Document:

ex_114043.htm

Exhibit 10.4

 

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT (this “Agreement”) effective as of April 17, 2018 (“Effective Date”) is by and between Sun BioPharma, Inc., a Delaware corporation (“Sun BioPharma” or the “Company”) and Susan Horvath (“Employee”), collectively referred to herein as the (“Parties”).

 

WITNESSETH

 

WHEREAS, the Company and Employee desire to formalize the employment relationship between the Parties by entering into this Agreement;

 

WHEREAS, the Company’s Compensation Committee (the “Committee”) has approved this Agreement; and

 

WHEREAS, Employee has determined that it is in the best interests of Employee to enter into this Agreement.

 

NOW, THEREFORE, in consideration of the premises, the promises hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the Parties, it is hereby agreed as follows:

 

	 	
			1.

				
			EMPLOYMENT.

			

 

(a)     Position. The Company hereby employs Employee in the position of Vice President of Finance and Chief Financial Officer effective April 17, 2018, and Employee hereby accepts such employment and continued employment.

 

(b)     Employment Period. Employee’s employment hereunder shall commence on April 17, 2018 and shall continue until terminated in accordance with Section 4 hereof (the “Employment Period”). The Company agrees to continue Employee in its employ as Vice President of Finance and Chief Financial Officer during the Employment Period, subject to termination of such employment pursuant to the terms of this Agreement.

 

	 	
			2.

				
			EMPLOYMENT DUTIES.

			

 

(a)     Duties. Employee shall have such duties as are customarily performed and exercised by the Vice President of Finance and Chief Financial Officer of a company with subsidiary operations, subject to the supervision by the President and Chief Executive Officer, together with such additional duties as are reasonably assigned by the President and Chief Executive Officer.. During the Employment Period, (i) Employee’s services shall be performed in metropolitan Minneapolis and/or St. Paul, subject to reasonable business travel and based upon the needs of the Company, (ii) Employee shall make his primary personal residence within metropolitan Minneapolis and/or St. Paul.

 

(b)     Time and Attention. Beginning April 17, 2018, excluding any periods of vacation and sick leave to which Employee is entitled, Employee agrees to devote Employee’s entire working time, energy, and skill to the business and affairs of the Company and, to the extent necessary to discharge the responsibilities assigned to Employee hereunder, to use Employee’s reasonable best efforts to perform faithfully and efficiently such responsibilities; provided, however, that these obligations shall not prohibit Employee from (i) as approved by the President and Chief Executive Officer, serving on civic or charitable board or committees and one (1) corporate board or committees or (ii) managing personal investments, so long as such activities do not materially interfere with the performance of Employee’s responsibilities to the Company, its subsidiaries and affiliates, or violate the Company’s conflict of interest policies. During the Employment Period, Employee shall (i) disclose to the Company any business opportunity that comes to Employee’s attention and that relates to the business of the Company or otherwise arises as a result of Employee’s employment and (ii) not take advantage of or otherwise divert such opportunity for Employee’s own benefit or that of any other person or entity without prior written consent of the Company.

 

 

 

 

(c)     Avoidance of Conflicting Obligations. Employee hereby acknowledges, agrees and represents that Employee’s execution of this Agreement and performance of employment-related obligations and duties for the Company will not cause any breach, default, or violation of any other employment, non-disclosure, confidentiality, non-competition, or other agreement to which Employee may be a party or otherwise be bound. Moreover, Employee hereby agrees that Employee will not use in the performance of his or her employment-related obligations and duties for the Company or otherwise disclose to the Company any trade secrets or confidential information of any person or entity (including any former employer) if and to the extent such use or disclosure may cause a breach or violation of any obligation or duty owed by Employee to such employer, person, or entity under any agreement or applicable law.

 

(d)     Other Activities. During the Employment Period, other than as set forth in paragraph (b) of this Section 2, Employee will not, without the prior written consent of the Company, directly or indirectly other than in the performance of his duties hereunder, render services of a business, professional or commercial nature to any other person or firm, whether for compensation or otherwise.

 

	 	
			3.

				
			COMPENSATION.

			

 

(a)     Compensation. For all services which Employee renders to the Company or any of its subsidiaries or affiliates during the Employment Period, the Company agrees to pay Employee the salary, cash incentive and equity compensation as set by the Board or its Compensation Committee, subject to the following:

 

(i)     Primary Cash Compensation. Effective as of April 17, 2018, Employee’s monthly salary is $18,750 per month, representing an annual rate of $225,000 (the “Base Salary”). Employee’s Base Salary shall be reviewed annually by the Board or its Compensation Committee and the Base Salary for each fiscal year during the Employment Period shall be determined by the Board or its Compensation Committee, which may authorize an increase in Employee’s Base Salary for such year. In no event may Employee’s Base Salary be reduced below its then-current level at any time during the Employment Period other than with Employee’s consent or pursuant to a general wage reduction in respect of substantially all of the Company’s executive officers, in which event Employee’s Base Salary may only be reduced to the same extent and up to the same percentage amount as the base salaries of other executive officers are reduced. Employee’s Base Salary shall be paid in accordance with the Company’s normal periodic payroll practices.

 

(ii)     Cash Bonus. Commencing with a bonus program approved by the Board or its Compensation Committee, Employee will be eligible for an annual cash bonus with a target bonus amount equal to no less than 40% of Base Salary to be paid in a single lump sum with the first payroll following the approval of the Audited Financial statement by the Audit Committee of the Board of Directors (the “Cash Bonus”). The target Cash Bonus is subject to achievement of annual bonus metrics set by the Board or its Compensation Committee from year to year and represents a bonus target percentage which may be earned subject to Employee’s continued employment with the Company through the end of the applicable Cash Bonus period and achievement of corporate/Board objectives set by the Board or its Compensation Committtee Employee’s target Cash Bonus percentage shall be reviewed annually by the Board or its Compensation Committee, beginning with the year after a Bonus Program is approved by the Board or its Compensation Committee, and the target Cash Bonus percentage for each such year shall be determined by the Board or its Compensation Committee, which may authorize an increase in Employee’s target Cash Bonus percentage for such year. In no event may Employee’s target Cash Bonus percentage be reduced below its then-current level at any time during the Employment Period other than with Employee’s consent or pursuant to a general target bonus percentage reduction in respect of substantially all of the Company’s executive officers, in which event Employee’s target Cash Bonus percentage may only be reduced to the same extent and up to the same percentage amount as the target bonus percentage of other executive officers are reduced.

 

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(iii)     Equity. On or promptly after the Effective Date, Company will grant to Employee an option to purchase an aggregate 40,000 shares of the Company’s common stock at a per share price not less than the Fair Market Value of the Company’s common stock as of the date of grant (the “Equity Award”). The Equity Award will be subject to the terms of any equity incentive plan under which it is issued and will vest and become exercisable in the following amounts on the corresponding dates: (a) 10,000 shares as of the date of grant, (b) 10,000 shares as of the date that is twelve (12) months after the date of grant, (c) 10,000 shares as of the date that is twenty four (24) months after the date of grant and (d) the remaining 10,000 shares as of the date that is thirty six (36) months after the date of grant. “Fair Market Value” will have the meaning ascribed to it in the equity incentive plan governing the Equity Award or, if no such plan exists, Section 409A of the Internal Revenue Code of 1986, as amended and in effect from time to time and including the regulations and guidance thereunder (the “Code”).

 

(iv)     Other Compensation. Commencing with the calendar year beginning January 1, 2019, Employee shall be entitled to participate in annual long-term incentive opportunities as determined by the Board consistent with those provided to other Company executive officers and in accordance with the Company’s plans and applicable award agreements.

 

(b)     Expenses. The Company shall pay all reasonable expenses incurred by Employee that are directly related to performance of her responsibilities and duties for the Company hereunder. Employee shall submit to the Company statements that justify in reasonable detail all reasonable expenses so incurred. Subject to such audits as the Company may deem necessary, the Company shall reimburse Employee the full amount of any such expenses advanced by Employee. Reimbursable expenses shall also include a standard car mileage allowance. All expenses eligible for reimbursements in connection with Employee’s employment must be incurred by Employee while employed by the Company and must be in accordance with the Company’s expense reimbursement policies. The amount of reimbursable expenses incurred in one taxable year shall not affect the expenses eligible for reimbursement in any other taxable year. Each category of reimbursement shall be paid as according to the Company’s standard expense reimbursement policy, typically at the end of the month of submission, but in no event shall any such reimbursement be paid after the last day of Employee’s taxable year following the taxable year in which the expense was incurred. No right to reimbursement is subject to liquidation or exchange for other benefits.

 

(c)     Benefits. Employee will be entitled to participate in each employee benefit plan and program of the Company to the extent that Employee meets the eligibility requirements for such employee benefit plan or program. Employee shall pay any contributions which are generally required of employees to receive any such benefits. The Company provides no assurance as to the adoption or continuance of any particular employee benefit plan or program, and Employee’s participation in any such plan or program shall be subject to the provisions, rules and regulations applicable thereto. If there is any waiting period for participation by Employee or her covered dependents in any of the health, dental or vision benefit plans, the Company will pay the excess of Employee’s health, dental and/or vision premiums incurred during such waiting period over the amount she otherwise would pay under Company plans. To the extent the Company makes directors’ and officers’ liability insurance available to the directors, it will also make it available to Employee on the same terms as other directors. Employee shall receive four (4) weeks paid vacation annually; provided, however, that vacations not taken during any calendar year shall not be carried over to a subsequent year. Upon the Date of Termination, Employee shall be paid at a rate per day equal to Employee’s Base Salary then in effect divided by 260 for all current and previously accumulated vacation days not taken during the calendar year in which the Date of Termination occurs, with such payment to be made within thirty (30) days following the Date of Termination. Such amount shall be deemed a payment obligation accruing through the Date of Termination for purposes of Section 5.

 

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			4.

				
			TERMINATION.

