Employment Agreement
EMPLOYMENT
AGREEMENT made as of August 1, 2006, between Xxxxx Xxxxxxx, an individual
residing at 0000 X 000X, Xxxxxx, Xxxxxxx 46777(hereinafter referred to as the
"Employee") and Freedom Financial Holdings, Inc., a corporation with offices
at
000 X. Xxxx Xxxx, Xxxxx 000, Xxxx Xxxxx, Xxxxxxx 00000 (hereinafter referred
to
as the "Employer").
WHEREAS,
the Employer desires to employ the Employee, and the Employee desires to serve
as an employee of the Employer on the terms and conditions hereinafter set
forth.
NOW
THEREFORE, in consideration of the mutual covenants and promises of the parties
hereto, the Employer and the Employee agree as follows:
1.
Employment:
The
Employer hereby agrees to employ the Employee as Chief Executive Officer to
perform managerial and executive functions of the Employer, and the Employee
hereby agrees to perform such services for the Employer on the terms and
conditions hereinafter stated, subject to the directives of the Board of
Directors of the Employer.
2.
Term
of Employment:
The
term of this Agreement shall begin on August 1, 2006 and shall continue in
full
force and effect until August 1, 2009; provided, however, that this Agreement
shall be automatically renewed on a year-to-year basis thereafter unless
terminated by either party on at least three (3) months prior written notice
during any given year, unless sooner terminated as provided herein.
Notwithstanding the foregoing, the Employer may terminate this Agreement at
any
time without cause upon thirty (30) day’s written notice to Employee in which
event the Employer shall pay severance to Employee pursuant to Section 8(g)
hereof.
3.
Compensation:
During
the term of this Agreement, for all services rendered by Employee under this
Agreement, the Employer shall pay the Employee an annual base salary of one
hundred twenty thousand dollars ($120,000) per annum, payable in arrears at
a
rate of five thousand dollars ($5,000) on the fifteenth and last day of each
month. The Employee's base salary may be increased by the Board of Directors
from time to time in its sole and absolute discretion. In addition to the annual
base salary described in this Section, Employee may receive cash performance
bonuses in the sole and absolute discretion of the Board of Directors of the
Employer. The Company shall pay a bonus in the amount of one hundred twenty
thousand dollars ($120,000) to the Employee in consideration of services
performed in connection with an initial public offering of the Company, payable
upon the close of such public offering.
4.
Fringe
Benefits:
(a)
During the term hereof, commencing on the day and year first above written,
the
Employer shall (i) provide the Employee and his immediate family with medical
and hospitalization insurance substantially similar to that provided for the
other executive personnel of the Employer in similar management positions,
(ii)
reimburse the Employee and his immediate family for dental expenses incurred
each year (such reimbursement shall be in addition to any dental insurance
provided to the Employee and his immediate family under any dental plan from
time to time maintained by the Company), (iii) reimburse the Employee for
expenses incurred in connection with the purchase by Employee of membership
in a
fitness or exercise program reasonably acceptable to the Company, (iv) reimburse
the Employee for the reasonable and customary cost of an annual physical
examination, (v) provide to the Employee dependent group medical coverage upon
terms and conditions satisfactory to the Company without charge to the Employee
and, (vi) life insurance in an amount equal to [2]
times
Employee's annual base salary.
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(b)
The
Employee is authorized to incur on behalf of the Employer only such reasonable
expenses (including travel and entertainment) in connection with the business
of
the Employer as are in conformity with the Employer's published guidelines.
The
Employer shall reimburse Employee for all such reasonable expenses incurred
in
connection with the business of the Employer upon the presentation by the
Employee, from time to time, of an itemized account of such expenditures, which
account shall be in form and substance in conformity with the rules and
regulations of the Internal Revenue Service.
(c)
During the term hereof, the Employer shall provide Employee with an automobile
expense allowance equal to $6,000 dollars ($.500) per month.
5.
