Document:

Exhibit 10.4

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (the “Agreement”) is made effective as of September 17, 2014, by and between JP Energy GP II LLC, a Delaware limited liability company (the “Company”), and Jeremiah J. Ashcroft III (the “Employee”).

 

WHEREAS, the Employee has been providing services to the Company as an executive officer of the Company as the Company’s Executive Vice President and Chief Operating Officer;

 

WHEREAS, the Employee previously or may in the future enter into one or more restricted unit or other equity incentive award agreements with the Company, JP Energy Partners LP (the “Partnership”) and/or their Affiliates (the “Award Agreements”);

 

WHEREAS, the Company and the Employee desire to enter into an employment agreement that governs the terms and conditions of the Employee’s employment from this date forward;

 

WHEREAS, pursuant to this Agreement, the Employee shall be employed by the Company in a confidential and fiduciary relationship, and Confidential Information (as defined in Section 9.A. hereof) will necessarily be provided to, communicated to, or acquired by the Employee by virtue of his employment with the Company; and

 

WHEREAS, for purposes of this Agreement, “Business” shall mean any business or activity in which the Company, the Partnership, JP Energy Development LP (“DevCo”) or any of their subsidiaries or affiliates (collectively, the “JPE Companies”) is or was engaged (or was actively considering or contemplating engaging in) at the time of the Employee’s termination, was engaged within the 12 month period prior to the time of Employee’s termination

 

NOW THEREFORE, based upon the above, the Company agrees to employ the Employee and the Employee agrees to be employed by the Company in accordance with the following terms and conditions.

 

1.                                      Prior Agreements.  Effective as of the date hereof, this Agreement shall supersede all prior agreements between the Employee and the Company regarding the terms and conditions of Employee’s employment and severance rights with the Company and the JPE Companies including, without limitation any employment agreement or offer letter previously entered into between the Employee and any JPE Company.  Notwithstanding the foregoing, the grant, vesting and other terms and conditions of the Employee’s equity awards shall continue to and will be governed exclusively by the Award Agreements.

 

2.                                      Term.  This Agreement shall become effective as of the date hereof (the “Effective Date”) and, subject to the provisions of Section 7 below, shall have a term that continues through and including the thirty-six (36) month anniversary of the Effective Date (the “Initial Term”) unless earlier terminated in accordance with this Agreement. The Initial Term shall automatically be extended for successive one (1) year periods (each, an “Extension Term” and, collectively with the Initial Term, the “Term”), unless either party hereto gives written notice of non-extension to the other no later than sixty (60) days prior to the expiration of the then-applicable Term.  Notwithstanding the foregoing, the Employee’s employment with the Company may be terminated prior to the expiration of the Initial Term or any Extension Term in accordance with Section 7 of this Agreement.

 

3.                                      Employment After the Term.  Upon and following any non-extension of the Term in accordance with Section 2, the Company and the Employee expect that the Employee will continue to be 

 

 

employed by the Company after the Term on an at-will basis on such terms and conditions as the Company and the Employee may then agree, provided that Sections 9 through 21 of this Agreement shall survive the expiration of the Term, regardless of whether the other provisions of this Agreement remain in effect, subject to the terms thereof, and regardless of whether any termination of the Employee’s employment is effected pursuant to this Agreement.

 

4.                                      Duties and Responsibilities.  During the Term of this Agreement, the Employee shall serve as Executive Vice President and Chief Operating Officer of the Company.  The Employee shall have those responsibilities ordinarily consistent with his position and those other responsibilities that may be assigned to him from time to time by the Company’s board of directors (the “Board”).  The Employee agrees to devote his full business time, energy and ability to the performance of his duties and responsibilities under this Agreement, and shall not pursue any other business activity of any type that would materially interfere with his performance of his duties under this Agreement.

 

5.                                      Place of Employment.  The Employee shall perform his duties and responsibilities under this Agreement at the Company’s offices at 600 E. Las Colinas Blvd., Suite 2000, Irving, Texas 75039, or, subject to Section 7.E. hereof, such other location(s) as may be required by the Board.

 

6.                                      Compensation and Benefits and Related Matters.  The Company shall pay the following compensation and benefits to the Employee for all services rendered by the Employee under the Agreement:

 

                                                                                                A.                                    Base Salary.  Subject to the terms and conditions set forth herein, including Section 7, the Company will pay the Employee a base salary at the annual rate of $425,000 (prorated for any portion of a year in which the Employee is employed by the Company), which amount shall be paid in equal installments on a bi-weekly basis at the Company’s regular payroll intervals.  The Employee’s base salary may be reviewed and adjusted from time to time in the discretion of the Board or the compensation committee of the Board (the “Committee”).

 

                                                          B.                                    Bonus.  The Employee shall be eligible to receive an annual bonus in accordance with the Company’s employee incentive bonus plan, as approved by the Board or the Committee and in effect from time to time.  The Employee shall have a target bonus equal to 100% of the Employee’s annual base salary (“Target Bonus”), which target bonus shall be earned based on the attainment of personal and Company performance goals as established by the Board or the Committee in its sole discretion.  Notwithstanding the foregoing, the Employee’s receipt of any annual bonus shall be conditioned upon the Company achieving at least 90% of the applicable EBITDA or other performance targets as determined by the Board or the Committee and as necessary to fund such bonus.  The Employee’s right to receive any annual bonus shall be subject to his continued employment with the Company through the applicable date of payment, unless otherwise determined by the Board or the Committee in its discretion or as otherwise set forth in the Company’s employee incentive bonus plan, as in effect from time to time.

 

                                                C.                                    Benefits. The Employee shall be eligible to participate in all vacation, group health, dental, life, 401(k), profit sharing and other insurance and/or benefit plans that the Company may offer to its employees from time to time and on the same terms as offered to other similarly situated employees as in effect on and after the Effective Date.

 

                                                D.                                    Business Expenses. During the Term, the Company shall reimburse the Employee for all necessary and reasonable business expenses actually incurred by the Employee for travel, lodging and food in performing his duties and responsibilities under this Agreement in accordance with the Company’s expense reimbursement policies in effect from time to time, provided that the 

 

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Employee shall submit documentation of such expenses in a form acceptable to the Company.

 

                                                E.                                     Key Person Insurance.  At any time during the Term, the Company shall have the right, at the sole discretion of the Board or the Committee, to insure the life of Employee for the Company’s sole benefit.   The Company shall have the right to determine the amount of insurance and the type of policy.  Employee shall reasonably cooperate with the Company in obtaining such insurance by submitting to physical examinations, by supplying all information reasonably required by any insurance carrier, and by executing all necessary documents reasonably required by any insurance carrier, provided that any information provided to an insurance company or broker shall not be provided to the Company without the prior written authorization of Employee.  Employee shall incur no financial obligation by executing any required document, and shall have no interest in any such policy.

 

7.                                     Termination.  The Company and the Employee shall be free to terminate this Agreement and the Employee’s employment hereunder as follows:

 

                                                A.                                    Termination by the Company for Cause.  The Company shall have the right to terminate for “Cause” immediately.  For purposes of this Agreement, “Cause” shall mean (i) fraud, embezzlement, or theft against the Company or any of its affiliates, (ii) any material violation of the Company’s corporate policies or code of ethics, (iii) any acts involving gross negligence, dishonesty or fraud, or that in the good faith opinion of the Company may cause a material harm to the Company or any of its affiliates, or any conviction of, or guilty plea or nolo contendere plea to, or confession of, a Class A-type felony or felony involving moral turpitude or other crime involving moral turpitude, (iv) an unauthorized disclosure or misuse of any trade secrets or confidential information of the Company or any of its affiliates, (v) material nonperformance by the Employee of his duties hereunder, including, without limitation, failing in any material respect to carry out lawful directions of the Board, and failure to remedy such nonperformance within ten (10) days following written notice from the Company specifically identifying the nonperformance and the actions required to cure it, provided that the Employee shall not be permitted to cure repeated failures, (vi) willful misconduct by the Employee that is intended to, or reasonably likely to, in the good faith judgment of the Company, materially injure the business, prospects, or reputation of the Company or its affiliates and failure to remedy such misconduct within ten (10) days following written notice from the Company specifically identifying the misconduct and the actions required to cure it (if such misconduct can be cured), provided that the Employee shall not be permitted to cure repeated failures, (vii) breach of a fiduciary duty owed to the Company or any of the material terms or provisions of this Agreement and failure to remedy such breach within ten (10) days following written notice from the Company specifically identifying the breach and the actions required to cure it (if such breach can be cured), provided that the Employee shall not be permitted to cure repeated failures, (viii) use of illegal drugs at work; and (ix) material breach of the terms of this Agreement.  Notwithstanding any other provision of this Agreement, in the event of a termination pursuant to this Section, the Company shall only be obligated to pay the Employee within thirty (30) days after the date of Employee’s termination of employment (a) his base salary through the date of termination, (b) reimbursement for reimbursable business expenses incurred prior to the date of termination, and (c) such other benefits and payments to which the Employee may be entitled by law or pursuant to the benefit plans of the Company then in effect (the amounts described in clauses (a)-(c), the “Accrued Obligations”).  Notwithstanding the foregoing, any payment to which the Employee may be entitled pursuant to the benefit plans of the Company then in effect shall be paid at the time and in the form specified in such benefit plans.  For the avoidance of doubt, in the event of a termination under this Section 7.A., the Employee shall not be entitled to any other payments under this Agreement except as set forth in the immediately preceding sentence.