			

 

(a)     Cause.     The Company may terminate Employee’s employment during the Employment Period for Cause. For purposes of this Agreement, “Cause” shall mean:

 

(i)       An intentional act of fraud, embezzlement, theft or any material violation of law that occurs during or in the course of the Employment Period;

 

(ii)      Intentional damage by Employee to the Company’s assets;

 

(iii)     Intentional disclosure by Employee of the Company’s confidential information contrary to Company policies;

 

(iv)      Material breach of Employee’s obligations under this Agreement;

 

(v)       Intentional engagement by Employee in any activity which would constitute a breach of Employee’s duty of loyalty or Employee’s assigned duties;

 

(vi)      Intentional breach by Employee of any of the Company’s policies and procedures;

 

(vii)     The willful and continued failure by Employee to perform Employee’s assigned duties (other than as a result of incapacity due to physical or mental illness); or

 

(viii)    Employee is or has been prevented from performing any duties contemplated by this Agreement by reason of any agreement with any third party to which Employee is a party or is bound, or

 

(ix)      Willful conduct by Employee that is demonstrably and materially injurious to the Company, monetarily or otherwise.

 

For purposes of this provision, no act, or failure to act, on the part of Employee shall be considered “willful” unless it is done, or omitted to be done, by Employee in bad faith or without reasonable belief that Employee’s action or omission was in the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by Employee in good faith and in the best interests of the Company.

 

(b)     Good Reason.     Employee may terminate Employee’s employment during the Employment Period for Good Reason.

 

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(i)     For purposes of this Agreement, “Good Reason” shall mean the assignment to Employee, without Employee’s consent, of any duties materially inconsistent with Employee’s position (including changes in status, offices, or titles and any change in Employee’s reporting requirements), authority, duties or responsibilities as contemplated by Section 2(a), the Company requiring Employee to relocate employee’s primary work location by more than fifty (50) miles, any other action by the Company which results in a material diminution in such position, authority, duties, responsibilities or aggregate Base Salary and Cash Bonus or the Company’s material breach of its obligations to Employee under this Agreement (each an “Event” for purposes of this paragraph).

 

(ii)     Employee must notify the Company in writing of any Event that constitutes Good Reason within ninety (90) days following Employee’s initial knowledge of the existence of such Event (or, if earlier, within ninety (90) days following the date upon which Employee should reasonably have been expected to have knowledge of such Event) or such Event shall not constitute Good Reason under this Agreement. Employee must provide at least thirty (30) days prior written notification of her intention to terminate his employment for Good Reason and the Company shall have thirty (30) days from the date of receipt of such notice to effect a cure of the condition constituting Good Reason, and, upon cure thereof by the Company, such Event shall no longer constitute Good Reason.

 

(c)     Notice of Termination. Any termination by either party for any reason, including any termination by the Company for Cause, or by Employee for Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 13(c). For purposes of this Agreement, a “Notice of Termination” means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Employee’s employment under the provision so indicated and (iii) specifies the Date of Termination (which date shall not be more than thirty (30) days after the giving of such notice; provided, however, that if Employee is terminating for Good Reason such date shall be not less than thirty (30) days nor more than forty-five

(45) days after giving such notice. The inadvertent failure by Employee or the Company to set forth in the Notice of Termination a particular fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of Employee or the Company, respectively, hereunder or preclude Employee or the Company, respectively, from asserting such fact or circumstance in enforcing Employee’s or the Company’s rights hereunder.

 

(d)     Date of Termination. “Date of Termination” means the date of receipt of the Notice of Termination, or any later date specified therein, as the case may be. The Company and Employee shall take all steps necessary (including with regard to any post-termination services by Employee) to ensure that any termination of employment described in this Section 4 constitutes a “separation from service” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended and in effect from time to time and including the regulations and guidance thereunder (the “Code”), and notwithstanding anything contained herein to the contrary, the date on which the separation from service takes place shall be the “Date of Termination.” Notwithstanding the foregoing, the Date of Termination may be accelerated by the party who receives Notice of Termination by providing to the other party written notice of acceleration, including the accelerated Date of Termination, within thirty (30) days of receipt of the Notice of Termination.

 

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			5.

				
			OBLIGATIONS OF COMPANY UPON TERMINATION.

			

 

(a)     Cause; Without Good Reason. If Employee’s employment is terminated by the Company for Cause or by Employee without Good Reason, the Employment Period shall terminate without further obligation to Employee other than Base Salary and accrued unused vacation through the Date of Termination paid on the Company’s normal payroll payment date.

 

(b)     Disability or Death. If the Employment Period is terminated due to the death or Permanent Disability of Employee, Employee (or his estate or legal representative) shall be entitled solely to the following: (i) Base Salary and accrued unused vacation through the Date of Termination (paid on the Company’s normal payroll payment date), (ii) payment of the annual cash bonus (as described in Section 3(a)(ii)) of this Agreement that Employee otherwise would have earned but for such termination of employment for the performance period in which Employee’s Date of Termination occurs, based on actual performance for the entire performance period, and payable no later than the end of the year in which the Permanent Disability or death occurs, provided that it shall be subject to a pro-rata reduction for the portion of the performance period following the Date of Termination, and (iii) in the case of a termination due to Permanent Disability, and subject to Employee being eligible for and taking all steps necessary to continue Employee’s group health insurance coverage with the Company following the Date of Termination, continued participation, at the Company’s expense, in the Company’s group health plans for Employee and his covered dependents through the earliest of: (x) the eighteen (18) month anniversary of the Date of Termination, (y) the date Employee becomes eligible for group health insurance coverage from any other employer, or (z) the date Employee is no longer eligible to continue Employee’s group health insurance coverage with the Company under applicable law. As used herein “Permanent Disability” shall mean and include Employee’s incapacity due to physical or mental illness or disability to timely perform his duties under this Agreement, as reasonably determined by the Board, for a period of six (6) or more months. Permanent Disability also includes Employee becoming permanently disabled within the meaning of any long-term disability plan of the Company applicable to Employee, and Employee commences to receive benefits under such plan. Termination of the Employment Period under this Section 5(b) shall not constitute a termination by the Company other than for Cause or by Employee for Good Reason.

 

(c)     Other Than for Cause; Good Reason. Except as otherwise provided in Section 6(a), if (i) the Company terminates Employee’s employment other than for Cause or (ii) Employee terminates employment for Good Reason, then the Employment Period shall terminate without further obligation to Employee other than the Company’s obligation to pay to Employee (or, in the case of his death, to his estate or legal representatives) any sums due to Employee through the Date of Termination and, subject to Employee satisfying the waiver and release condition identified in Section 13(d) and not violating the Protective Covenants, the Severance Payment and Benefits Continuation Payments. Such payments shall be subject to the Company’s normal payroll and withholding requirements.

 

(d)     Severance Payment and Benefits Continuation Payments. Subject to Employee satisfying the waiver and release condition identified in Section 13(d), the “Severance Payment” shall be equal to the aggregate of Employee’s annual Base Salary plus an amount equal to a prorated portion of Employee’s Cash Bonus target for the year in which the Date of Termination occurs, with such prorated amount determined by multiplying Employee’s Cash Bonus target for the year in which the Date of Termination occurs by a fraction, the numerator of which is the number of full months during such year in which Employee was employed and the denominator of which is twelve (12). In addition, subject to Employee satisfying the waiver and release condition identified in Section 13(d) not violating the Protective Covenants, and Employee being eligible for and taking all steps necessary to continue Employee’s group health insurance coverage with the Company following the Date of Termination, Employee will receive continued participation, at the Company’s expense, in the Company’s group health plans for Employee and his covered dependents through the earliest of: (x) the eighteen (18) month anniversary of the Date of Termination, (y) the date Employee becomes eligible for group health insurance coverage from any other employer, or (z) the date Employee is no longer eligible to continue Employee’s group health insurance coverage with the Company under applicable law (the “Benefits Continuation Payments”).

 

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			(e)

				
			Timing of Severance Payment.

			

 

(i)     Timing of Severance Payment. The Severance Payment shall be payable to Employee (or, in the event of death, to his estate or legal representative) in cash by the Company over a period of twelve (12) consecutive months, in equal monthly installments subject to the Company’s normal payroll policies commencing on the first regular payroll date that occurs after Employee’s Date of Termination; provided, however, that any installments that otherwise would be payable on the Company’s regular payroll dates between the Date of Termination and the fortieth (40th) calendar day after the Date of Termination will be delayed until the Company’s first regular payroll date that is more than forty (40) days after the Date of Termination and included with the installment payable on such payroll date.

 

(ii)     Distribution Rules.     The following rules shall apply with respect to the distribution of payments and benefits, if any, to be provided to Employee under this Section 5 and Section 6, as applicable:

 

(A)     Notwithstanding anything to the contrary contained herein, no payments shall be made to Employee upon Employee’s termination of employment from the Company under this Agreement unless such termination of employment is a “separation from service” under Code Section 409A. The determination of whether and when a “separation from service” has occurred shall be made in a manner consistent with and based on the presumptions set forth in Treasury Regulations Section 1.409A-1(h).     If, as of the date of the “separation from service” of Employee from the Company, Employee is not a Specified Employee (as defined in Section 5(e)(iii)), then the payments shall be made on the dates and terms set forth in Section 5(e)(i).

 

(B)     If, as of the date of the “separation from service” of Employee from the Company, Employee is a Specified Employee, then any portion of the payments that is a payment of deferred compensation as determined under Code Section 409A (after taking into account the exemption rules for short-term deferrals under Treasury Regulations Section 1.409A-1(b)(4) and separation payments under Treasury Regulations Section 1.409A-1(b)(9)(iii)) and that would, absent this subsection, be paid within the six-month period following the separation from service of Employee from the Company shall not be paid until the date that is six (6) months and one (1) day after such separation from service (or, if earlier, Employee’s death).

