Document:

gabriel_8k-ex1002.htm

EXHIBIT 10.02

 

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD, PLEDGED, OR OTHERWISE TRANSFERRED OR DISPOSED OF UNLESS AND UNTIL THIS NOTE IS REGISTERED UNDER THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.

 

GABRIEL TECHNOLOGIES CORPORATION

 

PROMISSORY NOTE

 

	$_____________ 	 _______________, 2009

 

FOR VALUE RECEIVED, the undersigned, Gabriel Technologies Corporation, a Delaware corporation (“Company”), promises to pay to the
order of ____________________ (“Lender”) the principal sum of _______________________________ Dollars ($_________.00) (the “Principal”), without interest, which amount shall be due and payable in lawful money of the United States of America at such place as Lender may from time to time designate, at the time and in accordance
with the terms and conditions provided in Section 1 below. This Note is one of the Notes issued by the Company pursuant to the Promissory Note Purchase Agreement effective _______________, 2009 among the Company and the investors that are parties thereto (the “Purchase Agreement”).

 

1. Payments. The Company shall pay Lender (i) _______________________________ Dollars ($_________.00) (which is the Principal plus an amount equal to 100% of the Principal), and (ii) ___% of the proceeds of an IP Event (as defined
below)(which is .000005% of the IP Event proceeds for each Dollar of Principal represented hereby), on the 10th business day after the first IP Event to occur after receipt by the Company of the Principal. For purposes of this Note, an “IP Event” is defined as the receipt by the Company or any of its subsidiaries of a minimum of $10,000,000 in net proceeds (in
cash or the fair market value of non-cash consideration) from (i) a licensing, sale, transfer, settlement or other transaction with one or more third parties relating to intellectual property of the Company or its subsidiaries, or (ii) a merger, consolidation, share exchange or sale of all or substantially all of the stock or assets of the Company or any of its subsidiaries.

 

2. Attorney’s Fees. If the indebtedness represented by this Note or any part thereof is collected in bankruptcy, receivership or other judicial proceedings or if this Note is placed in the hands of attorneys for collection after
default, the Company agrees to pay, in addition to the principal and interest payable hereunder, reasonable attorney’s fees and costs incurred by Lender.

 

3. Notices. Any notice, other communication or payment required or permitted hereunder shall be in writing and shall be deemed to have been given upon delivery.

 

4. Waivers. The Company hereby waives presentment, demand for performance, notice of non-performance, protest, notice of protest and notice of dishonor. No delay on the part of Lender in exercising any right hereunder shall operate
as a waiver of such right or any other right.

 

5. Assignment. This Note may be assigned by Lender without the consent of the Company; provided however, that any such assignment by Lender shall be in compliance with all applicable federal and state securities laws.

 

6. Choice of Law; Jurisdiction. This Note shall be construed in accordance with the laws of the State of Delaware, without regard to the conflicts of laws provisions thereof. Any
lawsuit or litigation arising under, out of, in connection with, or in relation to this Note, any amendment or restatement thereof, or the breach thereof, shall be brought in the courts of Omaha, Nebraska, which courts shall have exclusive jurisdiction over any such lawsuit or litigation.

 

 

 

 

 

 

IN WITNESS WHEREOF, Gabriel Technologies Corporation has caused this Promissory Note to be executed by its officer thereunto duly authorized.

 

	  	
GABRIEL TECHNOLOGIES CORPORATION

	  	
By:
	 	 
	  	
Printed Name:
	
 

	 	Title:	 

 

 

 2exv10w1

 

    Exhibit 10.1

 

     

	 	 	 
	
    Date
    
	
 
	
    To
    

	
    September 24, 2009
	
 
	
    Ross J. Kari

	
 
	
 
	
 

	
    From
    
	
 
	
 

	
    Charles E. Haldeman
	
 
	
 

	
 
	
 
	
 

	
    Subject
    
	
 
	
 

	
    Your Compensation as Executive Vice President and Chief
    Financial Officer

 

 

    On behalf of the Compensation Committee (“Committee”)
    of Freddie Mac’s Board of Directors (“Board”),
    this memorandum sets forth Freddie Mac’s agreement to
    employ you as its Executive Vice President and Chief Financial
    Officer, effective no later than October 15, 2009, pursuant
    to the terms and conditions set forth herein. The terms and
    conditions set forth herein supersede any previous
    communications you may have had with Freddie Mac, the Federal
    Housing Finance Agency (“FHFA”), or the Department of
    the Treasury.

 

    As you are aware, there has been substantial uncertainty
    regarding executive compensation practices in the financial
    services industry as a result of numerous government actions and
    the recently issued regulations. Our regulator, the FHFA, after
    consulting with the Department of the Treasury, has provided us
    with preliminary guidance on the impact of the new regulations
    on Freddie Mac’s compensation programs. FHFA has not yet
    approved a final pay structure for Freddie Mac’s
    executives, but this offer reflects commitments approved by FHFA
    related to annual base salary, target annual total direct
    compensation opportunity, and a transition payment.

 

    The terms and conditions in this letter have been approved by
    the Compensation Committee (the “Committee”) of
    Freddie Mac’s Board of Directors and the Federal Housing
    Finance Agency, which has also consulted with the Department of
    the Treasury.

 

    As Freddie Mac’s Executive Vice President and Chief
    Financial Officer, you shall report to me, Freddie Mac’s
    Chief Executive Officer, or my successor, and have the same
    status, privileges, and responsibilities normally inherent in
    such capacity in corporations of similar size and character. You
    shall also perform such additional duties as the Board may from
    time to time reasonably assign to you.

