Document:

EX 10.44 Affinity 2011 Long-Term Incentive Plan

Exhibit  10.44
AFFINITY GAMING
AMENDED 2011 LONG TERM INCENTIVE PLAN
ARTICLE I
PURPOSE
    
Effective Date. The Plan of Affinity Gaming (the “Company”) shall be known as the Affinity Gaming Amended 2011 Long Term Incentive Plan (as amended, the “Plan”), and shall be effective as of January 18, 2013 (the “Effective Date”).
Purpose of the Plan.  The Plan is intended to further the growth and profitability of the Company by increasing incentives and encouraging equity ownership on the part of the Employees, Members of the Board, and Independent Contractors of the Company and its Subsidiaries.  The Plan is intended to permit the grant of Awards that constitute Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units and Other Stock Awards.
ARTICLE II
DEFINITIONS

The following words and phrases shall have the following meanings unless a different meaning is plainly required by the context:
“1934 Act” means the Securities Exchange Act of 1934, as amended.  Reference to a specific section of the 1934 Act or regulation thereunder shall include such section or regulation, any valid regulation or interpretation promulgated under such section, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such section or regulation.
“Affiliate” means any entity (including, but not limited to, partnerships and joint ventures) directly or indirectly controlled by the Company.
“Award” means, individually or collectively, a grant under the Plan of Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, or Other Stock Awards.
“Award Agreement” means the written agreement setting forth the terms and conditions applicable to an Award.
“Base Price” means the price at which a SAR may be exercised with respect to a Share.
“Board” means the Company's Board of Directors, as constituted from time to time.
“Change in Control” shall mean the first (and only the first) to occur of the following: 

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	(a)
	any “person” as such term is used in Sections 13(d) and 14(d) of the 1934 Act (other than the Company, any trustee or other fiduciary holding securities under any employee benefit plan of the Company, or any company owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of voting power of the Company), becoming the beneficial owner (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of securities of the Company representing more than 50% of the combined voting power of the Company's then outstanding securities; or

		
	(b)
	a merger or consolidation of the Company or any Subsidiary of the Company with any other entity, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of the Company or such surviving entity (or, if the Company or such successor is a Subsidiary of another entity, the ultimate parent company of the Company or such successor) outstanding immediately after such merger or consolidation; provided, however, that a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no person (other than those covered by the exceptions in paragraph (a) of this definition) acquires more than 50% of the combined voting power of the Company's then outstanding securities shall not constitute a Change in Control of the Company; or

		
	(c)
	The sale of all or substantially all of the Company's assets other than the sale or disposition of all or substantially all of the assets of the Company to a person or persons who beneficially own, directly or indirectly, 50% or more of the combined voting power of the outstanding voting securities of the Company at the time of the sale.

“Code” means the Internal Revenue Code of 1986, as amended.  Reference to a specific section of the Code or regulation thereunder shall include such section or regulation, any valid regulation or other guidance promulgated under such section, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such section or regulation.
“Committee” means the committee of the Board described in ARTICLE III.
“Employee” means an employee of the Company, a Related Company, an Affiliate or a Subsidiary designated by the Committee.  Notwithstanding anything to the contrary contained herein, the Committee may grant Awards to an individual who has been extended an offer of employment by the Company, a Related Company or a Subsidiary; provided that any such Award shall be subject to forfeiture if such individual does not commence employment by a date established by the Committee.
“Exercise Price” means the price at which a Share subject to an Option may be purchased upon the exercise of the Option.

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“Fair Market Value” means, except as otherwise specified in a particular Award Agreement, (a) while the Shares are readily traded on an established national or regional securities exchange, the closing transaction price of such a Share as reported by the principal exchange on which such Shares are traded on the date as of which such value is being determined or, if there were no reported transaction for such date, the opening transaction price as reported by exchange for the first trading date following the date by which such value is being determined on the next preceding date for which a transaction was reported, (b) if the Shares are not readily traded on an established national or regional securities exchange, the average of the bid and ask prices for such a Share on the date as of which such value is being determined, where quoted for such Shares, or (c) if Fair Market Value cannot be determined under clause (a) or clause (b) above, or if the Committee determines in its sole discretion that the Shares are too thinly traded for Fair Market Value to be determined pursuant to clause (a) or clause (b), the value as determined by the Committee, in its sole discretion, on a good faith basis.
“Gaming Authorities” means all Governmental Entities with regulatory control or jurisdiction over the conduct of lawful gaming or gambling, including, without limitation, the Nevada Gaming Commission and the Nevada State Gaming Control Board, the Iowa Racing and Gaming Commission, the Missouri Gaming Commission and all other state and local regulatory and licensing bodies with authority over gaming activities and devices in the States of Nevada, Iowa and Missouri or any other state where the Company conducts gaming activities.
“Gaming Law” means any permit, law, order or other federal, state, local or foreign statute, ordinance, rule, regulation, permit, consent, registration, finding of suitability, approval, license, judgment, order, decree, injunction or other authorization, including any condition or limitation placed thereon, governing or relating to the gaming activities and operations conducted by the Company.
“Governmental Entities" means any government or governmental or regulatory body thereof, or quasi-governmental or quasi-regulatory body thereof, or political subdivision thereof, whether supra-national, federal, state or local, or any agency, instrumentality or authority thereof, or any court or arbitrator (public or private), including, without limitation, any Gaming Authority.
“Grant Date” means the date that the Award is granted.
“Immediate Family” means a Participant's children, stepchildren, grandchildren, parents, stepparents, grandparents, spouse, siblings (including half-brothers and half-sisters), in-laws (including all such relationships arising because of legal adoption) and any other person required under applicable law to be accorded a status identical to any of the foregoing.
“Independent Contractor” means an independent contractor or consultant of the Company, a Related Company or a Subsidiary designated by the Committee.  Notwithstanding anything to the contrary contained herein, the Committee may grant Awards to an individual who has been extended an offer to become an independent contractor or consultant by the Company, a Related Company or a Subsidiary; provided that any such Award shall be subject to forfeiture if such individual does not commence employment by a date established by the Committee.
“Member of the Board” means an individual who is a member of the Board or of the board of directors of a Related Company or a Subsidiary.

