Document:

ex4-1.htm

 

Exhibit 4.1

 

PSM Holdings, Inc.

 

2015 STOCK INCENTIVE PLAN

 

THE 2015 STOCK INCENTIVE PLAN (the “Plan”) of PSM Holdings, Inc., a Delaware corporation, is hereby adopted by its Board of Directors as of March 26, 2015 (the “Effective Date”).

 

Article 1.

 

PURPOSES OF THE PLAN

 

Section 1.01     Purposes. The purposes of the Plan are (a) to enhance the Company’s ability to attract and retain the services of qualified employees, officers, directors, consultants, and other service providers upon whose judgment, initiative and efforts the successful conduct and development of the Company’s business largely depends, and (b) to provide additional incentives to such persons or entities to devote their utmost effort and skill to the advancement and betterment of the Company, by providing them an opportunity to participate in the ownership of the Company and thereby have an interest in the success and increased value of the Company.

 

Article 2.

DEFINITIONS

 

For purposes of this Plan, terms not otherwise defined herein shall have the meanings indicated below:

 

Section 2.01     Administrator. “Administrator” means the Board or, if the Board delegates responsibility for any matter to the Committee, the term Administrator shall mean the Committee.

 

Section 2.02     Affiliated Company. “Affiliated Company” means: 

 

a)     with respect to Incentive Options, any “parent corporation” or “subsidiary corporation” of the Company, whether now existing or hereafter created or acquired, as those terms are defined in Sections 424(e) and 424(f) of the Code, respectively; and

 

b)     with respect to Nonqualified Options, Restricted Stock Units, Stock Appreciation Rights, and Restricted Stock Grants any entity described in paragraph (a) of this Section 2.02 above, plus any other corporation, limited liability company (“LLC”), partnership or joint venture, whether now existing or hereafter created or acquired, with respect to which the Company beneficially owns more than fifty percent (50%) of: (1) the total combined voting power of all outstanding voting securities or (2) the capital or profits interests of an LLC, partnership or joint venture.

 

Section 2.03     Base Price. “Base Price” means the price per share of Common Stock for purposes of computing the amount payable to a Participant who holds a Stock Appreciation Right upon exercise thereof.

 

Section 2.04     Board. “Board” means the Board of Directors of the Company.

 

 

 

 

 

Section 2.05     Change in Control. “Change in Control” means:

 

a)     The acquisition, directly or indirectly, in one transaction or a series of related transactions, by any person or group (within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) of the beneficial ownership of securities of the Company possessing more than fifty percent (50%) of the total combined voting power of all outstanding securities of the Company;

 

b)     A merger or consolidation in which the Company is not the surviving entity, except for a transaction in which the holders of the outstanding voting securities of the Company immediately prior to such merger or consolidation hold as a result of holding the Company securities prior to such transaction, in the aggregate, securities possessing more than fifty percent (50%) of the total combined voting power of all outstanding voting securities of the surviving entity (or the parent of the surviving entity) immediately after such merger or consolidation;

 

c)     A reverse merger in which the Company is the surviving entity but in which the holders of the outstanding voting securities of the Company immediately prior to such merger hold, in the aggregate, securities possessing less than fifty percent (50%) of the total combined voting power of all outstanding voting securities of the Company or of the acquiring entity immediately after such merger; or

 

d)     The sale, transfer or other disposition (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company, except for a transaction in which the holders of the outstanding voting securities of the Company immediately prior to such transaction(s) receive as a distribution with respect to securities of the Company, in the aggregate, securities possessing more than fifty percent (50%) of the total combined voting power of all outstanding voting securities of the acquiring entity immediately after such transaction(s).

 

e)     In addition, a Change in Control will be deemed to have occurred if, at any time during any period of twelve (12) consecutive months during the term of any Option, as stated in the Option Exercise Documents, Restricted Stock Award Agreement, Restricted Stock Unit Agreement or Stock Appreciation Right Agreement under this Plan, individuals who at the beginning of such period constituted the entire Board do not for any reason constitute a majority of the Board, unless the election, or the nomination for election by the Company’s stockholders, of each new director was approved by a vote of at least a majority of the directors then still in office who were directors at the beginning of the period (but not including any new director whose election or nomination is in connection with an actual or threatened proxy contest relating to the election of directors of the Company).

 

Notwithstanding the foregoing, a transaction will not be deemed a Change in Control unless the transaction qualifies as a change in control event within the meaning of Section 409A of the Code.

 

Section 2.06     Code. “Code” means the Internal Revenue Code of 1986, as amended from time to time.

 

Section 2.07     Committee. “Committee” means a committee of two or more members of the Board appointed to administer the Plan, as set forth in Section 9.01.

 

Section 2.08     Common Stock. “Common Stock” means the Common Stock of the Company, subject to adjustment pursuant to Section 4.02.

 

Section 2.09     Company. “Company” means PSM Holdings, Inc., a Delaware corporation, or any entity that is a successor to the Company. Except where the context otherwise requires, the term “Company” shall include any of the Company’s present or future parent or subsidiary corporations.

 

 

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Section 2.10     Disability. “Disability” means permanent and total disability as defined in Section 22(e)(3) of the Code. The Administrator’s determination of a Disability or the absence thereof shall be conclusive and binding on all interested parties.

 

Section 2.11     Effective Date. “Effective Date” means the date on which the Plan was originally adopted by the Board, as set forth on the first page hereof.

 

Section 2.12     Exchange Act. “Exchange Act” means the Securities and Exchange Act of 1934, as amended.

 

Section 2.13     Exercise Price. “Exercise Price” means the purchase price per share of Common Stock payable by the Optionee to the Company upon exercise of an Option.

