Exhibit 10.1

 

Executive EMPLOYMENT AGREEMENT

 

This EXECUTIVE EMPLOYMENT AGREEMENT (the “Agreement”) entered into effective the
1st day of April 2015 (the “Effective Date”), is by and between PSM Holdings,
Inc., a Delaware corporation with principal offices in Oklahoma City, Oklahoma
(the “Company”), and Kevin J. Gadawski, an individual residing in Dana Point,
California (the “Executive”).

 

RECITALS:

 

WHEREAS, the Executive has served as Chief Financial Officer (“CFO”) and Chief
Operating Officer (“COO”) of the Company since February 7, 2013, and as Chief
Executive Officer (“CEO”) and President since August 28, 2013;

 

WHEREAS, the Executive has been an employee and compensated by the Company
pursuant to an unwritten arrangement during those periods;

 

WHEREAS, the Company and the Executive desire to memorialize the terms and
conditions of the employment arrangement of the Executive for service as an
executive of the Company and as President and CEO of the Company’s wholly owned
subsidiary PrimeSource Mortgage, Inc. (“PSMI”); and

 

WHEREAS, the Board of Directors of the Company (the “Board”) has approved the
terms and conditions set forth in this Agreement;

 

NOW THEREFORE, in consideration of the mutual covenants and promises contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged by the parties hereto, the Company agrees to
employ the Executive, and the Executive agrees to perform services for the
Company as an employee, upon the terms and conditions set forth herein.

 

1.     TERM.

 

Executive’s term of employment (the “Initial Term”) under this Agreement shall
be three (3) years, commencing on the Effective Date, and shall continue for a
period through and including March 31, 2018, and shall expire after March 31,
2018, unless extended in writing by both the Company and Executive or earlier
terminated pursuant to the terms and conditions set forth in this Agreement (the
Initial Term and any extension thereof, the “Employment Term”). The terms of
this Agreement shall be binding upon the parties hereto from the Effective Date
throughout the Employment Term. The restrictive covenants in Sections 4(c), 9,
and 10 hereof shall survive the termination of this Agreement.

 

2.     TITLE AND DUTIES.

 

The Executive shall be employed and shall continue to serve as CEO, President,
COO, and CFO of Company, and shall be appointed and serve as President and CEO
of PSMI. The Executive shall perform such services consistent with his positions
as might be assigned to him from time to time by the Board and which are
consistent with the bylaws of the Company, including, but not limited to,
service for any subsidiary, partnership, limited liability company, joint
venture, trust or other enterprise or entity controlled by the Company. The
Executive shall have such responsibilities and authority as is commensurate with
such offices and as may be prescribed by the Board and bylaws of the Company.
The Board shall have the right to review and change the duties,
responsibilities, and functions of Executive from time to time as it may deem
necessary or appropriate; provided, however, that such duties, responsibilities,
and functions remain consistent with the Executives status as a senior executive
officer of the Company. It is expected that Executive will devote virtually his
full time to his duties associated with Company sufficient to reasonably perform
them in a manner consistent with past practices.

 

 
 

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3.      LOCATION.

 

The Executive shall perform his services at the Company’s facilities in Dana
Point, California, and as needed at its principal offices in Oklahoma City,
Oklahoma, or at such other location as mutually agreed between the Company and
the Executive.

 

4.     EXTENT OF SERVICES.

 

a.     Duty to Perform Services. The Executive agrees not to engage in any
material business activities during the term of this Agreement except those that
are for the benefit of the Company and its subsidiaries, and to devote not less
than substantially all of his entire business time, attention, skill, and effort
to the performance of his duties under this Agreement for the Company and any
corporation or other entity controlled by the Company now or during the term of
this Agreement. Notwithstanding the foregoing, the Executive may engage in
charitable, professional and civic activities that do not impair the performance
of his duties to the Company, as the same may be changed from time to time. In
addition, Executive may serve on the board of directors of up to two companies
not engaged in business which may reasonably compete with the business of the
Company, provided that Executive shall not be required to render any material
services on any committee or otherwise with respect to the operations or affairs
of any such company. Nothing contained herein shall prevent the Executive from
managing his own personal investments and affairs, including, but not limited
to, investing his assets in the securities of publicly traded companies;
provided, however, that the Executive’s activities do not constitute a conflict
of interest, violate securities laws, or otherwise interfere with the
performance of his duties and responsibilities as described herein. The
Executive agrees to adhere to the Company’s published policies and procedures,
or code of conduct, as each is adopted from time to time, affecting directors,
officers, employees, and agents and shall use his best efforts to promote the
Company’s interest, reputation, business and welfare.