 

    During your employment as Executive Vice President and Chief
    Financial Officer, you agree to devote substantially your full
    time, attention, and energies to Freddie Mac’s business,
    and to not be engaged in any other business activity, whether or
    not such business activity is pursued for gain, profit, or other
    pecuniary advantage, other than service on outside Boards as
    approved by the Committee. This restriction shall not prevent
    you from devoting a reasonable amount of time to charitable or
    public interest activities or from making passive

 

    Compensation
    Terms — September 24, 2009

    Page 2 of 18
    

 

    investments of your assets in such form or manner as you desire,
    consistent with Freddie Mac’s Personal Securities
    Investments Policy.

 

    Please review and confirm that such terms and conditions conform
    to your understanding by returning to Paul George, Freddie
    Mac’s Executive Vice-President of Human Resources and
    Corporate Services, a signed copy of this memorandum.

 

		
	
    I.  
	
    Compensation

 

    Freddie Mac agrees to provide you the following:

 

    A.     Base
    Salary

 

    Your annual base salary shall be no less than $675,000, and
    shall be paid in cash each calendar year on a semi-monthly basis
    while you are employed by Freddie Mac and will be paid subject
    to Freddie Mac’s executive compensation plans, practices
    and policies in effect as of the date of payment.

 

    Subject to approval by FHFA after consulting with the Department
    of the Treasury, the Committee has the discretion to determine
    whether to implement a base salary increase.

 

    If you terminate your employment with Freddie Mac at any time
    for any reason, your annual base salary will terminate as of the
    date your employment terminates.

 

    B.     Target
    Annual Total Direct Compensation Opportunity

 

    Your target annual total direct compensation opportunity will be
    $3,500,000, and will consist of a base salary of $675,000, an additional annual salary of $1,658,333 paid over time in installments, and an annual
    target incentive opportunity of $1,166,667. The incentive opportunity will have terms
    and conditions consistent with those that will be approved by
    FHFA and applicable to all Freddie Mac officers at the level of
    senior vice president and above.

 

    Your incentive opportunity for 2009 will be pro-rated based on
    your date of hire.

 

    The actual dollar amount of the incentive opportunity you
    receive shall be determined in the sole discretion of the
    Committee, subject to approval by FHFA after consulting with the
    Department of the Treasury, as appropriate.

 

		
	
    II.  
	
    Transition
    Payments

 

    Subject to your beginning employment with Freddie Mac, you will
    receive a cash sign-on award of $1,950,000 in recognition of the
    forfeited annual incentive opportunity and unvested equity at
    your current employer.

 

    The cash sign-on award will be paid to you in installments. The
    first installment will be paid to you in your first full
    semi-monthly paycheck after your date of hire. The remaining
    installments will be paid to you prior to the first anniversary
    of your date of hire. If you are not an employee of Freddie Mac
    on an installment payment date, the installment will be
    forfeited.

 

    Compensation
    Terms — September 24, 2009

    Page 3 of 18
    

 

    Each installment will be subject to repayment in the event that,
    prior to the first anniversary of an installment payment date,
    you terminate your employment with Freddie Mac for any reason or
    Freddie Mac terminates your employment for a reason that
    constitutes “Cause” (as defined in Attachment A
    hereto). For each installment payment, the amount subject to
    repayment will be equal to the amount of the installment payment
    minus one-twelfth of the installment payment for each whole
    month worked beginning on the installment payment date and
    ending on the day prior to the first anniversary of the
    installment payment date.

 

		
	
    III.  
	
    Relocation
    Benefit

 

    You shall receive the relocation benefit consistent with the
    Company’s executive relocation package; however, the terms
    below may either augment or supersede the parallel terms of the
    executive relocation package.

 

    We also agree to waive the required 60 day offer period
    under our normal home purchase and to immediately provide you a
    buy-out pursuant to the terms of our relocation policy as soon
    as your employment commences and subject to an appraisal
    conducted at Freddie Mac’s expense.

 

    In lieu of the
    90-day
    temporary living program provided under our standard executive
    relocation benefits, you will be provided with no more than six
    months of temporary lodging for you and your family at a local
    apartment and reimbursement for reasonable local commuting and
    necessary living expenses.

 

    In addition to the benefits provided under our standard
    executive relocation program, you will be reimbursed for travel
    to/from the Washington D.C. area and your residences in Ohio,
    Oregon, and Washington State during the temporary living period.
    Each member of your immediate family may make a single trip
    every three weeks during the temporary living period to/from the
    Washington D.C. area and your current residences for which you
    will be reimbursed.

 

    The Company will not provide a
    gross-up of
    any relocation expenses regardless of whether the benefit is
    provided on an exception basis or pursuant to the Company’s
    normal executive relocation benefit.

 

		
	
    IV.  
	
    Other
    Benefits

 

    You will be eligible to participate in all employee benefit
    plans offered to Freddie Mac’s senior executive officers
    (as may be modified or terminated from time to time by Freddie
    Mac in its sole discretion) pursuant to the terms set forth in
    the applicable plan. In summary, our benefit plans consist of
    the following:

 

			
	 	    • 
	
    Health and Welfare — Competitive and flexible medical
    benefits program for you and your eligible dependents with
    several options to choose from. Dental and vision coverage for
    you and your dependents that covers a wide variety of services.

 

    Compensation
    Terms — September 24, 2009

    Page 4 of 18
    

 

			
	 	    • 
	
    Thrift/401(k) Savings Plan — You will be able to
    contribute on a pre-tax basis and Freddie Mac will begin
    matching a portion of your contributions — based on
    years of service — up to 6% of pay. This plan also
    includes a Company annual discretionary contribution called the
    “Basic Contribution”, which is in addition to the
    matching contribution and is based on a defined formula with a
    five year vesting schedule.