 

                                                B.                                    Disability.  The Company shall have the right to terminate in the event that the Employee shall be prevented by Disability from substantially performing his duties and responsibilities 

 

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hereunder for ninety (90) or more days out of any one hundred eighty (180) day period.  For purposes of this Agreement, “Disability” shall mean, at any time the Company or any of its affiliates sponsors a long-term disability plan for the Company’s employees, “disability” as defined in such long-term disability plan for the purpose of determining a participant’s eligibility for benefits, provided, however, if the long-term disability plan contains multiple definitions of disability, “Disability” shall refer to that definition of disability which, if the Employee qualified for such disability benefits, would provide coverage for the longest period of time.  The determination of whether the Employee has a Disability shall be made by a physician selected by the Company and reasonably acceptable to the Executive or his representative(s).  At any time the Company does not sponsor a long-term disability plan for its employees, Disability shall mean the Employee’s inability to perform, with or without reasonable accommodation, the essential functions of the Employee’s position for ninety (90) or more days out of any one hundred eighty (180) day period as a result of incapacity due to mental or physical illness as determined by the Board or the Committee in its sole discretion.  Any refusal by the Employee to submit to a medical examination for the purpose of determining Disability shall be deemed to constitute conclusive evidence of the Employee’s Disability. In the event of a termination pursuant to this Section, the Company shall pay the Employee, as severance pay, on the 30th day following termination of employment, an amount equal to his base salary that would have been paid through the end of the third month following the termination, after which time the Employee’s right (if any) to receive income continuation shall be determined solely in accordance with the terms and conditions of the Company’s disability plans and/or any other compensation and benefit plans then in effect.  For the avoidance of doubt, in the event of a termination under this Section 7.B., the Employee shall not be entitled to any other payments under this Agreement except for the Accrued Obligations or as set forth in the immediately preceding sentence.

 

                                                C.                                    Death.  In the event of a termination by reason of the Employee’s death, the Company shall pay to the Employee’s estate, designated beneficiary or legal representative his base salary through the end of the month in which his death occurs.  For the avoidance of doubt, in the event of a termination under this Section 7.C., the Employee shall not be entitled to any other payments under this Agreement except for the Accrued Obligations or as set forth in the immediately preceding sentence.

 

                                                D.                                    Termination by the Company other than for Disability, Death or Cause.  The Company shall have the right to terminate, other than for Cause, disability or death, upon thirty (30) days prior written notice to the Employee (or may terminate immediately and pay the Employee’s base salary for such 30 days in a lump sum on the 30th day following termination, subject to Employee’s execution and nonrevocation of a release of claims as described below).  In the event of a termination pursuant to this Section, in addition to any other payments or benefits to which the Employee may be entitled under the Company’s benefit plans then in effect, the Company shall pay to the Employee, (i) his base salary through the date of termination, and (ii) provided that the Employee executes within 21 days after termination of employment and does not revoke a general release of claims against the Company and its affiliates, equityholders, officers, directors, agents and employees as to employment, benefits and compensation related claims, in a form acceptable to the Company, an amount (the “Severance Amount”) equal to one times (1.0x) the sum of Employee’s (a) annual base salary as of the date of termination and (b) Bonus Amount, payable in a single lump sum within 30 days after the date of termination.  For purposes of this Agreement, “Bonus Amount” means the Employee’s average cash bonus paid for the three most recently completed fiscal years or, for any portion of the three most recently completed years that Employee was not employed by the Company and therefore did not receive a bonus, Employee’s Target Bonus as a percentage of his base salary for the current fiscal year shall be used for the purpose of calculating Bonus Amount under this Section). In the event a severance payment is made under this Section 7.D, the Company will pay to Employee a monthly payment on the first payroll date of each month equal to the COBRA cost of continued health and dental coverage under health and dental plans of the Company pursuant to Section 4980B of the Internal Revenue Code, less the amount that Employee would be required to contribute for health and dental coverage if Employee were an active employee, for 

 

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a period of twelve (12) months from the termination date; provided, however, that this obligation shall cease upon Employee’s obtaining new employment that provides Employee with eligibility for medical benefits without a pre-existing condition limitation (such period is referred to as the “Benefit Period”).  These payments will commence on the Company’s first payroll date after the termination date and will continue until the end of the Benefit Period. For the avoidance of doubt, in the event of a termination under this Section 7.D., the Employee shall not be entitled to any other payments under this Agreement except for the Accrued Obligations or as set forth in the immediately preceding sentence.  For the avoidance of doubt, an election by the Company not to renew the Term effected by the Company giving the Executive written notice of non-extension of the Term no later than sixty (60) days prior to the expiration of the then-applicable Term in accordance with Section 2 shall not entitle the Executive to the severance payments and benefits described in this subsection D, provided, however, that if the Company terminates the Executive’s employment other than for Cause, disability or death upon the expiration of the Term, the Executive shall be entitled to receive the severance payments and benefits described in this subsection D, subject to all of the terms and conditions described herein.

 

                                                E.                                     Termination by the Employee for Good Reason.  The Employee shall have the right to terminate for “Good Reason” upon thirty (30) days’ prior written notice.  For purposes of this Agreement, “Good Reason” shall mean (i) the Company’s material breach of its obligations under this Agreement, including, without limitation, its obligation to pay salary to the Employee, (ii) a material and adverse diminution in the Employee’s job duties, responsibilities or authority, (iii) a change in the location where the Employee is required to perform his duties and responsibilities which exceeds fifty (50) miles from the location specified in Section 5 hereof, or (iv) a material reduction in the Employee’s base salary, it being intended that an individual or aggregate reduction of more than 10% from the Employee’s prior base salary level shall be considered material for purposes of this Agreement.  Employee may not resign Employee’s employment for Good Reason unless (A) Employee gives the Company written notice of his objection to any event set forth above within 30 days following such event, (B) such event is not corrected, in all material respects, by the Company within 30 days following its receipt of such notice, and (C) Employee resigns his employment with the Company not more than 30 days following the expiration of the 30-day correction period described in the foregoing subclause (B).  In the event of a termination pursuant to this Section, in addition to any other payments or benefits to which the Employee may be entitled under the Company’s benefit plans then in effect, the Company shall pay to the Employee, (i) his base salary through the date of termination, and (ii) provided that the Employee executes within 21 days after termination of employment and does not revoke a general release of claims against the Company and its affiliates, equityholders officers, directors, agents and employees as to employment, benefits and compensation related claims, in a form acceptable to the Company, an amount equal to one times (1.0x) the sum of Employee’s (a) base salary as of the date of termination and (b) Bonus Amount, payable in a single lump sum within 30 days after the date of termination.  In the event a severance payment is made under this Section 7.E., the Company will pay to Employee a monthly payment on the first payroll date of each month equal to the COBRA cost of continued health and dental coverage under health and dental plans of the Company pursuant to Section 4980B of the Internal Revenue Code, less the amount that Employee would be required to contribute for health and dental coverage if Employee were an active employee, for a period of twelve (12) months from the termination date; provided, however, that this obligation shall cease at the end of the Benefits Period.  These payments will commence on the Company’s first payroll date after the termination date and will continue until the end of the Benefit Period. For the avoidance of doubt, in the event of a termination under this Section 7.E., the Employee shall not be entitled to any other payments under this Agreement except for the Accrued Obligations or as set forth in the immediately preceding sentence.

 

F.                                      Termination by the Employee other than for Good Reason.  The Employee shall have the right to terminate for any reason other than for Good Reason by providing thirty (30) days’ prior written notice to the Company; provided that the Company may then terminate the Employee 

 

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immediately.  For the avoidance of doubt, in the event of a termination under this Section 7.F., the Employee shall not be entitled to any other payments under this Agreement except for the Accrued Obligations.

