SEPARATION AGREEMENT AND
RELEASE OF CLAIMS
THIS AGREEMENT, entered into as of the ___ day
of January 2006, by and between Franklin Credit Management
Corporation (the "Company"), a Delaware corporation, and Jeffrey R.
Johnson ("Employee");
W I T N E S S E T
H:
WHEREAS, the Employee has been employed as the
President and Chief Executive Officer of the Company under the
Employment Agreement dated as of October 1, 2004 (the
“Employment Agreement”); and
WHEREAS Employee and the Company have agreed to
terminate the employment relationship between Employee and the
Company on an amicable basis.
WHEREAS, the Employee and the Company desire to
settle fully and finally any differences between them, to
facilitate the Employee’s separation and allow for an orderly
transition by the Company.
NOW, THEREFORE, in consideration of the mutual
agreement and covenants contained herein, the parties do hereby
mutually agree as follows:
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1)
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TERMINATION OF EMPLOYMENT
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Employee's employment shall terminate effective
as of January 21, 2006 (the “Termination Date”). As of
the Termination Date, the Employment Agreement and all existing
employment agreements between Employee and the Company, whether
oral or written, are hereby terminated, except as otherwise
expressly stated herein. Except as otherwise expressly provided
herein, the parties agree that this Agreement supersedes the
Employment Agreement (and any such existing employment agreement
between the parties). Additionally, Employee hereby resigns all
positions as an officer or director of the Company, its
subsidiaries and affiliates, effective immediately.
The parties represent that they do not have any
claim, action, or proceeding pending against each other, or which
arises out of Employee’s employment by the Company or the
separation thereof.
In addition to paying Employee his salary
through January 21, 2006, the Company shall pay Employee the
following amounts (subject to any applicable federal, state and
local tax withholding requirements) in full and complete
satisfaction of all amounts due Employee under the Employment
Agreement:
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a)
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The Company
shall pay Employee $282,500.00 on or before January 21, 2006 in
full satisfaction of any and all amounts due under the Employment
Agreement, including but not limited, amounts payable under
Sections 4(b) and 12(b) of the Employment Agreement, severance,
medical benefits, and reimbursements.
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b)
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An additional
30,000 shares of Employee’s Restricted Award (as that term is
used in the Employment Agreement and the Restricted Stock Grant
Agreement, effective as of November 4, 2004) that are currently not
vested shall vest and become non-forfeitable on January 21, 2006
(the “Accelerated Shares”). All shares comprising the
Restricted Award not otherwise vested as of January 21, 2006 shall
be forfeited pursuant to the Employment Agreement and paragraph 6
of the Restricted Stock Grant Agreement. The Restricted Stock Grant
Agreement is hereby amended consistent with the above.
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c)
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The parties
shall reasonably cooperate in the certification or recertification,
to the extent required, of the Restricted Stock Grant and the
Accelerated Shares. Employee shall return to the Company the shares
of Employee's Restricted Award that are currently not vested and
will not become vested on or before January 21, 2006.
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d)
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Employee agrees
that he shall have no further rights under Section 2 of the
Registration Rights Agreement between the parties.
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The Company shall continue to indemnify Employee
in accordance with the terms and conditions set forth in the
Company’s Certificate of Incorporation and By Laws (as such
Certificate of Incorporation and By Laws may be amended from time
to time) or under the terms and conditions of the agreement
currently in place between the Company and its other officers and
directors for a period of six years from the date of this
Agreement. Notwithstanding the forgoing, the indemnification of
Employee shall extend only to acts or omissions of Employee during
the period of time during which Employee was an officer or director
of the Company.
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4)
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NON-COMPETITION/NON AND
NON-DISCLOSURE
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a)
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Employee is
hereby released from the provisions of Paragraphs 9(a), 9(b)(1) and
9(b)(3) of the Employment Agreement.
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b)
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For the six
year period following the date of this Agreement, Employee will
cooperate fully with the Company in its defense of or other
participation in any administrative proceeding, judicial
proceeding, governmental or regulatory inquiry or other proceeding
arising from any charge, complaint or other action that has been or
may be filed regarding Company actions in which Employee was
involved during his employment. The Company shall reimburse
Employee for his reasonable out-of-pocket expenses associated with
Employee’s cooperation as set forth above.
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c)
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Employee will
continue to comply with the terms of Paragraphs 8, 9(b)(2) and 14
of the Employment Agreement and such terms shall survive execution
of this Agreement and Employee’s termination of
employment.
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a)
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For a period of
two years after the execution of this Agreement, Employee covenants
and agrees that he will not, directly or indirectly, either for
himself or for any other person: (1) make any disparaging
statements concerning the Company, its past or present subsidiaries
or affiliates, or their respective past or present officers,
directors, agents, or
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