Duties
and Extent of Services:
Upon the
execution of this Agreement and throughout its term, the Employee shall assume
the position of Chief Executive Officer for the Employer and shall undertake
all
of the duties incident to such office in addition to rendering all such other
management duties as the Board of Directors may reasonably request. The parties
hereto shall take whatever action is necessary to cause the election or
appointment of the Employee to such position. The Employee shall exert his
best
efforts and shall devote his full time and attention to the affairs of the
Employer. During the term of this Agreement the Employee shall not, directly
or
indirectly, alone or as a member of a partnership (in the capacity of a general
partner) or limited liability company (in the capacity of a manager), or as
an
officer, director, significant shareholder (i.e., owning or holding beneficially
or of record five percent (5%) or more of the voting shares of an entity),
or
employee of any other corporation or entity, be engaged in or concerned with
any
other duties or pursuits whatsoever for pecuniary gain requiring his personal
services without the prior written consent of the Employer.
6.
Vacation:
During
each year of the term of this Agreement, the Employee shall be entitled to
thirty (30) days vacation.
7.
Termination:
Unless
renewed as provided herein, the Employee's employment hereunder shall terminate
on August 1, 2009, or sooner upon the occurrence of any of the following events:
(a)
The
Employee's death;
(b)
The
termination of the Employee's employment hereunder by the Employer, at its
option, to be exercised by written notice from the Employer to the Employee,
upon the Employee's incapacity or inability to perform his services as
contemplated herein for a period of at least sixty (60) consecutive days or
an
aggregate of one hundred twenty (120) consecutive or non-consecutive days during
any twelve-month period during the term hereof due to the fact that his physical
or mental health shall have become impaired so as to make it impossible or
impractical for him to perform the duties and responsibilities contemplated
for
him hereunder; or
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(c)
The
termination for cause of the Employee's employment hereunder by the Employer,
at
its option, to be exercised by written notice from the Employer to the Employee
in the event the Employee is derelict in his duties or commits any misconduct
with respect to the Employer's affairs and such dereliction or misconduct shall
continue for a period of thirty (30) days after the Employer shall have given
the Employee written notice specifying such dereliction or misconduct, and
advising him that the Employer shall have the right to terminate his employment
hereunder in the event such misconduct continues through such 30-day period.
(d)
In
the event that the Employee commits an act constituting common law fraud or
any
crime, which could reasonably be expected to have an adverse impact on the
Employer, its business or assets.
(e)
In
the event that the Employee should fail (otherwise than on account of illness
or
other incapacity) or refuse to carry out the reasonable directives of the Board
of Directors of the Employer, and such failure or refusal shall continue for
a
period of thirty (30) days after the Employer shall have given the Employee
written notice specifying such directives and wherein the Employee has failed
or
refused to carry out the same, and advising him that the Employer shall have
the
right to terminate his employment hereunder in the event such failure or refusal
continues through such 30-day period.
(f)
Cessation of the Employer's business.
(g)
On
thirty (30) days written notice from the Employer pursuant to Section 2 hereof.
If (i) the Employer terminates this Agreement pursuant to Section 2 hereof
on
thirty (30) days notice without cause or (ii) there is a Change in Control
(as
hereinafter defined) that occurs prior to the expiration or termination of
this
Agreement and, within twelve (12) months after the Change in Control, (A)
Employee's employment is terminated by the Employer otherwise than for the
reasons set forth in Sections (7) (a), (b), (c), (d), (e) and/or (f) hereof
or
(B) Employee terminates his employment for Good Reason (as hereinafter defined),
then Employer shall pay to Employee as severance pay, a total amount equal
to
(i) two times his most recent annual base salary, payable in twelve (12) equal
consecutive monthly installments (without interest) beginning one (1) month
after such termination plus (ii) the fringe benefits described in Section 5(a)
for the twelve (12)-month period commencing on the effective date of such
termination.