 

G.                                    Change in Control.  For purposes of this Agreement, “Change in Control” shall have the same meaning as is set forth in the Partnership’s 2014 Long-Term Incentive Plan.  Notwithstanding anything to the contrary in Section 7.D or 7.E above, in the event the Employee’s employment is terminated by the Company other than for Cause, disability or death or the Employee resigns for Good Reason, in either case within six months after a Change in Control (a “Change in Control Termination”), then the cash severance amount payable to the Employee under Section 7.D or 7.E above shall be calculated using two times (2.0x) the annual base salary and Bonus Amount (instead of 1.0 times), payable in a single lump sum within 30 days after the date of termination, and the Benefit Period will be twenty-four (24) months following the termination date (provided, however, that this obligation shall cease upon Employee’s obtaining new employment that provides Employee with eligibility for medical benefits without a pre-existing condition limitation), in each case subject to the release requirement.

 

                                                8.                                      Deemed Resignation.  Any termination of the Employee’s employment with the Company shall constitute an automatic resignation of the Employee as an officer of the Company and each JPE Company and an automatic resignation of the Employee from the Board (if applicable, and unless otherwise agreed in writing) and from the board of directors or similar governing body of any JPE Company and from the board of directors or similar governing body of any corporation, limited liability company or other entity in which the Company or any JPE Company holds an equity interest and with respect to which board or similar governing body the Employee serves as the Company’s or such JPE Company’s designee or other representative.

 

9.                                      Restrictive Covenants and Intellectual Property.

 

                                                                                                A.                                    Confidential Information. For the purpose of assisting the Employee in performance of his job requirements and responsibilities with the Company, the Company shall provide the Employee, during the Term of this Agreement, with some or all of the following, any and all of which constitute confidential information of the Company, the Partnership and their respective affiliates, including, but not limited to, JP Energy Development GP LLC and JP Energy Development LP (collectively the “Confidential Information”): (a) any and all trade secrets concerning the business and affairs of the Company, the Partnership or their respective affiliates, product specifications, data, know-how, formulae, compositions, processes, designs, sketches, photographs, graphs, drawings, samples, inventions and ideas, past, current and planned research and development, current and planned manufacturing and distribution methods and processes, customer lists, current and anticipated customer requirements, price lists, market studies, business plans, proprietary technologies, systems, structures, architectures, processes, improvements, devices, know-how, discoveries, concepts, methods and information of the Company, the Partnership and their respective affiliates and any other information, however documented, of the Company, the Partnership and their respective affiliates that is a trade secret under applicable law; (b) any and all information concerning the business and affairs of the Company, the Partnership and their respective affiliates (which includes historical financial statements, financial projections and budgets, historical and projected sales, capital spending budgets and plans, the names and backgrounds of key personnel, contractors, agents, suppliers personnel training and techniques and materials, and purchasing methods and techniques) however documented; and (c) any and all notes, analysis, compilations, studies, summaries and other material prepared by or for the Company, the Partnership and their respective affiliates containing or based, in whole or in part, upon any information included in the foregoing. The Employee acknowledges that he will occupy a position of trust and confidence with the Company during the Term of this Agreement and that he will during the Term of this Agreement have access to and become familiar with such Confidential Information.

 

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                                                Both during and after termination of employment, whether such termination is voluntary or involuntary, the Employee hereby agrees not to disclose to any unauthorized Persons or use for his own account or for the benefit of any third party any Confidential Information, whether or not such information is embodied in writing or other physical form or is retained in the memory of the Employee, without the Company’s prior written consent, unless and to the extent that the Confidential Information was known to Employee prior to his commencement of employment with the Company or is or becomes generally known to and available for use by the public other than as a result of any action by the Employee.  Notwithstanding the foregoing, if the Employee becomes legally compelled to disclose Confidential Information pursuant to judicial or administrative subpoena or process or other legal obligation, the Employee may make such disclosure only to the extent so required.  The Employee will, as promptly as possible and in any event (if permitted by law) prior to the making of such disclosure, notify the Company of any such subpoena, process or obligation and shall cooperate with the Company in seeking a protective order or other means of protecting the confidentiality of the Confidential Information.

 

The Employee agrees to deliver to the Company at the time his employment under this Agreement terminates for any reason, and at any other time the Company may request, all documents, memoranda, notes, plans, records, reports and other documentation (and all copies of all of the foregoing), that contain Confidential Information and any other Confidential Information that the Employee may then possess or have under his control in transferable form.

 

                                                B.                                    Noncompetition.  For the period during which the Employee is employed with the Company or its affiliates and during the Restricted Period, the Employee shall not, without the prior written consent of the Company, for whatever reason and with or without cause, either individually or in partnership or jointly or in conjunction with any person or persons as principal, agent, employee, stockholder, consultant, programmer, owner, investor, partner or in any other manner whatsoever (other than a holding of shares listed on a United States stock exchange or automated quotation system that does not exceed five percent of the outstanding shares so listed), directly or indirectly, knowingly (a) engage in the Business or participate in competition with any of the JPE Companies in any state in which (and otherwise within 60 miles of any location where) any JPE Company engages in the Business or is actively considering engaging in the Business (which geographic area shall be determined as of the date of the Employee’s termination with respect to the application of this Section 9.B. following such termination date), (b) solicit such Business from, or provide such services to, any of the customers or accounts of the Company or any of its affiliates or subsidiaries or any JPE Company, or (c) become the employee of, or otherwise render services to or on behalf of, any enterprise which competes with the Business.  For purposes of this Agreement, “Restricted Period” means (1) year following Employee’s termination of employment for any reason, regardless of whether such termination occurs during the Term, provided, however, that in the event of a Change in Control Termination that results in Employee receiving additional cash severance payments as a result of Section 7.G of this Agreement, the Restricted Period shall be two (2) years following Employee’s termination of employment.

 

                                                C.                                    Nonsolicitation.  For the period during which the Employee is employed with the Company or its affiliates pursuant to this Agreement and for two (2) years following Employee’s termination, the Employee shall not, without the prior written consent of the Company, directly or indirectly, knowingly (a) induce or attempt to induce any employee or consultant of any of the JPE Companies to leave the employ or services of any of the JPE Companies, (b) in any way interfere with the relationship between any of the JPE Companies and any employee or consultant of any of the JPE Companies, (c) employ, or otherwise engage as an employee, independent contractor or otherwise, any employee of any of the JPE Companies, or (d) induce or attempt to induce any customer, supplier, licensee or business relation of any of the JPE Companies or its affiliates to cease doing business with any 

 

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of the JPE Companies, or in any way interfere with the relationship between any customer, supplier, licensee or business relation of any of the JPE Companies.

 

                                                D.                                    Non-Disparagement.  The Employee agrees that he will not during the Term of this Agreement or thereafter disparage the Company, the Partnership or any of their respective affiliates, any of the products, practices or services of the Company, the Partnership or any of their respective affiliates, or any directors, officers, managers, employees, agents, representatives, equityholders or affiliates of the Company or the Partnership, either orally or in writing, at any time and the Company shall instruct members of the Board and the executive officers of the Company not to disparage the Employee, either orally or in writing, at any time; provided, that either party may confer in confidence with its legal representatives and make truthful statements as required by law or as required by any applicable rules of professional conduct.

 

                                                E.                                     Enforcement. The Employee acknowledges that (a) the Business of the Company and its affiliates is national in scope and may expand over time; (b) its products and services related to such Business are marketed throughout the United States; (c) the Business of the JPE Companies competes with other businesses that are located throughout the United States; (d) the provisions of this Section 9 are reasonable and necessary to protect and preserve the Company’s good will and Confidential Information; (e) this Section 9 is reasonable with respect to its duration, geographical area and scope; (f) the terms of this Section 9 are necessary to safeguard the Company’s Confidential Information; and (g) the Company would be irreparably damaged if the Employee were to breach this Section 9.  In the event of a breach by the Employee of any covenant set forth in this Section 9, the term of such covenant with respect to the Employee will be extended by the period of the duration of such breach.

 

                                                The parties hereto agree that, if any court of competent jurisdiction in a final nonappealable judgment determines that a specified time period, a specified geographical area, a specified business limitation or any other relevant feature of this Section 9 is unreasonable, arbitrary or against public policy, then a lesser time period, geographical area, business limitation or other relevant feature which is determined to be reasonable, not arbitrary and not against public policy may be enforced against the applicable party.

 

The Employee agrees that irreparable damage might occur and that the Company might not have any adequate remedy at law in the event that any of the provisions of this Section 9 were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the Company shall be entitled to seek an injunction or injunctions to prevent breaches of this Section 9 and to seek to enforce specifically the terms and provisions of this Section 9 in any Federal court located in the State of Texas or in any Texas state court, this being in addition to any other remedy to which the Company is entitled at law or in equity.  In addition, each of the parties hereto (a) consents to submit itself to the personal jurisdiction of any Federal court located in the State of Texas or a Texas state court in the event that any dispute arises out of this Section 9 for which an injunction is sought and (b) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court.  The Employee acknowledges that should it become necessary for the Company to file suit to seek an injunction or other equitable remedy to enforce the provisions contained in this Section 9, and any court of competent jurisdiction awards the Company any damages and/or an injunction due to the acts of the Employee, then the Company shall be entitled to recover its reasonable costs incurred in conducting the suit, including, but not limited to, reasonable attorneys’ fees and expenses.