 

Section 2.14     Fair Market Value. “Fair Market Value” on any given date means the value of one share of Common Stock, determined as follows:

 

a)     If the Common Stock is then listed or admitted to trading on The NASDAQ Stock Market or another stock exchange which reports closing sale prices, the Fair Market Value shall be the closing sale price on the date of valuation on The NASDAQ Stock Market or principal stock exchange on which the Common Stock is then listed or admitted to trading, or, if no closing sale price is quoted on such day, then the Fair Market Value shall be the closing sale price of the Common Stock on The NASDAQ Stock Market or such exchange on the next preceding day on which a closing sale price is reported.

 

b)     If the Common Stock is not then listed or admitted to trading on The NASDAQ Stock Market or a stock exchange which reports closing sale prices, the Fair Market Value shall be determined by the Administrator using (i) the last sale before or the first sale after the grant date; (ii) the closing price on the trading day before or on the grant date; (iii) the arithmetic mean (average) of the high and low prices on the trading day before or the trading day of the grant; (iv) an average of the stock price (determined either based on the arithmetic mean or the average of such selling price, weighted based on the volume of trading on each trading day during the period) over a fixed period occurring within 30 calendar days before or after the grant; or (v) any other reasonable valuation method using actual transactions.

 

c)     If neither (a) nor (b) is applicable as of the date of valuation, then the Fair Market Value shall be determined by the Administrator in good faith using any reasonable method of evaluation in a manner consistent with the valuation principles under Section 409A of the Code, which determination shall be conclusive and binding on all interested parties.

 

Section 2.15     FINRA Dealer. “FINRA Dealer” means a broker-dealer that is a member of the Financial Industry Regulatory Authority.

 

Section 2.16     Grant Form. “Grant Form” means the Grant of Stock Option form signed by both parties with respect to either an Incentive Option or a Nonqualified Option.

 

Section 2.17     Incentive Option. “Incentive Option” means any Option designated and qualified as an “incentive stock option” as defined in Section 422 of the Code.

 

Section 2.18     Nonqualified Option. “Nonqualified Option” means any Option that is not an Incentive Option.  To the extent that any Option designated as an Incentive Option fails in whole or in part to qualify as an Incentive Option, including, without limitation, for failure to meet the limitations applicable to a 10% Stockholder or because it exceeds the annual limit provided for in Section 5.07 below, it shall to that extent constitute a Nonqualified Option.

 

 

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Section 2.19     Option. “Option” means any option to purchase Common Stock granted pursuant to this Plan.

 

Section 2.20     Option Exercise Documents. “Option Exercise Documents” means and includes the Option Exercise Form, the Grant Form, and any other agreements the Optionee is required to enter into to exercise options.

 

Section 2.21     Option Exercise Form. “Option Exercise Form” means the form identified as Exhibit A to the Grant Form.

 

Section 2.22     Optionee. “Optionee” means any Participant who holds an Option.

 

Section 2.23     Participant. “Participant” means an individual or entity that holds Options, Restricted Stock Units, Stock Appreciation Rights, or Restricted Stock Awards under this Plan.

 

Section 2.24     Performance Criteria. “Performance Criteria” means one or more of the following as established by the Administrator, which may be stated as a target percentage or dollar amount, a percentage increase over a base period percentage or dollar amount or the occurrence of a specific event or events:

a)     Revenue;

b)     Gross profit;

c)     Operating income;

d)     Pre-tax income;  

e)     Earnings before interest, taxes, depreciation and amortization (“EBITDA”); 

f)     Earnings per common share on a fully diluted basis (“EPS”); 

g)     Consolidated net income of the Company divided by the average consolidated common stockholders’ equity (“ROE”); 

h)     Cash and cash equivalents derived from either (i) net cash flow from operations, or (ii) net cash flow from operations, financings and investing activities (“Cash Flow”); 

i)     Adjusted operating cash flow return on income; 

j)     Cost containment or reduction; 

k)     The percentage increase in the market price of the Company’s common stock over a stated period; and

l)     Individual business objectives.

 

Section 2.25     Restricted Stock Award. “Restricted Stock Award” means shares issued pursuant to the Restricted Stock Award Program in Article 8.

 

Section 2.26     Restricted Stock Award Agreement. “Restricted Stock Award Agreement” means the written agreement entered into between the Company and a Participant evidencing the grant of Restricted Stock Awards under the Plan.

 

Section 2.27     Service. “Service

 

Section 2.28     Restricted Stock Award Program. “Restricted Stock Award Program” means the program to issue restricted shares pursuant to Article 8.

 

Section 2.29     Restricted Stock Unit. “Restricted Stock Unit” means a right to receive an amount equal to the Fair Market Value of one share of Common Stock, issued pursuant to Article 6, subject to any restrictions and conditions as are established pursuant to Article 6.

 

 

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Section 2.30     Restricted Stock Unit Agreement. “Restricted Stock Unit Agreement” means the written agreement entered into between the Company and a Participant evidencing the grant of Restricted Stock Units under the Plan.

 

Section 2.31     Service. “Service” shall mean the provision of services to the Company (or any Parent or Subsidiary) by a person in the capacity of an employee, a non-employee member of the board of directors or a consultant or independent advisor, except to the extent otherwise specifically provided in the documents evidencing the option grant.

 

Section 2.32     Service Provider. “Service Provider” means a consultant or other person or entity the Administrator authorizes to become a  Participant in the Plan and who provides services to (i) the Company, (ii) an Affiliated Company, or (iii) any other business venture designated by the Administrator in which the Company or an Affiliated Company has a significant ownership interest.

 

Section 2.33     Stock Appreciation Right. “Stock Appreciation Right” means a right issued pursuant to Article 7, subject to any restrictions and conditions as are established pursuant to Article 7 that is designated as a Stock Appreciation Right.

 

Section 2.34     Stock Appreciation Right Agreement. “Stock Appreciation Right Agreement” means the written agreement entered into between the Company and a Participant evidencing the grant of Stock Appreciation Rights under the Plan.