 

(iii)     Specified Employee. As used herein, the term “Specified Employee” means a “specified employee” (as defined in Code Section 409A(a)(2)(B)(i)). By way of clarification, “specified employee” means a “key employee” (as defined in Section 416(i) of the Code, disregarding Section 416(i)(5) of the Code) of the Company. Employee shall be treated as a “key employee” if Employee meets the requirement of Section 416(i)(1)(A)(i), (ii) or (iii) of the Code at any time during the twelve (12) month period ending on an “identification date.” If Employee is a “key employee” as of an identification date, she shall be treated as a Specified Employee for the twelve (12) month period beginning on the first day of the fourth month following such identification date. For purposes of any Specified Employee determination hereunder, the “identification date” shall mean the last day of the calendar year.

 

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			6.

				
			CHANGE OF CONTROL TERMINATION PAYMENT.

			

 

(a)     Triggering Event. In consideration and recognition of Employee’s employment and his contribution to protecting and enhancing shareholder value in any future sale of the Company that may occur, the Company agrees to pay to Employee a change of control termination payment as specified below (the “Change of Control Termination Payment”). The Change of Control Termination Payment shall be in addition to amounts otherwise payable pursuant to Section 3 through the Date of Termination but in lieu of any Severance Payments or Benefits Continuation Payments otherwise due under Section 5, shall be subject to Employee satisfying the waiver and release condition identified in Section 13(d) and Employee not violating the Protective Covenants, and shall be earned upon the earlier of (i) the termination of Employee’s employment with the Company at any time within two (2) years following a Change of Control (as defined below) (A) by the Company for any reason other than Cause or (B) by Employee for Good Reason or (ii) upon the occurrence of a Change of Control, if Employee’s employment with the Company was terminated within six (6) months prior to the Change of Control, either by (A) the Company for any reason other than Cause or (B) by Employee for Good Reason (the earlier of (i) or (ii) above being referred to as the “Triggering Event”).

 

(b)     Amount. The amount of the Change of Control Termination Payment shall be equal to one (1.0) times the sum of Employee’s annual Base Salary as of the Date of Termination plus Employee’s Cash Bonus target for the year in which the Date of Termination occurs.

 

(c)     Payment; Medical Coverage; Vesting. Subject to Employee satisfying the waiver and release condition identified in Section 13(d) and not violating the Protective Covenants, the Change of Control Termination Payment shall be paid in a single cash lump sum payment to Employee (or, in the event of death, to his estate or legal representative) not later than forty (40) days after the Triggering Event. Such payment shall be in addition to sums due to Employee through the Date of Termination, shall be subject to normal withholding requirements of the Company and shall be in lieu of Severance Payments or Benefits Continuation Payments that may otherwise be due under Section 5. In addition, all unvested Equity Compensation and any additional unvested equity, including, but not necessarily limited to stock options and/or restricted stock units awarded to Employee shall immediately vest as of the Triggering Event. In addition, subject to Employee satisfying the waiver and release condition identified in Section 13(d) and not violating the Protective Covenants and Employee being eligible for and taking all steps necessary to continue Employee’s group health insurance coverage with the Company following the Date of Termination, Employee will receive the Benefits Continuation Payments.

 

(d)     Change of Control Defined. For the purposes of this Agreement, the term “Change of Control” means a change in the ownership or effective control of, or in the ownership of a substantial portion of the assets of, the Company, to the extent consistent with Code Section 409A and any regulatory or other interpretive authority promulgated thereunder, as described in paragraphs (i) through (iv) below.

 

(i)     Change in Ownership of Company.     A change in the ownership of the Company will be deemed to have occurred on the date that any one person, or more than one person acting as a group (within the meaning of paragraph (iv) below) other than a group of which Employee is a member, acquires ownership of the Company stock that, together with the Company stock held by such person or group, constitutes more than 50% of the voting power of the stock of the Company: provided, however that for purposes of this Section 6(d)(i), no Change of Control may be deemed to have occurred (A)     as a result of any transaction(s) completed on or before October 1, 2015 or (B) pursuant to the acquisition of ownership of the Company’s stock by a person owning more than 5% of Company stock as of September 5, 2015.

 

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(A)     If any one person or more than one person acting as a group (within the meaning of paragraph (iv) below), other than a group of which Employee is a member, is considered to own more than 50% of the total voting power of the stock of the Company, the acquisition of additional Company stock by such person or persons shall not be considered to cause a change in the ownership of the Company or to cause a change in the effective control of the Company (within the meaning of paragraph (ii) below).

 

(B)     An increase in the percentage of Company stock owned by any one person, or persons acting as a group (within the meaning of paragraph (iv) below), as a result of a transaction in which the Company acquires its stock in exchange for property, shall be treated as an acquisition of stock for purposes of this paragraph (i).

 

(C)     Except as provided in (B) above, the provisions of this paragraph

(i)     shall apply only to the transfer or issuance of Company stock if such stock remains outstanding after such transfer or issuance.

 

	 	
			(ii)

				
			Change in Effective Control of Company.

			

 

(A)     A change in the effective control of the Company shall occur on the date that either of (1) or (2) below occurs:

 

(1)     Any one person, or more than one person acting as a group (within the meaning of paragraph (iv) below), acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Company possessing 30% or more of the total voting power of the stock of the Company: provided, however, that for purposes of this Section 6(d)(ii), no Change of Control may be deemed to have occurred (A) as a result of any transaction(s) completed on or before October 1, 2015 or (B) pursuant to the acquisition of ownership of Company stock by a person owning more than 5% of the Company’s stock as of September 5, 2015, or

 

(2)     A majority of members of the Board are replaced during any twelve (12) month period by members of the Board whose appointment or election is not endorsed by a majority of the Board prior to the date of such appointment or election.

 

(B)A change in effective control of the Company also may occur with respect to any transaction in which either the Company or the other entity involved in a transaction experiences a Change of Control event described in paragraphs (i) or (iii).

 

(C)     If any one person, or more than one person acting as a group (within the meaning of paragraph (iv) below), is considered to effectively control the Company (within the meaning of this paragraph (ii)), the acquisition of additional control of the Company by the same person or persons shall not be considered to cause a change in the effective control of the Company (or to cause a change in the ownership of the Company within the meaning of paragraph (i)).

 

(iii)     Change in Ownership of a Substantial Portion of Company’s Assets. A change in the ownership of a substantial portion of the Company’s assets shall occur on the date that any one person, or more than one person acting as a group (within the meaning of paragraph (iv) below), other than a group of which Employee is a member, acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value (within the meaning of paragraph (iii)(B)) equal to or more than 40% of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions.

 

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(A)     A transfer of the Company’s assets shall not be treated as a change in the ownership of such assets if the assets are transferred to one or more of the following:

 

(1)     A shareholder of the Company (immediately before the asset transfer) in exchange for or with respect to Company stock;

 

(2)     An entity, 50% or more of the total value or voting power of which is owned, directly or indirectly, by the Company;

 

(3)     A person, or more than one person acting as a group (within the meaning of paragraph (iv) below), that owns, directly or indirectly, 50% or more of the total value or voting power of all of the outstanding stock of the Company; or

 

(4)     An entity, at least 50% of the total value or voting power of which is owned, directly or indirectly, by a person described in paragraph (iii)(A)(3).

 

For purposes of this paragraph (iii)(A), and except as otherwise provided, a person’s status is determined immediately after the transfer of assets.

 

(B)     For purposes of this paragraph (iii), gross fair market value means the value of all the Company’s assets, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.

 

(iv)     Group Definition. For the purposes of this Section 6, persons shall be considered to be acting as a group if they are owners of an entity that enters into a merger, consolidation, purchase, or acquisition of assets, or similar business transaction with the Company. If a person, including an entity shareholder, owns stock in the Company and another entity with which the Company enters into a merger, consolidation, purchase, or acquisition of stock, or similar business transaction, such person shall be considered to be acting as a group with the other owners of equity interests in an entity only to the extent of the ownership in that entity prior to the transaction giving rise to the change and not with respect to the ownership interest in the other corporation. Persons shall not be considered to be acting as a group solely because they purchase or own stock of the Company at the same time, or as a result of the same public offering of Company stock.

 

	 	
			7.

				
			PARACHUTE PAYMENT CUT-BACK.

			

 

(a)     Safe Harbor. Notwithstanding anything to the contrary contained herein, the Company will not pay to Employee any excise tax gross up pursuant to this Agreement or any other agreement between Employee and the Company. Further notwithstanding anything to the contrary contained herein, the Company shall reduce any payment contingent on a Change of Control pursuant to any plan, agreement, or arrangement of the Company that would be considered in determining whether a “parachute payment” (as defined in Section 280G (“Section 280G”) of the Code), has occurred (“Change of Control Severance Payment”) to 2.99 times Employee’s average compensation, as indicated on such Employee’s Form W-2, for the five (5) years ending immediately prior to the year containing the date of the Change of Control (the “Safe Harbor Amount”) if, and only if, reducing the Change of Control Severance Payment would provide Employee with a greater net after-tax Change of Control Severance Payment than would be the case if no such reduction took place. The Safe Harbor Amount, as defined herein, is an amount expressed in present value which maximizes the aggregate present value of the Change of Control Severance Payment without causing the Change of Control Severance Payment to be subject to the excise tax under Section 4999 (and related Section 280G) of the Code (the “Excise Tax”), determined in accordance with Section 280G(d)(4). Any reduction in the Change of Control Severance Payment shall be implemented in accordance with Section 7(b).

 

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(b)     Implementation Rules.

 

(i)     Reduction. Any reduction in payments pursuant to Section 7(a) shall apply to cash payments and/or vesting of equity awards so as to minimize the amount of compensation that is reduced (i.e., it applies to payments or vesting that to the greatest extent represent parachute payments), with the amount of compensation based on vesting to be based on all facts and circumstances as of the date of such vesting; provided, however, the reduction shall first be applied to cash payments and only applied to equity awards thereafter, such that equity awards are only reduced to the extent absolutely necessary; further, provided, however, no reduction shall be applied to an amount that constitutes a deferral of compensation under Code Section 409A except for amounts that have become payable at the time of the reduction and as to which the reduction will not result in a non-reduction in a corresponding amount that is a deferral of compensation under Code Section 409A that is not currently payable. In no event shall any reduction or cancellation of payments that constitute deferred compensation under Code Section 409A result in an impermissible change in the form or timing of such payments, or an impermissible acceleration or deferral of such payments, in violation of Code Section 409A.