 

b.     Corporate Opportunities. The Executive agrees that he will not take
personal advantage of any the Company business opportunities that arise during
his employment with the Company and that might be of benefit to the Company. All
material facts regarding such opportunities shall be promptly reported to the
Board for consideration by the Company.

 

c.     Non-Disparagement. The Executive agrees that, during the Employment Term
and for one year thereafter, he shall not, in any communications with the press
or other media or any customer, client or supplier of the Company, or any of
Company’s affiliates, criticize, ridicule or make any statement which disparages
or is derogatory of the Company, or any of Company’s respective directors or
senior officers.

 

d.     Representations Regarding Past Agreements. The Executive hereby
represents and warrants to the Company that the execution, delivery and
performance of this Agreement by the Executive does not and will not conflict
with, or result in breach or default under, or require the consent of, any other
party under any agreement to which the Executive is a party.

 

5.     COMPENSATION AND BENEFITS.

 

a.     Base Salary. The Executive’s annual base salary shall be $250,000
commencing on the Effective Date (the “Annual Base Salary”). The Annual Base
Salary shall be payable in equal installments in accordance with the Company’s
standard payroll practices. If this Agreement is extended pursuant to Section 1
above, the Executive’s Annual Base Salary shall be further reviewed no less
frequently than annually for increases in the discretion of the Compensation
Committee and/or Board, taking into account the compensation level for employees
with similar skills and responsibilities at companies comparable to the Company,
the financial condition of the Company, and the Executive’s value to the Company
relative to other members of the executive management of the Company; provided,
however, that at no time during the term of this Agreement shall the Executive’s
Annual Base Salary be decreased from the Annual Base Salary then in effect
except as part of an general program of salary adjustment by the Company
applicable to all vice presidents and above. In the event the Company is
reasonably unable to pay the Annual Base Salary for any pay period, the Company
and Executive may agree that the Annual Base Salary be paid with shares of
common stock under an equity compensation plan of Company effective at the time
at a 25% discount to the fair market price of the stock at the end of the pay
period.

 

 
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b.     Signing Bonus. As a signing bonus for the Executive entering into this
Agreement, the Company shall grant to the Executive options to purchase up to
10,000,000 shares of common stock of the Company pursuant to the terms of the
Company’s 2015 Stock Incentive Plan; provided that none of these options shall
be exercisable until sufficient unreserved and unissued common shares of the
Company are available for exercise of these options. Such options shall fully
vest over three years with one third vesting on each anniversary from the
Effective Date, will expire at 11:59 pm Pacific Time on March 31, 2019, and are
exercisable at $0.036 per share. The maximum number of options granted shall be
designated as incentive options, and the remaining options, if any, shall be
designated as non-statutory options.

 

c.     Incentive Bonus Pool. Executive will be eligible to participate in any
incentive bonus pool maintained for persons including executive officers of the
Company. The Executive will be eligible to receive an annual bonus as per the
incentive bonus pool of up to 100% of the then applicable Annual Base Salary,
less applicable withholding taxes.

 

d.     Other Benefits. During the Employment Term, Executive will be entitled to
participate in the employee benefit plans currently and hereafter maintained by
the Company of general applicability to other senior executives of the Company,
including, without limitation, the Company’s group medical, dental, vision,
disability, life insurance, flexible-spending account, 401(k) and other plans.
The Company shall also reimburse the Executive an amount allowable from time to
time consistent with reimbursable amounts to other employees participating in
Company’s group health insurance plan.

 

e.     Withholding Taxes. The Company may make any appropriate arrangements to
deduct from all benefits provided hereunder any taxes reasonably determined to
be required to be withheld by any government or government agency. The Executive
shall bear all taxes on benefits provided hereunder to the extent that no taxes
are withheld, irrespective of whether withholding is required.

 

f.     Vacation.      Executive will be entitled to paid vacation of four (4)
weeks per year in accordance with the Company’s vacation policy, with the timing
and duration of specific vacations mutually and reasonably agreed to by the
parties hereto.

 

g.     Reimbursement of Business Expenses. The Company shall promptly reimburse
the Executive for all reasonable travel, entertainment and other expenses
incurred or paid by the Executive in connection with, or related to, the
performance of his duties, responsibilities or services under this Agreement,
upon presentation by the Executive of such supporting information and
documentation as the Company may reasonably request in accordance with company
policy and the requirements of the Internal Revenue Code.

 

 
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h.     Auto Allowance. The Company shall provide to Executive an automobile
allowance of $750 per month for expenses incurred by Executive in connection
with the leasing or acquisition of an automobile and shall reimburse the
Employee for the cost to insure the vehicle and for mileage.