 

Section 2.35     10% Stockholder. “10% Stockholder” means a person who, as of a relevant date, owns or is deemed to own (by reason of the attribution rules applicable under Section 424(d) of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of an Affiliated Company.

 

Article 3.

 

ELIGIBILITY

 

Section 3.01     Incentive Options. Only employees of the Company or of an Affiliated Company (including members of the Board if they are employees of the Company or of an Affiliated Company) are eligible to receive Incentive Options under the Plan.

 

Section 3.02     Nonqualified Options; Restricted Stock Units and Stock Appreciation Rights. Employees of the Company or of an Affiliated Company, members of the Board (whether or not employed by the Company or an Affiliated Company), and Service Providers are eligible to receive Nonqualified Options, Restricted Stock Units, and Stock Appreciation Rights under the Plan.

 

Section 3.03     Section 162(m) Limitation. Subject to adjustment as to the number and kind of shares pursuant to Section 4.02, in no event shall any Participant be granted in any one calendar year any award that does not qualify as “performance-based compensation” under Section 162(m) of the Code. In granting awards which are intended to qualify under Section 162(m) of the Code, the Administrator shall follow any procedures determined by it from time to time to be necessary or appropriate to ensure qualification of the award under Section 162(m) of the Code (e.g., in determining the Performance Criteria).

 

 

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Article 4.

 

PLAN SHARES

 

Section 4.01     Shares Subject to the Plan. 

 

a)     The number of shares of Common Stock that may be issued under this Plan shall be forty million (40,000,000) shares, subject to adjustment as to the number and kind of shares pursuant to Section 4.02. For purposes of this limitation, in the event that (a) all or any portion of any Options or Stock Appreciation Rights granted under the Plan can no longer under any circumstances be exercised, (b) any shares of Common Stock are reacquired by the Company pursuant to the Option Exercise Documents, or (c) all or any portion of any Restricted Stock Units granted under the Plan are forfeited or can no longer under any circumstances vest, the shares of Common Stock allocable to or covered by the unexercised or unvested portion of such Options, Stock Appreciation Rights or Restricted Stock Units or the shares of Common Stock so reacquired shall again be available for grant or issuance under the Plan. The following shares of Common Stock may not again be made available for issuance as awards under the Plan: (i) shares of Common Stock not issued or delivered as a result of the net settlement of outstanding Stock Appreciation Rights or Options, (ii) shares of Common Stock used to pay the Exercise Price related to outstanding Options, (iii) shares of Common Stock used to pay withholding taxes related to outstanding Options, Stock Appreciation Rights or Restricted Stock Units, or (iv) shares of Common Stock repurchased on the open market with the proceeds of the Option Exercise Price.

 

Section 4.02     Changes in Capital Structure. In the event that the outstanding shares of Common Stock are hereafter increased or decreased or changed into or exchanged for a different number or kind of shares or other securities of the Company by reason of a recapitalization, stock split, reverse stock split, reclassification, stock dividend, or other change in the capital structure of the Company, then appropriate adjustments shall be made by the Administrator to the aggregate number and kind of shares subject to this Plan, the number and kind of shares and the price per share subject to or covered by outstanding Option Exercise Documents, Restricted Stock Award Agreement, Restricted Stock Unit Agreement or Stock Appreciation Right Agreement and the limit on the number of shares under Section 3.03, all in order to preserve, as nearly as practical, but not to increase, the benefits to Participants.

 

Article 5.

 

OPTIONS

 

Section 5.01     Grant of Stock Options.  The Administrator shall have the right to grant pursuant to this Plan, Options subject to such terms, restrictions, and conditions as the Administrator may determine at the time of grant.  Such conditions may include, but are not limited to, continued employment or the achievement of specified performance goals or objectives established by the Administrator with respect to one or more Performance Criteria, which require the Administrator to certify in writing whether and the extent to which such Performance Criteria were achieved. 

 

Section 5.02     Option Exercise Documents. Each Option granted pursuant to this Plan shall be evidenced by Option Exercise Documents which shall specify the number of shares subject thereto, vesting provisions relating to such Option, the Exercise Price per share, and whether the Option is an Incentive Option or Nonqualified Option. As soon as is practical following the grant of an Option, Option Exercise Documents shall be duly executed and delivered by or on behalf of the Company to the Optionee to whom such Option was granted.  Each Option Exercise Document shall be in such form and contain such additional terms and conditions, not inconsistent with the provisions of this Plan, as the Administrator shall, from time to time, deem desirable.

 

 

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Section 5.03     Exercise Price. The Exercise Price per share of Common Stock covered by each Option shall be determined by the Administrator, subject to the following:  (a) the Exercise Price of an Incentive Option shall not be less than 100% of Fair Market Value on the date the Incentive Option is granted, (b) the Exercise Price of a Nonqualified Option shall not be less than 100% of Fair Market Value on the date the Nonqualified Option is granted, and (c) if the person to whom an Incentive Option is granted is a 10% Stockholder on the date of grant, the Exercise Price shall not be less than 110% of Fair Market Value on the date the Incentive Option is granted. However, an Option may be granted with an Exercise Price lower than that set forth in the preceding sentence if such Option is granted pursuant to an assumption or substitution for another option in a manner satisfying the provisions of Sections 409A and 424 of the Code.