	 
	 	    • 
	
    Pension Plan — Provides benefits based on a formula
    that takes into account your age, salary, and years of service.
    The formula is, in summary, 1% x Highest Average Monthly Pay for
    a Consecutive 36 Month Period x Years of Service. You will vest
    in this benefit after five-years of service. Benefits are
    normally paid out in the form of a monthly annuity beginning at
    age 65.

	 
	 	    • 
	
    Supplemental Executive Retirement Plan (SERP) — An
    unfunded non-qualified plan for officers intended to make up for
    employer provided contributions
    and/or
    benefits under the Pension Plan and Thrift/401(k) Savings Plan
    that are capped due to Internal Revenue Code limitations.

	 
	 	    • 
	
    Income Protection — Provides short-term disability and
    long-term disability income protection, life insurance,
    accidental death and personal loss insurance, and business
    travel accident coverage.

 

    Under a separate cover we are sending details of our employee
    benefit plans. As a new employee, when you first become eligible
    for benefits, you may select the plans that best meet your needs
    and those of your family by logging on to
    http://netbenefits.fidelity.com.
    Shortly after your start date, you will receive an email from
    the “Benefits Center” instructing you to log on to
    Fidelity NetBenefits to make your benefits elections.

 

    You will not receive any information at your home address. Your
    enrollment window is 30 days following your first date of
    employment. During Orientation, our flexible benefits program
    and information about enrollment will be explained in greater
    detail. Please visit our new hire website, Step Inside,
    http://www.freddiemac.com/careers/stepinside/,
    for information about working at Freddie Mac.

 

    V.      Vacation

 

    As an officer, you are eligible to accrue up to 20 days of
    core vacation during your first calendar year of employment.
    This equates to 6.46 hours each pay period; you begin
    accruing vacation starting your first complete pay period.

 

    Starting in 2010 (your second calendar year of employment), you
    will have the opportunity to continue to accrue 20 days
    vacation during each calendar year. You will be provided more
    information following your start of employment.

 

    Compensation
    Terms — September 24, 2009

    Page 5 of 18
    

 

    VI.      Compensation
    In the Event of Termination

 

    In the event that Freddie Mac terminates your employment for
    reasons other than “Cause” (as defined in
    Attachment A hereto), then Freddie Mac will provide you
    with severance pay and other benefits in an amount equal to that
    provided to Freddie Mac’s senior executive officers
    pursuant to the terms of an applicable severance policy in
    effect as of the date of your termination of employment.

 

    In the event that Freddie Mac terminates your employment for any
    reason or you voluntarily terminate your employment, then
    Freddie Mac will provide you with any earned but unpaid annual
    base salary (that is paid semi-monthly in cash) through the date
    of termination, any accrued but unpaid vacation through the date
    of termination, and any reasonable business expenses incurred
    through the date of termination.

 

    In the event that any compensation or benefit to be provided
    pursuant to the terms of this Paragraph VI constitutes
    nonqualified deferred compensation subject to section 409A
    of the Internal Revenue Code, then any payment of such
    compensation or benefit shall be delayed to the extent necessary
    to comply with Internal Revenue Code
    section 409A(a)(2)(B)(i) and accompanying Treasury
    regulations and other applicable Treasury or Internal Revenue
    Service guidance.

 

    Your employment shall be deemed terminated within the meaning of
    Paragraph VI in the event, for any reason other than
    “Cause” (as defined in Attachment A hereto),
    Freddie Mac no longer permits you to serve as the Executive Vice
    President and Chief Financial Officer, your responsibilities as
    Executive Vice President and Chief Financial Officer are
    materially diminished, or your annual base salary (that is paid
    semi-monthly in cash) is reduced.

 

    VII.      Restrictive
    Covenant Agreement

 

    The terms of compensation provided in this memorandum are
    contingent on your agreement to be bound by the terms of the
    enclosed Restrictive Covenant Agreement, which you must sign and
    return together with a signed copy of this memorandum. It is
    included as Attachment B.

 

    VIII.     Recapture
    Agreement

 

    The terms of compensation provided in this memorandum are
    contingent on your agreement to be bound by the terms of the
    enclosed Recapture Agreement, which you must sign and return
    together with a signed copy of this memorandum. It is included
    as Attachment C.

 

    IX.        Escrow
    Agreement

 

    You acknowledge that payments of compensation and benefits,
    including any termination of employment payment pursuant to
    Paragraph V, are subject to escrow in the event prior to
    the first anniversary of the termination of your employment for
    any reason FHFA files a Notice of

 

    Compensation
    Terms — September 24, 2009

    Page 6 of 18
    

 

    Charges alleging misconduct by you that was knowing and caused
    or would be likely to cause a substantial loss to Freddie Mac
    and directs the company to escrow compensation and benefits that
    otherwise may be paid to you. In the event it is subsequently
    determined that no misconduct occurred, the amount placed in
    escrow shall be paid to you, plus reasonable interest for the
    period of escrow.

 

    X.       Indemnification
    Agreement

 

    Freddie Mac agrees to enter into an indemnification agreement
    with you that has terms and conditions consistent with those
    provided to all other executive officers of the Company.

 

    XI.       Assignment
    by Freddie Mac

 

    This Agreement is binding upon and shall inure to the benefit of
    the Company’s successors and assigns. The Company may
    assign this Agreement in connection with a merger,
    consolidation, assignment, sale, operation of law, or other
    disposition of substantially all of its assets or business,
    without the consent of Employee, provided the assignee
    acknowledges that the Agreement is binding upon it. This
    Agreement may not be assigned by Employee.