 

6.     TERMINATION OF EMPLOYMENT.

 

a.     Termination Due to Death. The Executive’s employment and this Agreement
shall terminate immediately upon his death. If the Executive’s employment is
terminated due to his death, his estate or his beneficiaries, as the case may
be, shall be entitled to:

 

(i)     payment of any unpaid portion of his Annual Base Salary through the date
of such termination;

 

(ii)     reimbursement for any outstanding reasonable business expenses he
incurred in performing his duties hereunder;

 

(iii)     the right to elect continuation coverage of insurance benefits to the
extent required by law;

 

(iv)     full and immediate vesting of any unexercised stock options or
restricted stock grants;

 

(v)      any pension survivor benefits that may become due pursuant to any
employee benefit plan or program of the Company; and

 

(vi)     payment of any accrued but unpaid benefits, and any other rights, as
required by the terms of any employee benefit plan or program of the Company,
this Agreement, or any other agreement between the Company and the Executive.

 

b.     Termination Due to Disability. The Company may terminate the Executive’s
employment at any time if the Executive becomes disabled, upon written notice by
the Company to the Executive. For all purposes under this Agreement,
“Disability” shall mean that the Executive, at the time the notice is given, has
been unable to perform his duties under this Agreement for a period of not less
than ninety (90) days during any 180-day period as a result of the Executive’s
incapacity due to physical or mental illness. If the Executive’s employment is
terminated due to his disability, he shall be entitled to:

 

(i)     payment of any unpaid portion of his Annual Base Salary through the date
of such termination;

 

(ii)     reimbursement for any outstanding reasonable business expenses he has
incurred in performing his duties hereunder;

 

(iii)     the right to elect continuation coverage of insurance benefits to the
extent required by law;

 

(iv)     full and immediate vesting of any unexercised stock options or
restricted stock grants; and

 

(v)     payment of any accrued but unpaid benefits, and any other rights, as
required by the terms of any employee benefit plan or program of the Company,
this Agreement, or any other agreement between the Company and the Executive.

 

 
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c.     Termination for Cause.

 

The Company may terminate the Executive’s employment at any time for Cause,
provided that it gives written notice of termination to the Executive as set
forth below. If the Executive’s employment is terminated for Cause, as defined
below, he shall be entitled to:

 

(i)      payment of any unpaid portion of his Annual Base Salary through the
date of such termination;

 

(ii)     reimbursement for any outstanding reasonable business expenses he
incurred in performing his duties hereunder through the date of such
termination;

 

(iii)     the right to elect continuation coverage of insurance benefits to the
extent required by law; and

 

(iv)     payment of any accrued but unpaid benefits and any other rights through
the date of termination, excluding any severance package benefits, as required
by the terms of any employee benefit plan or program of the Company, this
Agreement, or any other agreement between the Company and the Executive.

 

For purposes of this Agreement, a termination for “Cause” shall mean: (i) the
final conviction of Executive of, or Executive’s plea of guilty or nolo
contendere to, any felony or a crime involving dishonesty, fraud, or moral
turpitude; (ii) the indictment of Executive for any felony or a crime involving
dishonesty, fraud, or moral turpitude which, in the reasonable good-faith
judgment of the Board, has materially damaged, or could materially damage, the
reputation of the Company or would materially interfere with the performance of
services by the Executive; (iii) the willful commission of fraud, nonincidental
misappropriation, embezzlement, or other dishonest act by Executive against the
Company; (iv) Executive’s use of illegal drugs or alcohol on the Company’s
premises, Executive’s use of illegal drugs or alcohol having an adverse effect
on the performance of the Executive’s duties hereunder, or Executive’s use of
illegal drugs or alcohol which, in the reasonable good-faith judgment of the
Board, has materially damaged, or could materially damage, the reputation of the
Company; (v) Executive’s willful failure, gross negligence, or gross misconduct
in the performance of his duties to the Company; (vi) Executive’s gross
malfeasance in the performance of his duties hereunder; (vii) Executive’s
nonfeasance in the performance of his duties hereunder not cured within ten (10)
business days after notice of such nonfeasance; (viii) Executive’s failure to
follow a written order or direction from the Board which is both legal and
reasonable; or (ix) Executive’s breach of this Agreement not cured within ten
(10) business days after notice of such breach.

 

If the Company exercises its right to terminate the Executive for Cause, the
Company shall: (1) give the Executive written notice of termination at least ten
(10) business days before the date of such termination specifying in detail the
conduct constituting such Cause, and (2) deliver to the Executive a copy of a
resolution duly adopted by a majority of the entire membership of the Board,
excluding interested directors, after reasonable notice to the Executive and an
opportunity for the Executive to be heard in person by members of the Board,
finding that the Executive has engaged in such conduct.