 

Section 5.04     Payment of Exercise Price. Payment of the Exercise Price shall be made upon exercise of an Option and may be made, in the discretion of the Administrator, subject to any legal restrictions, by: (a) cash; (b) check; (c) the surrender of shares of Common Stock owned by the Optionee (provided that shares acquired pursuant to the exercise of options granted by the Company must have been held by the Optionee for the requisite period necessary to avoid a charge to the Company’s earnings for financial reporting purposes), which surrendered shares shall be valued at Fair Market Value as of the date of such exercise; (d) the cancellation of indebtedness of the Company to the Optionee; (e) the waiver of compensation due or accrued to the Optionee for services rendered; (f) provided that a public market for the Common Stock exists, a “same day sale” commitment from the Optionee and a FINRA Dealer whereby the Optionee irrevocably elects to exercise the Option and to sell a portion of the shares so purchased to pay for the Exercise Price and whereby the FINRA Dealer irrevocably commits upon receipt of such shares to forward the Exercise Price directly to the Company; (g) provided that a public market for the Common Stock exists, a “margin” commitment from the Optionee and a FINRA Dealer whereby the Optionee irrevocably elects to exercise the Option and to pledge the shares so purchased to the FINRA Dealer in a margin account as security for a loan from the FINRA Dealer in the amount of the Exercise Price, and whereby the FINRA Dealer irrevocably commits upon receipt of such shares to forward the Exercise Price directly to the Company; or (h) any combination of the foregoing methods of payment or any other consideration or method of payment as shall be permitted by applicable law.

 

Section 5.05     Term and Termination of Options. The term and provisions for termination of each Option shall be as fixed by the Administrator, but no Option may be exercisable more than ten (10) years after the date it is granted.  An Incentive Option granted to a person who is a 10% Stockholder on the date of grant shall not be exercisable more than five (5) years after the date it is granted.

 

Section 5.06     Vesting and Exercise of Options. Each Option shall vest and become exercisable in one or more installments at such time or times and subject to such conditions, including without limitation the achievement of specified performance goals or objectives established with respect to one or more Performance Criteria, as shall be determined by the Administrator. 

 

Section 5.07     Annual Limit on Incentive Options. To the extent required for “incentive stock option” treatment under Section 422 of the Code, the aggregate Fair Market Value (determined as of the time of grant) of the Common Stock with respect to which Incentive Options granted under this Plan and any other plan of the Company or any Affiliated Company become exercisable for the first time by an Optionee during any calendar year shall not exceed $100,000.

 

Section 5.08     Nontransferability of Options. Except as otherwise provided in this Section 5.08, Options shall not be assignable or transferable except by will, the laws of descent and distribution or to a revocable trust, and during the life of the Optionee, Options shall be exercisable only by the Optionee. At the discretion of the Administrator and in accordance with rules it establishes from time to time, Optionees may be permitted to transfer some or all of their Nonqualified Options to one or more “family members,” which is not a “prohibited transfer for value,” provided that (i) the Optionee (or such Optionee’s estate or representative) shall remain obligated to satisfy all income or other tax withholding obligations associated with the exercise of such Nonqualified Option; (ii) the Optionee shall notify the Company in writing that such transfer has occurred and disclose to the Company the name and address of the “family member” or “family members” and their relationship to the Optionee, and (iii) such transfer shall be effected pursuant to transfer documents in a form approved by the Administrator. For purposes of the foregoing, the terms “family members” and “prohibited transfer for value” have the meaning ascribed to them in the General Instructions to Form S-8 (or any successor form) promulgated under the Securities Act of 1933, as amended. 

 

 

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Section 5.09     Effect of Termination of Employment.

 

a)     The following provisions shall govern the exercise of any Options held by the Optionee at the time of termination of employment, disability, or death:

 

(1)     Should the Optionee’s employment be terminated for cause, then the Options shall terminate on the date of employment is terminated.

 

(2)     Should the Optionee’s employment be terminated for disability, then the Optionee shall have a period of six (6) months following the date of such termination during which to exercise each outstanding Option held by such Optionee at the time of disability.

 

(3)     If the Optionee dies while holding an outstanding Option, then the personal representative of his or her estate or the person or persons to whom the Option is transferred pursuant to the Optionee’s will or the laws of inheritance shall have six (6) months following the date of the Optionee’s death to exercise such Option.

 

(4)     Should Optionee’s employment be terminated by reason other than for cause, disability, or death, then the Optionee shall have a period of thirty (30) days following the date of such termination during which to exercise each outstanding option held by such Optionee.

 

(5)     Under no circumstances, however, shall any such Option be exercisable after the specified expiration of the option term.

 

(6)     During the applicable post-Service exercise period, the Option may not be exercised in the aggregate for more than the number of vested shares for which the Option is exercisable on the date of the Optionee’s termination of employment. Upon the expiration of the applicable exercise period or (if earlier) upon the expiration of the Option term, the Option shall terminate and cease to be outstanding for any vested shares for which the Option has not been exercised. However, the Option shall, immediately upon the Optionee’s termination of employment, terminate and cease to be outstanding with respect to any and all Option shares for which the option is not otherwise at the time exercisable or in which the Optionee is not otherwise at that time vested.

 

b)     The Administrator shall have the discretion, exercisable either at the time an Option is granted or at any time while the Option remains outstanding, to:

 

(1)     extend the period of time for which the Option is to remain exercisable following Optionee’s termination of employment or death from the limited period otherwise in effect for that Option to such greater period of time as the Administrator shall deem appropriate, but in no event beyond the expiration of the Option term; and/or

 

(2)     permit the Option to be exercised, during the applicable post-termination exercise period, not only with respect to the number of vested shares of Common Stock for which such Option is exercisable at the time of the Optionee’s termination of employment but also with respect to one or more additional installments in which the Optionee would have vested under the Option had the Optionee continued employment.

 

 

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Section 5.10     Rights as a Stockholder. An Optionee or permitted transferee of an Option shall have no rights or privileges as a stockholder with respect to any shares covered by an Option until such Option has been duly exercised and certificates representing shares purchased upon such exercise have been issued to such person.

 

Article 6.

 

RESTRICTED STOCK UNITS

 

Section 6.01     Grants of Restricted Stock Units. The Administrator shall have the right to grant pursuant to this Plan Restricted Stock Units subject to such terms, restrictions, and conditions as the Administrator may determine at the time of grant.  Such conditions may include, but are not limited to, continued employment or the achievement of specified performance goals or objectives established by the Administrator with respect to one or more Performance Criteria, which require the Administrator to certify in writing whether and the extent to which such Performance Criteria were achieved.