 

    XII.      FHFA
    Approval

 

    Notwithstanding FHFA’s approval of the terms and conditions
    of compensation provided herein, including compensation to be
    paid to you in the event of the termination of your employment,
    you acknowledge and understand that such approval is subject to
    reassessment by FHFA. If a severance triggering event were to
    occur, any future payout would be subject to the review and
    approval of the Director of the FHFA at that time.

 

    XIII.     Reservation
    of Rights

 

    This memorandum is not intended, nor shall it be interpreted, to
    constitute a contract of employment for a specified duration,
    and each of you and Freddie Mac retain the discretion to
    terminate the employment relationship at any time for any lawful
    reason.

 

    During the course of your review of this memorandum, Freddie Mac
    expects that you have had the opportunity to consult and receive
    assistance from appropriate advisors, including legal, tax, and
    financial advisors.

 

    This memorandum shall be construed, and the rights and
    obligations herein determined, exclusively in accordance with
    the substantive law of the Commonwealth of Virginia, excluding
    provisions of Virginia law concerning choice-of-law that would
    result in the law of any state other than Virginia being applied.

 

    Compensation
    Terms — September 24, 2009

    Page 7 of 18
    

 

 

    You and Freddie Mac agree that this Agreement shall supersede the September 17, 2009 agreement between you and Freddie Mac
and, as a consequence, the September 17, 2009 agreement is null and void.

 

 

	 	 	 
	

    /s/  Charles
    E. Haldeman, Jr.

	
 
	
    September 24, 2009

	
 
	
 
	
 

	

    Charles E. Haldeman

	
 
	
    Date

	

    Chief Executive Officer

	
 
	
 

 

 

    I agree to the terms of this memorandum, which includes
    Attachments A, B, and C.

 

 

	 	 	 
	

    /s/  Ross
    J. Kari

	
 
	
    September 24, 2009

	
 
	
 
	
 

	

    Ross J. Kari

	
 
	
    Date

 

 

    Attachments
    

 

    Compensation
    Terms — September 24, 2009

    Page 8 of 18
    

 

    ATTACHMENT
    A

    TO

    September 24, 2009 MEMORANDUM TO ROSS J. KARI

 

    Definition
    of “Cause”
    

 

    For purposes of the memorandum agreement, “Cause”
    shall mean the occurrence of one or more of the following:

 

    (i) You commit a felony or any crime involving moral
    turpitude;

 

    (ii) In carrying out your duties, you engage in conduct
    that constitutes gross neglect or gross misconduct or any
    material violation of applicable Freddie Mac rule or policy,
    including any policy relating to investment by Freddie Mac
    employees in securities, the violation of which amounts to gross
    neglect or gross misconduct;

 

    (iii) You materially breach any provision of this
    memorandum agreement; or

 

    (iv) Any other willful or malicious misconduct on your part
    that is substantially injurious to Freddie Mac.

 

    In each case, “Cause” shall not exist unless and until
    Freddie Mac has delivered to you a copy of a resolution duly
    adopted by a majority of the entire Board of Directors at a
    meeting of the Board of Directors called and held for such
    purpose (after reasonable notice to you and an opportunity for
    you, together with counsel, to be heard before the Board of
    Directors), finding that in the good faith opinion of the Board
    an event set forth in subclauses (i), (ii), (iii) or
    (iv) has occurred.

 

    In the case of an event set forth in subclauses (ii) or
    (iii), if Freddie Mac in its sole discretion determines that
    remedial action is appropriate and feasible, Freddie Mac will
    provide you with a reasonable opportunity to take such action
    (i.e., not to be unreasonably withheld), and “Cause”
    shall not exist if you make a good faith effort to remedy the
    event.

 

    During the period commencing on the date Freddie Mac notifies
    you that it intends to call a meeting of the Board of Directors
    to terminate your employment for “Cause” pursuant to
    this memorandum agreement, Freddie Mac may reduce your
    responsibilities and duties and any such reduction or
    diminishment in your responsibilities and duties during such
    period shall not constitute the termination of your employment.

 

    Compensation
    Terms — September 24, 2009

    Page 9 of 18
    

 

    Attachment
    B

 

    RESTRICTIVE
    COVENANT AND CONFIDENTIALITY AGREEMENT

 

    In exchange for the mutual promises and consideration set forth
    below, this Restrictive Covenant and Confidentiality Agreement
    (“Agreement”) is entered into by and between the
    Federal Home Loan Mortgage Corporation (“Freddie Mac”
    or “Company”) and Ross J. Kari
    (“Executive”), effective on the date the Executive
    assigns a personal signature to this agreement.

 

		
	
    I.  
	
    Definitions

 

    The following terms shall have the meanings indicated when used
    in this Agreement.

 

    A.      Prohibited
    Competition: Considering offers of employment from, seeking
    or accepting employment with, directly or indirectly providing
    professional services to, becoming a director of, or being an
    investor (representing more than a five (5) percent equity
    interest) in, (i) Fannie Mae (ii) all Federal Home
    Loan Banks (including the Office of Finance); and
    (iii) such other entities to which the Executive and the
    Company may agree in writing from time-to-time.