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“Option” means an option to purchase Shares granted pursuant to ARTICLE V.
“Other Stock Award” means an Award granted pursuant to ARTICLE VIII to receive Shares on the terms specified in any applicable Award Agreement.
“Participant” means an Employee, Independent Contractor, or Member of the Board with respect to whom an Award has been granted and remains outstanding.
“Performance Goals” means goals established by the Committee as contingencies for Awards to vest and/or become exercisable or distributable.
“Performance Period” means the designated period during which the Performance Goals must be satisfied with respect to the Award to which the Performance Goals relate.
“Period of Restriction” means the period during which Restricted Stock or an RSU is subject to forfeiture and/or restrictions on transferability.
“Plan” means this Affinity Gaming Amended 2011 Long Term Incentive Plan, as set forth in this instrument and as hereafter amended from time to time.
“Related Company” means any person or entity that would be considered a single employee with the Company under Section 414(b) or (c) of the Code if the language “at least 80 percent” as used in connection with the application of these provisions were replaced by “at least 50%.”
“Restricted Stock” means a Stock Award granted pursuant to ARTICLE VI under which the Shares are subject to forfeiture upon such terms and conditions as specified in the relevant Award Agreement.
“Restricted Stock Unit” or “RSU” means a Stock Award granted pursuant to ARTICLE VI subject to a period or periods of time after which the Participant will receive Shares if the conditions contained in such Stock Award have been met.
“Rule 16b-3” means Rule 16b-3 promulgated under the 1934 Act, as amended, and any future regulation amending, supplementing or superseding such regulation.
“Share” means the Company's common stock, par value $.001 per share, or any security issued by the Company or any successor in exchange or in substitution therefor.
“Stock Appreciation Right” or “SAR” means an Award granted pursuant to ARTICLE VII, granted alone or in tandem with a related Option which is designated by the Committee as a SAR.
“Stock Award” means an Award of Restricted Stock or an RSU pursuant to ARTICLE VI.
“Subsidiary(ies)” means any entity (other than the Company) in an unbroken chain of entities, including and beginning with the Company, if each of such entity, other than the last entity in the unbroken chain, owns, directly or indirectly, more than fifty percent (50%) of the voting securities or power in one of the other entities in such chain.

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ARITCLE III
ADMINISTRATION
    
3.1    The Committee.  The Plan shall be administered by the compensation committee of the Board (the “Committee”).  To the extent advisable or otherwise required by applicable law, regulation or rule, it is intended that each member of the Committee shall qualify as (a) a “non-employee director” under Rule 16b-3, (b) an “outside director” under Section 162(m) of the Code and (c) an “independent director” under the rules of any national securities exchange or national securities association, as applicable.  If it is later determined that one or more members of the Committee do not so qualify, actions taken by the Committee prior to such determination shall be valid despite such failure to qualify.

Reference to the Committee shall refer to the Board if the Committee ceases to exist and the Board does not appoint a successor Committee.
3.2    Authority and Action of the Committee.  It shall be the duty of the Committee to administer the Plan in accordance with the Plan's provisions.  The Committee shall have all powers and discretion necessary or appropriate to administer the Plan and to control its operation, including, but not limited to, the power to (a) determine which Employees, Members of the Board and Independent Contractors shall be eligible to receive Awards and to grant Awards, (b) prescribe the form, amount, timing and other terms and conditions of each Award, (c) interpret the Plan and the Award Agreements, (d) adopt such procedures as it deems necessary or appropriate to permit participation in the Plan by eligible Employees, Members of the Board and Independent Contractors, (e) adopt such rules as it deems necessary or appropriate for the administration, interpretation and application of the Plan, (f) interpret, amend or revoke any such procedures or rules, (g) correct any technical defect(s) or technical omission(s), or reconcile any technical inconsistency(ies), in the Plan and/or any Award Agreement, (h) accelerate the vesting of any award, (i) extend the period during which an Option may be exercisable, and (j) make all other decisions and determinations that may be required pursuant to the Plan and/or any Award Agreement or as the Committee deems necessary or advisable to administer the Plan.

The acts of the Committee shall be either (i) acts of a majority of the members of the Committee present at any meeting at which a quorum is present or (ii) acts approved in writing by all of the members of the Committee without a meeting.  A majority of the Committee shall constitute a quorum.  The Committee's determinations under the Plan need not be uniform and may be made selectively among Participants, whether or not such Participants are similarly situated.  Each member of the Committee is entitled to, in good faith, rely or act upon any report or other information furnished to that member by any Employee of the Company or any of its Subsidiaries or Affiliates, the Company's independent certified public accountants or any executive compensation consultant or other professional retained by the Company to assist in the administration of the Plan.
The Company shall effect the granting of Awards under the Plan, in accordance with the determinations made by the Committee, by execution of written agreements and/or other instruments in such form as is approved by the Committee.

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3.3    Delegation by the Committee.  The Committee in its sole discretion and on such terms and conditions as it may provide may delegate all or any part of its authority and powers under the Plan to one or more Members of the Board of the Company and/or officers of the Company; provided, however, that the Committee may not delegate its authority or power if prohibited by law, or if such delegation would cause the Awards or other transactions under the Plan to cease to be exempt from Section 16(b) of the 1934 Act or not to qualify for, or cease to qualify for, exemption under Code § 162(m).

3.4    Decisions Binding.  All determinations, decisions and interpretations of the Committee, the Board, and any delegate of the Committee pursuant to the provisions of the Plan or any Award Agreement shall be final, conclusive, and binding on all persons, and shall be given the maximum deference permitted by law.

3.5    Performance Goals.  The Committee shall have the authority to grant Awards under this Plan that are contingent upon the achievement of Performance Goals.  Such Performance Goals are to be specified in the relevant Award Agreement and may be based on such factors including, but not limited to: (a) revenue, (b) earnings per Share (or other security issued by the Company), (c) net income per Share (or other security issued by the Company), (d) Share (or other security issued by the Company) price, (e) pre-tax profits, (f) net earnings, (g) net income, (h) operating income, (i) cash flow, (j) earnings before interest, taxes, depreciation and amortization, (k) sales, (l) total stockholder return relative to assets, (m) total stockholder return relative to peers, (n) financial returns (including, without limitation, return on assets, return on equity and return on investment), (o) cost reduction targets, (p) customer satisfaction, (q) customer growth, (r) employee satisfaction, (s) gross margin, (t) revenue growth, (u) store openings, (v) any combination of the foregoing, or, (w) such other criteria as the Committee may determine.  Performance Goals may be in respect of the performance of the Company, any of its Subsidiaries or Affiliates or any combination thereof on either a consolidated, business unit or divisional level.  Performance Goals may be absolute or relative (to prior performance of the Company or to the performance of one or more other entities or external indices) and may be expressed in terms of a progression within a specified range. 

ARTICLE IV
SHARES SUBJECT TO THE PLAN

4.1    Number of Shares. Subject to adjustment as provided in Section 10.19, the number of Shares available for grants of Awards under the Plan shall be 1,000,000 Shares.  Shares awarded under the Plan may be either authorized but unissued Shares, authorized and issued Shares reacquired and held as treasury Shares or a combination thereof. To the extent permitted by applicable law or exchange rules, Shares issued in assumption of, or in substitution for, any outstanding awards of any entity acquired in any form of combination by the Company or any Subsidiary or Affiliate shall not reduce the Shares available for grants of Awards under this Section 4.1.  

4.2    Limit on Individual Awards. Subject to adjustment as provided in Section 10.19, the maximum number of Shares with respect to which (i) Options and SARs, (ii) Restricted Stock, RSUs and Other Stock Awards that vest only if the Participant achieves Performance Goals established by 

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the Committee or (iii) any combination of (i) and (ii), may be granted during any calendar year to any Participant shall be 500,000 Shares.