 

Section 6.02     Restricted Stock Unit Agreements. A Participant shall have no rights with respect to the Restricted Stock Units covered by a Restricted Stock Unit Agreement until the Participant has executed and delivered to the Company the applicable Restricted Stock Unit Agreement. Each Restricted Stock Unit Agreement shall be in such form, and shall set forth such other terms, conditions, and restrictions of the Restricted Stock Unit Agreement, not inconsistent with the provisions of this Plan, as the Administrator shall, from time to time, deem desirable. Each such Restricted Stock Unit Agreement may be different from each other Restricted Stock Unit Agreement.

 

Section 6.03     Vesting of Restricted Stock Units. The Restricted Stock Unit Agreement shall specify the date or dates, the performance goals, if any, established by the Administrator with respect to one or more Performance Criteria that must be achieved, and any other conditions on which the Restricted Stock Units may vest.

 

Section 6.04     Form and Timing of Settlement. Settlement in respect of vested Restricted Stock Units will be automatic upon vesting thereof.  Payment in respect thereof will be made no later than thirty (30) days thereafter and may, in the discretion of the Administrator, be in cash, shares of Common Stock of equivalent Fair Market Value as of the date of exercise, or a combination of both, except as specifically provided in the Restricted Stock Unit Agreement.

 

Section 6.05     Rights as a Stockholder. Holders of Restricted Stock Units shall have no rights or privileges as a stockholder with respect to any shares of Common Stock covered thereby unless and until they become owners of shares of Common Stock following settlement in respect of such Restricted Stock Units, in whole or in part, in shares of Common Stock pursuant to their respective Restricted Stock Unit Agreements and the terms and conditions of the Plan.

 

Section 6.06     Restrictions. Restricted Stock Units may not be sold, pledged or otherwise encumbered or disposed of and shall not be assignable or transferable except by will, the laws of descent and distribution or pursuant to a domestic relations order entered by a court in settlement of marital property rights, except as specifically provided in the Restricted Stock Unit Agreement or as authorized by the Administrator. 

 

 

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Article 7.

 

STOCK APPRECIATION RIGHTS

 

Section 7.01     Grants of Stock Appreciation Rights. The Administrator shall have the right to grant pursuant to this Plan, Stock Appreciation Rights subject to such terms, restrictions and conditions as the Administrator may determine at the time of grant. Such conditions may include, but are not limited to, continued employment or the achievement of specified performance goals or objectives established by the Administrator with respect to one or more Performance Criteria, which require the Administrator to certify in writing whether and the extent to which such Performance Criteria were achieved.

 

Section 7.02     Stock Appreciation Right Agreements. A Participant shall have no rights with respect to the Stock Appreciation Rights covered by a Stock Appreciation Right Agreement until the Participant has executed and delivered to the Company the applicable Stock Appreciation Right Agreement. Each Stock Appreciation Right Agreement shall be in such form, and shall set forth the Base Price and such other terms, conditions and restrictions of the Stock Appreciation Right Agreement, not inconsistent with the provisions of this Plan, as the Administrator shall, from time to time, deem desirable. Each such Stock Appreciation Right Agreement may be different from each other Stock Appreciation Right Agreement.

 

Section 7.03     Base Price. The Base Price per share of Common Stock covered by each Stock Appreciation Right shall be determined by the Administrator and will be not less than 100% of Fair Market Value on the date the Stock Appreciation Right is granted.  However, a Stock Appreciation Right may be granted with a Base Price lower than that set forth in the preceding sentence if such Stock Appreciation Right is granted pursuant to an assumption or substitution for another stock appreciation right in a manner satisfying the provisions of Section 409A of the Code.

 

Section 7.04     Term and Termination of Stock Appreciation Rights. The term and provisions for termination of each Stock Appreciation Right shall be as fixed by the Administrator, but no Stock Appreciation Right may be exercisable more than ten (10) years after the date it is granted.

 

Section 7.05     Vesting and Exercise of Stock Appreciation Rights. Each Stock Appreciation Right shall vest and become exercisable in one or more installments at such time or times and subject to such conditions, including without limitation the achievement of specified performance goals or objectives established with respect to one or more Performance Criteria, as shall be determined by the Administrator.

 

Section 7.06     Amount, Form and Timing of Settlement. Upon exercise of a Stock Appreciation Right, the Participant who holds such Stock Appreciation Right will be entitled to receive payment from the Company in an amount equal to the product of (a) the difference between the Fair Market Value of a share of Common Stock on the date of exercise over the Base Price per share of Common Stock covered by such Stock Appreciation Right and (b) the number of shares of Common Stock with respect to which such Stock Appreciation Right is being exercised. Payment in respect thereof will be made no later than thirty (30) days after such exercise, provided that such payment will be made in a manner such that no amount of compensation will be treated as deferred under Treasury Regulation Section 1.409A-1(b)(5)(i)(D).  Such payment may, in the discretion of the Administrator, be in cash, shares of Common Stock of equivalent Fair Market Value as of the date of exercise, or a combination of both, except as specifically provided in the Stock Appreciation Right Agreement.

 

 

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Section 7.07     Rights as a Stockholder. Holders of Stock Appreciation Rights shall have no rights or privileges as a stockholder with respect to any shares of Common Stock covered thereby unless and until they become owners of shares of Common Stock following settlement in respect of such Stock Appreciation Rights, in whole or in part, in shares of Common Stock pursuant to their respective Stock Appreciation Right Agreements and the terms and conditions of the Plan.

 

Section 7.08     Restrictions. Stock Appreciation Rights may not be sold, pledged or otherwise encumbered or disposed of and shall not be assignable or transferable except by will, the laws of descent and distribution or pursuant to a domestic relations order entered by a court in settlement of marital property rights, except as specifically provided in the Stock Appreciation Right Agreement or as authorized by the Administrator. 