 

(ii)     Excise Tax. For purposes of determining whether the Change of Control Severance Payment will be subject to the Excise Tax and the amount of such Excise Tax:

 

(A)     The Change of Control Severance Payment shall be treated as a “parachute payment” within the meaning of Section 280G(b)(2), and if it is an “excess parachute payment” within the meaning of Section 280G(b)(1), it shall be treated as subject to the Excise Tax, unless, and except to the extent that, in the written opinion of independent compensation consultants, counsel or auditors of nationally recognized standing (“Independent Advisors”) selected by the Company and reasonably acceptable to Employee, the Change of Control Severance Payment (in whole or in part) does not constitute a parachute payment, or such excess parachute payment (in whole or in part) represents reasonable compensation for services actually rendered within the meaning of Section 280G(b)(4) in excess of the base amount within the meaning of Section 280G(b)(3) or are otherwise not subject to the Excise Tax.

 

(B)     The value of any non-cash benefits or any deferred payment or benefit shall be determined by the Independent Advisors in accordance with the principles of Sections 280G(d)(3) and (4).

 

(iii)     Tax Rates. For purposes of determining reductions in compensation pursuant to this Section 7(b), if any, Employee will be deemed (A) to pay federal income taxes at the applicable rates of federal income taxation for the calendar year in which the compensation would be payable; and (B) to pay any applicable state and local income taxes at the applicable rates of taxation for the calendar year in which the compensation would be payable, taking into account any effect on federal income taxes from payment of state and local income taxes.

 

	 	
			8.

				
			NON-EXCLUSIVITY OF RIGHTS.

			

 

Nothing in this Agreement shall prevent or limit Employee’s continuing or future participation in any plan, program, policy or practice provided by the Company or any of its affiliated companies and for which Employee may qualify, nor, except as specifically set forth herein, shall anything herein limit or otherwise affect such rights as Employee may have under any contract or agreement with the Company or any of its affiliated companies. Amounts which are vested benefits or which Employee is otherwise entitled to receive under any plan, practice or program of or any contract or agreement with the Company or any of its affiliated companies at or subsequent to the Date of Termination shall be payable in accordance with such plan, policy, practice or program or contract or agreement except as explicitly modified by this Agreement.

 

11

 

 

	 	
			9.

				
			FULL SETTLEMENT.

			

 

In no event shall Employee be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to Employee under any of the provisions of this Agreement, and such amounts shall not be reduced whether or not Employee obtains other employment. The Company agrees to pay as incurred, to the full extent permitted by law, all legal fees and expenses which Employee may reasonably incur as a result of any contest or dispute by the Company or Employee with respect to liability under, or the interpretation of the validity or enforceability of, any provision of this Agreement, but only in the event and to the extent that (i) Employee receives a final, non-appealable judgment in his favor in any such action or receives a final judgment in his favor that has not been appealed by the Company within thirty (30) days of the date of the judgment; or (ii) the Parties agree to dismiss any such action upon the Company’s payment of the sums allegedly due Employee or performance of the covenants by the Company allegedly breached by it.

 

	 	
			10.

				
			PROTECTIVE COVENANTS

			

 

(a)     Confidential Information. Employee and the Company are Parties to one or more separate agreements respecting confidential information, trade secrets, and inventions (collectively, the “IP Agreements”). The Parties agree that the IP Agreements shall not be superseded or terminated by this Agreement and shall survive any termination of this Agreement.

 

(b)     Non-Compete Commitment. During the term of this Agreement and for a period of one (1) year following the Date of Termination, regardless of the reason for the termination of Employee’s employment and whether such termination occurs at the initiative of Employee or the Company, Employee agrees that she will not accept any position as vice president of finance and chief financial officer with, or provide comparable level executive consultation to any Competitive Business of the Company. As used herein, a “Competitive Business” is a business (including but not limited to a business started by Employee) that is in the business of providing activities, products or services that are competitive with those provided by the Company and that are of the type conducted, authorized, offered, or provided within one year prior to Employee’s Date of Termination.

 

(c)     Agreement Not to Solicit Employees. During the Employment Period and for a period of one (1) year following the Date of Termination, regardless of the reason for the termination of Employee’s employment and whether such termination occurs at the initiative of Employee or the Company, Employee covenants and agrees that Employee shall not (a) solicit, recruit, or hire (or attempt to solicit, recruit, or hire) or otherwise assist anyone in soliciting, recruiting, or hiring, any employee or independent contractor of the Company who performed work for the Company within the last year of Employee’s employment with the Company until that employee’s employment or that independent contractor’s engagement with the Company has been voluntarily or involuntarily terminated for at least six (6) months, or (b) otherwise encourage, solicit, or support any employee(s) or independent contractor(s) to leave their employment with the Company.

 

12

 

 

(d)     Non-Solicitation of Customers or Clients. During the Employment Period and for a period of one (1) year following the Date of Termination, regardless of the reason for the termination of Employee’s employment and whether such termination occurs at the initiative of Employee or the Company, Employee agrees not to solicit, directly or by assisting others, any business from any of the Company’s customers or clients, including actively sought prospective customers or clients, with whom Employee has had material contact during the one-year period prior to the termination of the Employment Period with the Company, for the purpose of providing products or services that are competitive with those provided by the Company. As used in this paragraph, “material contact” means the contact between Employee and each customer, client or vendor, or potential customer, client or vendor (i) with whom or which Employee dealt on behalf of the employer, (ii) whose dealings with the Company were coordinated or supervised by Employee, (iii) about whom Employee obtained confidential information in the ordinary course of business as a result of Employee’s association with the Company, or

(i)     who receives products or services authorized by the Company, the sale or provision of which results or resulted in compensation, commissions, or earnings for Employee within one year prior to Employee’s Date of Termination.

 

(e)     Non-Disparagement. Employee agrees not to make disparaging remarks, or remarks that could reasonably be construed as disparaging, regarding the Company, its subsidiaries, their directors, officers, or employees, businesses or practices during the Employment Period and thereafter.

 

(f)     Certain Payment Obligations/Consideration. Employee agrees that the payment of any Severance Payment, Benefits Continuation Payments or Change of Control Termination Payment shall be subject to and expressly conditioned upon Employee’s compliance with the covenants set forth in paragraphs (a) through (e) of this Section 10 (collectively, the “Protective Covenants”). Payments of amounts owing under any Change of Control Termination Payment, Severance Payment or Benefits Continuation Payments obligation shall be conditioned upon Employee’s continued compliance with the Protective Covenants. Should Employee fail to comply with any of the Protective Covenants, the Company shall not be required to make the Change of Control Termination Payment, Severance Payment (or any portion thereof remaining unpaid) or Benefits Continuation Payments and Employee shall be required to repay any portion of the Change of Control Termination Payment, Severance Payment or Benefits Continuation Payments that Employee has already received from the Company. Employee acknowledges that the consideration for the Protective Covenants includes the employment granted and the salary and other compensation provided hereunder including, but not limited to, the covenants respecting a Severance Payment, Change of Control Termination Payment or Benefits Continuation Payments.

 

(g)     Specific Performance. Employee acknowledges that it would be difficult to calculate the Company’s damages from Employee’s breach of any of the Protective Covenants and that money damages (even including any repayments made pursuant to paragraph (f)) would therefore be an inadequate remedy. Accordingly, upon such breach, Employee acknowledges that the Company may seek and shall be entitled to temporary, preliminary, and/or permanent injunctive relief against Employee, and/or other appropriate orders to restrain such breach. Nothing in this provision shall limit or prevent the Company from seeking any other damages or relief provided by applicable law for breach of this Agreement or any section or provision hereof. Employee agrees that the Company may obtain specific performance, and that the Company shall not be required to post bond in the event it is necessary for the Company to obtain temporary or preliminary injunctive relief, any bond requirement hereby being expressly waived by Employee.

 

(h)     Protective Covenant Enforceability. The Parties covenant and agree that the provisions contained in paragraphs (a) through (g) are reasonable and are not known or believed to be in violation of any federal, state, or local law, rule, or regulation. It is the reasonable intent and expectation of the Parties that these protective covenants shall be enforced in accordance with their terms. However, in the event a court of competent jurisdiction finds any provision herein (or subpart thereof) to be void or unenforceable, the Parties agree that the court shall modify the provision(s) (or subpart(s) thereof) to make the provision(s) (or subpart(s) thereof) and this Agreement valid and enforceable to the fullest extent permitted by applicable law. Any illegal or unenforceable provision (or subpart thereof), or any modification by any court, shall not affect the remainder of this Agreement, which shall continue at all times to be valid and enforceable in accordance with its terms.

 

13

 

 

	 	
			11.

				
			SUCCESSORS.

			

 

(a)     Successors in Interest. This Agreement is personal to Employee and, without the prior written consent of the Company, shall not be assignable by Employee otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by Employee’s legal representatives. This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns.

 

(b)     Assumption of Agreement. The Company will require any successor who acquires all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, the “Company” shall mean Sun BioPharma, Inc., as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law or otherwise.

 

	 	
			12.

				
			COMPLIANCE WITH CODE SECTION 409A.

			

 

(a)     Compliance. All payments that may be made and benefits that may be provided pursuant to this Agreement are intended to comply with, or otherwise be exempt from, Code Section 409A and any regulations and Treasury guidance promulgated hereunder, and any ambiguities shall be interpreted in a manner consistent with the requirements of Code Section 409A. Further, notwithstanding anything to the contrary, all Severance and Change of Control Termination payments payable under the provisions of Section 5 or Section 6 shall be paid to Employee no later than the last day of the second calendar year following the calendar year in which the Date of Termination occurs. None of the payments under this Agreement are intended to result in the inclusion in Employee’s federal gross income of an amount on account of a failure under Section 409A(a)(1) of the Code. The Parties intend to administer and interpret this Agreement to carry out such intentions. Notwithstanding any other provision of this Agreement, to the extent that the right to any payment (including the provision of benefits) hereunder provides for the “deferral of compensation” within the meaning of Section 409A(d)(1) of the Code, the payment shall be paid (or provided) in accordance with the following:

 

(i)     Each payment hereunder is intended to constitute a separate payment from each other payment for purposes of Treasury Regulations Section 1.409A-2(b)(2).