4.3    Lapsed Awards. To the extent that Shares subject to an outstanding Option (except to the extent Shares are issued or delivered by the Company in connection with the exercise of a tandem SAR) or other Award are not issued or delivered by reason of (i) the expiration, cancellation, forfeiture or other termination of such Award, (ii) the withholding of such Shares in satisfaction of applicable federal, state or local taxes or (iii) of the settlement of all or a portion of such Award in cash, then such Shares shall again be available under this Plan.

ARTICLE V
STOCK OPTIONS

5.1    Grant of Options.  Subject to the provisions of the Plan, Options may be granted to Participants at such times, and subject to such terms and conditions, as determined by the Committee in its sole discretion.  All Options are intended to be non-qualified options. 

5.2    Award Agreement.  Each Option shall be evidenced by an Award Agreement that shall specify the Exercise Price, the expiration date of the Option, the number of Shares to which the Option pertains, any conditions to the exercise of all or a portion of the Option, and such other terms and conditions as the Committee, in its discretion, shall determine. 
 
5.3    Exercise Price.  Subject to the other provisions of this Section, the Exercise Price with respect to Shares subject to an Option shall be determined by the Committee in its sole discretion; provided, however, that the Exercise Price shall be not less than one hundred percent (100%) of the Fair Market Value of a Share on the Grant Date.

5.4    Expiration Dates.  Each Option shall terminate not later than the expiration date specified in the Award Agreement pertaining to such Option.

5.5    Exercisability.

5.5.1    Exercisability of Options.  Subject to Section 5.4, Options granted under the Plan shall be exercisable at such times, and shall be subject to such restrictions and conditions, as the Committee shall determine in its sole discretion.  The exercise of an Option is contingent upon payment by the Participant of the amount sufficient to pay all taxes required to be withheld by any governmental agency.  Such payment may be in any form approved by the Committee.

5.5.2    Method of Exercise.  Options shall be exercised by the Participant's delivery of a written notice of exercise to the Corporate Secretary of the Company (or his or her designee), setting forth the number of Shares with respect to which the Option is to be exercised, accompanied by full payment of the Exercise Price with respect to each such Share and an amount sufficient to pay all taxes required to be withheld by any governmental agency.  The Exercise Price shall be payable to the Company in full in cash or its equivalent.  The Committee, in its sole discretion, also may permit exercise (a) by tendering previously acquired Shares which have been held by the Particpant 

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for at least six months having an aggregate Fair Market Value at the time of exercise equal to the aggregate Exercise Price of the Shares with respect to which the Option is to be exercised, or (b) by any other means which the Committee, in its sole discretion, determines to both provide legal consideration for the Shares, and to be consistent with the purposes of the Plan.  As soon as practicable after receipt of a written notification of exercise and full payment for the Shares with respect to which the Option is exercised, the Company shall deliver to the Participant certificates (which may be in book entry form) or other documentation in respect of such Shares with respect to which the Option is exercised.
5.5.3    Early Exercise.  The Committee may provide that an Option include a provision whereby the Participant may elect at any time before the Participant's termination of employment to exercise the Option as to any part or all of the Shares subject to the Option prior to the full vesting of the Option with the Shares being delivered pursuant to such exercise being subject to the provisions of Article VI and treated as Restricted Stock.  Any unvested Shares so purchased may be subject to a repurchase option in favor of the Company or to any other restriction the Committee determines to be appropriate.

5.6    Restrictions on Share Transferability.  The Committee may impose such additional restrictions on any Shares acquired pursuant to the exercise of an Option as it may deem advisable, including, but not limited to, restrictions related to applicable federal securities laws, the requirements of any national securities exchange or system upon which Shares are then listed or traded, or any blue sky or state securities laws.

5.7    Cashing Out of Option.  On receipt of written notice of exercise, the Committee may elect to cash out all or part of the portion of the Shares for which an Option is being exercised by paying the optionee an amount, in cash or Shares, equal to the excess of the Fair Market Value of the Shares over the Exercise Price times the number of Shares for which the Option is being exercised on the effective date of such cash-out.

5.8    Certain Powers.  Notwithstanding anything herein to the contrary, unless otherwise provided in the Award Agreement, the Committee may, at its sole and absolute discretion, (i) lower the Exercise Price of an Option after it is granted, or take any other action with the effect of lowering the Exercise Price of an Option after it is granted or (ii) permit Participants to cancel an Option in exchange for another Award.

ARTICLE VI
STOCK AWARDS

6.1    Grant of Stock Awards.  Subject to the provisions of the Plan, Stock Awards may be granted to such Participants at such times, and subject to such terms and conditions, as determined by the Committee in its sole discretion.

6.2    Stock Award Agreement.  Each Stock Award shall be evidenced by an Award Agreement that shall specify the number of Shares granted, the price, if any, to be paid for the Shares and the Period of Restriction applicable to a Restricted Stock Award (or “RSU Award”) and such other terms and conditions as the Committee, in its sole discretion, shall determine.

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6.3    Transferability/Share Certificates.  Shares subject to an Award of Restricted Stock may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated during a Period of Restriction.  During the Period of Restriction, a Restricted Stock Award may be registered in the holder's name or a nominee's name at the discretion of the Company and may bear a legend as described in Section 6.4.2.  Unless the Committee determines otherwise, shares of Restricted Stock shall be held by the Company as escrow agent during the applicable Period of Restriction, together with appropriate instruments of assignment (including a power of attorney), each endorsed in blank with a guarantee of signature if deemed necessary or appropriate by the Company, which would permit transfer to the Company of all or a portion of the Shares subject to the Restricted Stock Award in the event such Award is forfeited in whole or part.

6.4    Other Restrictions.  The Committee, in its sole discretion, may impose such other restrictions on Shares subject to an Award of Restricted Stock as it may deem advisable or appropriate.

6.4.1    General Restrictions.  The Committee may set restrictions based upon applicable federal or state securities laws, or any other basis determined by the Committee in its discretion.

6.4.2    Legend on Certificates.  The Committee, in its sole discretion, may legend any certificates or other documentation representing Restricted Stock during the Period of Restriction to give appropriate notice of such restrictions. For example, the Committee may determine that some or all certificates representing Shares of Restricted Stock shall bear the following legend: “The sale or other transfer of the shares of stock represented by this certificate, whether voluntary, involuntary, or by operation of law, is subject to certain restrictions on transfer as set forth in the Affinity Gaming Amended 2011 Long Term Incentive Plan (the “Plan”), and in a Restricted Stock Award Agreement (as defined by the Plan).  A copy of the Plan and such Restricted Stock Award Agreement may be obtained from the Corporate Secretary.  Certificates may also contain any legend required by Gaming Laws or Gaming Authorities.”

6.5    Removal of Restrictions.  Shares of Restricted Stock covered by a Restricted Stock Award made under the Plan shall be released from escrow as soon as practicable after the termination of the Period of Restriction and, subject to the Company's right to require payment of any taxes, a certificate or certificates (or other documentation) evidencing ownership of the requisite number of Shares shall be delivered to the Participant.

