MANAGEMENT SHAREHOLDER AGREEMENT
This
Management Shareholders Agreement (“the Agreement”) is entered into this
17th
day of
December, 2007 by and between Freedom Financial Group, Inc., a Delaware
corporation (the "Corporation"), and Xxxxxx X. Xxxxxxx (the "Management
Shareholder").
WHEREAS,
Management Shareholder has accepted a position with the Corporation as Senior
Vice President.
WHEREAS,
as an
inducement to Management Shareholder to accept the position of Senior Vice
President, the Corporation has agreed to transfer to Management Shareholder
135,000 shares of stock in the Corporation (the Shares) subject to certain
restrictions.
WHEREAS,
the
Corporation and the Management Shareholder agree that until and unless the
Corporation raises Required Capital, as hereinafter defined, and certain other
restrictions are satisfied, the Shares shall be subject to certain conditions
and restrictions.
In
consideration of the mutual promises contained herein, the parties agree as
follows:
1. In
conjunction with the after execution of this Agreement, the Corporation will
issue a certificate for the Shares which shall contain the following
legends:
This
stock is issued and held pursuant to a Management Shareholder Agreement dated
December 17, 2007, a copy of which is filed with the Secretary of the
Corporation, and this stock cannot be sold, assigned, donated, pledged,
hypothecated, transferred or otherwise disposed of except subject to the terms
of said Management Shareholder Agreement.
THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED IN THE
ABSENCE OF (i) AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT TO THE
SECURITIES UNDER SUCH ACT, OR (ii) AN OPINION OF COUNSEL REASONABLY SATISFACTORY
TO THE CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.
2. Subject
to the provisions of Section 2.11, the following restrictions will apply to
the
Shares.
2.1 The
Management Shareholder hereby agrees that 50% of the Shares issued to him are
automatically forfeited on January 9, 2009, if the Corporation has not raised
Required Capital as hereinafter defined on or before January 9,
2009.
2.2 The
Management Shareholder hereby agrees to relinquish any rights to receive
dividends or proceeds from the liquidation of the Corporation until (i) the
receipt by the Corporation of the Required Capital, or (ii) January 10, 2009,
whichever first occurs.
2.3 The
Management Shareholders will not sell any of the Shares so long as any risk
of
forfeiture of any portion of their shares of stock exists under Section
2.1.
2.4 The
Management Shareholders will not sell any of the Shares so long as the
restriction on the right to receive dividends or proceeds from liquidation
continues under Section 2.2.
2.5 Except
as provided in Section 4 and Section 5, the Management Shareholder will not
sell
any of the Shares prior to six (6) months after the raising of Required
Capital.
2.6 Upon
satisfaction of the conditions set forth in this Section, the Management
Shareholder shall have the right to sell, at his option, free of any encumbrance
or restriction created by this Agreement, all or any portion of the
Shares.
2.7 The
restrictions set forth in Section 2 and all sub-paragraphs thereof on the Shares
which are not forfeited are lifted as of January 10, 2009, if not sooner
lifted.
2.8 Within
ten (10) business days after the restrictions on the Management Shareholder’s
Shares as set forth in Section 2 hereof and all sub-sections thereof, have
terminated, the Corporation will instruct the transfer agent to issue new shares
of stock to the Management Shareholder free of any encumbrance or restriction
created by this Agreement and the Management Shareholders shall deliver to
the
Corporation for cancellation all certificates for shares of stock previously
issued to him.
2.9 In
the event the Management Shareholder is entitled to sell any shares of stock
in
the Corporation, the Corporation agrees to do all things necessary under Rule
144 under the Securities Act of 1933, as amended, (the Act) in order for the
Management Shareholder to sell such shares pursuant to such Rule.
2.10
The
Corporation agrees that in the event it registers any other shares of stock
in
the Corporation by an appropriate registration statement under the Act, it
will
include the Management Shareholder’s shares of stock in the Corporation in such
registration in what is commonly known as a “piggyback registration”, unless
objected to by the underwriter or broker selling the shares in the registration
statement.
2.11. As
used
herein, the Required Capital is raised if there is a binding agreement with
one
or more solvent investors, or lenders for the loan, loans, equity acquisition,
equity investment or any similar kind of investment in the Corporation which
total in the aggregate $10,000,000.00 or more on or before January 9, 2009;
provided that the agreement for the Required Capital closes before January
9,
2009, or within six (6) months of its date of execution, whichever is later,
and, in any event, no later than June 9, 2009; with not less than $10,000,000
in
a combination of funds and credit being available to the Corporation immediately
after closing, and, provided further that if the Corporation enters into a
binding agreement for the Required Capital during the period from January 9,
2009, to June 9, 2009, with a source for the Required Capital that the
Corporation was negotiating with prior to January 9, 2009, and the agreement
for
the Required Capital in this proviso closes within six (6) months of its date
of
execution with the Required Capital being available to the Corporation
immediately after closing, it shall be deemed for the purposes of this Agreement
that the Required Capital was raised on or before January 9, 2009.
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3. So
long
as a Management Shareholder retains ownership of the Shares and no event of
forfeiture has occurred, the Management Shareholder shall have the unrestricted
right to vote all of his shares.
4. Notwithstanding
the provisions of Section 2 hereof, the Management Shareholder shall have the
right to sell, at his option, any or all shares owned by him after a change
in
control of the Corporation.
As used
herein, “Change in Control” means when one or more “Persons”, individually or
acting in concert as a group, acquire the right to vote 50% or more of the
outstanding voting rights of the Corporation. The word “Person” includes natural
human beings and all forms of legal entities.