 

(ii)     Payments with respect to reimbursements of expenses or benefits or provision of fringe or other in-kind benefits shall be made on or before the last day of the calendar year following the calendar year in which the relevant expense or benefit is incurred. The amount of expenses or benefits eligible for reimbursement, payment or provision during a calendar year shall not affect the expenses or benefits eligible for reimbursement, payment or provision in any other calendar year.

 

(b)     Amendments. The Company and Employee agree that they will execute any and all amendments to this Agreement as they mutually agree in good faith may be necessary to ensure compliance with Code Section 409A.

 

14

 

 

(c)     Tax Matters. The Company makes no representation or warranty as to the tax effect of any of the preceding provisions, and the provisions of this Agreement shall not be construed as a guarantee by the Company of any particular tax effect to Employee under this Agreement. Without limiting the foregoing, the Company shall not be liable to Employee or any other person for any payment made under this Agreement which is determined to result in the imposition of an excise tax, penalty or interest under Code Section 409A, nor for reporting in good faith any payment made under this Agreement as an amount includible in gross income under Code Section 409A.

 

	 	
			13.

				
			MISCELLANEOUS.

			

 

(a)     Governing Law; Interpretation; Severability. This Agreement shall be governed by the laws of the State of Minnesota without regard to the conflicts of laws provisions of that State or any other State. The Company hereby consents to, and waives any objection to, personal jurisdiction in any state or federal court sitting in Hennepin County, Minnesota, for the purpose of any action to enforce this Agreement or recover damages for the breach thereof. The Parties agree that any dispute arising from this Agreement, including but not limited to issues of breach, enforceability, or modification, shall be decided only in a state or federal court sitting in Hennepin County, Minnesota, which the Parties expressly agree shall be the exclusive venue for any such action.

 

(b)     Amendment; Validity. This Agreement may not be amended or modified otherwise than by a written agreement executed by the Parties hereto or their respective successors and legal representatives. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement. The captions of this Agreement are not part of the provisions hereof and shall have no force and effect.

 

(c)     Notices. All notices and other communications hereunder shall be in writing

and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, in either case, accompanied by a facsimile copy, addressed as follows:

 

If to Employee:

 

Susan Horvath

4601 Tower St.

Edina, MN     55424

 

If to the Company:

 

Sun BioPharma, Inc.

712 Vista Blvd.     #305

Waconia, MN     55387

 

or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee.

 

(d)     Waiver and Release. Employee acknowledges and agrees that the Company requires, as a condition to receipt of any Severance Payment or Benefits Continuation Payments under Section 5 or any Change of Control Termination Payment or Benefits Continuation Payments under Section 6, that Employee (or a representative of his estate) execute a waiver and release discharging the Company, its subsidiaries, and their respective affiliates, and its and their officers, directors, managers, employees, agents and representatives and the heirs, predecessors, successors and assigns of all of the foregoing, from any and all claims, actions, causes of action or other liability, whether known or unknown, contingent or fixed, arising out of or in any way related to the benefits thereunder, including, without limitation, any claims under the this Agreement or other related instruments, other than the Company’s obligation to pay the consideration as provided in this Agreement. The waiver and release shall be in a form determined by the Company and acceptable to Employee and shall be executed prior to the expiration of the time periods provided for any first payment of such benefits.

 

15

 

 

(e)     Non-Waiver. The failure of the Company to insist upon or enforce strict performance of any provision of this Agreement or to exercise any rights or remedies thereunder will not be construed as a waiver by the Company to assert or rely upon any such provision, right, or remedy in that or any other instance.

 

(f)     Entire Agreement. This Agreement embodies the entire agreement between the Parties with respect to the subject matter addressed herein and supersedes any prior understandings, agreements or representations by or among the Parties, written or oral, that may relate to the subject matter hereof; provided, however, that nothing in this Agreement is intended to and does not modify, supersede or replace the IP Agreements, and documents adopted by the Board with respect to the Cash Bonus, any agreements or plans concerning any equity awards to Employee, or any agreements or other documents related to any employee benefit plans, each of which are to be in effect in accordance with their terms.

 

(g)     Survival. The covenants set forth in Sections 4, 5, 6, 7, 8, 9, 10, 11, 12 and 13 shall survive any termination of Employee’s employment or termination of the Employment Period.

 

(h)     Counterparts; Facsimile; Electronic Submission. This Agreement may be executed in one (1) or more counterparts, each of which shall be deemed an original, and it shall not be necessary in making proof of this Agreement or the terms hereof to produce or account for more than one

(1) of such counterparts. Executed signature pages to this Agreement may be delivered by facsimile or electronically, and such facsimiles or electronically submitted documents will be deemed as sufficient as if actual signature pages had been delivered.

 

[Signatures on following page]

 

16ccfi_Ex10_41

		
			Exhibit 10.41
		

		
			 
		

		
			Community Choice Financial Inc.
		

		
			2011 Management Equity Incentive Plan
		

		
			Option Award Agreement
		

		
			GRANT TO:  William E. Saunders, Jr. 
		

		
			THIS AGREEMENT (the “Agreement”) is made as of January 1, 2018, between Community Choice Financial Inc., an Ohio corporation (together with its successors, the “Company”), and William E. Saunders, Jr., who is an employee of the Company or one of its Subsidiaries (the “Grantee”).  Capitalized terms, unless defined in this Agreement, shall have the same meanings as in the Plan (as defined below).  
		

		
			WHEREAS, in connection with the Grantee’s employment with the Company or one of its Subsidiaries, the Company granted to the Grantee as of January 1, 2018 (the “Grant Date”) an option to purchase 30,051 common shares, par value $0.01, of the Company (“Options”) pursuant to the terms and conditions of this Agreement and the Company’s 2011 Management Equity Incentive Plan (the “Plan”). 
		

		
			WHEREAS, the Board or its duly authorized designee has determined that it would be to the advantage, and in the best interest, of the Company and its shareholders to grant the Options provided for herein to the Grantee as an incentive for increased efforts during employment with the Company or one of its Subsidiaries.
		

		
			NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto hereby agree as follows:
		

			
	
			
				 1.
			

			
	
			
			GRANT OF Options AWARD

			
	
			
				 (a)
			

			
	
			
			Grant.  Subject to the terms and conditions of the Plan and this Agreement, the Company has granted to the Grantee Options for 30,051 shares, which will be earned based on the vesting provision of Section 2(a).

			
	
			
				 (b)
			

			
	
			
			Plan.  The foregoing award was granted under the Plan, which is incorporated herein by this reference and made a part of this Agreement.

			
	
			
				 (c)
			

			
	
			
			No Rights as Stockholder.  It shall be understood that none of the terms contained any such rights unless and until such Grantee receives Shares in connection with the exercise of Options.

			
	
			
				 2.
			

			
	
			
			RIGHT TO EXERCISE; VESTING

			
	
			
				 (a)
			

			
	
			
			Vesting.  Subject to the provisions of this Agreement, the Options granted hereunder shall vest as of the earlier of: (a) December 31, 2018, provided however that Grantee is employed by the Company or one of its subsidiaries as of that date, or (b) the 

		 

 

	Termination Date (as hereinafter defined) but only if the Termination Event is either (i) a termination without Cause, or (ii) a resignation with Good Reason.

			
	
			
				 (b)
			

			
	
			
			Effect of Vesting.  For each vested Option the Grantee may exercise such Option for one share.

			
	
			
				 3.
			

			
	
			
			Exercise Procedures

			
	
			
				 (a)
			

			
	
			
			Notice of Exercise.  The Grantee may exercise its Options prior to their expiration as set forth in Section 6 to the extent they are vested by giving written notice to the Company in form and substance reasonably satisfactory to the Company (such notice, a “Notice of Exercise”) specifying the election to exercise such Options, the number of vested Options which are being exercised and the form of payment.  The Notice of Exercise shall be signed by the Grantee.  The Grantee shall deliver to the Company, at the time of giving the notice, payment in a form permissible under Section 4 for the full amount of the Exercise Price and, if such person is not then party to the Stockholders Agreement, such person shall be required to execute a Joinder Agreement.

			
	
			
				 (b)
			

			
	
			
			Issuance of Shares.  After receiving a properly completed and executed Notice of Exercise and payment for the full amount of the Exercise Price as required by Section 3(a) and, if applicable, an executed Joinder Agreement, the Company shall cause to be issued a certificate or certificates for the Purchased Shares (as defined below), registered in the name of the Grantee (or in the names of such person and his spouse as community property or as joint tenants with right of survivorship), provided that as a condition to the issuance of Purchased Shares hereunder, the Grantee shall make, as of the time of issuance of such Purchased Shares, representations and warranties in a form satisfactory to the Company and substantially similar to those contained in Exhibit A.  In connection with any exercise of these Options, the Person exercising these Options shall deliver to the Company a duly executed blank share power in the form attached hereto as Exhibit B.  The date of the issuance of the Purchased Shares by the Company to the Grantee, the “Exercise Date”.

			
	
			
				 (c)
			

			
	
			
			Withholding Requirements.  The Company may withhold any tax (or other governmental obligation) required to be withheld in connection with the exercise of the Options, and as a condition to the settlement of any exercise of the Options.  Such withholding may be made from any source (including any salary or other compensation payable to the Grantee), and the Grantee shall make arrangements satisfactory to the Company to enable it to satisfy all such withholding requirements as a condition to the exercise of the Options (including by remitting to the Company an amount in cash sufficient to satisfy the withholding obligation).  For the avoidance of doubt, the Company will not withhold any amounts greater than the statutory minimum.