 

 
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d.     Involuntary Termination Without Cause or Constructive Termination Without
Cause. Subject to the provisions of Section 12 below governing a Change of
Control Termination, the Company may terminate the Executive’s employment at any
time without Cause, provided that it gives written notice of termination at
least ninety (90) days before the date of such termination. If the Executive’s
employment is terminated without Cause, or if there is a constructive
termination without Cause by which Executive terminates his employment
(hereinafter “Good Reason”), as defined below, the Executive shall be entitled
to receive from the Company the following:

 

(i)     payment of any unpaid portion of his Annual Base Salary through the date
of such termination plus three (3) months of Annual Base Salary payable upon
such termination date;

 

(ii)     reimbursement for any outstanding reasonable business expenses he
incurred in performing his duties hereunder;

 

(iii)     the right to elect continuation coverage of insurance benefits to the
extent required by law;

 

(iv)     full and immediate vesting of any unexercised stock options or
restricted stock grants;

 

(v)     payment of any accrued but unpaid benefits, and any other rights, as
required by the terms of any employee benefit plan or program of the Company,
this Agreement, or any other agreement between the Company and the Executive;
and

 

(vi)     payment of amounts equal to any premiums for health insurance
continuation coverage under any the Company health plans that is elected by the
Executive or his beneficiaries pursuant to Section 498B of the Internal Revenue
Code, at a time or times mutually agreed to by the parties, but only so long as
the Executive is not eligible for coverage under a health plan of another
Company (whether or not he elects to receive coverage under that plan).

 

For purposes of this Agreement, “Good Reason” shall mean a termination of the
Executive at his own initiative following the occurrence, without the
Executive’s prior written consent, of one or more of the following events not on
account of Cause:

 

 

(1)

the removal of the Executive from or the failure to elect or re-elect the
Executive to the position of an executive officer of the Company ;

 

 

(2)

a material reduction in the Executive’s then current Annual Base Salary;

 

 

(3)

a material diminution in the Executive’s authority, duties, or responsibilities;

 

 

(4)

a material diminution in the budget over which the Executive retains authority;

 

 

(5)

a material change in the geographic location at which the Executive must perform
the services hereunder; or

 

 

(6)

any other action or inaction which constitutes a material breach by the Company
of this Agreement.

 

In the event the Executive is terminated without Cause or there is Good Reason
for his termination, the Executive shall provide the Company with written notice
within ninety (90) days of the event and the Company shall have ten (10)
business days to cure the default.

 

 
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e.     Voluntary Termination. If the Executive voluntarily terminates his
employment on his own initiative for reasons other than his death, Disability,
or Good Reason, he shall be entitled to:

 

(i)     payment of any unpaid portion of his Annual Base Salary through the
effective date of such termination;

 

(ii)     reimbursement for any outstanding reasonable business expenses he has
incurred in performing his duties hereunder;

 

(iii)     the right to elect continuation coverage of insurance benefits to the
extent required by law; and

 

(iv)     payment of any accrued but unpaid benefits, and any other rights, as
required by the terms of any employee benefit plan or program of the Company,
this Agreement, or any other agreement between the Company and the Executive.

 

A voluntary termination under this paragraph shall be effective upon fifteen
(15) days’ prior written notice to the Company unless the parties mutually agree
to extend the effective date.

 

7.     Mitigation and Offset.

 

If the Executive’s employment is terminated during the term of this Agreement
pursuant to the provisions of paragraph 6(d), above, the Executive shall be
under no duty or obligation to seek or accept other employment, and no payment
or benefits of any kind due him under this Agreement shall be reduced, suspended
or in any way offset by any subsequent employment. The obligation of the Company
to make the payments provided for in this Agreement shall not be affected by any
circumstance including, by way of example rather than limitation, any set-off,
counterclaim, recoupment, defense, or other right that the Company may assert,
or due to any other employment or source of income obtained by the Executive.

 

8.     Entitlement to Other Benefits.

 

Except as expressly provided herein, this Agreement shall not be construed as
limiting in any way any rights or benefits the Executive, his spouse, dependents
or beneficiaries may have pursuant to any other employee benefits plans or
programs.

 

9.      NON-COMPETITION AND CONFIDENTIAL INFORMATION.

 

a.     Executive Acknowledgment. Executive acknowledges that his position with
the Company is special, unique and intellectual in character and his position in
the Company will place him in a position of confidence and trust with employees
and clients of the Company.

 

 

b.     Non-Competition. Executive agrees that during the Employment Term and for
a period of one (1) year thereafter, Executive will not directly or indirectly:
(i) (whether as director, officer, consultant, principal, employee, agent or
otherwise) engage in or contribute Executive's knowledge and abilities to any
business or entity in competition with the Company; (ii) employ or attempt to
employ or assist anyone in employing any person who is an employee of the
Company or was an employee of the Company during the previous one year period;
or (iii) attempt in any manner to solicit from any client business of the type
performed by the Company or persuade any client of the Company to cease doing
business or reduce the amount of business that such client has customarily done
with the Company.