5. Notwithstanding
the provisions of Section 2 hereof, a Management Shareholder and the personal
representative, heirs and assigns of a deceased Management Shareholder shall
have the right to sell, at their option, any and all shares owned by the
deceased Management Shareholder. A former Management Shareholder whose
employment has been terminated as a result of a Permanent Disability shall
have
the right to sell all Shares owned by him. As used herein, “Permanent
Disability” shall mean the Disability (as hereinafter defined) of a Management
Shareholder for 90 consecutive calendar days or 120 calendar days in the
aggregate during any consecutive 12-month period. “Disability” shall mean the
Management Shareholder’s physical or mental disability so as to render the
Management Shareholder incapable of carrying out substantially all of his duties
as an Employee of the Corporation.
6. A
former
Management Shareholder whose employment with the Corporation has been terminated
due to a Permanent Disability, or the legal representative, heirs and assigns
of
a deceased Management Shareholder, shall have the option to put to the
Corporation all or as many of the Shares as are not then subject to forfeiture
at fair market value, and the Corporation shall be obligated to purchase such
shares. The put option may be exercised for a period of ninety (90) days
following a former Management Shareholder’s death, or the termination of the
former Management Shareholder’s employment with the Corporation due to a
Permanent Disability and shall be exercisable by the former Management
Shareholder or by his legal representative. Fair market value shall be
recognized market value of the stock as of the date of death or termination
or
employment or the date of termination of employment for Permanent Disability.
In
the event there is no recognized market, the fair value of the shares of stock
shall be determined in good faith by the Corporation’s accountants using
commercially reasonable valuation methods.
CONDITION
PRECEDENT: The
provisions of this paragraph are subject to the express condition of the
Corporation obtaining and at all relevant times having in effect a policy or
policies of life insurance and disability insurance covering the life of the
Management Shareholder and the potential Permanent Disability of the Management
Shareholder. In the event the Corporation cannot purchase policies of life
insurance and disability insurance at a cost that the Corporation deems
reasonable, then the provisions of this paragraph are null and void. The parties
agree that in the event the definition of Permanent Disability in any policy
of
insurance acquired by the Corporation varies from the definition of Permanent
Disability in this Agreement, then this Agreement will be automatically modified
to conform to the definition of Permanent Disability as reflected in the policy
of insurance. Any monies that are due and owing under the terms of this
paragraph will be payable by the Corporation ten (10) business days after it
receives the proceeds of any applicable policies of insurance.
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7. If
a
Management Shareholder’s employment with the Corporation is terminated other
than for cause, the restrictions of Section 2 and all sub-sections thereof
are
lifted on the Management Shareholder’s Shares; and the Management Shareholder
shall have the right to sell his 50% of his Shares. The Management Shareholder
shall not have the right to sell the remaining 50% of his Shares which are
subject to forfeiture until and unless those Shares are not subject to
forfeiture under the provisions of Section 2 hereof. If the Management
Shareholder’s employment is terminated for cause, his Shares will be subject to
the restrictions of Section 2, and all sub-sections thereof.
As
used
herein, “terminated for cause” means (a) conviction of, or a plea of nolo
contendere to, a felony, (b) substantial neglect, substantial misconduct or
substantial failure (including conflict of interest) in the carrying out of
Employee’s duties, (c) the engaging by Employee in a material act or acts of
dishonesty adversely affecting the Corporation, any affiliate or any client
of
the Corporation, or (d) habitual drunkenness or the illegal use of drugs by
Employee.
8. Mediation
and Arbitration.
The
parties agree that any dispute or claim arising out of or relating to this
Agreement or any termination of the Employee’s employment, shall be settled by
mediation or by final and binding arbitration in accordance with the Employment
Arbitration Rules and Mediation Procedures of the American Arbitration
Association ("AAA"). Judgment upon any award entered in the arbitration
proceeding may be entered in any court having jurisdiction thereof. Mediation
and arbitration proceedings shall be private and confidential. Any dispute
regarding the enforcement or interpretation of this Agreement shall be first
submitted to mediation, and, if mediation is unsuccessful, to arbitration.
The
mediation and the arbitration shall be in accordance with the Employment
Arbitration Rules and Mediation Procedures of the AAA.
The
arbitration shall take place in Springfield, Missouri. All costs and expenses
of
the arbitration (e.g. arbitrator's fee) shall be borne equally by the parties.
Each party shall pay their own attorney's fees and litigation expenses and
all
other costs and expenses they incur arising out of or related to the
arbitration.
9. Miscellaneous
Provisions.
9.1 This
Agreement shall be governed by and shall be interpreted and enforced in
accordance with the laws of the state of Delaware.
9.2 No
amendment to this Agreement shall be valid unless made in writing and executed
by the parties hereto.
9.3 This
Agreement may be executed in any number of counterparts, each of which shall
be
deemed an original, but all of which shall constitute one in the same
document.
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9.4 All
notices required or permitted hereunder shall be given in writing by hand
delivery, by express delivery, or be registered or certified U.S. mail, postage
prepaid to the address provided to the other party for delivery of such notices,
as may be provided in writing from time to time.
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FREEDOM
FINANCIAL GROUP, INC.,
a
Delaware corporation
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| By: | /s/ Xxxxxx X. Xxxxxxxxxxxx | |
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Xxxxxx
X. Xxxxxxxxxxxx, President
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| /s/ Xxxxxx X. Xxxxxxx | ||
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XXXXXX
X. XXXXXXX
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