			
	
			
				 4.
			

			
	
			
			payment of EXERCISE price

			
	
			
				 (a)
			

			
	
			
			Cash or Check.  In connection with an exercise of the Options, all or part of the Exercise Price may be paid in cash or by check.

		
			

		 

 

		

			
	
			
				 (b)
			

			
	
			
			Net Exercise.  Notwithstanding anything in this Agreement to the contrary, in connection with an exercise of the Options, all or part of the Exercise Price may be paid by reducing the number of Shares being purchased pursuant to such exercise by the number of such Shares having a Fair Market Value equal to the Exercise Price.

			
	
			
				 (c)
			

			
	
			
			Other Methods of Payment for Shares.  At the sole discretion of the Board, and subject to applicable law, all or any part of the Exercise Price and any applicable withholding requirements may be paid by any other method permissible at the time under the terms of the Plan.

			
	
			
				 5.
			

			
	
			
			SECURITIES LAW ISSUES, TRANSFER restrictionS

			
	
			
				 (a)
			

			
	
			
			Grantee Acknowledgements and Representations.  The Grantee understands and agrees that:  (i) the Options have not been registered under the Securities Act, (ii) the Options are restricted securities under the Securities Act and (iii) the Options may not be resold or transferred unless they are first registered under the Securities Act or unless an exemption from such registration is available.  The Grantee hereby makes the representations and warranties set forth in Exhibit A hereto.

			
	
			
				 (b)
			

			
	
			
			No Registration Rights.  The Company may, but shall not be obligated to, register or qualify the issuance of Purchased Shares to the Grantee, or the resale of any such Purchased Shares by the Grantee under the Securities Act or any other applicable law.  

			
	
			
				 (c)
			

			
	
			
			Transfers.  No Option shall be transferable to any Person for any reason. Any attempt to Transfer any Option shall be null and void and have no force or effect, and the Company shall not, and shall cause any transfer agent not to, give any effect in such entity’s share records to such attempted Transfer.  Any Purchased Shares shall be subject to the restrictions on Transfer as set forth in Article 3 of the Stockholders Agreement, except with respect to a Transfer by will or by the laws of descent and distribution.  Unless otherwise permitted pursuant to the Stockholders Agreement, the Grantee shall not Transfer any Purchased Shares (i) except in compliance with the provisions of Article 3 of the Stockholders Agreement, and (ii) unless the transferee shall have agreed in writing to be bound by the terms of this Agreement in a manner acceptable to the Board and otherwise acknowledging that such Purchased Shares are subject to the restrictions set forth in this Agreement.  Any attempt to Transfer any Purchased Shares not in compliance with this Agreement shall be null and void and have no force or effect, and the Company shall not, and shall cause any transfer agent not to, give any effect in such entity’s share records to such attempted Transfer. The Grantee acknowledges that the transfer restrictions contained in this Agreement are reasonable and in the best interests of the Company.

			
	
			
				 6.
			

			
	
			
			TERM of Grant.

		
			Subject to the provisions of Section 2(a), the Options subject to in this Agreement shall expire on the tenth anniversary following the date of this Agreement, except in (a) the case of death or Disability, in which case the Options subject to this Agreement terminate on the first anniversary of the date of death or Disability, and (b) the case of Grantees who have not been employed at 

		 

 

least five years as of the date of a Termination Event, as defined below, in which case the Options subject to this Agreement terminate on the Termination Date, also defined below.  
		

			
	
			
				 7.
			

			
	
			
			Right of Repurchase upon TERMINATION OF EMPLOYMENT  

			
	
			
				 (a)
			

			
	
			
			Repurchase Rights.

			
	
			
				 1.
			

			
	
			
			Upon the termination of employment of the Grantee by the Company or any of its Subsidiaries for any reason (the reason for the termination of such employment, the “Termination Event” and the date of such termination, the “Termination Date”), subject to the provisions of this Section 7 and the prior approval of the Compensation Committee of the Board (or if there is no such Compensation Committee, the Board), the Company shall have the right (but not the obligation) to purchase, and if such right is exercised, the Grantee shall sell, and shall cause any Permitted Transferees of the Grantee to sell (and such Permitted Transferees shall sell), to the Company, all or any portion (as determined by the Company) of the Purchased Shares (if any) owned by the Grantee or his Permitted Transferees at a price per Purchased Share equal to an amount (the “Termination Price”) (as determined pursuant to Section 7(b) below); provided,  that the parties acknowledge that any unvested Options held by the Grantee as of the Termination Date shall be cancelled pursuant to this Agreement.

			
	
			
				 2.
			

			
	
			
			With respect to the Purchased Shares, the Company shall notify the Grantee in writing, within the Call Period whether the Company will exercise its right to purchase the Purchased Shares (the date on which the Grantee is so notified, the “Call Notice Date”).  

			
	
			
				 3.
			

			
	
			
			The closing of the purchase by the Company of Purchased Shares pursuant to this Section 7 shall take place at the principal office of the Company, on the date chosen by the Company, which date shall, except as may be reasonably necessary to determine the Termination Price, in no event be more than 45 days after the Call Notice Date.  At such closing, (A) the Company shall pay the Grantee and/or such Grantee’s Permitted Transferees, as applicable, against delivery of duly endorsed certificates described below representing such Purchased Shares, the aggregate Termination Price by wire transfer of immediately available federal funds and (B) the Grantee and/or such Grantee’s Permitted Transferees, as applicable, shall deliver to the Company a certificate or certificates representing the Purchased Shares to be purchased by the Company, duly endorsed, or with share (or equivalent) powers duly endorsed, for transfer with signature guaranteed, free and clear of any lien or encumbrance, with any necessary share (or equivalent) transfer tax stamps affixed. The delivery of a certificate or certificates for the Purchased Shares by any Person selling such Purchased Shares pursuant to this Section 7(a)(iii) shall be deemed a representation and warranty by such Person that: (w) 

		 

 

	such Person has full right, title and interest in and to such Purchased Shares; (x) such Person has all necessary power and authority and has taken all necessary action to sell such Purchased Shares as contemplated; (y) such Purchased Shares are free and clear of any and all liens or encumbrances; and (z) there is no adverse claim with respect to such Purchased Shares.

			
	
			
				 (b)
			

			
	
			
			Termination Pricing.  The Termination Price of any Purchased Share shall be determined as follows:

			
	
			
				 1.
			

			
	
			
			If the Termination Event was a resignation by the Grantee with Good Reason or termination of the employment of the Grantee by the Company or any of its Subsidiaries without Cause, the Termination Price for such Purchased Share shall be the Fair Market Value on the FMV Calculation Date, 

			
	
			
				 2.
			

			
	
			
			if the Termination Event was as a result of the death or Disability of the Grantee, the Termination Price for such Purchased Share shall be the Fair Market Value on the Termination Date, and  

			
	
			
				 3.
			

			
	
			
			if the Termination Event was a termination of the employment of the Grantee by the Company or any of its Subsidiaries with Cause, or was a resignation by the Grantee without Good Reason, the Termination Price for such Purchased Share shall be the lower of (A) the Fair Market Value on the FMV Calculation Date or (B) the Exercise Price per Share.

			
	
			
				 (c)
			

			
	
			
			Payment Terms.  In the event that the Company exercises a Right of Repurchase pursuant to Section 7 of this Agreement, the Company shall pay the Termination Price in cash; provided,  however, that if the Company is at the time of the Purchase Closing prohibited from purchasing all or any portion of such Purchased Shares (i) because restrictive covenants or other provisions contained in the documents evidencing such entity’s or any of its Affiliates’ indebtedness for borrowed money do not permit or allow such entity to make such payments in cash in whole or in part; (ii) pursuant to applicable law; or (iii) that the Grantee was terminated for Cause, resigned without Good Reason, or if the Grantee was not employed by the Company or one of its Subsidiaries for at least five years prior to the termination for Cause or resignation without Good Reason , then, the Termination Price may be paid by the execution and delivery by the Company of a promissory note or other deferred cash payment arrangement (if applicable, any promissory note to be subordinated to the indebtedness for borrowed money of such company or any of its Affiliates) bearing interest at the prime rate, as published in the Wall Street Journal, Eastern edition, on the first Business Day immediately prior to the day on which such promissory note or other deferred cash payment is issued, with principal and accrued interest payable at such time as is required in the Board’s determination to ensure that any payment pursuant to such promissory note or other deferred cash payment arrangement is not prohibited because of any of the matters described in clauses (i) or (ii) of this Section 7(c) above.  

		
			

		 

 

		

			
	
			
				 8.
			

			
	
			
			ADJUSTMENT OF SHARES

		
			In the event of a Recapitalization, the terms of this Award (including, without limitation, the number and kind of Shares subject to this Award) shall be adjusted as set forth in Section 13 (a) of the Plan.  In the event that the Company is a party to a merger or consolidation, this Award shall be subject to Section 13(b) of the Plan.
		

			
	
			
				 9.
			

			
	
			
			MISCELLANEOUS PROVISIONS

			
	
			
				 (a)
			

			
	
			
			No Retention Rights.  Nothing in this Agreement or in the Plan shall confer upon the Grantee any right to continue in Service or interfere with or otherwise restrict in any way the rights of the Company or any Subsidiary employing the Grantee, which rights are hereby expressly reserved by the Company and any Subsidiary employing the Grantee, to terminate the Grantee’s Service at any time and for any reason, with or without Cause.

			
	
			
				 (b)
			

			
	
			
			Notices.  All notices, requests and other communications under this Agreement shall be in writing and shall be delivered in person (by courier or otherwise), mailed by certified or registered mail, return receipt requested, or sent by facsimile transmission, as follows:

		
			If to the Company, to: 
		

		
			Community Choice Financial Inc.
		