 

 
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c.     Confidentiality. Executive acknowledges that Executive will have access
to certain proprietary and confidential information of the Company and its
clients including, but not limited to, contemplated new products and services,
marketing and advertising campaigns, sales projections, creative campaigns and
themes and financial information of the Company. Executive agrees not to use or
disclose any confidential information during the Employment Term or thereafter
other than in connection with performing Executive's services for the Company in
accordance with this Agreement.

 

 

d.     Enforcement. Executive agrees that the restrictions set forth in this
Section 9 are reasonable and necessary to protect the goodwill of the Company.
If any of the covenants set forth herein are deemed to be invalid or
unenforceable based upon the duration or otherwise, the parties contemplate that
such provisions shall be modified to make them enforceable to the fullest extent
permitted by law.

 

e.     Equitable Relief. In the event of a breach or threatened breach by
Executive of the provisions set forth in this Section 9, Executive acknowledges
that the Company will be irreparably harmed and that monetary damages shall be
an insufficient remedy to the Company. Therefore, Executive consents to
enforcement of this paragraph by means of temporary or permanent injunction and
other appropriate equitable relief in any competent court, in addition to any
other remedies the Company may have under this Agreement or otherwise.

 

10.      INTELLECTUAL PROPERTY.

 

a.     Inventions. The Company has retained Executive to work essentially full
time so that anything Executive produces during the Employment Term is the
property of the Company. Any writing, invention, design, system, process,
development or discovery conceived, developed, created or made by Executive,
alone or with others, during the period of his employment hereunder and
applicable to the business of the Company, whether or not patentable,
registrable, or copyrightable, shall become the sole and exclusive property of
the Company.

 

b.     Disclosure and Cooperation. Executive shall disclose the same promptly
and completely to the Company and shall, during the period of his employment
hereunder and at any time and from time to time hereafter, (i) execute all
documents requested by the Company for vesting in the Company the entire right,
title and interest in and to the same, (ii) execute all documents requested by
the Company for filing such applications for and procuring patents, trademarks,
service marks or copyrights as the Company, in its sole discretion, may desire
to prosecute, and (iii) give the Company all assistance it may reasonably
require, including the giving of testimony in any suit, action, investigation or
other proceeding, in order to obtain, maintain and protect the Company's right
therein and thereto.

 

11.      POST EMPLOYMENT OBLIGATIONS.

 

a.     Company Property. All records, files, lists, including computer generated
lists, drawings, documents, equipment and similar items relating to the
Company's business which Executive shall prepare or receive from the Company
shall remain the Company's sole and exclusive property. Upon termination of this
Agreement, Executive shall promptly return to the Company all property of the
Company in his possession. Executive further represents that he will not copy or
cause to be copied, print out or cause to be printed out any software, documents
or other materials originating with or belonging to the Company. Executive
additionally represents that, upon termination of his employment with the
Company, he will not retain in his possession any such software, documents or
other materials.

 

 
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b.     Cooperation. Executive agrees that both during and after his employment
he shall, at the request of the Company, render all assistance and perform all
lawful acts that the Company considers necessary or advisable in connection with
any litigation involving the Company or any director, officer, employee,
shareholder, agent, representative, consultant, client or vendor of the Company.

 

12.      Change of Control

 

a.     Change of Control Defined. For purposes of this Agreement, “Change in
Control” means:

 

(i)     any person or entity becoming the beneficial owner, directly or
indirectly, of securities of the Company representing forty (40%) percent of the
total voting power of all its then outstanding voting securities;

 

(ii)     a merger or consolidation of the Company in which its voting securities
immediately prior to the merger or consolidation do not represent, or are not
converted into securities that represent, a majority of the voting power of all
voting securities of the surviving entity immediately after the merger or
consolidation;

 

(iii)     a sale of substantially all of the assets of the Company, or any
consolidated subsidiary, or a liquidation or dissolution of the Company, or a
consolidated subsidiary; or

 

(iv)     individuals who, as of the date of the signing of this Agreement,
constitute the Board of Directors (the “Incumbent Board”) cease for any reason
to constitute at least a majority of such Board; provided that any individual
who becomes a director of the Company subsequent to the date of the signing of
this Agreement, whose election, or nomination for election by the Company
stockholders, was approved by the vote of at least a majority of the directors
then in office shall be deemed a member of the Incumbent Board.