6.6    Voting Rights.  During the Period of Restriction, Participants holding Shares of Restricted Stock granted hereunder may exercise full voting rights with respect to those Shares, unless otherwise provided in the Award Agreement.

6.7    Dividends and Other Distributions.  During the Period of Restriction, Participants holding shares of Restricted Stock shall be entitled to receive all dividends and other distributions paid with respect to such Shares unless otherwise provided in the Award Agreement.  Except as otherwise set forth in an Award Agreement, if any such dividends or distributions are paid in Shares, the Shares shall be deposited with the Company and shall be subject to the same restrictions on 

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transferability and forfeitability as the Shares of Restricted Stock with respect to which they were paid.

6.8    Performance Goals and Performance Periods.  The Committee may grant Stock Awards that become earned if the Participant achieves the applicable Performance Goals during and in respect of the designated Performance Period.  The Performance Goals and the Performance Period shall be established by the Committee, in its sole discretion.  The Committee shall establish Performance Goals for each Performance Period prior to, or as soon as practicable after, the commencement of such Performance Period.  The Committee shall also establish a schedule or schedules for the Stock Awards setting forth the portion of the Award which will be earned or forfeited based on the degree of achievement, or lack thereof, of the Performance Goals at the end of the relevant Performance Period.  The Performance Goals shall be defined as to their respective components and meaning by the Committee (in its sole discretion).  During any Performance Period, the Committee shall have the authority to adjust the Performance Goals and/or the Performance Period in such manner as the Committee, in its sole discretion, deems appropriate at any time and from time to time.  The payout of any such Award may be adjusted at the discretion of the Committee.

ARTICLE VII
STOCK APPRECIATION RIGHTS

7.1    Grant of SARs.  Subject to the provisions of the Plan, SARs may be granted to such Participants at such times, and subject to such terms and conditions, as shall be determined by the Committee in its sole discretion.

7.2    SAR Agreement.  Each SAR grant shall be evidenced by an Award Agreement that shall specify the Base Price, the expiration date of the SAR, the number of Shares to which the SAR pertains, any conditions to the exercise of all or a portion of the SAR, and such other terms and conditions as the Committee, in its sole discretion, shall determine.

7.3    Base Price.  The Base Price of a SAR shall be determined by the Committee in its sole discretion; provided, however, that the Base Price shall not be less than one hundred percent (100%) of the Fair Market Value of a Share on the Grant Date.  Without limiting the foregoing, the Base Price with respect to Shares subject to a tandem SAR shall be the same as the Exercise Price with respect to the Shares subject to the related Option.

7.4    Expiration Dates.  Each SAR shall terminate no later than the expiration date specified in the Award Agreement pertaining to such SAR; provided, however, that the expiration date with respect to a tandem SAR shall not be later than the expiration date of the related Option.

7.5    Payment.  Except as otherwise provided in the relevant Award Agreement, upon exercise of a SAR, the Participant shall be entitled to receive payment from the Company in an amount determined by multiplying: (i) the amount by which the Fair Market Value of a Share on the date of exercise exceeds the Base Price specified in the Award Agreement pertaining to such SAR by (ii) the number of Shares with respect to which the SAR is exercised.

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7.6    Exercisability.

7.6.1    Exercisability of SARs.  Subject to Section 5.4, SARs granted under the Plan shall be exercisable at such times, and shall be subject to such restrictions and conditions, as the Committee shall determine in its sole discretion.  The exercise of a SAR is contingent upon payment by the Participant of the amount sufficient to pay all taxes required to be withheld by any governmental agency.  Such payment may be in any form approved by the Committee.

7.6.2    Method of Exercise.  Unless otherwise specified in the Award Agreement pertaining to a SAR, a SAR may be exercised (a) by the Participant's delivery of a written notice of exercise to the General Counsel of the Company (or his or her designee) setting forth the number of whole SARs which are being exercised, (b) in the case of a tandem SAR, by surrendering to the Company any Options which are cancelled by reason of the exercise of such SAR, and (c) by executing such documents as the Company may reasonably request.  The exercise of a SAR is contingent upon payment in accordance with the Plan by the Participant of the amount sufficient to pay all taxes required to be withheld by any governmental agency.  Such payment may be in any form approved by the Committee.

7.6.3    Early Exercise.  The Committee may provide that a SAR include a provision whereby the Participant may elect at any time before the Participant's termination of employment to exercise the SAR as to any part or all of the Shares subject to the SAR prior to the full vesting of the SAR and the Shares delivered pursuant to the exercise of shall be subject to the provisions of Article VIII and treated as Restricted Stock.  Any unvested Shares so purchased may be subject to a repurchase option in favor of the Company or to any other restriction the Committee determines to be appropriate.

7.6.4    Tandem SARs.  Tandem SARs (i.e., SARs issued in tandem with Options) shall be exercisable only at such time or times and to the extent that the Options to which they relate shall be exercisable in accordance with the provisions of Article VII.  The related Options which have been surrendered by the exercise of a tandem SAR, in whole or in part, shall no longer be exercisable to the extent the related tandem SARs have been exercised.  Payment to a Participant upon the exercise of the SAR shall be made, as determined by the Committee in its sole discretion, either (a) in cash, (b) in Shares with a Fair Market Value equal to the amount of the payment or (c) in a combination thereof, as set forth in the applicable Award Agreement.

7.7    Restrictions on Share Transferability.  The Committee may impose such additional restrictions on any Shares acquired pursuant to the exercise of a SAR as it may deem advisable, including, but not limited to, restrictions related to applicable federal securities laws, the requirements of any national securities exchange or system upon which Shares are then listed or traded, or any blue sky or state securities laws.

7.8    Cashing Out of SARs.  On receipt of written notice of exercise, the Committee may elect to cash out all or part of the portion of the Shares for which a SAR is being exercised by paying the optionee an amount, in cash or Shares, equal to the excess of the Fair Market Value of the Shares over the Base Price times the number of Shares for which the SAR is being exercised on the effective date of such cash-out.

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7.9    Certain Powers.  Notwithstanding anything herein to the contrary, unless otherwise provided in the Award Agreement, the Committee may, at its sole and absolute discretion, (i) lower the Base Price of a SAR after it is granted, or take any other action with the effect of lowering the Base Price of a SAR after it is granted or (ii) permit Participants to cancel a SAR in exchange for another Award.

ARTICLE VIII
OTHER STOCK AWARDS

Subject to the provisions of the Plan, the Committee may develop sub-plans or grant other equity-based awards (“Other Stock Awards”) on such terms as it may determine, including, but not limited to, Awards designed to comply with or take advantage of applicable local laws of jurisdictions outside of the United States.

ARTICLE IX
CHANGE IN CONTROL

Unless otherwise provided in an Award Agreement, in the event of a Change in Control, unless the right to accelerated vesting, the lapse of restrictions or risks of forfeiture, or accelerated delivery or receipt of cash provided for herein is waived or deferred by a Participant and the Company by written notice prior to the Change in Control, all restrictions and risks of forfeiture on Awards (other than those imposed by law or regulation) shall lapse, and all deferral or vesting periods relating to Awards shall immediately expire.  In the event of a Change in Control, the Board can unilaterally implement or negotiate a procedure with any party to the Change in Control pursuant to which all Participants' unexercised Options and/or SARs may be cashed out as part of the purchase transaction, without requiring exercise, for the difference between the purchase price and the Exercise Price.