 

    B.      Confidential
    Information: Information or materials in written, oral,
    magnetic, digital, computer, photographic, optical, electronic,
    or other form, whether now existing or developed or created
    during the period of Executive’s employment with Freddie
    Mac, that constitutes trade secrets
    and/or
    proprietary or confidential information. This information
    includes, but is not limited to: (i) all information marked
    Proprietary or Confidential; (ii) information concerning
    the components, capabilities, and attributes of Freddie
    Mac’s business plans, methods, and strategies;
    (iii) information relating to tactics, plans, or strategies
    concerning shareholders, investors, pricing, investment,
    marketing, sales, trading, funding, hedging, modeling, sales and
    risk management; (iv) financial or tax information and
    analyses, including but not limited to, information concerning
    Freddie Mac’s capital structure and tax or financial
    planning; (v) confidential information about Freddie
    Mac’s customers, borrowers, employees, or others;
    (vi) pricing and quoting information, policies, procedures,
    and practices; (vii) confidential customer lists;
    (viii) proprietary algorithms; (ix) confidential
    contract terms; (x) confidential information concerning
    Freddie Mac’s policies, procedures, and practices or the
    way in which Freddie Mac does business; (xi) proprietary or
    confidential data bases, including their structure and content;
    (xii) proprietary Freddie Mac business software, including
    its design, specifications and documentation;
    (xiii) information about Freddie Mac products, programs,
    and services which has not yet been made public;
    (xiv) confidential information about Freddie Mac’s
    dealings with third parties, including dealers, customers,
    vendors, and regulators;
    and/or
    (xv) confidential information belonging to third parties to
    which Executive received access in connection with
    Executive’s employment with Freddie Mac. Confidential
    Information does not include general skills, experience, or
    knowledge acquired in connection with Executive’s
    employment with Freddie Mac that otherwise are generally known
    to the public or within the industry or trade in which Freddie
    Mac operates.

 

    Compensation
    Terms — September 24, 2009

    Page 10 of 18
    

 

    C.      Severance: Cash
    compensation paid pursuant to Freddie Mac’s Severance
    Policy.

 

    D.      Severance Policy:
    Freddie Mac Policy 3-254.1 (Severance — Officers), or
    any subsequent and superceding severance policy.

 

    II.      Non-Competition

 

    Executive recognizes that as a result of Executive’s
    employment with Freddie Mac, Executive has access to and
    knowledge of critically sensitive Confidential Information, the
    improper disclosure or use of which would result in grave
    competitive harm to Freddie Mac. Therefore, Executive agrees
    that during Executive’s employment with Freddie Mac and for
    twenty-four (24) months immediately following termination
    of Executive’s employment for any reason, Executive shall
    not engage in Prohibited Competition. Executive acknowledges and
    agrees that this covenant has unique, substantial and
    immeasurable value to Freddie Mac, that Executive has sufficient
    skills to provide a livelihood for Executive while this covenant
    remains in force, and that this covenant will not interfere with
    Executive’s ability to work consistent with
    Executive’s experience, training and education. This
    non-competition covenant applies regardless of whether
    Executive’s employment is terminated by Executive, by
    Freddie Mac, or by a joint decision.

 

    III.      Non-Solicitation
    and Non-Recruitment

 

    During Executive’s employment with Freddie Mac and for a
    period of twelve (12) months after Executive’s
    termination of employment for any reason, Executive shall not
    directly or indirectly, on his own behalf of or on behalf of any
    other person, corporation, partnership, firm, financial
    institution or other business entity, recruit or solicit or
    attempt to recruit or solicit or assist another to recruit or
    solicit any person (who at such time is employed as a Freddie
    Mac officer (or equivalent) to cease their employment
    relationship with Freddie Mac for the purpose of their being
    employed by or providing professional services to any other
    entity or person; provided that this section shall not be
    construed as a prohibition on the ability of Executive to
    provide a reference to any person or entity with which Executive
    has no affiliation provide the Freddie Mac employee has notified
    Freddie Mac of their intent to terminated their employment with
    Freddie Mac.

 

    IV.      Treatment
    of Confidential Information

 

    A.      Non-Disclosure.
    Executive recognizes that Freddie Mac is engaged in an extremely
    competitive business and that, in the course of performing
    Executive’s job duties, Executive will have access to and
    gain knowledge about Confidential Information. Executive further
    recognizes the importance of carefully protecting this
    Confidential Information in order for Freddie Mac to compete
    successfully. Therefore, Executive agrees that Executive will
    neither divulge Confidential Information to any persons,
    including to other Freddie Mac employees who do not have a
    Freddie Mac business-related need to know, nor make use of the

 

    Compensation
    Terms — September 24, 2009

    Page 11 of 18
    

 

    Confidential Information for the Executive’s own benefit or
    for the benefit of anyone else other than Freddie Mac. Executive
    further agrees to take all reasonable precautions to prevent the
    disclosure of Confidential Information to unauthorized persons
    or entities, and to comply with all Company policies,
    procedures, and instructions regarding the treatment of such
    information.

 

    B.      Return of
    Materials. Executive agrees that upon termination of
    Executive’s employment with Freddie Mac for any reason
    whatsoever, Executive will deliver to Executive’s immediate
    supervisor all tangible materials embodying Confidential
    Information, including, but not limited to, any documentation,
    records, listings, notes, files, data, sketches, memoranda,
    models, accounts, reference materials, samples, machine-readable
    media, computer disks, tapes, and equipment which in any way
    relate to Confidential Information, whether developed by
    Executive or not. Executive further agrees not to retain any
    copies of any materials embodying Confidential Information.

 

    C.      Post-Termination
    Obligations. Executive agrees that after the termination of
    Executive’s employment for any reason, Executive will not
    use in any way whatsoever, nor disclose any Confidential
    Information learned or obtained in connection with
    Executive’s employment with Freddie Mac without first
    obtaining the written permission of the Executive Vice President
    of Human Resources of Freddie Mac. Executive further agrees
    that, in order to assure the continued confidentiality of the
    Confidential Information, Freddie Mac may correspond with
    Executive’s future employers to advise them generally of
    Executive’s exposure to and knowledge of Confidential
    Information, and Executive’s obligations and
    responsibilities regarding the Confidential Information.
    Executive understands and agrees that any such contact may
    include a request for assurance and confirmation from such
    employer(s) that Executive will not disclose Confidential
    Information to such employer(s), nor will such employer(s)
    permit any use whatsoever of the Confidential Information. To
    enable Freddie Mac to monitor compliance with the obligations
    imposed by this Agreement, Executive further agrees to inform in
    writing Freddie Mac’s Executive Vice President of Human
    Resources of the identity of Executive’s subsequent
    employer(s) and Executive’s prospective job title and
    responsibilities prior to beginning employment. Executive agrees
    that this notice requirement shall remain in effect for twelve
    (12) months following the termination of Executive’s
    Freddie Mac employment.