 

 

b.      Involuntary Termination Relating to a Change in Control. The Company may
terminate the Executive’s employment without Cause or the Executive may
terminate his employment for Good Reason, either upon thirty (30) day’s prior
written notice, in the case of a Change of Control. In the event Executive’s
employment is terminated on account of (i) an involuntary termination by the
Company for any reason other than Cause, death, or Disability, or (ii) the
Executive voluntarily terminates employment with the Company on account of a
resignation for Good Reason, in either case that occurs (x) at the same time as,
or within the twelve (12) month period following, the consummation of a Change
in Control or (y) within the sixty (60) day period prior to the date of a Change
in Control where the Change in Control was under consideration at the time of
Executive’s termination date (a “Change of Control Termination”), then Executive
shall be entitled to the benefits provided in subsection (c) of this Section 12.
A Change of Control Termination shall be governed by this Section 12 and shall
supersede the termination provisions of Section 6 hereof.

 

c.     Compensation upon Involuntary Termination Relating to a Change in
Control. Subject to the provisions of subsection (e) of this Section 12, in the
event a termination described in subsection (b) of this Section 12 occurs, the
Company shall provide that the following be paid to the Executive after his
termination date, provided that Executive executes and does not revoke the
Release:

 

(i)     One (1) times the sum of the highest Annual Base Salary, paid in a
single lump sum cash payment on the sixtieth (60th) day following Executive’s
termination date.

 

 
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(ii)     With respect to any outstanding Company stock options held by the
Executive as of his Termination Date, the Company shall fully accelerate the
vesting and exercisability of such stock options, so that all such stock options
shall be fully vested and exercisable as of Executive’s termination date, such
options (as well as any outstanding stock options that previously became vested
and exercisable) to remain exercisable, notwithstanding anything in any other
agreement governing such options, until the later of (A) a period of one year
after the Executive’s termination date, or (B) the original term of the option.

 

(iii)     With respect to any Restricted Stock Units or Restricted Share Awards
issued under a Plan and held by the Executive that are unvested at the time of
his termination date, all such unvested Restricted Stock Units and Restricted
Share Awards shall vest and settle not later than sixty (60) days following the
Termination Date.

 

(iv)      Executive shall receive any amounts earned, accrued or owing but not
yet paid to Executive as of his termination date, payable in a lump sum, and any
benefits accrued or earned in accordance with the terms of any applicable
benefit plans and programs of the Company.

 

d.     Consequence of a Change in Control. Notwithstanding the terms of any of
the Company’s equity compensation plans (each a “Plan”), if, as of the date of a
Change in Control, Executive holds stock options issued under a Plan that are
not vested and exercisable, such stock options shall become fully vested and
exercisable as of the date of the Change in Control if the acquirer does not
agree to assume or substitute for equivalent stock options such outstanding
stock options.

 

e.     Release. Notwithstanding the foregoing, no payments or other benefits
under this Section 12 shall be made unless Executive executes, and does not
revoke, the Company’s standard written release (the “Release”) of any and all
claims against the Company and all related parties with respect to all matters
arising out of Executive’s employment by the Company (other than entitlements
under the terms of this Agreement or under any other plans or programs of the
Company in which Executive participated and under which Executive has accrued or
become entitled to a benefit) or a termination thereof, with such release being
effective not later than sixty (60) days following Executive’s termination date.

 

13.     ARBITRATION.

 

Any dispute or controversy arising under or in connection with this Agreement
shall, if either the Company or the Executive so elects within fifteen (15)
business days after the dispute or controversy arises or if the Company and
Executive jointly so elects, be settled by arbitration, in accordance with the
Commercial Arbitration Rules procedures of the American Arbitration Association.
Arbitration shall occur before a single arbitrator; provided, however, that if
the parties cannot agree on the selection of such arbitrator within thirty (30)
days after the matter is referred to arbitration, each party shall select one
arbitrator and those arbitrators shall jointly designate a third arbitrator to
comprise a panel of three arbitrators. The decision of the arbitrator shall be
rendered in writing, shall be final, and may be entered as a judgment in any
court in the State of Oklahoma. The Company and the Executive each irrevocably
consent to the jurisdiction of the federal and state courts located in State of
Oklahoma for this purpose. The arbitrator shall establish the extent of
discovery permitted and shall be authorized to allocate the reasonable costs of
arbitration between the parties. Notwithstanding the foregoing, the Company, in
its sole discretion, may bring an action in any court of competent jurisdiction
to seek injunctive relief in order to avoid irreparable harm and such other
relief as the Company shall elect to enforce the Executive’s covenants herein.

 

 
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14.     INDEMNIFICATION.