 

Article 8.

RESTRICTED STOCK AWARDS PROGRAM

 

Section 8.01     Restricted Stock Award Terms. Shares of Common Stock may be issued under the Restricted Stock Awards Program through direct and immediate issuances of Restricted Stock Awards without any intervening option grants. Each such stock grant shall be evidenced by a Restricted Stock Awards Agreement which complies with the terms specified below.

 

Section 8.02     Cost of Shares. Grants of Restricted Stock Awards under the Restricted Stock Awards Program shall be made at such cost as the Administrator shall determine and may be issued for no monetary consideration, subject to applicable state law.

 

Section 8.03     Vesting Provisions.

 

a)     Restricted Stock Awards issued under the Restricted Stock Awards Program may, in the discretion of the Administrator, be fully and immediately vested upon issuance or may vest in one or more installments over the Participant’s period of Service or upon attainment of specified performance objectives.

 

b)     Any new, substituted or additional securities or other property (including money paid other than as a regular cash dividend) which the Participant may have the right to receive with respect to the Participant’s unvested Restricted Stock Awards by reason of any stock dividend, stock split, recapitalization, combination of shares, exchange of shares or other change affecting the outstanding Common Stock as a class without the Company’s receipt of consideration shall be issued subject to (i) the same vesting requirements applicable to the Participant’s unvested Restricted Stock Awards and (ii) such escrow arrangements as the Administrator shall deem appropriate.

 

c)     Unless specified otherwise in the Restricted Stock Awards Agreement, the Participant shall have full shareholder rights with respect to any Restricted Stock Awards issued to the Participant under the Restricted Stock Awards Program, whether or not the Participant’s interest in those shares is vested, and accordingly, the Participant shall have the right to vote such shares and to receive any regular cash dividends paid on such shares.

 

d)     Should the Participant cease to remain in Service while holding one or more unvested Restricted Stock Awards issued under the Restricted Stock Awards Program or should the performance objectives not be attained with respect to one or more such unvested Restricted Stock Awards, then those shares shall be immediately surrendered to the Company for cancellation, and the Participant shall have no further shareholder rights with respect to those shares. To the extent the surrendered shares were previously issued to the Participant for consideration paid in cash or cash equivalent (including the Participant’s purchase-money indebtedness), the Company shall repay to the Participant the cash consideration paid for the surrendered shares and shall cancel the unpaid principal balance of any outstanding purchase-money note of the Participant attributable to such surrendered shares.

 

 

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e)     The Administrator may in its discretion waive the surrender and cancellation of one or more unvested Restricted Stock Awards (or other assets attributable thereto) which would otherwise occur upon the non-completion of the vesting schedule applicable to such shares. Such waiver shall result in the immediate vesting of the Participant’s interest in the Restricted Stock Awards as to which the waiver applies. Such waiver may be effected at any time, whether before or after the Participant’s cessation of Service or the attainment or non-attainment of the applicable performance objectives.

 

Section 8.04     Non-transferability. Restricted Stock Awards granted under the Restricted Stock Awards Program shall not be transferable until the shares are vested.

 

Section 8.05     Share Escrow/Legends. Unvested Restricted Stock Awards may, in the Administrator’s discretion, be held in escrow by the Company until the Participant’s interest in such shares vests or may be issued directly to the Participant with restrictive legends on the certificates evidencing those unvested shares.

 

Article 9.

 

ADMINISTRATION OF THE PLAN

 

Section 9.01     Administrator. Authority to control and manage the operation and administration of the Plan shall be vested in the Board, which may delegate such responsibilities in whole or in part to a committee consisting of two (2) or more members of the Board (the “Committee”), each of whom shall meet the independence requirements under the then applicable rules, regulations or listing requirements adopted by The NASDAQ Stock Market or the principal exchange on which the Company’s shares of Common Stock are then listed or admitted to trading.  Members of the Committee may be appointed from time to time by, and shall serve at the pleasure of, the Board. The Board may limit the composition of the Committee to those persons necessary to comply with the requirements of Section 162(m) of the Code and Section 16 of the Exchange Act. As used herein, the term “Administrator” means the Board or, with respect to any matter as to which responsibility has been delegated to the Committee, the term Administrator shall mean the Committee.

 

Section 9.02     Powers of the Administrator. In addition to any other powers or authority conferred upon the Administrator elsewhere in this Plan or by law, the Administrator shall have full power and authority:  (a) to determine the persons to whom, and the time or times at which, Incentive Options, Nonqualified Options, Restricted Stock Units, Stock Appreciation Rights, or Restricted Stock Awards shall be granted, the number of shares to be represented by each Option Exercise Documents, and the Exercise Price of such Options and the Base Price of such Stock Appreciation Rights; (b) to interpret the Plan; (c) to create, amend or rescind rules and regulations relating to the Plan; (d) to determine the terms, conditions and restrictions contained in, and the form of, Option Exercise Documents; (e) to determine the identity or capacity of any persons who may be entitled to exercise a Participant’s rights under any Option Exercise Documents under the Plan; (f) to correct any defect or supply any omission or reconcile any inconsistency in the Plan or in any Option Exercise Documents, Restricted Stock Awards Agreement, Restricted Stock Unit Agreement, or Stock Appreciation Right Agreement; (g) to accelerate the vesting of any Option, Restricted Stock Unit, Stock Appreciation Right, or Restricted Stock Award; (h) to extend the expiration date of any Option Exercise Documents; (i) subject to Section 9.03, to amend outstanding Option Exercise Documents to provide for, among other things, any change or modification which the Administrator could have included in the original agreement or in furtherance of the powers provided for herein; and (j) to make all other determinations necessary or advisable for the administration of this Plan, but only to the extent not contrary to the express provisions of this Plan.  Any action, decision, interpretation or determination made in good faith by the Administrator in the exercise of its authority conferred upon it under this Plan shall be final and binding on the Company and all Participants.  Notwithstanding any term or provision in this Plan, the Administrator shall not have the power or authority, by amendment or otherwise to extend the expiration date of an Option or Stock Appreciation Right beyond the tenth (10th) anniversary of the date such Option or Stock Appreciation Right was granted.