ARTICLE X
MISCELLANEOUS

10.1    Company Call Right

10.1.1    Call Right upon Termination, Involuntary Transfer.  The following provisions of this Section 10.1 shall only apply to the extent expressly provided for in an Award Agreement, as determined by the Committee in its sole discretion.  Upon the termination of service of a Participant for any reason, or an Involuntary Transfer (as defined below) of any Shares acquired pursuant to an Award occurs, the Company shall have the right (a “Call Right”), to purchase and, upon the exercise of the Call Right by the Company, the Participant shall be required to sell, all Shares beneficially owned by a Participant or his beneficiary that have been acquired pursuant to an Award.  Upon such termination of service or Involuntary Transfer, as the case may be, the Call Right may be exercised by the Company for a period of three years after the occurrence of such event (or, if later, the date on which the Company is notified or becomes aware of the occurrence of such event).  The Company 

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may exercise such Call Right by giving written notice thereof to the Participant.  All determinations with respect to the Company's exercise of the Call Right shall be made by the Committee.

10.1.2    Purchase Price.  With respect to any exercise of a Call Right by the Company, the purchase price per Share to be paid by the Company at the closing provided for in this Section 10.1 shall be the Fair Market Value of such Equity Interest, determined as of the later of the date of termination of the Participant's service or the Involuntary Transfer, as applicable, and the six month anniversary of the date the Participant received and/or vested in such Share; provided, however, that if the Participant's service has been terminated for “Cause,” the purchase price per Equity Interest shall be zero.  For the avoidance of doubt, with respect to any Option or SAR, the purchase price shall be paid with respect to Shares beneficially owned by the Participant following the exercise or net settlement of such Option or SAR (i.e., after payment for or deduction of the exercise or base price of such right).

10.1.3    Involuntary Transfer.  For purposes hereof, “Involuntary Transfer” means a transfer of the Participant's Shares by operation of law including, without limitation, as a result of (A) a sale or other disposition by a trustee or debtor in possession appointed or retained in a bankruptcy case, (B) a sale at any creditors' or judicial sale, or (C) a transfer arising out of a divorce or separation proceeding.

10.1.4    Election and Delivery Procedures.  The closing of any exercise of the Call Right pursuant to this Section shall take place at the offices of the Company, or such other place as may be mutually agreed upon, not less than ten (10) or more than thirty (30) days after the date such Call Right is exercised.  The exact date and time of closing shall be specified by the Company.  At such closing, the Participant shall deliver certificates for the vested Shares to be sold to the Company duly endorsed, or accompanied by written instruments of transfer in a form reasonably satisfactory to the Company duly executed, by such transferor, free and clear of any lien, security interest, pledge, claim, option, right of first refusal, marital right or other encumbrance.  The Company shall pay the applicable purchase price for the vested Equity Interests.

10.1.5    Legal Limitations.  Anything in this Plan to the contrary notwithstanding, to the extent that the limitations or restrictions applicable to the Company under the laws of its jurisdiction of formation, the restrictions or limitations contained in any applicable law, rule or regulation or under the terms of any indebtedness for borrowed money of the Company prohibit the Company from, or would cause the Company to be in default thereunder after, making any payment required under this Plan with respect to any Share, then the Company shall not be obligated to make such payment at such time, and shall have the right to defer such payment until the Committee reasonably determines that such limitations and restrictions no longer restrict the Company from making such deferred payment.  Any amounts the payment of which is so deferred shall bear interest, compounded annually and calculated at a rate equal to the prime rate and shall be paid (with interest) promptly after, and to the extent that, the Committee determines that the limitations and restrictions referred to in the first sentence of this Section 10.1 no longer restrict such payment.

10.2    Drag Along Right.  In the event that the holders of a majority of the Company's voting securities propose to sell, or otherwise dispose of, securities representing a majority of the Company's 

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outstanding voting power to a party unaffiliated with the Company, the Committee shall have the right to require the Participant to sell to the purchaser of such interests, upon the same terms and conditions as are applicable to such holders, all or a portion of the Participant's Shares acquired pursuant to an Award (including both vested and unvested interests) up to (a) the number of the Participant's Shares multiplied by (b) a fraction, the numerator of which is the number of voting securities to be sold by such holders and the denominator of which is the number of voting securities owned by such holders.

10.3    Clawback/Forfeiture.  Notwithstanding anything to the contrary contained herein, an Award Agreement may provide that the Committee may in its sole discretion cancel such Award, in whole or in part, if the Participant, without the consent of the Company, while employed by or providing services to the Company or any Affiliate or after termination of such employment or service, violates a non-competition, non-solicitation or non-disclosure covenant or agreement or otherwise engages in activity that is in conflict with or adverse to the interest of the Company or any Affiliate, including fraud or conduct contributing to any financial restatements or irregularities, as determined by the Committee in its sole discretion.  The Committee may also provide in an Award Agreement that if the Participant engages in any activity referred to in the preceding sentence, the Participant will forfeit any gain realized on the vesting or exercise of such Award, and must repay the gain to the Company.

10.4    Non-United States Participants and Jurisdictions.  Notwithstanding any provision in the Plan to the contrary, in order to foster and promote achievement of the purposes of the Plan or to comply with provisions of laws in other countries in which the Company operates or has employees, the Committee, in its discretion, shall have the power and authority, to the extent not inconsistent with the intent of the Plan, to (i) determine which individuals who are foreign nationals or who are employed outside of the United States are eligible to participate in the Plan, (ii) modify the terms and conditions of any Awards made to such individuals, and (iii) establish subplans and modify exercise and payment procedures and other Award terms and procedures to the extent such actions may be necessary or advisable to comply with any tax, securities, regulatory or other laws of other jurisdictions with respect to Awards that may be subject to such laws.  Moreover, the Committee may approve such supplements to or amendments, restatements or alternative versions of the Plan, not inconsistent with the intent of the Plan, as it may consider necessary or appropriate for such purposes, without thereby affecting the terms of the Plan as in effect for any other purpose.

10.5    Gaming Laws.  Awards granted under the Plan shall be subject to all Gaming Laws applicable to the Company and all rules and regulations promulgated by any Gaming Authority with jurisdiction over the Company, and shall be subject to forfeiture, disposition and repurchase rights in favor of the Company to the extent necessary to comply with any determination, order or finding of any such Gaming Authority.

10.6    No Effect on Employment or Service.  Nothing in the Plan shall interfere with or limit in any way the right of the Company to terminate any Participant's employment or service at any time, for any reason and with or without cause.

10.7    Participation.  No person shall have the right to be selected to receive an Award under this Plan, or, having been so selected, to be selected to receive a future Award.

