FREEDOM FINANCIAL HOLDINGS, INC. RESTRICTED STOCK AGREEMENT
FREEDOM
FINANCIAL HOLDINGS, INC.
This
Agreement
is made
as of September 30, 2006 in Fort Xxxxx, Indiana, between Freedom Financial
Holdings, Inc., a Maryland corporation (the “Company”), and Xxxxx Xxxxxxx
(“Xxxxxxx”), an individual with a principal residence of 0000 X 000 X Xxxxxx,
Xxxxxxx 00000.
WHEREAS
the
Company desires to issue to Xxxxxxx and Xxxxxxx desires to acquire shares of
Class B Preferred Stock of the Company as herein described on the terms and
conditions hereinafter set forth.
WHEREAS
the
issuance of Class B Preferred Stock hereunder is in connection with services
rendered by Xxxxxxx for the Company.
NOW,
THEREFORE,
the
parties hereto agree as follows:
1. Issuance
of Stock.
Pursuant
the vesting schedule and satisfaction of the condition precedent to vesting
in
Section 3, the Company hereby agrees to issue to Xxxxxxx and Xxxxxxx hereby
agrees to acquire an aggregate of 169,500 shares of the Company’s Class B
Convertible Preferred Stock, $.001 par value, convertible to common stock,
$.001
par value in the aggregate (the “Shares”).
2. Share
Certificate.
The
Company shall promptly issue and deliver to Xxxxxxx a share certificate
evidencing the Shares. The share certificate will bear the legends as described
in Section 7, below.
3. Vesting.
The
Shares shall vest pursuant to the following vesting schedule:
(a) Vesting
Schedule.
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(1)
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October
1, 2007 - 56,500 Shares
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(2)
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October
1, 2008 - 56,500 Shares
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(3)
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October
1, 2009 - 56,500 Shares
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(b) Condition
Precedent. Xxxxxxx hereby agrees to remain employed by the Company for a period
of three (3) years from the date of execution of this Agreement. In the event
that Xxxxxxx is not employed by the Company on each date listed in Section
3(a),
all of his right, title, and interest to the Shares indicated for such time
period will be forfeited.
(c) Terms
of
Employment. The terms and conditions of Xxxxxxx’x employment shall be those as
defined in the employment agreement between Xxxxxxx and the Company executed
on
August 1, 2006 whereby the parties agreed to employ Xxxxxxx as the Chief
Executive Officer of the Company or any such agreement which amends or replaces
the August 1, 2006 agreement.
4. Restrictions
on Transfer of Class B Preferred Shares Issued Pursuant to This
Agreement.
(a) The
Shares being issued hereunder may not be sold, offered for sale, pledged,
hypothecated or otherwise transferred in the absence of an effective
Registration Statement under the Act with respect to such Shares or an opinion
of counsel reasonably acceptable to the Company that such registration is not
required. The Company shall not be required to transfer on its books any portion
of such Shares issued hereunder which shall have been sold or transferred in
violation of any of the provisions set forth in this Agreement, or to treat
as
the owner of such Shares or to accord the right to vote as such owner or to
pay
dividends to any transferee to whom such Shares shall have been so transferred.
(b) Xxxxxxx
understands and acknowledges that the Shares have not been registered under
the
Act and are deemed to constitute “restricted securities” under Rule 144
promulgated under the Act. In this connection, Xxxxxxx warrants and represents
to the Company that Xxxxxxx is acquiring the Shares for Xxxxxxx’x own account
and Xxxxxxx has no present intention of distributing or selling said Shares
except as permitted under the Act. Xxxxxxx further warrants and represents
that
Xxxxxxx has either (i) preexisting personal or business relationships with
the
Company or any of its officers, directors or controlling persons, or (ii) the
capacity to protect his own interests in connection with the acquisition of
the
Shares by virtue of the business or financial expertise of Xxxxxxx or of any
professional advisors to Xxxxxxx who are unaffiliated with and who are not
compensated by the Company or any of its affiliates, directly or indirectly.
