Robert A. Ferguson
                                                  1702 Brookchester Drive
                                                  Katy, Texas 77450

<PAGE>

                                    EXHIBIT A
                                    ---------

                             to Employment Agreement

                              HINES NURSERIES INC.
                      EXECUTIVE VARIABLE CONPENSATION PLAN

o    Hines Nurseries Inc. ("Hines") has adopted this Executive Variable
     Compensation Plan (the "Bonus Plan"). Hines reserves the right to modify or
     amend the Bonus Plan or substitute therefore other bonus compensation
     arrangements as shall be approved by the Board of Directors (the "Board")
     from time to time.

o    The Bonus Plan is a long-term incentive which is results oriented and
     directly tied to Net Cash Flow (as defined below) performance. It has been
     designed to be self-regulating and a significant portion of a key manager's
     total wages whenever significant results are achieved.

o    The Bonus Plan has been effective since January 1, 1990.

o    The variable compensation pool will be equivalent to 6% of Net Cash Flow in
     each fiscal year. This percentage will be applied to all dollars of Net
     Cash Flow greater than $0.

o    "Net Cash Flow" means earnings before interest, taxes, depreciation and
     amortization, plus any management fees mutually approved by Hines and the
     participants in this Bonus Plan, plus expenses relating to any merger,
     acquisition or other corporate reorganization of Hines or expenses of any
     public or private offering of Hines' equity securities, minus any increase
     in inventory, plus any decrease in inventory, minus capital expenditures,
     exclusive of expenditures for acquisitions, expansions and replacement of
     existing acreage.

o    The total variable compensation pool will be allocated to participants as
     determined by the Board after consultation with senior management.

o    The Board will determine any additions or reductions in the number of
     participants (currently 16 members) after consultation with senior
     management.

o    The relative proportion of each participant's share in the total bonus pool
     developed in accordance with the descriptions, formulas, and examples given
     herein is as follows:

     President                      =       1.2

     7 Key Managers                 =       1.0
     (excluding the President)

     3 Sales Managers               =       1.0

     6 Other Site Managers          =       0.5

     The allocation formula will be performance based and will reward Central
     Resource Managers based 100% on consolidated performance and will reward
     Site Managers based 75% on specific site performance and 25% on
     consolidated performances.

o    Two measures will be used to evaluate performance:

              Net Cash Flow

              Return on Sales = Nest Cash Flow divided by Net Sales

o    The Board will measure performance under the performance formulas in
     consultation with senior management.

<PAGE>

o    A description of the bonus calculation follows:

          I.   Central Resource Managers/1.0 shares

               a.   Net Cash Flow
                    Consolidated Net Cash Flow / $300,000 = 1% Bonus

               b.   Return on Sales
                    Consolidated Net Cash Flow / Net Sales = Return on Sales
                    1% R.O.S. = 1.5% Bonus

          II.  President /1.2 Shares same as above except that the calculated
               bonus percentages are multiplied by 1.2

          III. Site General Managers and Sales Managers/1.0 shares 75% Site
               Performance /25% Consolidated Performance

               a.   Site Net Cash Flow / $100,000 = 1% Bonus

               b.   Return on Sales
                    Site Net Cash Flow / Site Net Sales = Return on Sales
                    1% R.O.S. = 1.5% Bonus

          IV.  Site Production Managers/0.5 Shares
               75% Site Performance/25% Consolidated Performance

               a.   Net Cash Flow / $200,000 = 1% Bonus

               b.   Return on Sales
                    Site Net Cash Flow + Site Net Sales = Return on Sales
                    1% R.O.S. = .75% Bonus

o    If the total amount of incentive compensation developed in accordance with
     the descriptions, formulas, and examples provided herein exceeds 6% of Net
     Cash Flow then the relative proportion of each participant's originally
     calculated share will be reduced proportionately until the total amount of
     the bonus pool equals 6% of Net Cash Flow.

         Example:   Calculated bonus pool = 6.3% of Net Cash Flow

                    The calculated pool is too high by 0.3% of Net Cash Flow or
                    4.76% of the originally calculated amount (0.3% / 6.3% =
                    4.76%)

                    Each participant's originally calculated bonus will be
                    reduced by 4.76%