Employee
expressly understands that payment of such severance pay and benefits (or
portion thereof if such payments terminate pursuant to the last sentence of
this
paragraph) represents liquidated damages in full and final settlement of any
and
all amounts owed by Employer to Employee under this Agreement or otherwise
except for the accrued portion, if any, of any bonus, stock option, commission,
vacation or other benefit to which Employee is expressly entitled pursuant
to
any formal, written plan or agreement maintained by the Employer.
Notwithstanding the foregoing, if Employee obtains full-time employment from
any
person or entity or accepts an engagement as a self-employed consultant or
similar position during such 12-month period, then, upon commencement of any
such employment or engagement, the severance pay and benefits payable under
this
Section 8(g) shall immediately be and be deemed reduced by an amount equal
to
the compensation and/or benefits payable by such other employment or engagement
and the Employer shall have no further obligation to Employee under this
Agreement or otherwise.
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(h)
As
used in this Agreement, the following terms have the meanings set forth
below:
(i)
"Affiliate" of a person means any person directly or indirectly controlling,
controlled by or under common control with the first person.
(ii)
"Associate" has the meaning ascribed thereto in Rule 12b-2 under the Exchange
Act as in effect on the date hereof.
(iii)
"Change in Control" means the occurrence of any of the following
events:
(A)
A
consolidation, merger, combination or other transaction between Parent or
Employer, and any other corporation or other legal entity (other than an
Affiliate of Parent or Employer) in which shares of common stock of Parent
or
Employer are exchanged for or changed into other stock or securities, cash
and/or other property, if as a result of such transaction less than fifty
percent (50%) of the combined voting power of the common stock (or other
securities entitled to vote generally in the election of directors) of the
surviving or resulting entity is beneficially owned (as hereinafter defined)
by
the beneficial owners of the Parent's or Employer's common stock as the case
may
be as of the date hereof ("Current Shareholders") and the number of persons
serving on the Board of Directors of the surviving or resulting entity who
are
Affiliates, Associates, designees or nominees of any single "person" (as defined
in Section 13(d)(3) of the Exchange Act) other than the Current Shareholders
is
greater than the number of persons serving on such Board of Directors who are
Affiliates, Associates, designees or nominees of the Current
Shareholders;
(B)
A
sale of all or at least fifty percent (50%) (measured by book value as of the
most recent annual or quarterly balance sheet) of the assets of Parent or
Employer to another corporation or other legal entity (other than one of the
Current Shareholders or any Affiliate of Parent or Employer); and
(C)
A
sale or other disposition of shares of common stock of Parent or Employer by
the
Current Shareholders to any corporation or other legal entity (other than one
of
the Current Shareholders or any Affiliate of Parent or Employer) as a result
of
which less than fifty percent (50%) of the then-outstanding common stock of
Parent or Employer is beneficially owned (as hereinafter defined) by the Current
Shareholders and the number of persons serving on Parent's or Employer's Board
of Directors who are Affiliates, Associates, designees or nominees of any single
"person" (as defined in Section 13(d)(3) of the Exchange Act) other than the
Current Shareholders is greater than the number of persons serving on Parent's
or Employer's Board of Directors who are Affiliates, Associates, designees
or
nominees of the Current Shareholders.
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Beneficial
ownership will be determined by applying the definition set forth in Rule 13d-3
under the Exchange Act as in effect on the date hereof. Also, for purposes
of
this Agreement, any person who, on the date on which a Change in control occurs,
is serving on Parent's or Employer's Board of Directors will deemed to be an
Affiliate, Associate, designee or nominee of the Current Shareholders after
the
Change in Control for as long as such person serves as a director of Parent
or
Employer or of any entity that survives or results from a transaction described
in Section 8(h)(iii).
(iv)
"Employer" includes any successor to all or substantially all of the business
or
assets of the Employer.
(v)
"Exchange Act" means the Securities Exchange Act of 1934, as amended form time
to time.