 

The Employee further agrees that in the event any of the provisions of this Section 9 are not performed in accordance with their terms or are otherwise breached, the Employee shall forfeit all rights to future payments under this Agreement and shall return to the Company any payments previously made by the Company pursuant to Section 7.D or 7.E of this Agreement.

 

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                                                F.                                      Intellectual Property.  All rights to developments, discoveries, inventions, improvements and innovations (including all data and records pertaining thereto) related to the Business of the Company, whether or not patentable, copyrightable, registrable as a trademark, or reduced to writing, that Employee may develop, discover, invent or originate during Employee’s employment with the Company, either alone or with others and whether or not during working hours or by the use of the facilities of the Company (“Intellectual Property”), shall be the exclusive property of the Company.  Employee shall promptly disclose all Intellectual Property to the Company, shall execute at the request of the Company any assignments or other documents the Company may deem reasonably necessary to protect or perfect its rights therein, and shall assist the Company, upon reasonable request and at the Company’s expense, in obtaining, defending and enforcing the Company’s rights therein. Employee hereby appoints the Company as Employee’s attorney-in-fact to execute on Employee’s behalf any assignments or other documents reasonably deemed necessary by the Company to protect or perfect its rights to any Intellectual Property.

 

                                                10.                               Duty of Loyalty.  The Employee acknowledges that he is a fiduciary of the Company and owes a duty of loyalty to the Company to perform his duties and responsibilities under this Agreement in good faith and in the best interests of the Company and without personal economic conflict.

 

11.                               Assignment.  This Agreement, and the rights and obligations of the Employee and the Company hereunder, shall inure to the benefit of and shall be binding upon the Employee, his heirs and representatives, and upon the Company and its successors and assigns.  This Agreement may not be assigned by either party, except that the Company may assign this Agreement to any affiliate of or successor to the Company.

 

                                                12.                               Choice of Law; Venue; Waiver of Jury Trial.  This Agreement shall be construed and interpreted in accordance with, and all disputes arising under or related to this Agreement shall be governed by, the laws of the State of Texas.  Each party to this Agreement hereby consents to the exclusive jurisdiction and venue of the United States District Court located in Dallas, Texas and of the State courts located in Dallas, Texas and irrevocably agrees that all actions or proceedings arising out of or relating to this Agreement shall be litigated in such courts.  Each party (a) consents to submit himself, herself or itself to the personal jurisdiction of such courts for such actions or proceedings, (b) agrees that he, she or it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court, and (c) agrees that he, she or it will not bring any such action or proceeding in any court other than such courts.  Each party accepts for himself, herself or itself and in connection with such party’s properties, generally and unconditionally, the exclusive and irrevocable jurisdiction and venue of the aforesaid courts and waives any defense of forum non conveniens, and irrevocably agrees to be bound by any non-appealable judgment rendered thereby in connection with such actions or proceedings.  A copy of any service of process served upon the parties shall be mailed by registered mail to the respective party except that, unless otherwise provided by applicable law, any failure to mail such copy shall not affect the validity of service of process.  If any agent appointed by a party refuses to accept service, each party agrees that service upon the appropriate party by registered mail shall constitute sufficient service.  Nothing herein shall affect the right of a party to serve process in any other manner permitted by law.  Because disputes arising in connection with an employment relationship of the type set forth in this Agreement are most quickly and economically resolved by an experienced and expert person, the parties desire that their disputes be resolved by a judge applying all applicable laws as set forth herein. Therefore, each party to this Agreement hereby waives all rights to trial by jury in any action, suit, or proceeding brought to resolve any dispute between the parties hereto, whether arising in contract, tort, or otherwise, arising out of, connected with, related or incidental to this Agreement, the transactions contemplated hereby and/or the relationship established between the parties hereunder.

 

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13.                               Notices.  All notices required by this Agreement shall be in writing and shall be delivered in person or mailed by certified mail, return receipt requested, or by a nationally recognized overnight delivery service as follows:

 

A.                                    If to the Employee:

 

At the address set forth under the Employee’s signature to this Agreement

 

B.                                    If to the Company:

 

JP Energy GP II LLC

600 E. Las Colinas Blvd, Suite 2000

Irving, Texas 75039

Attn: Legal

Fax:   972-444-0320

 

or to such other address as the Employee or the Company, as applicable, shall specify in writing given in accordance with this Section 13.

 

14.                               Severability.  In the event that any one or more of the provisions of this Agreement shall be held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.  Moreover, if any one or more of the provisions contained in this Agreement shall be held to be excessively broad as to duration, activity or subject, such provision shall be construed by limiting or reducing them so as to be enforceable to the maximum extent compatible with applicable law.

 

15.                               Waiver.  No consent to or waiver of any breach or default in the performance of any obligation hereunder shall be deemed or construed to be a consent to or waiver of any other breach or default in the performance of any of the same or any other obligations hereunder.  No purported waiver hereunder shall be effective unless it is in writing and signed by the party waiving the breach or default hereunder.

 

16.                               Entire Agreement; Modification.  This Agreement sets forth the entire agreement and understanding between the Employee and the Company with respect to the subject matter contained herein, and supersedes any employment agreement or offer letter previously entered into between the Employee and any JPE Company and all other prior agreements, arrangements and understandings between them, whether written or oral, relating to the subject matter hereof.  Notwithstanding the foregoing, the Award Agreement(s), if any, previously entered into by the Employee shall remain unchanged by this Agreement and shall continue in full force and effect according to their terms.  This Agreement may be amended only by a written instrument signed by the Employee and an authorized representative of the Company.

 

17.                               Headings.  The section headings contained herein are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.

 

18.                               Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same agreement, and shall become effective when one or more counterparts have been signed by the Employee and the Company.

 

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19.                               Consultation with Counsel; No Representations.  The Employee agrees and acknowledges that he has had a full and complete opportunity to consult with counsel of his own choosing concerning the terms, enforceability and implications of this Agreement, and that the Company has made no representations, warranties, promises or inducements to him concerning the terms, enforceability or implications of this Agreement other than are as reflected in this Agreement.

 

20.                               Withholding.  The Company shall be entitled to withhold from any amounts payable under this Agreement any federal, state, local or foreign withholding or other taxes or charges which the Company is required to withhold. The Company shall be entitled to rely on an opinion of counsel if any questions as to the amount or requirement of withholding shall arise.

 

21.                               Defense of Claims.  Employee agrees that, during a period of 48 months after the date on which Employee’s employment with the Company ceases, Employee will, upon written request by the Company, cooperate with the Company in the defense of any claims or actions that may be made by or against the Company or its affiliates that relate to Employee’s prior areas of responsibility, except if Employee’s reasonable interests are adverse to such entities in such claim or action.  The Company agrees to pay or reimburse Employee for all of his reasonable travel and other direct expenses incurred, or to be reasonably incurred, to comply with Employee’s obligations under this Section.

 

22.                               409A Compliance.  The intent of the Parties is that the payments and benefits under this Agreement comply with or be exempt from Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations and guidance promulgated thereunder (collectively, “Section 409A”) and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith.

 

Notwithstanding anything in this Agreement to the contrary, any compensation or benefits payable under this Agreement that is designated under this Agreement as payable upon Employee’s termination of employment shall be payable only upon Employee’s “separation from service” with the Company within the meaning of Section 409A (a “Separation from Service”).

 

Notwithstanding anything in this Agreement to the contrary, if Employee is deemed by the Company at the time of Employee’s Separation from Service to be a “specified employee” for purposes of Section 409A, to the extent delayed commencement of any portion of the benefits to which Employee is entitled under this Agreement is required in order to avoid a prohibited distribution under Section 409A, such portion of Employee’s benefits shall not be provided to Employee prior to the earlier of (i) the expiration of the six-month period measured from the date of Employee’s Separation from Service with the Company or (ii) the date of Employee’s death.  Upon the first business day following the expiration of the applicable Section 409A period, all payments deferred pursuant to the preceding sentence shall be paid in a lump sum to Employee (or Employee’s estate or beneficiaries), and any remaining payments due to Employee under this Agreement shall be paid as otherwise provided herein.