		
			7001 Post Road, Suite 200
		

		
			Dublin, OH 43016
		

		
			Attention:   Stock Option Administrator
		

		
			 
		

		
			If to the Grantee, to the address that he/she most recently provided to the Company, 
		

			
	
			
				 (c)
			

			
	
			
			or, in each case, at such other address or fax number as such party may hereafter specify for the purpose of notices hereunder by written notice to the other party hereto.  All notices, requests and other communications shall be deemed received on the date of receipt by the recipient thereof if received prior to 5:00 p.m. in the place of receipt and such day is a Business Day in the place of receipt.  Otherwise, any such notice, request or communication shall be deemed not to have been received until the next succeeding Business Day in the place of receipt.  Any notice, request or other written communication sent by facsimile transmission shall be confirmed by certified or registered mail, return receipt requested, posted within one Business Day, or by personal delivery, whether by courier or otherwise, made within two Business Days after the date of such facsimile transmissions; provided that such confirmation mailing or delivery shall not affect the date of receipt, which will be the date that the facsimile successfully transmitted the notice, request or other communication.

			
	
			
				 (d)
			

			
	
			
			Entire Agreement.  This Agreement and the Plan, together with the Stockholders Agreement and the other agreements referred to herein and therein and any schedules, exhibits and other documents referred to herein or therein, constitute the entire agreement and understanding among the parties hereto in respect of the subject matter hereof and thereof and supersede all prior and contemporaneous arrangements, agreements and 

		 

 

	understandings, both oral and written, whether in term sheets, presentations or otherwise, among the parties hereto, or between any of them, with respect to the subject matter hereof and thereof.

			
	
			
				 (e)
			

			
	
			
			Amendment; Waiver.  No amendment or modification of any provision of this Agreement shall be effective unless signed in writing by or on behalf of the Company and the Grantee, except that the Company may amend or modify the Agreement without the Grantee’s consent in accordance with the provisions of the Plan or as otherwise set forth in this Agreement.  The failure of the Company in any instance to exercise the Right of Repurchase shall not constitute a waiver of any other repurchase rights that may subsequently arise under the provisions of this Agreement or any other agreement between the Company and the Grantee.  No waiver of any breach or condition of this Agreement shall be deemed to be a waiver of any other or subsequent breach or condition whether of like or different nature.  Any amendment or modification of or to any provision of this Agreement, or any waiver of any provision of this Agreement, shall be effective only in the specific instance and for the specific purpose for which made or given.

			
	
			
				 (f)
			

			
	
			
			Assignment.  Neither this Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable by the Grantee except pursuant to a Transfer in accordance with the provisions of this Agreement.

			
	
			
				 (g)
			

			
	
			
			Successors and Assigns; No Third Party Beneficiaries.  This Agreement shall inure to the benefit of and be binding upon the Company and the Grantee and their respective heirs, successors, legal representatives and permitted assigns.  Nothing in this Agreement, expressed or implied, is intended to confer on any Person other than the Company and the Grantee, and their respective heirs, successors, legal representatives and permitted assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement.

			
	
			
				 (h)
			

			
	
			
			Governing Law, Venue.  This Agreement and any matters or disputes related to, in connection with, or arising under this Agreement shall be governed by the laws of the State of Ohio, without regard to the conflicts of laws rules of such state.  Any legal action or proceeding with respect this Agreement shall be brought in the federal or state court sitting in the State of Ohio, and, by execution and delivery of this Agreement, each party hereby irrevocably accepts for itself and in respect of its property, generally and unconditionally, the exclusive jurisdiction of such courts.  Each party irrevocably waives any objection which it may now or hereafter have to the laying of venue of the aforesaid actions or proceedings arising out of or in connection with this Agreement in the courts referred to in this paragraph and hereby further irrevocably waives and agrees not to plead or claim in any such court that any such action or proceeding brought in any such court has been brought in an inconvenient forum.

			
	
			
				 (i)
			

			
	
			
			Waiver of Jury Trial.   The Grantee hereby irrevocably waives all right of trial by jury in any legal action or proceeding (including counterclaims) relating to or arising out of or in connection with this Agreement or any of the transactions or 

		 

 

	relationships hereby contemplated or otherwise in connection with the enforcement of any rights or obligations hereunder.    

			
	
			
				 (j)
			

			
	
			
			Interpretation.  Unless otherwise expressly provided, for purposes of this Agreement, the following rules of interpretation apply:  

			
	
			
				i.
			

			
	
			
			Headings.  The division of this Agreement into Sections and other subdivisions and the insertion of headings are for convenience of reference only and do not alter the meaning of, or affect the construction or interpretation of, this Agreement.

			
	
			
				ii.
			

			
	
			
			Section References.  All references in this Agreement to any “Section” are to the corresponding Section of this Agreement.

			
	
			
				iii.
			

			
	
			
			Schedules/Exhibits.  Any capitalized terms used in any Schedule or Exhibit to this Agreement but are not otherwise defined therein have the meanings set forth in this Agreement.

			
	
			
				 (k)
			

			
	
			
			Severability.  If any provision of this Agreement is invalid, illegal, or incapable of being enforced by any law, all other provisions of this Agreement remain in full force and effect so long as the economic and legal substance of the transactions contemplated hereby are not affected in any manner materially adverse to any party.  If any provision of this Agreement is held to be invalid, illegal, or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.

			
	
			
				 (l)
			

			
	
			
			Counterparts.  The parties may execute this Agreement in one or more counterparts, each of which constitutes an original copy of this Agreement and all of which, collectively constitute only one agreement.  The signatures of all the parties need not appear on the same counterpart.

			
	
			
				 (m)
			

			
	
			
			Grantee Undertaking.  The Grantee agrees to take whatever additional action and execute whatever additional documents the Company may deem necessary or advisable to carry out or effect one or more of the obligations or restrictions imposed on either the Grantee or upon the Options or any Purchased Shares pursuant to the provisions of this Agreement.  

			
	
			
				 (n)
			

			
	
			
			Plan; Stockholders Agreement; Counsel.  The Grantee acknowledges and understands that material definitions and provisions concerning the Options or any Purchased Shares and the Grantee’s rights and obligations with respect thereto are set forth in the Plan and the Stockholders Agreement.  The Grantee has had the opportunity to retain counsel, and has read carefully, and understands, the provisions of such documents.  

			
	
			
				 10.
			

			
	
			
			Definitions

		
			“Affiliate” shall mean, with respect to any specified Person, (i) any other Person which directly or indirectly through one or more intermediaries controls, or is controlled by, or is under 

		 

 

common control with, such specified Person (for the purposes of this definition, “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise); provided,  however, that neither the Company nor any of its Subsidiaries shall be deemed an Affiliate of any of the Stockholders (and vice versa), and (ii) if such specified Person is an investment fund, any other investment fund the primary investment advisor to which is the primary investment advisor to such specified Person.
		

		
			“Board” means the Board of Directors of the Company, as constituted from time to time or, if a Committee has been appointed, such Committee.
		

		
			“Business Day” has the meaning ascribed to such term in the Stockholders Agreement.  
		

		
			“Call Period” shall mean from the Termination Date until:
		

		
			if the Termination Event is a termination of the employment for any reason other than death or Disability of the Grantee, the later of (A) the date that is 60 days after such Termination Date and (B) the date that is 190 days after the Exercise Date, 
		

		
			if the Termination Event is a termination of the employment of the Grantee by the Company or any of its Subsidiaries as a result of the death or Disability of the Grantee, the date that is the later of (A) 60 days after the Termination Date or (B) the date which is 60 days after the Exercise Date, or 
		

		
			 “Cause” shall mean:
		

		
			(i)Grantees’s failure or refusal to comply, on a timely basis, with any lawful direction or instruction of the Board;
		

		
			(ii)Grantee’s gross negligence or willful misconduct in the performance of his/her duties as an employee of the Company;
		

		
			(iii)Grantee’s commission of fraud, embezzlement, misappropriation of funds, breach of fiduciary duty or act of dishonesty against the Company;
		

		
			(iv)Conviction of Grantee of a felony or entry by Grantee of a plea of nolo contendre or a plea of guilty under an indictment to a felony; or
		

		
			(v)Grantee’s habitual drug addiction or intoxication.
		

		
			The Company shall have the right to terminate Grantee’s employment for Cause.  
		

		
			  “Code” means the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated thereunder.  
		

		
			

		 

 

		

		
			“Committee” means the compensation committee of the Board of Directors of the Company.  
		

		
			  “Disability” means Grantee’s incapacity due to physical or mental illness such that  Grantee is unable to perform his/her duties for 180 consecutive days and, within 30 days after a notice of termination, which notice of termination may not be given until the expiration of such consecutive 180 day period, is given to Grantee, Grantee has not returned to work.    
		

		
			“Exercise Price” means $1.00.
		

		
			“Fair Market Value” or “FMV” with respect to a share of stock of the Company, shall mean (i) in the event that such shares are listed on an established U.S. exchange or through the NASDAQ National Market or any established over-the-counter trading system, the average of the closing prices of such Group Equity Securities on such exchange if listed or, if not so listed, the average bid and asked price of such shares reported on the NASDAQ National Market or any established over-the-counter trading system on which prices for such shares are quoted, in each case, for a period of twenty trading days prior to such date of determination, or (ii) if such shares are not publicly traded, a good faith determination by the Board through a reasonable application of a reasonable valuation method.  Such determination shall be conclusive and binding on all persons.  
		

		
			“FMV Calculation Date” means:
		

			
	
			
				i.
			

			
	
			
			if the Termination Event is a termination by the Company or any of its Subsidiaries without Cause, a resignation by the Grantee with Good Reason or a resignation by the Grantee without Good Reason after three years of Service:

			
	
			
				ii.
			

			
	
			
			if the Exercise Date occurred 180 days or more before the Termination Date, the Termination Date, and

			
	
			
				iii.
			

			
	
			
			if the Exercise Date occurred 179 days or less before the Termination Date or occurs after the Termination Date, then the Call Notice Date; 

			
	
			
				iv.
			