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10.8    Unfunded Status.  The Plan is intended to constitute an “unfunded” plan for incentive and deferred compensation.  With respect to any payments not yet made to a Participant by the Company, nothing set forth herein shall give any Participant any rights that are greater than those of a general creditor of the Company.  In its sole and absolute discretion, the Committee may authorize the creation of trusts or other arrangements to meet the obligations created under the Plan to deliver Shares or payments in lieu of or with respect to Awards hereunder; provided, however, that the existence of such trusts or other arrangements is consistent with the unfunded status of the Plan.

10.9    Indemnification.  Each person who is or shall have been a member of the Committee, or of the Board, shall be indemnified and held harmless by the Company against and from (a) any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any good faith action taken or good faith failure to act under the Plan or any Award Agreement, and (b) from any and all amounts paid by him or her in settlement thereof, with the Company's approval, or paid by him or her in satisfaction of any judgment in any such claim, action, suit, or proceeding against him or her, provided he or she shall give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf.  The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company's Certificate of Incorporation or By-Laws, by contract, as a matter of law, or otherwise, or under any power that the Company may have to indemnify them or hold them harmless.

10.10    Successors.  All obligations of the Company under the Plan, with respect to Awards granted hereunder, shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation or otherwise, of all or substantially all of the business or assets of the Company.

10.11    Beneficiary Designations.  Subject to the restrictions in Section 10.12 below, a Participant under the Plan may name a beneficiary or beneficiaries to whom any vested but unpaid Award shall be paid in the event of the Participant's death.  For purposes of this Section, a beneficiary may include a designated trust having as its primary beneficiary a family member of a Participant.  Each such designation shall revoke all prior designations by the Participant and shall be effective only if given in a form and manner acceptable to the Committee.  In the absence of any such designation, any vested benefits remaining unpaid at the Participant's death shall be paid to the Participant's estate and, subject to the terms of the Plan and of the applicable Award Agreement, any unexercised vested Award may be exercised by the administrator or executor of the Participant's estate.

10.12    Nontransferability of Awards.  No Award granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will, by the laws of descent and distribution; provided, however, that except as provided by in the relevant Award Agreement, a Participant may transfer, without consideration, an Award to one or more members of his or her Immediate Family, to a trust established for the exclusive benefit of one or more members of his or her Immediate Family, to a partnership in which all the partners are members of his or her Immediate Family, or to a limited liability company in which all the members are members of his or 

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her Immediate Family; provided, further, that any such Immediate Family, and any such trust, partnership and limited liability company, shall agree to be and shall be bound by the terms of the Plan, and by the terms and provisions of the applicable Award Agreement and any other agreements covering the transferred Awards.  All rights with respect to an Award granted to a Participant shall be available during his or her lifetime only to the Participant and may be exercised only by the Participant or the Participant's legal representative.

10.13    No Rights as Shareholder.  Except to the limited extent provided in Sections 6.6 and 6.7, no Participant (nor any beneficiary) shall have any of the rights or privileges of a shareholder of the Company with respect to any Shares issuable pursuant to an Award (or exercise thereof), unless and until certificates representing such Shares shall have been issued, recorded on the records of the Company or its transfer agents or registrars, and delivered to the Participant (or beneficiary).

10.14    Withholding Requirements.  Prior to the delivery of any Shares or cash pursuant to an Award (or exercise thereof), the Company shall have the power and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy any federal, state, local and foreign taxes of any kind (including, but not limited to, the Participant's FICA and SDI obligations) which the Committee, in its sole discretion, deems necessary to be withheld or remitted to comply with the Code and/or any other applicable law, rule or regulation with respect to such Award (or exercise thereof).

10.15    Withholding Arrangements.  The Committee, in its sole discretion and pursuant to such procedures as it may specify from time to time, may permit or require a Participant to satisfy all or part of the tax withholding obligations in connection with an Award by (a) having the Company withhold otherwise deliverable Shares, or (b) delivering to the Company already-owned Shares, in each case having a Fair Market Value equal to the amount sufficient to satisfy the minimum statutory tax withholding obligations, provided such Shares have been held by the Participant for at least six months.

10.16    No Corporate Action Restriction.  The existence of the Plan, any Award Agreement and/or the Awards granted hereunder shall not limit, affect or restrict in any way the right or power of the Board or the shareholders of the Company to make or authorize (a) any adjustment, recapitalization, reorganization or other change in the Company's or any Subsidiary's or Affiliate's capital structure or business, (b) any merger, consolidation or change in the ownership of the Company or any Subsidiary or Affiliate, (c) any issue of bonds, debentures, capital, preferred or prior preference equity interests ahead of or affecting the Company's or any Subsidiary's or Affiliate's equity interests or the rights thereof, (d) any dissolution or liquidation of the Company or any Subsidiary or Affiliate, (e) any sale or transfer of all or any part of the Company's or any Subsidiary's or Affiliate's assets or business, or (f) any other corporate act or proceeding by the Company or any Subsidiary or Affiliate.  No Participant, beneficiary or any other person shall have any claim against any Member of the Board or the Committee, the Company or any Subsidiary or Affiliate, or any employees, officers, shareholders or agents of the Company or any Subsidiary or Affiliate, as a result of any such action.

10.17    Shareholders Agreement and Other Requirements.  Notwithstanding anything herein to the contrary, as a condition to the receipt of any Award or the receipt of any Shares pursuant to a 

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the exercise of any Option under the Plan, to the extent required by the Committee, the Participant shall execute and deliver a shareholder's agreement or such other documentation which shall set forth certain restrictions on transferability of any Shares, and such other terms as the Board or Committee shall from time to time establish.  Such shareholder's agreement or other documentation shall apply to the Shares acquired under the Plan and covered by such shareholder's agreement or other documentation.  The Company may require, in connection with the grant of any Award or as a condition of exercise of any Option, that the Participant become a party to any other existing shareholder agreement (or other agreement).

10.18    Restrictions on Shares.  Each Award made hereunder shall be subject to the requirement that if at any time the Company determines that the listing, registration or qualification of the Shares subject to such Award upon any securities exchange or under any law, or the consent or approval of any governmental body, or the taking of any other action is necessary or desirable as a condition of, or in connection with, the exercise or settlement of such Award or the delivery of Shares thereunder, such Award shall not be exercised or settled and such Shares shall not be delivered unless such listing, registration, qualification, consent, approval or other action shall have been effected or obtained, free of any conditions not acceptable to the Company.  The Company may require that any certificates evidencing Shares delivered pursuant to any Award made hereunder bear a legend indicating that the sale, transfer or other disposition thereof by the holder is prohibited except in compliance with the Securities Act of 1933, as amended, and the rules and regulations thereunder.  Finally, no Shares shall be issued and delivered under the Plan, unless the issuance and delivery of those Shares shall comply with all relevant regulations and any registration, approval or action thereunder.