 

To the extent that any reimbursements under this Agreement are subject to Section 409A, any such reimbursements payable to Employee shall be paid to Employee no later than December 31 of the year following the year in which the expense was incurred.  Provided that Employee submits Employee’s reimbursement request promptly following the date the expense is incurred, the amount of expenses reimbursed in one year shall not affect the amount eligible for reimbursement in any subsequent year, other than medical expenses referred to in Section 105(b) of the Code, and Employee’s right to reimbursement under this Agreement will not be subject to liquidation or exchange for another benefit.

 

Employee’s right to receive any installment payments under this Agreement, including without limitation any continuation salary payments that are payable on Company payroll dates, shall be treated as 

 

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a right to receive a series of separate payments and, accordingly, each such installment payment shall at all times be considered a separate and distinct payment as permitted under Section 409A.  Except as otherwise permitted under Section 409A, no payment hereunder shall be accelerated or deferred unless such acceleration or deferral would not result in additional tax or interest pursuant to Section 409A.

 

[Signature page follows]

 

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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed and delivered as of the date first written above.

 

 

	
 
    	
JP ENERGY GP II LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ J. Patrick Barley
    
	
 
    	
Name: 
    	
J. Patrick Barley
    
	
 
    	
Title:
    	
CEO
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
EMPLOYEE
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/ Jeremiah Ashcroft III
    
	
 
    	
Name:    Jeremiah Ashcroft III
    
	
 
    	
Address: 
    	
3610 Durness Way
    
	
 
    	
 
    	
Houston, Texas 77025Ex. 10.1 Employment Agreement

Exhibit 10.1

EMPLOYMENT AGREEMENT
THIS AGREEMENT (the “Agreement”) is made by and between Fidelity & Guaranty Life Business Services, Inc., a Delaware corporation with an address at Two Ruan Center, 601 Locust Street, Des Moines, Iowa (“F&G”), and Christopher J. Littlefield (“Executive”), as of October 6, 2014.
WHEREAS, the parties wish to enter into an employment agreement on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of F&G’s employment of Executive, and the mutual obligations and rights set forth in this Agreement, the parties agree as follows:
1.    DEFINITIONS
		
	(a)
	“Client” or “Client List” means all Past, Present and Potential Clients as defined below;

“Company” means, collectively, Fidelity & Guaranty Life Business Services, Inc., Fidelity & Guaranty Life (FGL), Fidelity & Guaranty Life Holdings, Inc., Fidelity & Guaranty Life Insurance Company, Fidelity & Guaranty Life Insurance Company of New York, and Raven Reinsurance Company (and any other affiliated entities hereafter formed), but “Company” does not include any Group Company;
“Compensation” means Executive’s salary and any bonus that may be awarded in the Company’s sole discretion;
“Compensation Year” means the 12-month period ending each September 30th.  
“Confidential Information” means all secret, confidential or otherwise non-public information, knowledge or data relating to the Group, and their respective businesses or financial affairs, whether or not in writing, including but not limited to information related to:  their suppliers and their businesses; prices charged to and terms of business with their customers; their marketing plans and sales forecasts; their financial information, results and forecasts; their proposals or plans for the acquisition or disposal of a company or business or any part thereof; their proposals or plans for any expansion or reduction of activities; their employees, including the employees’ performance, compensation and benefits; their research activities, inventions, trade secrets, designs, formulas and product lines; any information provided to the Group in confidence by its affiliates, customers, suppliers or other parties; and other information concerning and related to Clients; provided, however, that Confidential Information shall not include information that is already lawfully available to the public or already known by third parties who are under no obligation to keep such information confidential;
“Disability” means Executive’s inability to perform his duties on a full-time basis for 180 days during any 12-month period as a result of incapacity due to mental or physical illness, even with reasonable accommodations; 
“Employment Period” means the period of time when Executive is employed by the Company, including any Notice Period set forth in Section 5.2(A) below; 

“Group” means the Company and the Group Companies, collectively and singularly;
“Group Company” means Harbinger Group Inc., and any direct or indirect subsidiary of Harbinger Group Inc. other than the Company;
“Notice Period” means the period set forth in Section 5.2(A) ending three (3) months from the date of written notice to terminate Executive’s employment;
“Past Client” means any person or entity who had been an investment advisory or insurance customer, distributor or client of the Company during the one (1) year period immediately preceding the termination of Executive’s employment with the Company and with which Executive dealt while at the Company or which became known to Executive during the course of his employment at the Company.
“Potential Client” means any person or entity to whom the Company has offered (by means of a personal meeting, telephone call, or a letter or written proposal specifically directed to the particular person or entity) within the one (1) year immediately preceding the termination of Executive’s employment to serve as investment adviser or to provide or distribute insurance products but which is not at such time an investment advisory or insurance customer, distributor or client of the Company and with which Executive dealt while at the Company or which became known to Executive during the course of his employment at the Company; this definition includes persons or entities for which a plan exists to make such an offer, but excludes persons or entities solicited or to be solicited solely by form letters and blanket mailings.
“Present Client” means any person or entity who at the time of Executive’s termination of employment is an investment advisory or insurance customer, distributor or client of the Company and with which Executive dealt while at the Company or which became known to Executive during the course of his employment at the Company.
“Termination Date” means the date when Executive ceases to be an employee of the Group;
(b)    References to Sections are, unless otherwise stated, to Sections of this Agreement; and

		
	(c)
	Section headings are for convenience only and shall not affect the construction or interpretation of this Agreement.

2.    EMPLOYMENT
2.1    Executive’s employment with the Company is “at will,” meaning that Executive may resign at any time for any reason and the Company may discharge Executive at any time for any reason, subject only to any obligation to provide notice as set forth in Section 5.2(A) below.  Therefore, beyond any obligation to give notice as set forth in Section 5.2(A) below, nothing in this Agreement obligates Executive to remain in the Company’s employ for any period of time, and the Company has no obligation to employ Executive for any definite or indefinite period of time.
2.2    Executive hereby represents to the Company that Executive is not bound by any agreement or any other restriction which conflicts with or prevents the performance of Executive’s duties and obligations to the Company under this Agreement.  

 
3.    SCOPE OF EMPLOYMENT

3.1    Executive will faithfully, diligently and efficiently perform such duties on behalf of the Company as the Company may assign to him.  Executive agrees to abide by the rules, regulations, instructions, personnel practices and policies of the Company, including any changes which may be adopted from time to time.  Executive’s actions shall at all times be consistent with, and pursued solely to further, the interests of the Company.  Under no circumstances will Executive take any action contrary to the best interests of the Company at any time during the Employment Period.
3.2    Executive shall serve as the President of F&G and shall devote substantially all of his business time and attention and his best efforts to the performance of his duties and responsibilities under this Agreement and shall not engage in any other business activity, except as may be approved by the Executive Committee of F&G; provided that nothing in this Agreement shall prohibit the Executive from (i) engaging in religious, charitable or other community or non-profit activities that do not impair the Executive’s ability to fulfill the Executive’s duties and responsibilities under this Agreement; (ii) investing the Executive’s personal assets in any business that does not compete with the Company, where the Executive is not obligated or required to, and shall not in fact, devote any substantial managerial efforts, or (iii) holding directorships in other companies after obtaining the consent of the Executive Committee of F&G; provided further that none of the activities permitted in clauses (i) through (iii) individually or in the aggregate interfere with the performance of the Executive’s duties under this Agreement.  Executive's principal place of business shall be in the greater Des Moines, Iowa metropolitan area. 
3.3     Executive shall not acquire or hold more than two hundred and fifty thousand dollars ($250,000) in value, determined at the time of this agreement or at the time of acquisition with respect to subsequent purchases, of any class of publicly-traded securities of a competitor as set forth in Exhibit A which may be updated periodically by the Company in its reasonable discretion.