(vi)
"Good Reason" means that, following a Change in Control and without Employee's
written consent, (A) there has been a material and significant adverse change
in
the nature or scope of Employee's authority, duties or responsibilities in
effect immediately prior to the Change in Control; (B) there has been a
reduction in Employee's annual base salary in effect immediately prior to the
Change in Control or an adverse change in Employee's total compensation such
that Employee's compensation and benefits in the aggregate are not materially
comparable to his aggregate compensation and benefits in effect immediately
prior to the Change in Control; or (C) the principal place of Employee's
employment is relocated to a place that is more than one hundred (100) miles
from the principal place of Employee's employment immediately prior to the
Change in Control or Employee is required to be away from his office in the
course of discharging his duties and responsibilities materially and
significantly more than was required prior to the Change in
Control.
In
the
event of any termination (other than by the Employer without cause on thirty
(30) days’ notice pursuant to Section 2), the Employer shall pay to the Employee
such portion of his annual base salary payable to the date such termination
becomes effective (reduced by any amount payable pursuant to any disability
insurance policies), and thereafter the Employee shall have no claim for any
further compensation hereunder; provided, however, that in the event of the
Employee's death, his death shall be deemed to have occurred on the last day
of
the month in which he dies. Upon any termination Employee shall also receive
all
the benefits to which he is entitled under the Consolidated Omnibus Budget
Reconciliation Act ("COBRA"), provided that if the Employee is entitled to
receive severance and fringe benefits described in Section 8(g), COBRA benefits
shall commence at the expiration of the twelve (12) month (or such shorter
period) as is provided in such Section.
8.
Restrictions
On The Employee:
During
the period commencing on the date hereof and ending two (2) years after the
termination of the Employee's employment by the Employer for any reason, the
Employee shall not directly or indirectly induce or attempt to induce any of
the
employees of the Employer to leave the employ of Employer. If this Agreement
is
terminated by the Employer pursuant to Section 2 hereof, the foregoing 2-year
period shall be reduced to one (1) year.
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9.
Covenant
Not To Compete:
During
the period commencing on the date hereof, and ending on the termination of
the
Employee's employment for any reason, the Employee shall not, except as a
passive investor in publicly held companies, engage in, or own or control any
interest in, or act as principal, director, officer or employee of, or
consultant to, any firm or corporation which is in competition with the Employer
or its Parent.
10.
Proprietary
Information:
(a)
For
purposes of this Agreement, "proprietary information" shall mean any proprietary
information relating to the business of the Employer or its Parent or any entity
in which the Employer or its Parent has a controlling interest that has not
previously been publicly released by duly authorized representatives of the
Employer and shall include (but shall not be limited to) information encompassed
in all proposals, marketing and sales plans, financial information, costs,
pricing information, computer programs (including without limitation source
code, object code, algorithms and models), customer information, customer lists,
and all methods, concepts, know-how or ideas in or reasonably related to the
business of Employer or any entity in which the Employer has a controlling
interest. The Employee agrees to regard and preserve as confidential all
proprietary information, whether he has such information in his memory or in
writing or other tangible or intangible form. The Employee will not, without
written authority from the Employer to do so, directly or indirectly, use for
his benefit or purposes, nor disclose to others, either during the term of
his
employment hereunder or thereafter, any proprietary information except as
required by the conditions of his employment hereunder or pursuant to court
order (in which case Employee shall give the Employer prompt written notice
so
that the Employer may seek a protective order or other appropriate remedy and/or
waive compliance with the provisions of this Agreement. The Employee agrees
not
to remove from the premises of the Employer or any subsidiary or affiliate
of
the Employer, except as an employee of the Employer in pursuit of the business
of the Employer or any of its subsidiaries, affiliates or any entity in which
the Employer has a controlling interest, or except as specifically permitted
in
writing by the Employer, any document or object containing or reflecting any
proprietary information. The Employee recognizes that all such documents and
objects, whether developed by him or by someone else, are the exclusive property
of the Employer. Proprietary information shall not include information which
is
presently in the public domain or which comes into the public domain through
no
fault of the Employee or which is disclosed to the Employee by a third party
lawfully in possession of such information with a right to disclose
same.