Xxxxxxx further acknowledges that the exemption from registration under Rule
144
will not be available for at least one year from the date of acquisition of
the
Shares unless at least one year from the date of sale (i) a public trading
market then exists for the Class B Preferred Stock of the Company, (ii) adequate
information concerning the Company is then available to the public, and (iii)
other terms and conditions of Rule 144 are complied with; and that any sale
of
the Shares may be made only in limited amounts in accordance with such terms
and
conditions. Xxxxxxx further represents and warrants that he is a bona fide
resident of, and not a temporary resident of, and has his principal residence
in
the State of Indiana.
(c) Xxxxxxx
hereby agrees that if so requested by the Company or any representative of
the
underwriters in connection with any registration of the public offering of
any
securities of the Company under the Act, Xxxxxxx shall not sell, transfer or
otherwise dispose of any Shares or other securities of the Company during a
period of up to 180 days (as specified by such representative) following the
effective date of a registration statement of the Company filed under the Act;
provided, however, that such restriction shall only apply to the first two
registration statements of the Company to become effective under the Act which
include securities to be sold on behalf of the Company to the public in an
underwritten public offering under the Act. The Company may impose stop-transfer
instructions with respect to securities subject to the foregoing restrictions
until the end of such 180-day period.
5. Registration
Rights.
The
Shares are subject to a registration rights agreement of even date between
Xxxxxxx and the Company (the “Registration Rights Agreement”). Pursuant to the
Registration Rights Agreement, common stock which underlies the Class B
preferred shares will be registered pursuant to the Securities Act of 1933,
as
amended, (the “Act”) if the Company proposes to file a registration statement
under the Act.
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6. Conversion
to Common Stock.
Upon
the effectiveness of a registration statement filed by the Company in connection
with the public offering of the securities of the Company and upon election
by
Xxxxxxx to convert the Class B shares to common shares, the restrictions on
transfer as described in Section 4 will not be applicable; applicable
restrictions on transfer and sale will be those as defined in Section 3 of
this
Agreement and the Registration Rights Agreement.
7. Stock
Certificate Legends.
All
stock certificates evidencing any shares of Class B Preferred Stock issued
hereunder shall be endorsed with the following legends:
(a) “THE
SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A RESTRICTED STOCK
AGREEMENT SET FORTH IN AN AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED
HOLDER, OR THE PREDECESSOR IN INTEREST, A COPY OF WHICH IS ON FILE AT THE
PRINCIPAL OFFICE OF THIS COMPANY. ANY TRANSFER OR ATTEMPTED TRANSFER OF ANY
SHARES SUBJECT TO SUCH RESTRICTED STOCK AGREEMENT IS VOID WITHOUT THE PRIOR
EXPRESS WRITTEN CONSENT OF THE ISSUER OF THESE SHARES.”
(b) “THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE “ACT”). THEY MAY NOT BE SOLD OR OFFERED FOR SALE OR
OTHERWISE DISTRIBUTED UNLESS THE SECURITIES ARE REGISTERED UNDER THE ACT OR
AN
EXEMPTION THEREFROM IS AVAILABLE.”
(c) Any
other
legend required to be placed thereon by the Company’s bylaws or applicable
state, federal or foreign securities laws.
8. Adjustment
for Stock Split.
All
references to the number of Shares and the purchase price of the Shares in
this
Agreement shall be appropriately adjusted to reflect any stock split, stock
dividend or other change in the Shares, which may be made by the Company after
the date of this Agreement.
9. Tax
Consequences.