 

 

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Section 9.03     Repricing Prohibited. Subject to Section 4.02, and except in connection with a corporate transaction involving the Company (including, without limitation, any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, or exchange of shares), neither the Committee nor the Board shall amend the terms of outstanding awards to reduce the Exercise Price of outstanding Options or the Base Price of outstanding Stock Appreciation Rights or cancel outstanding Options, Stock Appreciation Rights, or Restricted Stock Awards in exchange for cash, other awards or Options with an Exercise Price that is less than the Exercise Price of the original Options or Stock Appreciation Rights with a Base Price that is less than the Base Price of the original Stock Appreciation Rights, without approval of the Company’s stockholders, evidenced by a majority of votes cast. 

 

Section 9.04     Limitation on Liability.  No employee of the Company or member of the Board or Committee shall be subject to any liability with respect to duties under the Plan unless the person acts fraudulently or in bad faith.  To the extent permitted by law, the Company shall indemnify each member of the Board or Committee, and any employee of the Company with duties under the Plan, who was or is a party, or is threatened to be made a party, to any threatened, pending or completed proceeding, whether civil, criminal, administrative or investigative, by reason of such person’s conduct in the performance of duties under the Plan.

 

Article 10.

CHANGE IN CONTROL

 

Section 10.01     Options and Stock Appreciation Rights. Vesting of all outstanding Options, Stock or Appreciation Rights shall accelerate automatically effective as of immediately prior to the consummation of the Change in Control. In connection with such acceleration, the Administrator in its discretion may provide, in connection with the Change in Control transaction, for the purchase or exchange of each Option or Stock Appreciation Right for an amount of cash or other property having a value equal to (i) with respect to each Option, the amount (or “spread”) by which, (x) the value of the cash or other property that the Optionee would have received pursuant to the Change in Control transaction in exchange for the shares issuable upon exercise of the Option had the Option been exercised immediately prior to the Change in Control, exceeds (y) the Exercise Price of the Option, and (ii) with respect to each Stock Appreciation Right, the value of the cash or other property that the Participant would have received had the Stock Appreciation Right been exercised immediately prior to the Change in Control. The Administrator shall have the discretion to provide in each Option Exercise Document other terms and conditions that relate to vesting of such Option or Stock Appreciation Right in the event of a Change in Control. The aforementioned terms and conditions may vary in each Option Exercise Document and may be different from and have precedence over the provisions set forth in this Section 10.01.

 

Section 10.02     Restricted Stock Units and Restricted Stock Awards. All Restricted Stock Units and unvested Restricted Stock Awards shall vest in full effective as of immediately prior to the consummation of the Change in Control. In connection with such acceleration, the Administrator in its discretion may provide, in connection with the Change in Control transaction, for the purchase or exchange of each Restricted Stock Unit or Restricted Share for an amount of cash or other property having a value equal to the value of the cash or other property that the Participant would have received had the Restricted Stock Unit or Restricted Share vested immediately prior to the Change in Control. The Administrator shall have the discretion to provide in each agreement other terms and conditions that relate to vesting of such Restricted Stock Units and Restricted Stock Awards in the event of a Change in Control. The aforementioned terms and conditions may vary in each agreement, and may be different from and have precedence over the provisions set forth in this Section 10.02.

 

 

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Article 11.

AMENDMENT AND TERMINATION OF THE PLAN

 

Section 11.01     Amendments. The Board may from time to time alter, amend, suspend or terminate this Plan in such respects as the Board may deem advisable. No such alteration, amendment, suspension or termination shall be made which shall substantially affect or impair the rights of any Participant under an outstanding Option Exercise Documents, Restricted Stock Awards Agreement, Restricted Stock Unit Agreement, and Stock Appreciation Right Agreement without such Participant’s consent. The Board may alter or amend the Plan to comply with requirements under the Code relating to Incentive Options or other types of options which gives Optionees more favorable tax treatment than that applicable to Options granted under this Plan as of the date of its adoption. Upon any such alteration or amendment, any outstanding Option granted hereunder may, if the Administrator so determines and if permitted by applicable law, be subject to the more favorable tax treatment afforded to an Optionee pursuant to such terms and conditions.

 

Section 11.02     Plan Termination. Unless this Plan shall theretofore have been terminated, the Plan shall terminate on the tenth (10th) anniversary of the Effective Date and no Options, Restricted Stock Units, Stock Appreciation Rights, or Restricted Stock Awards may be granted under the Plan thereafter, but Option Exercise Documents, Restricted Stock Awards Agreement, Restricted Stock Unit Agreements, and Stock Appreciation Right Agreements then outstanding shall continue in effect in accordance with their respective terms.

 

Article 12.

 

TAXES

 

Section 12.01     Withholding. The Company shall have the power to withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy any applicable Federal, state, and local tax withholding requirements with respect to any Options, Restricted Stock Units, Stock Appreciation Rights, or Restricted Stock Awards. To the extent permissible under applicable tax, securities and other laws, the Administrator may, in its sole discretion and upon such terms and conditions as it may deem appropriate, permit a Participant to satisfy his or her obligation to pay any such tax, in whole or in part, up to an amount determined on the basis of the highest marginal tax rate applicable to such Participant, by (a) directing the Company to apply shares of Common Stock to which the Participant is entitled as a result of the exercise of an Option or Stock Appreciation Right or vesting of a Restricted Stock Unit or Restricted Share, or (b) delivering to the Company shares of Common Stock owned by the Participant. The shares of Common Stock so applied or delivered in satisfaction of the Participant’s tax withholding obligation shall be valued at their Fair Market Value as of the date of measurement of the amount of income subject to withholding.