(b)
All
proprietary information and all of the Employee's interest in trade secrets,
trademarks, computer programs, customer information, customer lists, employee
lists, products, procedure, copyrights, patents and developments hereafter
to
the end of the period of employment hereunder developed by the Employee as
a
result of, or in connection with, his employment hereunder, shall belong to
the
Employer; and without further compensation, but at the Employer's expense,
forthwith upon request of the Employer, Employee shall execute any and all
such
assignments and other documents and take any and all such other action as
Employer may reasonably request in order to vest in Employer all the Employee's
right, title and interest in and to all of the aforesaid items, free and clear
of liens, charges and encumbrances.
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(c)
The
Employee expressly agrees that the covenants set forth in Sections 9, 10 and
11
of this Agreement are being given to Employer in connection with the employment
of the Employee by Employer and that such covenants are intended to protect
Employer against the competition by the Employee, within the terms stated,
to
the fullest extent deemed reasonable and permitted in law and equity. In the
event that the foregoing limitations upon the conduct of the Employee are beyond
those permitted by law, such limitations, both as to time and geographical
area,
shall be, and be deemed to be, reduced in scope and effect to the maximum extent
permitted by law.
11.
Injunctive
Relief:
The
Employee acknowledges that the injury to the Employer resulting from any
violation by him of any of the covenants contained in this Agreement will be
of
such a character that it cannot be adequately compensated by money damages,
and,
accordingly, the Employer may, in addition to pursuing its other remedies,
obtain an injunction from any court having jurisdiction of the matter
restraining any such violation.
12.
Representation
of Employee:
The
Employee represents and warrants that neither the execution and delivery of
this
Agreement nor the performance of his duties hereunder violates the provisions
of
any other agreement to which he is a party or by which he is bound.
13.
Parties;
Non-Assignability:
As
used herein, the term the "Employer" shall mean and include the Employer, its
Parent and any subsidiary thereof and any successor thereto unless the context
indicates otherwise. Any assignment of this Agreement shall be subject to the
provisions of Section 8(g). This Agreement and all rights hereunder are personal
to the Employee and shall not be assignable by him and any purported assignment
shall be null and void and shall not be binding on the Employer.
14.
Entire
Agreement:
This
Agreement contains the entire agreement between the parties hereto with respect
to the transactions contemplated herein and supersedes all previous
representations, negotiations, commitments, and writing with respect
thereto.
15.
Amendment
or Alteration:
No
amendment or alteration of the terms of this Agreement shall be valid unless
made in writing and signed by all of the parties hereto.
16.
Choice
of Law:
This
Agreement shall be governed by the laws of the State of Indiana.
17.
Arbitration:
Any
controversy, claim, or breach arising out of or relating to this Agreement
or
the breach thereof shall be settled by arbitration in Fort Xxxxx, Indiana in
accordance with the rules of the American Arbitration Association and the
judgment upon the award rendered shall be entered by consent in any court having
jurisdiction thereof.
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18.
Notices:
Any
notices required or permitted to be given under this Agreement shall be
sufficient if in writing, and if sent by registered mail to the residence of
the
Employee, or to the principal office of the Employer, respectively.
19.
Waiver
of Breach:
The
waiver by any party hereto of a breach of any provision of this Agreement shall
not operate or be construed as a waiver of any subsequent breach by any of
the
parties hereto.
21.
Binding
Effect:
The
terms of this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective personal representatives, heirs,
administrators, successors, and permitted assigns.
22.
Gender:
Pronouns in any gender shall be construed as masculine, feminine, or neuter
as
the context requires in this Agreement.
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year
first above written.
Freedom
Financial Holdings, Inc.
By:
/s/
Xxxxx
Xxxxxxx, Chief Executive Officer
/s/
Xxxxx
Xxxxxxx
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