Xxxxxxx
understands that the Shares have been valued by the Board of Directors of the
Company at One Dollar ($1.00) per Share (the “Issue Price”), and that the
Company believes this valuation represents a fair attempt at reaching an
accurate appraisal of their present worth. Xxxxxxx understands, however, that
the Company can give no assurances that the Issue Price is in fact the fair
market value of the Shares and that it is possible that the Internal Revenue
Service could successfully assert that the value of the Shares on the date
of
purchase is greater than so determined. If the Internal Revenue Service were
to
succeed in a tax determination that the Shares had value greater than that
upon
which the transaction was based, the additional value could constitute ordinary
income as of the date of its receipt. The additional taxes (and interest) due
would be payable by Xxxxxxx, and there is no provision for the Company to
reimburse him for that tax liability, and Xxxxxxx assumes all responsibility
for
such potential tax liability. Xxxxxxx has reviewed with Xxxxxxx’x own tax
advisor the federal, state, local and foreign tax consequences of this
investment and the transactions contemplated by this Agreement. Xxxxxxx is
relying solely on such advisors and not on any statements or representations
of
the Company or any of its agents. Xxxxxxx understands that Xxxxxxx (and not
the
Company) shall be responsible for Xxxxxxx’x own tax liability that may arise as
a result of the transactions contemplated by this Agreement. ACCORDINGLY,
XXXXXXX SHALL BE RESPONSIBLE FOR THE PROPER AND TIMELY FILING OF ANY ELECTION
PURSUANT TO SECTION 83(b) OF THE INTERNAL REVENUE CODE, AND ANY COMPARABLE
STATE
ELECTION, WHICH XXXXXXX ELECTS TO MAKE IN CONNECTION WITH THE TRANSACTION
CONTEMPLATED BY THIS AGREEMENT, AND THE COMPANY SHALL HAVE NO OBLIGATION OR
LIABILITY THEREFOR. An 83(b) Election Form is attached as Exhibit A hereto.
The
Company may withhold from Xxxxxxx’x wages, or require Xxxxxxx to pay, any
applicable withholding or employment taxes resulting from the lapse of any
restrictions imposed on the Shares.
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10. General
Provisions.
(a) The
rights and benefits of the Company under this Agreement shall be transferable
to
any one or more persons or entities, and all covenants and agreements hereunder
shall inure to the benefit of, and be enforceable by the Company’s successors
and assigns. Subject to the restrictions on transfer set forth herein, rights
and obligations of Xxxxxxx under this Agreement shall be binding upon Xxxxxxx,
his heirs, executors, administrators, successors and assigns. The rights and
obligations of Xxxxxxx under this Agreement may only be assigned with the prior
written consent of the Company.
(b) Any
notice, demand or request required or permitted to be given by either the
Company or Xxxxxxx pursuant to the terms of this Agreement shall be in writing
and shall be deemed given when delivered personally or deposited in the U.S.
Mail, First Class with postage prepaid, and addressed to the parties at the
addresses of the parties set forth at the end of this Agreement or such other
address as a party may request by notifying the other in writing.
(c) Nothing
in this Agreement shall affect in any manner whatsoever the right or power
of
the Company, or a parent or subsidiary of the Company, to terminate Xxxxxxx’x
employment for any reason, with or without cause.
(d) Either
party’s failure to enforce any provision or provisions of this Agreement shall
not in any way be construed as a waiver of any such provision or provisions,
nor
prevent that party thereafter from enforcing each and every other provision
of
this Agreement. The rights granted both parties herein are cumulative and shall
not constitute a waiver of either party’s right to assert all other legal
remedies available to it under the circumstances.
(e) Xxxxxxx
agrees upon request to execute any further documents or instruments necessary
or
desirable to carry out the purposes or intent of this Agreement.
(f) Xxxxxxx
has reviewed this Agreement in its entirety, has had an opportunity to obtain
the advice of counsel prior to executing this Agreement and fully understands
all provisions of this Agreement.
(g) This
Agreement shall be governed by the laws of the State of Indiana and interpreted
and determined in accordance with the laws of the State of Indiana, as such
laws
are applied by Indiana courts to contract made and to be performed entirely
in
Indiana by residents of that state.
(h) Xxxxxxx
acknowledges and agrees that the vesting of shares pursuant to Section 3 hereof
is earned only by continuing service as an employee at the will of the Company.
Xxxxxxx further acknowledges and agrees that this agreement, the transactions
contemplated hereunder and the vesting schedule set forth herein do not
constitute an express or implied promise of continued engagement as an employee
for the vesting period, for any period, or at all, and shall not interfere
with
Xxxxxxx’x right or the Company’s right to terminate Xxxxxxx’x employment
relationship at any time, with or without cause.
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IN
WITNESS WHEREOF,
the
parties have duly executed this Agreement as of the day and year first set
forth
above.
| Freedom Financial Holdings, Inc. |
Xxxxxxx:
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| By: |
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Xxxxx
Xxxx, Secretary
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Xxxxx
Xxxxxxx
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