			
	
			
			if the Termination Event is as a result of the death or Disability of the Grantee, then the Termination Date; and 

			
	
			
				v.
			

			
	
			
			if the Termination Event is a termination by the Company or any of its Subsidiaries with Cause, or a resignation by the Grantee without Good Reason during the Grantee’s, then the Termination Date.

		
			“Good Reason”  Grantee may resign for “Good Reason” within 30 days after Grantee has actual knowledge of the occurrence, without the written consent of Grantee, of one of the following events:
		

		
			(i)a reduction in Grantee’s base salary, or non-timely payment of base salary or earned annual bonus not cured by the Company within five business days;  
		

		
			

		 

 

		

		
			(ii)a material diminution in Grantee’s duties or responsibilities not cured by the Company within 20 days after written notice to the Company. For the purposes of this section, a “material diminution in Grantee’s duties or responsibilities” shall not include a realignment or reorganization of executive responsibilities as the result of Company growth or contraction or the growth or contraction of the Company’s management team, but shall include the removal or withdrawal of substantially all of the Executive’s duties or responsibilities; or 
		

		
			(iii)Grantee’s retirement provided however that Grantee shall give not less than 30 days written notice thereof.
		

		
			“Joinder Agreement” means an agreement substantially in the form of Exhibit A of the Stockholders Agreement, pursuant to which the Grantee shall become a party to the Stockholders Agreement and subject to all of the rights, restrictions and obligations contained therein.
		

		
			“Permitted Transferee” has the meaning ascribed to such term in the Stockholders Agreement.
		

		
			“Person” means an individual, corporation, limited liability company, partnership, association, trust or other entity or organization.  
		

		
			“Purchased Shares” means any Shares issued pursuant to the exercise of any Option in accordance with the terms of this Agreement.
		

		
			“Right of Repurchase” means the Company’s right of repurchase described in Section 7 of this Agreement.
		

		
			“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.  
		

		
			“Service” means service as an employee.  
		

		
			“Share(s)” means common share(s) of the Company.
		

		
			“Stockholders Agreement” means that certain Stockholders Agreement dated as of April 28, 2011, by and among the Company, the Grantee and the other parties thereto (as the same shall be amended, modified or supplemented from time to time).   
		

		
			“Subsidiary”  means, with respect to the Company, any other Person in which the Company, directly or indirectly through one or more Affiliates or otherwise, beneficially owns at least 50% of either the ownership interest (determined by equity or economic interests) in, or the voting control of, such other Person.  
		

		
			“Transfer” has the meaning ascribed in such term in the Stockholders Agreement.  
		

		
			 
		

		
			

		 

 

		

		
			IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first written above.
		

		
			COMMUNITY CHOICE FINANCIAL INC.
		

		
			By: /s/ Kyle F. Hanson
		

		
			Name:  Kyle F. Hanson
		

		
			Title:    President
		

		
			/s/ William E. Saunders, Jr.
		

		
			William E. Saunders, Jr.
		

		
			 
		

		
			

		 

 

		

		
			EXHIBIT A 
		

		
			to Option Award Agreement
		

		
			Investment Representations and Warranties
		

		
			The Grantee hereby represents and warrants to the Company that:
		

			
	
			
				 1.
			

			
	
			
			The Options and Purchased Shares received by him will be held by him for investment only for his own account, not as a nominee or agent, and not with a view to the sale or distribution of any part thereof in violation of applicable U.S. federal or state or foreign securities laws.  The Grantee has no current intention of selling, granting participation in or otherwise distributing the Options or Purchased Shares in violation of applicable U.S. federal or state or foreign securities laws.  The Grantee does not have any contract, undertaking, agreement or arrangement with any person or entity to sell, transfer or grant participation to such person or entity, or to any third person or entity, with respect to any of the Options or Purchased Shares, in each case, in violation of applicable U.S. federal or state or foreign securities laws.

			
	
			
				 2.
			

			
	
			
			The Grantee understands that although the Company has a pending S-1 Registration Statement with the U.S. Securities and Exchange Commission that as of the date of this grant, the issuance of the Options and Purchased Shares have not been registered under the Securities Act or any applicable U.S. state or foreign securities laws, and that the Options and Purchased Shares are being issued in reliance on an exemption from registration, which exemption depends upon, among other things, the bona fide nature of the investment intent and the accuracy of the Grantee’s representations as expressed herein.

			
	
			
				 3.
			

			
	
			
			The Grantee has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of his owning the Options and Purchased Shares.  The Grantee is a sophisticated investor, has relied upon independent investigations made by the Grantee and, to the extent believed by the Grantee to be appropriate, the Grantee’s representatives, including the Grantee’s own professional, tax and other advisors, and is making an independent decision to invest in the Options and Purchased Shares.  The Grantee has been furnished with such documents, materials and information that the Grantee deems necessary or appropriate for evaluating an investment in the Company, and the Grantee has read carefully such documents, materials and information and understands and has evaluated the types of risks involved with holding the Options and Purchased Shares.  The Grantee has not relied upon any representations or other information (whether oral or written) from the Company or its shareholders, directors, officers or affiliates, or from any other person or entity, in connection with his investment in the Options and Purchased Shares.  The Grantee acknowledges that the Company has not given any assurances with respect to the tax consequences of the ownership and disposition of the Options and Purchased Shares.

		
			

		 

 

		

			
	
			
				 4.
			

			
	
			
			The Grantee has had, prior to his being granted the Options and Purchased Shares, the opportunity to ask questions of, and receive answers from, the Company concerning the terms and conditions of the transactions contemplated by the Agreement and the Grantee’s holding of the Options and Purchased Shares and to obtain additional information necessary to verify the accuracy of any information furnished to his or to which she had access.  The Grantee confirms that she has satisfied himself with respect to any of the foregoing matters.

			
	
			
				 5.
			

			
	
			
			The Grantee understands that no U.S. federal or state or foreign agency has passed upon the Options or Purchased Shares or upon the Company, or upon the accuracy, validity or completeness of any documentation provided to the Grantee in connection with the transactions contemplated by the Agreement, nor has any such agency made any finding or determination as to holding the Options or Purchased Shares.

			
	
			
				 6.
			

			
	
			
			The Grantee understands that there are substantial restrictions on the transferability of the Options and Purchased Shares and that on the date of the Agreement and for an indefinite period thereafter there will be no public market for the Options or Purchased Shares and, accordingly, it may not be possible for the Grantee to liquidate his investment in case of emergency, if at all.  In addition, the Grantee understands that the Agreement and Stockholders Agreement contain substantial restrictions on the transferability of the Options and Purchased Shares and provide that, in the event that the conditions relating to the transfer of any Options or Purchased Shares in such document has not been satisfied, the holder shall not transfer any such Options or Purchased Shares, and unless otherwise specified the Company will not recognize the transfer of any such Options or Purchased Shares on its books and records or issue any share certificates representing any such Options or Purchased Shares, and any purported transfer not in accordance with the terms of the Agreement or the Stockholders Agreement shall be void.  As such, Grantee understands that: a restrictive legend or legends in a form to be set forth in the Agreement and the Stockholders Agreement will be placed on the certificates representing the Options and Purchased Shares; a notation will be made in the appropriate records of the Company indicating that each of the Options and Purchased Shares are subject to restrictions on transfer and, if the Company should at some time in the future engage the services of a securities transfer agent, appropriate stop-transfer instructions will be issued to such transfer agent with respect to the Options and Purchased Shares; and the Grantee will sell, transfer or otherwise dispose of the Options or Purchased Shares only in a manner consistent with its representations set forth herein and then only in accordance with the Agreement and the Stockholders Agreement.

			
	
			
				 7.
			

			
	
			
			The Grantee understands that (i) the neither the Options nor the Purchased Shares may not be sold, transferred or otherwise disposed of without registration under the Securities Act or an exemption therefrom, (ii) the Options and Purchased Shares have not been registered under the Securities Act; (iii) the Options and Purchased Shares must be held indefinitely and she must continue to bear the economic risk of holding the Options and Purchased Shares unless such Options and Purchased Shares are subsequently registered under the Securities Act or an exemption from such registration is available; (iv) the Grantee is prepared to bear the economic risk of holding the Options and Purchased Shares for an indefinite period of time; (v) it is not anticipated that there will be any 

		 

 

	public market for the Options or Purchased Shares; (vi) the Options and Purchased Shares are characterized as “restricted securities” under the U.S. federal securities laws; and (vii) the Options and Purchased Shares may not be sold, transferred or otherwise disposed of except in compliance with federal, state and local law. 

			
	
			
				 8.
			

			
	
			
			The Grantee understands that an investment in the Options or Purchased Shares is not recommended for investors who have any need for a current return on this investment or who cannot bear the risk of losing their entire investment.  In that regard, the Grantee understands that his holding the Options and Purchased Shares involves a high degree of risk of loss.  The Grantee acknowledges that: (i) he/she has adequate means of providing for his current needs and possible personal contingencies and has no need for liquidity in this investment; (ii) his/her commitment to investments which are not readily marketable is not disproportionate to his net worth; and (iii) his/her holding the Options and Purchased Shares will not cause his overall financial commitments to become excessive.  

		
			 
		

		
			 
		

		
			 
		

		
			

		 

 

		

		
			EXHIBIT B 
		

		
			to Option Award Agreement
		

		
			 
		

		
			Share Power
		

		
			 
		

		
			IRREVOCABLE STOCK POWERS
		

		
			COMMUNITY CHOICE FINANCIAL INC.
		

		
			 
		

		
			 
		

		
			FOR VALUE RECEIVED, William E. Saunders, Jr., does hereby sell, assign and transfer unto ____________________    _______________ Common Shares of Community Choice Financial Inc., par value $0.01, represented by Certificate No. ___ herewith and does hereby irrevocably constitute and appoint ______________________ attorney to transfer the said stock on the books of the within named corporation with full power of substitution in the premises.    
		

		
			Dated:  _________________
		

		
			By: William E. Saunders, Jr
		

		
			       
		

		
			       William E. Saunders, Jr.

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