4.    COMPENSATION AND BENEFITS

4.1    Compensation:  Executive’s Compensation will be determined in the Company’s sole discretion.
4.2    Benefits:  Executive shall be eligible to receive the various benefits offered by the Company to its executive employees as may be determined from time to time by the Company.  These benefits may be modified or eliminated from time to time at the sole discretion of the Company.  Where a particular benefit is subject to a formal plan (for example, medical insurance), eligibility to participate in and receive the particular benefit shall be governed solely by the applicable plan document.
4.3    Expenses:  Executive shall be entitled to reimbursement for reasonable out-of-pocket expenses incurred for the Group’s business (including travel and entertainment) in accordance with the policies, practices and procedures of the Company.
4.4    Sign-On Bonus:  Subject to the provisions of this Section 4.4, Executive shall be entitled to receive a sign-on bonus in the form of restricted common stock of Fidelity & Guaranty Life (FGL).  Executive shall receive the number of shares (rounded down to  exclude any fractional share) determined by dividing Two Hundred and Fifty Thousand Dollars ($250,000) by the closing price on the New York Stock Exchange of FGL on the date on which this Agreement becomes effective (as set forth in the first paragraph of the Agreement).  Executive shall become vested in such restricted stock after completing one year of employment with F&G; provided, however, that if the Company terminates the employment of Executive without Cause 

(under Section 5.2(A)(i) below) during the first year of Executive’s employment, Executive shall become vested in a pro-rata portion of such grant, based on the portion of the first year of employment completed.  Such grant shall be subject in all respects to the terms and conditions of the Fidelity & Guaranty Life 2013 Stock Incentive Plan (“SIP”) and the grant agreement.
5.    TERMINATION OF EMPLOYMENT
5.1    Termination For Cause:  The Company may terminate Executive’s employment for Cause immediately upon written notice.  Upon termination of Executive’s employment with the Company in accordance with this Section 5.1, all Compensation and benefits will cease and Executive shall not be entitled to receive any other Compensation, payments or benefits, except (a) earned wages or accrued vacation time that remains due and payable, and (b) benefits to the extent that Executive is entitled to accrued benefits under the express terms of any plan governing such benefits.  Executive will have the right to elect to continue his health and dental insurance after the Termination Date to the extent permitted by the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”).  Such coverage shall be at Executive’s expense and is not the responsibility of the Company.
For purposes of this Agreement, the Executive shall be deemed terminated for “Cause” if the Company terminates the Executive’s employment in writing after (i) the Board of Directors of FGL determines that the Executive has breached his obligations under this Agreement after the Company has given the Executive notice of and 10 business days to cure such breach;  (ii) the Executive shall have been convicted, indicted for, or entered a plea of nolo contendere to, any felony or any other act involving fraud, theft, misappropriation, dishonesty, or embezzlement, or (iii) the Executive shall have committed acts of misconduct that could reasonably be expected to materially impair the goodwill or business of the Company or cause material damage to its or their property, goodwill, or business.
5.2    Termination For Reasons Other Than Cause:  
(A)    Termination With Notice Period:  Either party may terminate Executive’s employment for any reason other than for Cause, Disability or death by giving the other party three (3) months’ notice in writing; terminations for Cause are governed by Section 5.1 above, for Disability by Section 5.2(C) below and death by Section 5.2(D) below.
(i)    By The Company:
(a)    Continuation of Compensation and Benefits:  In the event that the Company provides notice to Executive under this Section 5.2(A), then for the duration of the Notice Period Executive shall continue to receive the base salary that he received immediately prior to the notice of termination and shall continue to be eligible to receive all benefits to which he is entitled as an employee of the Company.  Executive shall be entitled to a pro rata portion of any bonus that otherwise would have been payable to Executive for the Compensation Year in which such employment termination occurs.  Pro-ration of the bonus shall be based on the portion of the Compensation Year prior to Executive’s termination of employment, and the pro-rated bonus shall be paid within 2-1/2 months following the Compensation Year in which it was earned.  Except as provided below, Executive shall not receive any Compensation or be eligible for any benefits after the Termination Date, including but not limited to salary and medical, dental, life and disability benefits.  Executive will have the right to elect to continue his health and dental insurance after the Termination Date to the extent permitted by COBRA.  Except as provided below, any COBRA 

coverage will be at Executive’s own expense and is not the responsibility of the Company.
(b)    Severance:  Provided Executive signs and delivers, and does not revoke, a general release substantially in the form attached hereto as Exhibit B, (x) Executive shall be entitled to receive a severance payment equal to two (2) weeks of base salary for every full year that Executive was employed by the Group, subject to a minimum payment of twenty-six (26) weeks base salary and a maximum payment of fifty-two (52) weeks base salary, and (y) if Executive properly elects COBRA coverage, the Company will make payments to the insurance provider(s) equal to the amount due for Executive’s COBRA coverage payments for a period of time equal to the number of weeks of Executive’s severance payments (by way of example only, if Executive is entitled to a severance payment equal to thirty weeks’ base salary because he has been employed by the Company for fifteen (15) years, the Company will make monthly payments to the COBRA insurance provider for the first thirty weeks of COBRA coverage, assuming Executive has executed and not revoked the release).  The release agreement shall be provided to the Executive during the first month of the Notice Period.  The severance payment based on tenure with the Company shall be paid in a lump sum within ten (10) days following the expiration of the Notice Period, provided that Executive has executed the release agreement, returned it to the Company, and allowed the revocation period therefor to expire, by the end of the Notice Period.  Executive shall not be entitled to any other payment of any kind, except (a) as expressly provided in this Agreement, (b) earned wages or accrued vacation time that remains due and payable, and (c) benefits to the extent that Executive is entitled to accrued benefits under the express terms of any plan governing such benefits.
(ii)    By Executive:  In the event that Executive provides notice to the Company under Section 5.2(A), Executive shall not be entitled to any bonus or equity award (either in full or pro rata) otherwise payable after the date on which notice is given or any other compensation, payment or benefits of any kind, except (a) for the duration of the Notice Period, Executive shall continue to receive the base salary that he received immediately prior to the notice of termination and shall continue to be eligible to receive all benefits to which he is entitled as an employee of the Company, (b) earned wages or accrued vacation time that remain due and payable after the Termination Date, and (c) benefits payable after the Termination Date to the extent that Executive is entitled to accrued benefits under the express terms of any plan governing such benefits.  Executive will have the right to elect to continue his health and dental insurance after the Termination Date to the extent permitted by COBRA.  Such coverage shall be at Executive’s expense and is not the responsibility of the Company.
(B)    Conduct During the Notice Period:  During the Notice Period, Executive remains employed by the Company and shall not commence employment with any other employer, and is subject to all of the obligations, rules, policies and practices of the Company, including the obligation to act solely in the best interest of the Company.  During the Notice Period, Executive shall perform such duties and tasks as the Company may assign to Executive, provided, however, that the Company reserves the right to have Executive stay away from the Company’s premises, and not contact any Group employee or Client for purposes adverse to the interests of the Company.

(C)    Disability:  The Company may terminate Executive’s employment on written notice to Executive that the Company has determined that a Disability of Executive has occurred.  Should the Company terminate this Agreement by reason of Executive’s Disability, all Compensation and benefits will cease effective on the Termination Date, and Executive shall have no right to any further payments or benefits except (a) to the extent that Executive is entitled to wages, accrued but unused vacation time or accrued benefits under the express terms of any plan governing such benefits, and (b) a pro rata bonus for the period when Executive was performing his regular duties on a full-time basis to the extent such bonus would have otherwise been payable in the absence of such disability.
(D)    Death:  Executive’s employment shall terminate automatically upon Executive’s death.  All Compensation and benefits will cease effective on the date of Executive’s death, except that Executive’s estate shall be eligible to receive Executive’s bonus, to the extent such bonus would have otherwise been payable, for the period up through Executive’s death; in the event Executive’s death is prior to the end of a Compensation Year, the bonus shall be prorated based upon the number of days Executive worked during the Compensation Year.
(E)    Equity Compensation:  Any unvested award granted under any Company equity compensation plan will be handled in accordance with the terms of the applicable plan and grant agreement.
(F)    IRC Section 409A Compliance:  The parties intend that the payments and benefits to which Executive could become entitled in connection with a termination of employment shall comply with or meet an exemption from Section 409A of the Internal Revenue Code.  In this regard, notwithstanding anything in this Agreement to the contrary, all cash amounts that become payable under this Agreement shall be paid within the “short-term deferral” period described in Section 1.409A-1(b)(4) of the Treasury Regulations, shall qualify for the exception for “separation pay” set forth in Section 1.409A-1(b)(9) of the Treasury Regulations or another exception, or shall comply with Section 409A of the Internal Revenue Code.  Payments subject to Section 409A of the Internal Revenue Code that are due upon termination of employment shall be made only upon “separation from service” within the meaning of Section 409A(a)(2)(A)(i) of the Internal Revenue Code, and shall be subject to the 6-month payment delay described in Section 409A(a)(2)(B)(i) of the Internal Revenue Code if the Executive is a “specified employee” as described therein.  In the event that it is determined that the terms of this Agreement do not comply with Section 409A of the Code, the parties will negotiate reasonably and in good faith to amend the terms of this Agreement so that it complies (in a manner that preserves the economic value of the payments and benefits to which Executive may become entitled) so that payments are made within the time period and in a manner permitted by the applicable Treasury Regulations.
5.3    Upon termination (or suspension) of Executive’s employment, regardless of the reason, Executive shall deliver to the Company all books, documents and materials described in Section 6 below, and all computers, blackberries, other personal data devices, phones, credit cards, keys and other property of the Group that are in Executive’s possession or control.
5.4    Termination of Executive’s employment with the Company for any reason shall constitute Executive’s resignation as an officer, director, trustee and/or any and all other positions held by him with any subsidiary or any pooled investment vehicle organized or advised by the Group, effective automatically.  Executive shall execute any and all documents and take any and all action reasonably requested by the Group to acknowledge and effect such resignations.