10.19    Changes in Capital Structure.  In the event that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, change of control or exchange of Shares or other securities of the Company, or other corporate transaction or event (each a “Corporate Event”) affects the Shares, the Board shall, in such manner as it in good faith deems equitable, adjust any or all of (i) the number of Shares or other securities of the Company (or number and kind of other securities or property) with respect to which Awards may be granted, (ii) the number of Shares or other securities of the Company (or number and kind of other securities or property) subject to outstanding Awards, and (iii) the Exercise Price or Base Price with respect to any Award, or make provision for an immediate cash payment to the holder of an outstanding Award in consideration for the cancellation of such Award.

If the Company enters into or is involved in any Corporate Event, the Board may, prior to such Corporate Event and effective upon such Corporate Event, take such action as it deems appropriate, including, but not limited to, replacing Awards with substitute awards in respect of the Shares, other securities or other property of the surviving entity or any affiliate of the surviving entity on such terms and conditions, as to the number of shares (or other equity interests), pricing and otherwise, which shall substantially preserve the value, rights and benefits of any affected Awards granted hereunder as of the date of the consummation of the Corporate Event.  Notwithstanding anything to the contrary in the Plan, if any Corporate Event occurs, the Company shall have the right, but not the obligation, to cancel each Participant's Awards immediately prior to such Corporate Event and to pay to each affected Participant in connection with the cancellation of such Participant's Awards, 

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an amount equal that the Committee, in its sole discretion, in good faith determines to be the equivalent value of such Award (e.g., in the case of an Option or SAR, the amount of the spread), it being understood that the equivalent value of an Option or SAR with an exercise price greater than or equal to the fair market value of the underlying Share shall be $0.

Upon receipt by any affected Participant of any such substitute awards (or payment) as a result of any such Corporate Event, such Participant's affected Awards for which such substitute awards (or payment) were received shall be thereupon cancelled without the need for obtaining the consent of any such affected Participant.  Any actions or determinations of the Committee under this Section 10.19 need not be uniform as to all outstanding Awards, nor treat all Participants identically.

ARTICLE XI
AMENDMENT, TERMINATION AND DURATION

11.1    Amendment, Suspension or Termination.  The Board, in its sole discretion, may amend, suspend or terminate the Plan, or any part thereof, at any time and for any reason, subject to any requirement of shareholder approval required by applicable law, rule or regulation, including, without limitation, Section 162(m) of the Code and the rules of the New York Stock Exchange; provided, however, the Board may amend the Plan and any Award Agreement without shareholder approval as necessary to avoid the imposition of any taxes under Section 409A of the Code.  Subject to the preceding sentence, the amendment, suspension or termination of the Plan shall not, without the consent of the Participant, materially adversely alter or impair any rights or obligations under any Award theretofore granted to such Participant.  Notwithstanding the foregoing, the Committee may, but shall not be required to, amend or modify any Award to the extent necessary to avoid the imposition of taxes under Section 409A of the Code.  The Company intends to administer the Plan and all Awards granted thereunder in a manner that complies with Code Section 409A, however, the Company shall not be responsible for any additional tax imposed pursuant to Code Section 409A, nor will the Company indemnify or otherwise reimburse Participant for any liability incurred as a result of Code Section 409A.  No Award may be granted during any period of suspension or after termination of the Plan.  Notwithstanding anything in this Plan to the contrary and subject to Section 10.19, without the approval of shareholders of the Company, no amendment and no substitution or exchange of an outstanding award shall reduce the exercise price of any outstanding Option, Base Price of any outstanding SAR, or purchase price of any other outstanding Award conferring a right to purchase Shares to an amount less than the Fair Market Value of a Shares at the date of grant of the outstanding award.
11.2    Duration of the Plan.  The Plan shall, subject to Section 11.1, terminate ten years after adoption by the Board, unless earlier terminated by the Board and no further Awards shall be granted under the Plan.  The termination of the Plan shall not affect any Awards granted prior to the termination of the Plan.

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ARTICLE XII
LEGAL CONSTRUCTION

12.1    Gender and Number.  Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine; the plural shall include the singular and the singular shall include the plural.

12.2    Severability.  In the event any provision of the Plan or of any Award Agreement shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan or the Award Agreement, and the Plan and/or the Award Agreement shall be construed and enforced as if the illegal or invalid provision had not been included.

12.3    Requirements of Law.  The granting of Awards and the issuance of Shares under the Plan shall be subject to all applicable laws, rules and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.

12.4    Governing Law; Waiver of Jury Trial.  The Plan and all Award Agreements shall be construed in accordance with and governed by the laws of the State of Nevada, but without regard to its conflict of law provisions.  Participant hereby agrees to waive all rights to trial by jury in any proceeding (whether based on contract, tort or otherwise) arising out of or relating to any Award Agreement.

12.5    Captions.  Captions are provided herein for convenience only, and shall not serve as a basis for interpretation or construction of the Plan.

19EX 10.1 Larkins Employment Agreement April 1 2013

 

 
EXECUTION COPY

EXECUTIVE EMPLOYMENT AGREEMENT

THIS EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into as of April 1, 2013 (the “Effective Date”), between SQUARETWO FINANCIAL CORPORATION, a Delaware corporation (the “Company”), and PAUL A. LARKINS (“Executive”).
1.0    RECITALS.
1.1    On April 6, 2009, the Executive and the Company entered into an Executive Employment Agreement (“the “Prior Agreement”).  The Executive and the Company are entering into this Agreement to replace the terms of the Prior Agreemen setting forth the terms and conditions of Executive's employment with the Company.  The Company hereby employs Executive and Executive hereby accepts employment with the Company upon the terms and conditions contained in this Agreement.
1.2    As an executive officer of the Company, Executive has access to valuable confidential and proprietary information used in the business of the Company, including financial data, customer data, operational data, trade secrets and other intellectual property that if disclosed to or used by competitors or potential competitors would cause irreparable harm to the Company.
1.3    Executive and the Company desire to enter into this Agreement in order to provide the Company with adequate protection from the unauthorized disclosure or use of the Company's confidential and proprietary information.
NOW, THEREFORE, IN CONSIDERATION of the foregoing facts, the mutual covenants and agreements contained herein and other good and valuable consideration, the Company and Executive agree as follows:
2.0    DEFINITIONS.
2.1    Affiliate: “Affiliate” means, with respect to any party, any corporation, limited liability company, partnership, joint venture, firm and/or other entity which Controls, is Controlled by or is under common Control with such party.
2.2    Board of Directors: “Board of Directors” shall mean the board of directors of the Company.
2.3    Business: “Business” means (i) the providing of operational assistance and/or software to collection law firms or collection agencies, including without limitation the operation of a franchise network of collection law firms, (ii) the purchasing of debt; (iii) the collection of debt on a contingency basis or otherwise; (iv) the development and sale of software for the collections industry; and/or (v) any other line of business in which the Company or its Affiliates engage in, or formulate business plans to engage in, during the term of Executive's employment with the Company.
2.4    Compensation Committee: “Compensation Committee” shall mean a committee of the Board of Directors which has been delegated responsibility for employee compensation matters or, in the absence thereof, the entire Board of Directors.
2.5    Confidential and Proprietary Information: “Confidential and Proprietary Information” means all proprietary trade secrets and/or proprietary information and any idea in whatever form, tangible or intangible, pertaining in any manner to the Business of the Company or any Affiliate of the Company, or to the Company's clients, consultants, or business associates, unless the information is or becomes publicly known through lawful means (other than disclosure by Executive, unless such disclosure by Executive is made in good faith in the course of performing Executive's duties under this Agreement, or with the express written consent of the Board of Directors).
2.6    Control: “Control” means (i) in the case of corporate entities, direct or indirect ownership of at least fifty percent (50%) of the stock or participating assets entitled to vote for the election of directors; and (ii) in the case of non-corporate entities (such as individuals, limited liability companies, partnerships or limited partnerships), either (A) direct or indirect ownership of at least fifty percent (50%) of the equity interest, or (B) the power to direct the management and policies of the noncorporate entity.
2.7    Covered Entity: “Covered Entity” means every Affiliate of Executive, and every business, association, trust, corporation, partnership, limited liability company, proprietorship or other entity in which Executive has invested in (whether through debt or equity securities), or has contributed any capital or made any advances to, or in which any Affiliate of Executive has an ownership interest or profit sharing percentage, or a firm from which Executive or any Affiliate of Executive receives or is entitled to receive income, compensation or consulting fees in which Executive or any Affiliate of Executive has an interest as a lender (other than solely as a trade creditor for the sale of goods or provision of services that do not otherwise violate the provisions of this Agreement). The agreements of Executive contained herein specifically apply to each entity which is presently a Covered Entity or which becomes a Covered Entity subsequent to the date of this Agreement. Notwithstanding the foregoing, nothing contained in this Agreement prohibits Executive or any 