 

The Company agrees that if the Executive is made a party, or is threatened to be
made a party, to any action, suit or proceeding, whether civil, criminal,
administrative, or investigative (a “Proceeding”), by reason of the fact that he
is or was a director, officer or employee or the Company, or is or was serving
at the request of the Company as a director, officer, member, employee or agent
of another corporation, partnership, limited liability company, joint venture,
trust or other enterprise, including service with respect to employee benefit
plans, whether or not the basis of such Proceeding is the Executive’s alleged
action in an official capacity while serving as a director, officer, member,
employee or agent, the Executive shall be indemnified and held harmless by the
Company to the fullest extent permitted or authorized by law and by the
Company’s articles of incorporation and bylaws. To the extent consistent with
the foregoing, this obligation to indemnify the Executive and hold him harmless
shall continue even if he has ceased to be a director, officer, member, employee
or agent of the Company or other such entity described above, and shall inure to
the benefit of the Executive’s heirs, executors and administrators. The Company
shall advance to the Executive all reasonable costs and expenses incurred by him
in connection with a Proceeding within twenty (20) days after receipt by the
Company of a written request for such advance. Such request shall include an
undertaking by the Executive to repay the amount of such advance if it shall
ultimately be determined that the Executive is not entitled to be indemnified
against such costs and expenses.

 

Neither the failure of the Company (including its Board, independent legal
counsel or stockholders) to have made a determination before such Proceeding
concerning payment of amounts claimed by the Executive under the paragraph above
that indemnification of the Executive is proper because he has met the
applicable standards of conduct, nor a determination by the Company (including
its Board, independent legal counsel or stockholders) that the Executive has not
met such applicable standards of conduct, shall create a presumption that the
Executive has not met the applicable standards of conduct.

 

Executive understands and acknowledges that the Company may be required in the
future to undertake with the Securities and Exchange Commission to submit in
certain circumstances the question of indemnification to a court for a
determination of the Company’s right under public policy to indemnify Executive
and the obligation to indemnify the Executive hereunder shall be expressly
subject to the outcome of such determination.

 

15.     General Provisions.

 

a.     Notices. Any notice, demand, request, waiver or other communication
required or permitted to be given pursuant to this Agreement must be in writing
(including electronic format) and will be deemed by the parties to have been
received (i) upon delivery in person (including by reputable express courier
service) at the address set forth below; (ii) upon delivery by facsimile (as
verified by a printout showing satisfactory transmission) at the facsimile
number designated below (if sent on a business day during normal business hours
where such notice is to be received and if not, on the first business day
following such delivery where such notice is to be received); (iii) upon
delivery by electronic mail (as verified by a printout showing satisfactory
transmission) at the electronic mail address set forth below (if sent on a
business day during normal business hours where such notice is to be received
and if not, on the first business day following such delivery where such notice
is to be received); or (iv) upon three business days after mailing with the
United States Postal Service if mailed from and to a location within the
continental United States by registered or certified mail, return receipt
requested, addressed to the address set forth below. Any party hereto may from
time to time change its physical or electronic address or facsimile number for
notices by giving notice of such changed address or number to the other party in
accordance with this section.

 

 
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If to the Company at:

 

PSM Holdings, Inc.

   

5300 Mosteller Drive, Suite 3

   

Oklahoma City, OK 73112

   

Attention: Michael Margolies, Chairman, Compensation Committee

   

Facsimile No.:

   

Email Address: mm@littlebanc.com 

     

With a copy (which will not constitute notice) to:

 

 

Ronald N. Vance

   

The Law Office of Ronald N. Vance & Associates, P.C.

   

1656 Reunion Avenue

   

Suite 250

   

South Jordan, UT 84095

   

Facsimile No. (801) 446-8803

   

Email Address: ron@vancelaw.us 

     

If to the Executive at:

 

Kevin J. Gadawski

   

19 Terraza Del Mar

   

Dana Point, CA 92629

   

Facsimile No.:

   

Email Address: kg@littlebanc.com

 

b.     Legal Expenses. Except as provided in Section 13 (Arbitration), if any
legal action or other proceeding is brought for the enforcement of this
Agreement, or because of an alleged dispute, breach, default, or
misrepresentation in connection with any of the provisions of this Agreement,
the successful or prevailing party or parties will be entitled to recover
reasonable attorneys’ fees and other costs incurred in that action or
proceeding, in addition to any other relief to which it or they may be entitled.