 

    D.      Ability to Enforce
    Agreement and Assist Government Investigations. Nothing in
    this Agreement prohibits or otherwise restricts you from:
    (1) making any disclosure of information required by law;
    (2) assisting any regulatory or law enforcement agency or
    legislative body to the extent you maintain a legal right to do
    so notwithstanding this Agreement; (3) filing, testifying,
    participating in or otherwise assisting in a proceeding relating
    to the alleged violation of any federal, state, or local law,
    regulation, or rule, to the extent you maintain a legal right to
    do so notwithstanding this Agreement; or (4) filing,
    testifying, participating in or otherwise assisting the
    Securities and Exchange Commission or any other proper authority
    in a proceeding relating to allegations of fraud.

 

    Compensation
    Terms — September 24, 2009

    Page 12 of 18
    

 

		
	
    V.      
	
    Consideration
    Given to Executive

 

    In exchange for agreeing to be bound by the terms, conditions,
    and restrictions stated in this Agreement, Freddie Mac will
    provide the Executive with the following consideration, each of
    which itself is adequate consideration for Executive’s
    agreement to be bound by the provisions of this Agreement:

 

    A.      Compensation Agreement.
    Freddie Mac has agreed to compensate Executive as Executive
    Vice President and Chief Financial Officer pursuant to the terms
    and conditions set forth in the September 24, 2009
    memorandum agreement between Executive and Freddie Mac.

 

    B.      Severance. In the
    event that Freddie Mac terminates your employment for reasons other than “Cause,” then Freddie Mac will
provide you with severance pay and other benefits in an
    amount equal to that provided to Freddie Mac’s senior
    executive officers pursuant to the terms of an applicable
    severance policy in effect as of the date of your termination of employment.
    Your receipt of Severance is contingent on any
    legally required approval from the Director of the Federal
    Housing Finance Agency in consultation with the Department of the Treasury.

 

    VI.      Compliance
    with the Code of Conduct and Corporate Policies

 

    As a Freddie Mac employee, Executive will be subject to Freddie
    Mac’s Code of Conduct (“Code”) and to Corporate
    Policy 3-206, Personal Securities Investments Policy
    (“Policy”) that, among other things, limit the
    investment activities of Freddie Mac employees. Executive agrees
    to fully comply with the Code and the Policy.

 

    VII.      Absence
    of Any Conflict of Interest

 

    Executive represents that Executive does not have any
    confidential information, trade secrets or other proprietary
    information that Executive obtained as the result of
    Executive’s employment with another employer that Executive
    will be using in Executive’s position at Freddie Mac.
    Executive also represents that Executive is not subject to any
    employment, confidentiality or stock grant agreements, or any
    other restrictions or limitations imposed by a prior employer,
    which would affect Executive’s ability to perform the
    duties and responsibilities of Chief Financial Officer of
    Freddie Mac and that Executive has provided Freddie Mac with
    copies of any such agreements or limitations so that Freddie Mac
    can make an independent judgment that Executive’s
    employment with Freddie Mac is not inconsistent with any of its
    terms.

 

    Executive further agrees to be bound by, and comply fully with,
    his/her
    obligations under the Personal Securities Investments Policy.
    Executive agrees to consult with Freddie Mac’s Chief
    Compliance Officer as soon as practical prior to beginning
    employment about any investments that Executive or a “covered household
    member,” as that term is defined in the

 

    Compensation
    Terms — September 24, 2009

    Page 13 of 18
    

 

    Policy, may have
    that may be prohibited by the Policy. Executive also agrees to
    disclose prior to beginning employment any other matter or
    situation that may create a conflict of interest as such term is
    defined in the Code.

 

    In addition, prior to beginning employment, Executive agrees to
    disclose to Freddie Mac’s Human Resources Division the
    terms of any employment, confidentiality or stock grant
    agreements to which Executive may currently be subject that may
    affect Executive’s future employment or recruiting
    activities so that Freddie Mac may ensure that Executive’s
    employment by Freddie Mac and conduct as a Freddie Mac employee
    are not inconsistent with any of their terms.

 

    VIII.     Affect
    of Termination of Employment

 

    In the event that your employment terminates for any reason, you
    agree that you shall be deemed to have resigned, effective as of
    the date of such termination of employment with Freddie Mac and
    from all positions, titles, duties, authorities and
    responsibilities arising out of or relating to your employment,
    including any directorships or fiduciary positions to which your
    were serving at the request of, or appointment by, Freddie Mac.
    You also agree that you will execute any such documents and take
    any such further steps as Freddie Mac’s Board of Directors
    reasonably may ask of you to effectuate such resignations.

 

    IX.      Reservation
    of Rights

 

    Executive agrees that nothing in this Agreement constitutes a
    contract or commitment by Freddie Mac to continue
    Executive’s employment in any job position for any period
    of time, nor does anything in this Agreement limit in any way
    Freddie Mac’s right to terminate Executive’s
    employment at any time for any reason.