 

Section 12.02     Compliance with Section 409A of the Code. Options, Restricted Stock Units, Stock Appreciation Rights, and Restricted Stock Awards will be designed and operated in such a manner that they are either exempt from the application of, or comply with, the requirements of Section 409A of the Code such that the grant, payment, settlement or deferral will not be subject to the additional tax or interest applicable under Section 409A of the Code, except as otherwise determined in the sole discretion of the Administrator. The Plan and each Option Exercise Document, Restricted Stock Awards Agreement, Restricted Stock Unit Agreement, and Stock Appreciation Right Agreement is intended to meet the requirements of Section 409A of the Code and will be construed and interpreted in accordance with such intent, except as otherwise determined in the sole discretion of the Administrator. To the extent that an Option, Restricted Stock Unit, Stock Appreciation Right, or Restricted Stock Award, or grant, payment, settlement or deferral thereof is subject to Section 409A of the Code such Option, Restricted Stock Unit, Stock Appreciation Right, or Restricted Share will be granted, paid, settled or deferred in a manner that will meet the requirements of Section 409A of the Code, such that the grant, payment, settlement or deferral thereof will not be subject to the additional tax or interest applicable under Section 409A of the Code.

 

 

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Article 13.

MISCELLANEOUS

 

Section 13.01     Involuntary Transfer. In the event of any transfer by operation of law or other involuntary transfer (including divorce or death) of all or a portion of any awards or shares granted pursuant to this Plan, whether vested or unvested, held by the record holder thereof, the Company shall have the right to purchase all of the awards or shares transferred at the greater of the purchase price paid by purchaser or the Fair Market Value of the awards or shares (as determined by the Board of Directors) on the date of transfer. Upon such a transfer, the person acquiring the awards or shares shall promptly notify the Secretary of the Company of such transfer. The right to purchase such awards or shares shall be provided to the Company for a period of thirty (30) days following receipt by the Company of written notice by the person acquiring the awards or shares. Within thirty (30) days of receiving notice of the transfer or proposed transfer, the Company shall notify the purchaser/acquirer or his or her executor of the price. If the purchaser/acquirer does not agree with the Company’s valuation, the purchaser/acquirer may have the valuation determined by an independent appraiser to be mutually agreed upon and paid for by the purchaser/acquirer and the Company.

 

Section 13.02     Shareholder Approval of the Plan. The Plan shall be approved by a majority of the outstanding securities entitled to vote by the later of (i) within twelve (12) months before or after the date the Plan is adopted, or (ii) prior to or within twelve (12) months of the granting of any Incentive Options or Nonqualified Options, or the issuance of any Restricted Stock Units, Stock Appreciation Rights, or Restricted Stock Awards. If any Incentive Options or Nonqualified Options is exercised, or any Restricted Stock Units, Stock Appreciation Rights, or Restricted Stock Awards is issued before security holder approval is obtained shall be rescinded if security holder approval is not obtained in the manner described in the preceding sentence.

 

Section 13.03     Excess Awards. Awards may be granted under the Plan which are in each instance in excess of the number of shares of Common Stock then available for issuance under the Plan, provided any excess shares actually issued under those programs shall be held in escrow until there is obtained shareholder approval of an amendment sufficiently increasing the number of shares of Common Stock available for issuance under the Plan. If such shareholder approval is not obtained within twelve (12) months after the date the first such excess issuances are made, then (i) any unexercised options granted on the basis of such excess shares shall terminate and cease to be outstanding and (ii) the Company shall promptly refund to the Participants the exercise or purchase price paid for any excess shares issued under the Plan and held in escrow, together with interest (at the applicable Short Term Federal Rate) for the period the shares were held in escrow, and such shares shall thereupon be automatically canceled and cease to be outstanding.

 

 

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Section 13.04     Benefits Not Alienable. Other than as provided above, benefits under this Plan may not be assigned or alienated, whether voluntarily or involuntarily. Any unauthorized attempt at assignment, transfer, pledge or other disposition shall be without effect.

 

Section 13.05     No Enlargement of Employee Rights. This Plan is strictly a voluntary undertaking on the part of the Company and shall not be deemed to constitute a contract between the Company and any Participant to be consideration for, or an inducement to, or a condition of, the employment of any Participant. Nothing contained in the Plan shall be deemed to give the right to any Participant to be retained as an employee of the Company or any Affiliated Company or to interfere with the right of the Company or any Affiliated Company to discharge any Participant at any time.

 

Section 13.06     Application of Funds. The proceeds received by the Company from the sale of Common Stock pursuant to Option Exercise Documents, except as otherwise provided herein, will be used for general corporate purposes.

 

Section 13.07     Annual Reports. During the term of this Plan, the Company will furnish to each Participant who does not otherwise receive such materials, copies of all reports, proxy statements and other communications that the Company distributes generally to its stockholders, including, but not limited to, financial statements.

 

Section 13.08     Choice of Law and Venue.  The Plan and all related documents shall be governed by, and construed in accordance with, the laws of the State of Delaware.  Acceptance of an award shall be deemed to constitute consent to the jurisdiction and venue of the courts located in the State of Delaware for all purposes in connection with any suit, action or other proceeding relating to such award, including the enforcement of any rights under the Plan or any agreement or other document, and shall be deemed to constitute consent to any process or notice of motion in connection with such proceeding being served by certified or registered mail or personal service within or without the State of Delaware, provided a reasonable time for appearance is allowed.

 

16ex10-1.htm

 

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.

 

 

 

 

 

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.

 

 

6

 

 

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.

 

 

7

 

 

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.

 

 

8

 

 

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. 

 

 

9

 

 

(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.

 

 

10

 

 

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.

 

 

11

 

 

	
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.

 

 

12

 

 

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. 

 

 

13

 

 

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

 

14

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