6.    FURTHER COVENANTS.
6.1    All Business to Be the Property of the Group; Assignment of Intellectual Property.

(A)Executive agrees that any and all presently existing investment advisory and insurance business of the Group and all business developed by Executive or any other employee of the Group, including without limitation all investment advisory and insurance contracts, distribution agreements, fees, commissions, compensation records, performance records, Client Lists, agreements and any other incident of any business developed or sought by the Group or earned or carried on by Executive during his employment with the Group, are and shall be the exclusive property of the Group for its sole use and (where applicable) shall be payable directly to the Group.  Executive grants to the Group Executive’s entire right, title and interest throughout the world, if any, in and to all research, information, Client Lists, product lists, distributor lists, identities, investment profiles and particular needs and characteristics of Clients, performance records, and all other investment advisory, insurance, technical and research data made, conceived, developed and/or acquired by Executive solely, jointly or in common with others during the period of Executive’s employment by the Group, that relate to the Group’s business as it was or is now rendered or as it may, from time to time, hereafter be rendered or proposed to be rendered during the Employment Period.
(B)Any inventions and any copyrightable material developed by Executive in the scope of his employment with the Group shall be promptly disclosed to the Group and will be “works for hire” owned by the Group.  Executive will, at the Group’s expense, do whatever is necessary to transfer to the Group, and document its ownership of, any such property.
6.2    Confidentiality.  Executive shall not, either during the period of Executive’s employment with the Group or thereafter, use for Executive’s own benefit or disclose to or use for the benefit of any person outside the Group, any information concerning Confidential Information, whether Executive has such information in Executive’s memory or embodied in writing or other tangible or electronic form.  All Confidential Information, and all originals and copies of any Confidential Information, and any other written material relating to the business of the Group, including information stored electronically, shall be the sole property of the Group.  Executive acknowledges and agrees that the Confidential Information has been and will be developed by the effort and expense of the Group; that such Confidential Information has economic value to the Group and would have significant economic value to the Group’s competitors if divulged; that the Confidential Information is not available to the Group’s competitors; and that keeping the Confidential Information from the Group’s competitors has economic value to the Group.  Upon the termination of Executive’s employment in any manner or for any reason, Executive shall promptly surrender to the Group or destroy all originals and copies of any Confidential Information, and Executive shall not thereafter retain or use any Confidential Information for any purpose.
6.3    Trade Secrets.  Executive acknowledges that while employed by the Group, Executive will have contact with and become aware of the Group’s proprietary insurance product information, and proprietary business processes and strategy (the “Trade Secrets”).  Executive agrees that the Trade Secrets are a valuable asset of the Group.  Executive further agrees that the Trade Secrets have been and will be developed by the Group and would have significant economic value to the Group’s competitors if divulged; that the Trade Secrets are not available to the Group’s competitors; that keeping the Trade Secrets confidential from the Group’s competitors has economic value to the Group; and that the Group takes reasonable steps to protect the confidentiality of the Trade Secrets.

6.4    Restrictive Covenants.
(A)For six (6) months following the Termination Date, irrespective of the reason for the termination, Executive shall not, directly or indirectly, solicit or attempt to solicit, or assist others in soliciting or attempting to solicit, any Client of the Company for the purpose of providing investment advisory or insurance services, insurance products or insurance distribution services.  For six (6) months following the Termination Date, irrespective of the reason for the termination, Executive shall not, directly or indirectly, solicit or attempt to solicit, or assist others in soliciting or attempting to solicit, any Independent Marketing Organizations of the Company for the purpose of providing investment advisory or insurance services or products or distribution services.  Executive agrees that the restriction contained in this Section is necessary to protect the Company’s business and property in which the Company has made a considerable investment, and to prevent misuse of the Confidential Information and Trade Secrets. 
(B)For eighteen (18) months following the termination of Executive’s employment with the Company, irrespective of the reason for the termination, Executive shall not directly or indirectly solicit, recruit, induce away, or attempt to solicit, recruit, or induce away, or hire any employee, director or officer of the Company with whom Executive had contact during Executive’s employment with the Company.  For purposes of this paragraph, “contact” means any personal interaction whatsoever between the individual and Executive.
(C)For six (6) months following the termination of the Executive’s employment with the Company, irrespective of the reason for the termination, the Executive shall not, without the written consent of the Company, directly or indirectly carry on or participate in a Competing Business (as defined below).  A “Competing Business” shall mean a life insurance or annuity business, or a business in the life insurance or annuity industry, in the United States of America.  The phrase “carry on or participate in a Competing Business” shall include engaging in any of the following activities, directly or indirectly:  (i) Carrying on or engaging in a Competing Business as a principal, or on the Executive’s own account, or solely or jointly with others as a director, officer, agent, employee, consultant or partner, or stockholder, limited partner or other interest holder owning more than five (5) percent of the stock or equity interests or securities convertible into more than five (5) percent of the stock or equity interests in any entity that is carrying on or engaging in a Competing Business; (ii) as agent or principal, carrying on or engaging in any activities or negotiations with respect to the acquisition or disposition of a Competing Business; (iii) extending credit for the purpose of establishing or operating a Competing Business; (iv) lending or allowing the Executive’s name or reputation to be used in a Competing Business; (v) otherwise allowing the Executive’s skill, knowledge or experience to be used in a Competing Business.
(D)Executive and the Company agree that the period of time and the geographic area applicable to the covenants of Section 6.4 are reasonable and necessary to protect the legitimate business interests and goodwill of the Company in view of (1) Executive’s senior executive position within the Company, (2) the geographic scope and nature of the business in which the Company is engaged, (3) Executive’s knowledge of the Company’s business and (4) Executive’s relationships with the Clients.
6.5    Executive shall comply with (a) every applicable rule of law and (b) the rules and regulations of regulatory authorities insofar as the same are applicable to his employment with the Group.
6.6    The following non-disparagement provisions shall apply:
(A)    Executive shall not disparage, portray in a negative light or make any statement which would be harmful to, or lead to unfavorable publicity for, the Group, or any of their current or former directors, officers or employees, including, without limitation, in any and all interviews, oral statements, written 

materials, electronically displayed materials and materials or information displayed on internet or internet-related sites; provided, however, that this Agreement does not apply to the extent Executive is making truthful statements when required by law or by order of a court or other legal body having jurisdiction or when responding to an inquiry from any governmental or regulatory organization.
(B)    The Group shall not disparage, portray in a negative light, or make any statement which would be harmful to or lead to unfavorable publicity for, Executive, including, without limitation, in any and all interviews, oral statements, written materials, electronically displayed materials and materials or information displayed on internet or internet-related sites; provided, however, that this Agreement does not apply to the extent the Group is making truthful statements when required by law or by order of a court or other legal body having jurisdiction or when responding to an inquiry from any governmental or regulatory organization. 
6.7    At no time after the Termination Date shall Executive represent himself as being interested in or employed by or in any way connected with the Group, other than as a former employee of the Group.  
6.8    Executive agrees to (i) provide truthful and reasonable cooperation, including but not limited to his appearance at interviews and depositions, in all legal matters, including but not limited to regulatory and litigation proceedings relating to his employment or area of responsibility at the Group, whether or not such matters have already been commenced and through the conclusion of such matters or proceedings, and (ii) to provide to the Group’s counsel all documents in Executive’s possession or control relating to such regulatory or litigation matters.  F&G will reimburse Executive for all reasonable travel expenses in connection with such cooperation.
6.9    The provisions of this Agreement, including but not limited to this Section 6, shall continue to apply with full force and effect should Executive transfer between or among the Group, wherever situated, or otherwise become employed by any other member of the Group, or be promoted or reassigned to any position.  In the event that Executive becomes employed by a member of the Group other than the Company, this Agreement shall be read to substitute the other company’s name wherever the Company is referenced and the Company’s rights under this Agreement shall be assigned to Executive’s new employer and Executive consents to such assignment, so long as Executive’s rights are in no way diminished or prejudiced by such assignment.  
6.10    The Group shall have the right to communicate Executive’s ongoing obligations under this Agreement to any entity or individual by whom Executive becomes employed or with whom Executive becomes otherwise engaged following termination of employment with the Group, and Executive consents to the Group making that communication.
6.11    To the extent any of the covenants of this Section 6 or any other provisions of this Agreement shall be deemed illegal or unenforceable by a court or other tribunal of competent jurisdiction with respect to (i) geographic area, (ii) time period, (iii) any activity or capacity covered by such covenant or contractual provision, or (iv) any other term or provision of such covenant or contractual provision, the covenant or contractual provision shall be construed to the maximum breadth determined to be legal and enforceable and the illegality or unenforceability of any one covenant or contractual provision shall not affect the legality and enforceability of the other covenants or contractual provisions.
6.12    Executive acknowledges and agrees that the Company’s remedy at law for any breach of the provisions of Section 6 of this Agreement would be inadequate and that for breach of such provisions the Company shall, in addition to such other remedies as may be available to it at law or in equity or as provided in this Agreement, be entitled to temporary, preliminary and permanent injunctive relief as well as to enforce 