 

    X.      Enforcement

 

    A.      Executive acknowledges
    that Executive may be subject to discipline, up to and including
    termination of employment, for Executive’s breach or threat
    of breach of any provision of this Agreement.

 

    B.      Executive agrees that
    irreparable injury will result to Freddie Mac’s business
    interests in the event of breach or threatened breach of this
    Agreement, the full extent of Freddie Mac’s damages will be
    impossible to ascertain, and monetary damages will not be an
    adequate remedy for Freddie Mac. Therefore, Executive agrees
    that in the event of a breach or threat of breach of any
    provision(s) of this Agreement, Freddie Mac, in addition to any
    other relief available, shall be entitled to temporary,
    preliminary, and permanent equitable relief to restrain any such
    breach or threat of breach by Executive and all persons acting
    for and/or
    in concert with Executive, without the necessity of posting bond
    or security, which Executive expressly waives.

 

    Compensation
    Terms — September 24, 2009

    Page 14 of 18
    

 

    C.      Executive agrees that each
    of Executive’s obligations specified in this Agreement is a
    separate and independent covenant, and that all of
    Executive’s obligations set forth herein shall survive any
    termination, for any reason, of Executive’s Freddie Mac
    employment. To the extent that any provision of this Agreement
    is determined by a court of competent jurisdiction to be
    unenforceable because it is overbroad, that provision shall be
    limited and enforced to the extent permitted by applicable law.
    Should any provision of this Agreement be declared or determined
    by any court of competent jurisdiction to be unenforceable or
    invalid under applicable law, the validity of the remaining
    obligations will not be affected thereby and only the
    unenforceable or invalid obligation will be deemed not to be a
    part of this Agreement.

 

    D.      This Agreement is governed
    by, and will be construed in accordance with, the laws of the
    Commonwealth of Virginia, without regard to its or any other
    jurisdiction’s conflict-of-law provisions. Executive agrees
    that any action related to or arising out of this Agreement
    shall be brought exclusively in the United States District Court
    for the Eastern District of Virginia, and Executive hereby
    irrevocably consents to personal jurisdiction and venue in such
    court and to service of process by United States Mail or express
    courier service in any such action.

 

    E.      If any dispute(s) arise(s)
    between Freddie Mac and Executive with respect to any matter
    which is the subject of this Agreement, the prevailing party in
    such dispute(s) shall be entitled to recover from the other
    party all of its costs and expenses, including its reasonable
    attorneys’ fees.

 

    Executive has been advised to discuss all aspects of this
    Agreement with Executive’s private attorney. Executive
    acknowledges that Executive has carefully read and understands
    the terms and provisions of this Agreement and that they are
    reasonable. Executive signs this Agreement voluntarily and
    accepts all obligations contained in this Agreement in exchange
    for the consideration to be given to Executive as outlined
    above, which Executive acknowledges is adequate and
    satisfactory, and which Executive further acknowledges Freddie
    Mac is not otherwise obligated to provide to Executive. Neither
    Freddie Mac nor its agents, representatives, directors, officers
    or employees have made any representations to Executive
    concerning the terms or effects of this Agreement, other than
    those contained in this Agreement.

 

 

	 	 	 	 	 	 	 
	

    By:

	
 
	
 
	
 
	
    Date:
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
    Ross J.
    Kari          
	
 
	
 
	
 
	
 

 

    Compensation
    Terms — September 24, 2009

    Page 15 of 18
    

 

    Attachment
    C

 

    Recapture
    Agreement

 

 

	 	 	 
	
    Triggering Event
	
 
	
    The recapture will be triggered if, at any time during the
    executive’s employment with Freddie Mac (or, under certain
    circumstances after termination of the executive’s
    employment, as described below), the Board determines and
    notifies you in writing that any of the following
    (“Triggering Events”) occurred:

 

			
	 	    1. 
	
    The executive has obtained a legally binding right to bonus or
    incentive payment based on materially inaccurate financial
    statements (which includes, but is not limited to, statements of
    earnings, revenues, or gains) or any other materially inaccurate
    performance metric criteria.

	 
	 	    2. 
	
    As a result of misconduct, Freddie Mac is required to prepare an
    accounting restatement due to the material noncompliance of
    Freddie Mac with any financial reporting requirements under the
    federal securities laws.

	 
	 	    3. 
	
    The executive’s employment with Freddie Mac is terminated
    for “cause” under subclauses (i) or (iv) as
    defined below or, within two years of the termination of the
    executive’s employment at Freddie Mac, the Board makes a
    determination that circumstances existed at the time of the
    executive’s termination that would have justified
    termination for cause under subclauses (i) or (iv) or
    the executive was later convicted of or pleaded nolo contendere
    to a felony committed before the termination date and such
    felony resulted in material business or reputational harm to
    Freddie Mac.

	 
	 	    4. 
	
    The executive’s employment with Freddie Mac is terminated
    for “cause” under subclauses (ii) or
    (iii) as defined below, or within two years of the
    termination of the executive’s employment at Freddie Mac,
    the Board makes a determination that circumstances existed at
    the time of the executive’s termination that would have
    justified a termination for cause under subclauses (ii) or
    (iii) as defined below and that actions of the executive
    resulted in material business or reputational harm to Freddie
    Mac.

 

    Compensation
    Terms — September 24, 2009

    Page 16 of 18
    

 

 

	 	 	 
	
    Definition of

    Cause
	
 
	
    For purposes of this Recapture Agreement, “cause”
    shall mean the occurrence of one or more of the following:

 

    (i) The executive is convicted of or pleads nolo contendere
    to a charge of a felony or any crime involving moral turpitude;

 

    (ii) In carrying out his duties, the executive engages in
    conduct that constitutes gross neglect or gross misconduct or
    any material violation of applicable Freddie Mac rule or policy,
    including any policy relating to investment by Freddie Mac
    employees in securities, the violation of which amounts to gross
    neglect or gross misconduct;

 

    (iii) The executive materially breaches any provision of
    the Memorandum Agreement dated September 24, 2009 from
    Charles E. Haldeman to the executive; or

 

    (iv) Any other willful or malicious misconduct on the
    executive’s part that is substantially injurious to Freddie
    Mac.

