Exhibit
10.2
EMPLOYMENT, NONCOMPETITION, AND
NONDISCLOSURE AGREEMENT
THIS EMPLOYMENT, NONCOMPETITION, AND
NONDISCLOSURE AGREEMENT (this “ Agreement
”) is made as of ______ ___, 2008 (the “
Effective Date ”), by and between TERRY LEE
(“ Employee ”), and HEARTLAND, INC., a
Maryland corporation (the “ Company
”). Capitalized terms used but not defined herein
shall have the meanings set forth in the Loan Agreement (as defined
below).
Note: ANY AND ALL PRIOR
EMPLOYMENT AGREEMENTS BETWEEN THE PARTIES ARE TERMINATED AND
SUPERCEDED BY THIS AGREEMENT.
RECITALS
1. Employee owns
_____ shares of common stock of the Company representing
% of the issued and outstanding Equity Securities of
the Company, and Employee is currently the Chief Executive Officer
and Chairman of the Board of Directors of the Company;
2. Concurrently with
the execution and delivery of this Agreement, the Employee,
together with all other shareholders of Lee Oil Company, Inc.,
Lee’s Food Marts LLC, and Lee Enterprises, Inc, (collectively
the “Target”) are entering into that certain Securities
Purchase Agreement dated the date hereof, by and among the Company,
as purchaser, and Employee and other shareholders of the Target, as
seller, (the “ Purchase Agreement ”),
pursuant to which the Company is purchasing all of the shares of
the Target, subject to the terms and conditions of the Purchase
Agreement (the “ Acquisition
”).
3. Employee owns
_____ shares of common stock of the Target representing
% of the issued and outstanding Equity Securities of
the Target, and Employee is the President of each of the entities
comprising the Target;
4. Concurrently with
the execution and delivery of this Agreement, the Company is
entering into that certain Loan Agreement (the “ Loan
Agreement ”) and related Loan Documents (as defined
in the Loan Agreement) dated the date hereof, by and among Choice
Financial Group, Inc., a North Dakota corporation, as lender
(“ Choice ”), and the Company, as
borrower, pursuant to which Choice is agreeing, subject to the
terms and conditions of the Loan Agreement, to make term loans from
time to time to the Company in an aggregate amount not to exceed
$3,250,000 (the “ Term Loan
”);
5. Concurrently with
the execution and delivery of this Agreement, the Employee shall
become holder of that certain Promissory Note (the “
Lee Promissory Note ”) dated the date hereof,
and the Company, as borrower, pursuant to which Employee is
agreeing, subject to the terms and conditions of the Loan
Agreement, to receive a portion of the compensation payable by the
Company to Employee in the amount of $1,625,000 in connection with
the acquisition of the Target pursuant to the Purchase Agreement
(the “Term Loan”);
6. The Company is
using the proceeds of the Term Loan to pay a portion of the
purchase price of the Acquisition;
7. In connection with
the Acquisition and a condition precedent to the Company’s
execution and delivery of the Purchase Agreement, the Company is
issuing 1,250,000 shares of its ownership interest, representing
% of the issued and outstanding shares of stock
interest in the Company as of the Effective Date (the “
Employee Equity Interest ”), to Employee on the
Effective Date;
8. Upon receiving his
% Employee Equity Interest in the Company in
connection with the Acquisition, Employee will receive the benefits
of the Acquisition and the Term Loan;
9. This Agreement is
ancillary to, and its execution and delivery by Employee is a
condition precedent of the Company’s obligation to execute,
the Purchase Agreement;
10. This Agreement is
ancillary to, and its execution and delivery by Employee is a
condition precedent of Choice’s obligation to execute, the
Loan Agreement and the other Loan Documents;
11. The Company has
offered to employ Employee as the Chief Executive Officer of the
Company for the Employment Term (as defined below), and Employee
desires employment as the Chief Executive Officer of the Company
subject to the terms and conditions of this Agreement;
12. During the term of
Employee’s employment with the Company, the Company will
furnish to Employee the Confidential Information (as defined below)
of the Company, which Employee will utilize in his employment with
the Company; and
13. In consideration
for (i) the Company’s execution and delivery of the Purchase
Agreement, (ii) the Company’s payment of the Purchase Price
for the Purchase Agreement and issuance of the Employee Equity
Interest to Employee, (iii) Choice’s execution and
delivery of the Loan Documents, (iv) Choice’s agreement to
make the Choice Loan to the Company, (v) the Company’s
agreement to employ Employee for the Employment Term, and (iv) the
Company’s promise to furnish the Confidential Information to
Employee during the Employment Term, the Employee has agreed to
enter into this Agreement with the Company.