 

c.     Assignability and Binding Nature. No rights or obligations may be
assigned or transferred by the Company except that such rights or obligations
may, subject to the provisions of Section 12 (Change of Control), be assigned or
transferred pursuant to a merger or consolidation in which the Company is not
the continuing entity, or the sale or liquidation of all or substantially all of
the assets of the Company, provided that the assignee or transferee is the
successor to all or substantially all of the assets of the Company and such
assignee or transferee assumes the liabilities, obligations, and duties of the
Company, as contained in this Agreement, either contractually or as a matter of
law. Notwithstanding any such assignment, the Company shall not be relieved from
liability under this Agreement. The obligations of the Executive are personal
and no rights or obligations of the Executive under this Agreement may be
assigned or transferred by the Executive other than his right to receive
compensation and benefits, provided such assignment or transfer is otherwise
permitted by law.

 

d.     Amendment. This agreement may be amended or modified only by a written
instrument executed by both the Company and the Executive.

 

e.     Exhibits. Any exhibit, schedule, or other attachment referenced in this
Agreement is annexed hereto and is incorporated herein by this reference and
expressly made a part hereof.

 

 
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f.     Pronouns. Whenever the context might require, any pronouns used herein
shall include the corresponding masculine, feminine or neuter forms, and the
singular forms of nouns and pronouns shall include the plural, and vice versa.

 

g.     Captions. The captions appearing herein are for convenience of reference
only and in no way define, limit or affect the scope or substance of any section
hereof.

 

h.     Time. All reference herein to periods of days are to calendar days,
unless expressly provided otherwise. Any reference herein to business days shall
mean any day other than Saturday, Sunday or other day on which commercial banks
in the State of Oklahoma are authorized or required by law to remain closed.
Where the time period specified herein would end on a weekend or holiday, the
time period shall be deemed to end on the next business day.

 

i.     Entire Agreement. This Agreement constitutes the entire agreement between
the Company and the Executive and supersedes all prior agreements and
understandings, whether written or oral relating to the subject matter hereof.

 

j.     Severability. In case any provision hereof shall be held by a court or
arbitrator with jurisdiction over the Company or the Executive to be invalid,
illegal, or otherwise unenforceable, such provision shall be restated to reflect
as nearly as possible the original intentions of the Company and the Executive
in accordance with applicable law, and the validity, legality, and
enforceability of the remaining provisions shall in no way be affected or
impaired thereby.

 

k.     Waiver. No delays or omission by the Company or the Executive in
exercising any right hereunder shall operate as a waiver of that or any other
right. A waiver or consent given by the Company or the Executive or any one
occasion shall be effective only in that instance and shall not be construed as
a bar or waiver of any right on any other occasion.

 

l.     Governing Law. This Agreement shall be construed, interpreted, and
enforced in accordance with the laws of the State of Oklahoma, without regard to
its conflicts of laws principles.

 

m.     Jurisdiction; Service of Process. If neither the Company or the Executive
elects to be governed by the provisions of Section 13 (Arbitration), the parties
to this Agreement, acting for themselves and for their respective successors and
assigns, without regard to domicile, citizenship or residence, hereby expressly
and irrevocably elect as the sole judicial forum for the adjudication of any
matters arising under or in connection with this Agreement, and consent and
subject themselves to the jurisdiction of, the courts of the State of Oklahoma
located in County of Oklahoma, and/or the United States District Court, District
of Oklahoma, in respect of any matter arising under this Agreement.

 

n.     Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument.

 

o.     Full Knowledge. By their signatures, the parties acknowledge that they
have carefully read and fully understand the terms and conditions of this
Agreement, that each party has had the benefit of separate counsel, or has been
advised to obtain separate counsel, and that each party has freely agreed to be
bound by the terms and conditions of this Agreement. To the extent that a party
elects not to consult with such counsel, the party hereby waives any defense to
inadequate representation by counsel.

 

p.     Construction. This Agreement shall be construed as though all parties had
drafted it.

 

 
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q.     Non-Exclusivity of Remedies. The rights and remedies of the parties
hereto shall not be mutually exclusive, and the exercise of one or more of the
provisions of this Agreement shall not preclude the exercise of any other
provision.

 

r.     Remedies. In addition to being entitled to exercise all rights provided
herein or granted by law, including recovery of damages, each of the parties
hereto will be entitled to specific performance. Each of the parties agrees that
monetary damages may not be adequate compensation for any loss incurred by
reason of any breach of obligations described in the foregoing sentence and
hereby agrees to waive in any action for specific performance of any such
obligation the defense that a remedy at law would be adequate.

 

IN WITNESS WHEREOF, each of the parties hereto has executed this Executive
Employment Agreement the respective days and year set forth below.

 

 

COMPANY: 

PSM HOLDINGS, INC.

 

 

    Date: March 30, 2015  By: /s/ Michael Margolies                             
Michael Margolies

 

       Chairman, Compensation Committee

 

                        

EMPLOYEE:   

 

       

Date: March 30, 2015 

/s/ Kevin J. Gadawski                         

 

Kevin J. Gadawski

 

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