 

			
	 	    • 
	
    In each case, “cause” shall not exist unless and until
    Freddie Mac shall have provided: (i) reasonable notice to
    the executive setting forth Freddie Mac’s intention to make
    a determination that an event set forth in subclauses (i), (ii),
    (iii) or (iv) has occurred; (ii) where remedial
    action is appropriate and feasible, a reasonable opportunity for
    the executive to take such action; (iii) an opportunity for
    the executive, together with the executive’s counsel, to be
    heard before the Board; and (iv) executive with a copy of a
    resolution duly adopted by a majority of the entire Board of
    Directors at a meeting of the Board of Directors called and held
    for such purpose finding that in the good faith opinion of the
    Board an event set forth in subclauses (i), (ii), (iii) or
    (iv) has occurred. No act or failure to act by the
    executive will be considered “willful” unless it is
    done, or omitted to be done, by the executive in bad faith or
    without reasonable belief that the executive’s action or
    omission was in the best interests of Freddie Mac.

 

    Compensation
    Terms — September 24, 2009

    Page 17 of 18
    

 

 

	 	 	 
	
    Recapture Period
	
 
	
 

 

			
	 	    1. 
	
    In the case of the first Triggering Event, compensation subject
    to recapture may include Recapture Eligible Compensation (as
    defined below) paid to the Executive for up to two years prior
    to the Triggering Event.

	 
	 	    2. 
	
    In the case of the second Triggering Event, compensation is
    subject to recapture consistent with Section 304 of the
    Sarbanes-Oxley Act of 2002.

	 
	 	    3. 
	
    In the case of the third Triggering Event, compensation subject
    to recapture may include Recapture Eligible Compensation paid to
    the Executive for up to two years prior to the date that the
    executive is terminated or subsequent to the termination of
    employment.

	 
	 	    4. 
	
    In the case of the fourth Triggering Event, compensation subject
    to recapture may include Recapture Eligible Compensation paid to
    the Executive at the time of termination of employment or
    subsequent to the date of termination.

 

 

	 	 	 
	
    Compensation

    Subject to

    Recapture
	
 
	
    For purposes of this Recapture Agreement, “Recapture
    Eligible Compensation” shall consist of the following:

 

			
	 	    1. 
	
    In the case of the first Triggering Event, Recapture Eligible
    Compensation consists of the annual short-term incentive
    (“STI”) (i.e., the annual bonus) and the annual
    long-term incentives (“LTI”).

	 
	 	    2. 
	
    In the case of the second Triggering Event, Recapture Eligible
    Compensation consists of bonuses and profits described in
    section 304 of the Sarbanes-Oxley Act of 2002.

	 
	 	    3. 
	
    In the case of the third and fourth Triggering Events, Recapture
    Eligible Compensation consists of the annual STI, the annual LTI
    and any severance benefits paid.

 

	 	 	 
	
 
	
 
	
    In the event that the executive is terminated for cause under
    any of the subclauses (i), (ii), (iii) or
    (iv) specified in the Definition of Cause above, the
    executive forfeits rights to any future payment of annual STI,
    LTI or severance benefits that might otherwise have been due
    pursuant to the terms of applicable plans or awards from the
    date of executive’s termination forward.

 

    Compensation
    Terms — September 24, 2009

    Page 18 of 18
    

 

	 	 	 
	
 
	
 
	
    With respect to any recapture of compensation:

 

			
	 	    • 
	
    A recapture of STI or other cash paid, for such compensation
    that the Board determines is subject to repayment, would require
    the executive to repay the gross amount of the compensation
    previously paid. Additionally, any further obligation of Freddie
    Mac to make payments under such plans could be cancelled.

	 
	 	    • 
	
    A recapture of LTI or other stock-based award granted, for such
    awards that the Board determines, would require the executive to
    repay Freddie Mac the full fair market value of the award(s)
    based upon vesting date. Additionally, any unvested
    and/or
    unexercised stock-based awards could be cancelled.

	 
	 	    • 
	
    Base salary paid prior to the date of the Triggering Event is
    not subject to recapture.

	 
	 	    • 
	
    The executive’s assets acquired prior to employment by
    Freddie Mac or acquired from sources other than Freddie Mac
    directly are not subject to recapture under this agreement. The
    right to recapture is not retroactive prior to the date of
    employment.

 

	 	 	 
	
    Amount to be Recaptured
	
 
	
    The Board has discretion to determine the appropriate amount
    required to be recaptured, if any, upon a Triggering Event,
    which is intended to be the compensation in excess of what
    Freddie Mac would have paid the executive had Freddie Mac taken
    into consideration the impact of the Triggering Event at the
    time such compensation was awarded.

	
     
	
 
	
 

	
 
	
 
	
    Any disputes between the executive and Freddie Mac concerning
    the occurrence of a Triggering Event or the amount subject to
    recapture shall be determined exclusively in accordance with the
    substantive laws of the Commonwealth of Virginia, excluding
    provisions of the Virginia law concerning choice-of-law that
    would result in the law of any state other than Virginia being
    applied.

 

 

    I agree to the terms of this Recapture Agreement

 

 

	 	 	 	 	 	 	 
	

    By:

	
 
	
 
	
 
	
    Date:
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
    Ross J.
    Kari

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