AGREEMENT
The Company and Employee (each a “
Party ” and collectively, the “
Parties ” to this Agreement), intending to be
legally bound, agree as follows:
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Employment. The Company hereby agrees to employ
Employee and Employee hereby accepts such employment upon the terms
and conditions hereinafter set forth.
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Duties. Employee shall serve as the Chief
Executive Officer of the Company and shall carry out (i) the duties
that Employee has historically carried out in the ordinary course
of business of Company and (ii) such other duties as are typical,
customary and consistent with the historical practices for such
position, as assigned to him from time to time by the Board of
Directors. During the Employment Term, the parties
understand and agree that the Employee will be engaged in other
employment activities for other direct and indirect remuneration
without the written consent of the Company.
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In
consideration for the services to be rendered by Employee hereunder
and for all rights and covenants granted herein, Company shall pay
to Employee an annual salary in the amount of
$140,000. This salary shall be paid in accordance with
the customary payroll practices of the Company and subject to such
deductions, if any, as are required by applicable law and
regulations.
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Employee shall
be entitled to participate in the Company’s various benefit
plans on terms similar to those received by other key employees and
management of the Company.
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Company shall
reimburse Employee for reasonable travel, entertainment, and
similar expenses that Employee incurs in promoting Company’s
business, subject to policies, directives, and approval from
Company.
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Employee shall
be entitled to vacation time, no less than 3 weeks per year and
otherwise pursuant to Company’s vacation policy in effect
from time to time.
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Company shall
provide Employee with such facilities, equipment, supplies and
services as are suitable to his position, for the performance of
his duties.
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The Company
shall issue the Employee Equity Interest to Employee, being
1,250,000 shares of common stock of the Company on the date of
execution hereof.
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The Company
hereby grants to Employee an option to purchase up to 364,501
additional shares of common stock of the Company at the price of
$0.33 per share, which may be exercised by Employee over the next
twelve years.
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The Company
hereby grants to Employee an option to purchase up to 1,458,004
additional shares of common stock of the Company at the price of
$0.33 per share, which shall be exercisable on a cashless basis and
vest quarterly on a pro-rata basis over a period of four years
commencing on the date hereof. Upon vesting, this option
may be exercised by Employee over the next twelve
years. In the event Employee becomes terminated from the
Company for any reason, the unvested portion of the 1,458,004
additional shares of common stock of the Company will vest
immediately.
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The Company
shall issue to Employee 150,000 shares of common stock of the
Company on the date of execution hereof as a signing
bonus.
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The Company may
further grant to Employee additional options to purchase additional
shares of common stock of the Company as the Board of Directors
deem advisable.
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Term. Unless earlier terminated by the
Company or Employee in accordance with this Agreement, the
employment of Employee hereunder shall commence on the date first
set forth above and continue until the five (5) year anniversary of
the Effective Date (the “ Employment Term
”); provided, that the Employment Term shall
automatically be extended for an additional period of five (5)
years on such five (5) year anniversary of the Effective Date,
unless the Employee gives written notice to the Company of his
termination of the Employment Term at least thirty (30) days prior
to such anniversary date. Notwithstanding the foregoing,
the Company may terminate its employment of the Employee for Cause
prior to the expiration of the Employment Term. For
purposes hereof, “ Cause ” shall include,
without limitation:
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Employee’s material breach of this
Agreement and Employee’s failure to cure such breach within
thirty (30) days after receipt of written notice thereof (the
“ Notice and Cure Period ”)
setting forth in detail the nature of such alleged breach by
Employee and the requirement to cure; or
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Employee shall
have been convicted of (or plead guilt or nolo contendre to)
any felony.
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Termination
for Cause . For Cause as identified and
consistent with paragraph 1 (d) hereinabove, the Company may
terminate its employment of the Employee prior to the expiration of
the Employment Term upon providing written notice to
Employee. Upon such termination, Employee shall be
entitled to his unpaid salary, if any, up to the date of such
termination, together with the accelerated and full payment of the
outstanding balance at termination date of the Lee Promissory
Note. Upon payment of the Lee Promissory Note,
Employee shall remain bound by his covenants in Section
3 and Section 4
after
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