its rights by an action for specific performance to the extent permitted by law.  Executive expressly consents to the granting of temporary, preliminary, and permanent injunctive relief and/or specific performance for breach of this Agreement.  The Company agrees to the foregoing provisions of this Section 6.12 with respect to actions by Executive to enforce Section 6.6(B).  
6.13     Executive acknowledges that his agreement to comply with these restrictions was an inducement for the Group to continue to employ Executive and to enter into this Agreement with Executive.
7.    GENERAL
7.1    (A)    This Agreement and any disputes relating to the parties’ relationship or the termination of that relationship, whether arising in law or equity and whether based on contract, tort or statutory rights, shall be deemed to have been made in the state of Iowa and shall take effect as an instrument under seal, and the validity, interpretation and performance of this Agreement shall be governed by, and construed in accordance with, the internal law of the state of Iowa, without giving effect to conflict-of-law principles.  
(B)    Except as provided in Section 7.1(C), any dispute or controversy between the parties hereto, including without limitation, any and all matters relating to this Agreement, Executive’s employment with the Company and the cessation thereof, and all matters arising under any federal, state or local statute, rule or regulation, or principle of contract law or common law, including but not limited to any and all medical leave statutes, wage-payment statutes, employment discrimination statutes and any other equivalent federal, state or local statute, shall be settled by arbitration administered by the American Arbitration Association (“AAA”) in the Greater Des Moines, Iowa metropolitan area pursuant to the AAA’s National Rules for the Resolution of Employment Disputes (or their equivalent), which arbitration shall be confidential, final and binding to the fullest extent permitted by law. Except as provided in Section 7.1(D), the Company shall pay seventy-five percent (75%) of the fees and costs imposed by the arbitrator and the Executive shall pay twenty-five percent (25%) of such fees and costs, and each party shall be responsible for its own attorneys’ fees.  Each party hereby agrees to and does take the following action:
(i)irrevocably submits to the jurisdiction of state or federal courts in the State of Iowa for the purpose of enforcing the award or decision in any such proceeding;
(ii)waives, and agrees not to assert, by way of motion, as a defense or otherwise, in any such suit, action or proceeding, any claim that (A) the party is not subject personally to the jurisdiction of the above-named courts, (B) the party’s property is exempt or immune from attachment or execution, (C) the suit, action or proceeding is brought in an inconvenient forum, (D) the venue of the suit, action or proceeding is improper, or (E) this Agreement or the subject matter hereof may not be enforced in or by such court;
(iii)waives, and agrees not to seek any review by a court in another jurisdiction that may be called upon to enforce the judgment of any of the above-referenced courts; and
(iv)consents to service of process by registered or certified United States mail, postage-prepaid, return receipt requested, or an equivalent governmental mail service, at the address set forth in the Notice provision of this Agreement.
Each party agrees that such party’s submission to jurisdiction and consent to service of process by United States registered or certified mail, or an equivalent governmental mail service, is for the express benefit of the other party. Final judgment against either party in any action, suit or proceeding may be enforced in other jurisdictions by suit, action or proceeding on the judgment, or in any other manner provided by or pursuant to the laws of such other jurisdiction.
(C)    Notwithstanding Section 7.1(B), if the Legal Action involves an alleged breach of an obligation under Article 6 of this Agreement (Further Covenants) by the Executive, which breach may give 

rise to immediate and irreparable harm, the Company may seek injunctive relief in any state or federal court of competent jurisdiction in the State of Iowa.  (Such action for injunctive relief shall be resolved by a judge alone, and both parties waive the right to a jury.)
(D)    If either party brings an arbitration proceeding under Section 7.1(B) resulting from an alleged breach of an obligation under Article 6 of this Agreement (Further Covenants) by the other party, or files suit for injunctive relief to enforce its rights under Section 7.1(C), and prevails in its action, the prevailing party shall also be entitled to recover from the other party all expenses incurred by the prevailing party in preparing for and taking such action, including, but not limited to, investigative costs, arbitration or court costs (as the case may be), and attorneys’ fees.
7.2    This agreement may be executed in counterparts.
7.3    This Agreement contains the entire agreement of the parties and supersedes all oral or written employment, consulting or similar agreements, understandings or arrangements between Executive, on the one hand, and the Group, on the other hand, relating to Executive’s employment or the termination of his employment.  In entering into this Agreement, neither party is relying on any oral or written representation, promise, agreement or understanding that is not set forth in this Agreement, and both parties expressly disclaim any reliance on any oral or written representation, promise, agreement or understanding not set forth in this Agreement.
7.4    This Agreement may not be amended or modified other than by a written agreement executed by both parties.  The writing executed by the Company must be by the CEO of F&G.  This Agreement is binding upon and inures to the benefit of both parties and their respective successors and assigns, including any corporation with which or into which the Company may be merged or which may succeed to substantially all of its assets or business, although the obligations of Executive are personal, are not assignable, and may be performed only by him.
7.5    All notices and other communications required under this Agreement shall be in writing and shall be given by hand delivery to the other party, by overnight delivery service, signature required, or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:
If to Executive:    Christopher Littlefield
660 SE Woodcrest Drive
Waukee, IA  50263

If to the Company:      Fidelity & Guaranty Life Business Services, Inc.
1001 Fleet Street
Baltimore, MD 21202
Attn:  Rose Boehm

or to such other address as either party shall have furnished to the other in writing in accordance with this provision.  Notices and communications shall be effective when delivered to the addressee or, if addressee refuses delivery, on the date delivery was first attempted.
7.6    Executive’s or the Company’s failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right Executive or the Company may have hereunder shall not be deemed to be a waiver of such provision or right or any other provision or right under this Agreement.
7.7    The Company shall have the right to set off any damages incurred by the Group as a result of a breach of this Agreement by the Executive against any amounts due to Executive by the Group, except 

for Executive’s salary and other sums that are non-forfeitable wages under the law or otherwise protected from offset or seizure by law.  In addition to, and without limiting in any way, the Company’s rights and remedies as set forth in this Agreement or in law or equity, Executive agrees that if Executive engages in any activities prohibited by this Agreement, Executive will pay over to the Company all compensation or revenue received in connection with such activities.
7.8     All compensation and benefits payable under this Agreement shall be subject to withholding by the Company of all applicable taxes.  The parties further understand and agree that should any relevant law (including without limitation any regulatory interpretations thereof) change between the time of execution of this Agreement and the payment of the various payments to Executive called for by the Agreement, the parties will revise the Agreement accordingly in a good-faith attempt to ensure ongoing compliance with such law upon mutual agreement of the parties, staying as consistent as possible with the financial and other business terms of this Agreement, but in any case Executive hereby agrees that all personal income taxes on his compensation and benefits under this Agreement and all penalties and interest with respect to such personal income taxes, including but not limited to under Section 409A of the Internal Revenue Code (subject to the terms of Section 5.2(F)), if any, are his own responsibility.
7.9     Executive and the Company represent and acknowledge that the consideration that each has received under this Agreement is sufficient and adequate for the obligations that each has agreed to undertake, and expressly waives any right to assert that they have not received adequate consideration for agreeing to the obligations undertaken in this Agreement.
7.10    Executive acknowledges and represents that he understands his obligations and rights under this Agreement, has had adequate time to consider it, and has had adequate time and opportunity to ask any questions and obtain any advice he felt necessary or appropriate.  No one has placed any pressure on Executive to execute this Agreement prior to the expiration of a reasonable time for him to read it, ask any questions and obtain any advice he felt necessary or appropriate.  Executive enters into this Agreement freely and voluntarily.
7.11     The officer executing this Agreement on behalf of F&G has the authority to enter into this Agreement, and Executive is relying on his authority to do so.
7.12    The terms and conditions of Executive’s offer letter, attached as Exhibit C to this Agreement, are hereby incorporated into this Agreement.  

IN WITNESS whereof this Agreement has been executed the day and year first above written.

EXECUTIVE

        /s/ Christopher J. Littlefield                    
By:  Christopher J. Littlefield

Date: October 6, 2014    

FIDELITY & GUARANTY LIFE BUSINESS
SERVICES, INC.

/s/ Leland C. Launer, Jr.                 
By:      Leland C. Launer, Jr.,
Chief Executive Officer    

Date: October 6, 2014

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