Affiliate of Executive from owning less than five percent (5%) of any class of voting securities registered under the Securities Exchange Act of 1934, as amended, of any issuer, and no such issuer shall be considered a Covered Entity solely by virtue of such ownership or the incidents thereof. Further notwithstanding anything contained in the foregoing provisions to the contrary, the term “Covered Entity” shall not include the Company, any Subsidiary of the Company, or any Affiliate of the Company or any such Subsidiary.
2.8    Discharge For Cause: “Discharge For Cause” shall mean termination of employment for any one or more of the following: (i) willful misfeasance or nonfeasance by Executive of his assigned duties, which includes not following the reasonable written direction of the Board of Directors or any committee thereof (other than by reason of disability), or repeated intentional refusal by Executive to perform his assigned duties (other than by reason of disability) which continues uncured for thirty (30) days following receipt of written notice from the Board of Directors, the Compensation Committee or the Chairman of the Board of Directors; (ii) such Executive personally engaging in illegal conduct or in any act of moral turpitude that causes material harm to the reputation, business, or finances of the Company or any Affiliate of the Company; (iii) such Executive breaching in any material respect any provision of this Agreement except Sections 4.7 or 4.8, (other than by reason of disability) which continues uncured for thirty (30) days following receipt of written notice from the Board of Directors, the Compensation Committee or the Chairman of the Board of Directors; (iv)such Executive breaching any obligation contained in Sections 4.7 or 4.8 of this Agreement; and (v) such Executive's commencement of employment with another company while he is an employee of the Company without the prior consent of the Board of Directors.
2.9    Discharge Without Cause: “Discharge Without Cause” shall mean the Company's termination of Executive's employment hereunder during the term hereof for any reason other than a Discharge For Cause or due to Executive's death or Permanent Disability.
2.10    EBITDA: “EBITDA” shall mean earnings before interest, taxes, depreciation and amortization, as determined by generally accepted accounting principles, consistently applied, and including without limitation, an accrual for bonuses of officers and employees (including the Executive) for the year for which EBITDA is determined and as adjusted pursuant to the consistent practices of the Company.
2.11    Permanent Disability: “Permanent Disability” shall mean Executive's inability to perform Executive's duties hereunder due to a physical or mental condition for a period of one hundred twenty (120) consecutive days or an aggregate of one hundred eighty (180) days in any twelve (12) month period.
2.12    Subsidiary: “Subsidiary” shall mean any corporation, trust, general or limited partnership, limited liability company, limited liability partnership, firm, company or other business enterprise which is Controlled by the Company thorough direct ownership of the stock or other proprietary interests of such business enterprise or indirectly through the ownership of stock or other proprietary interests in one (1) or more other business enterprises which are connected with the Company by means of one (1) or more chains of business enterprises that are connected by ownership of stock or other proprietary interests.   Attached as Schedule A lists the Company's current subsidiaries.  An updated Schedule A will be provided to Executive at the time of any separation of employment for any reason.
2.13    Termination For Good Reason: “Termination For Good Reason” shall mean voluntary termination of this Agreement by Executive if, without the written consent of Executive: (i) there is a material reduction by the Company to either (a) Executive's annual salary then in effect or (b) Executive's bonus target established under Section 5.2 of this Agreement (although the award of any bonus is discretionary and a bonus award that is less than the target shall not give Executive the right to terminate this Agreement for Good Reason); except for any reduction which is remedied by the Company promptly after receipt of written notice thereof given by Executive; (ii) the Company materially breaches the terms of this Agreement and such breach is not cured within thirty (30) days after receipt of written notice thereof given by Executive; (iii) there is a material, adverse, and non-temporary diminution of Executive's current job title, reporting relationship, or duties as President, or requirements that are inconsistent with the position of President, excluding for this purpose any action not taken in bad faith and that is remedied by the Company promptly after receipt of written notice thereof given by Executive; or (iv) there is a relocation of Executive to a facility or location more than forty (40) miles from the Company's current location.  If circumstances arise giving Executive the right to terminate this Agreement for Good Reason, Executive shall within 60 days notify the Company in writing of the existence of such circumstances, and the Company shall have an additional 30 days within which to investigate and remedy the circumstances, after which 30 days Executive shall have an additional 60 days within which to exercise the right to terminate for Good Reason.  If Executive does not timely do so the right to terminate for Good reason shall lapse and be deemed waived, and the Executive shall not thereafter have the right to terminate for Good Reason unless further circumstances occur giving rise independently to a right to terminate for Good Reason under this paragraph.
2.14    Territory: “Territory” means the United States and Canada.  
3.0    CAPACITIES AND DUTIES: INDEMNIFICATION.
3.1    Title: Executive is hereby employed in the capacity of President and Chief Executive Officer of the Company. Executive shall report directly to the Board of Directors and shall be subject to their supervision, control and direction. Executive will at all times abide by the Company's written personnel policies applicable to similarly situated employees of the Company as in effect from time to time and previously provided to Executive (including without limitation its equal employment opportunity and harassment policies), and will faithfully, industriously and to the best of Executive's ability, experience and talents perform all of the duties that may be required of and from Executive pursuant to the terms hereof, consistent with Executive's status as the President of the Company.

3.2    Exclusive Services: During the Term, Executive agrees to devote Executive's best efforts and full business time to rendering services to the Company. Executive is specifically restricted from being employed by any other company, other than a Subsidiary or an Affiliate of the Company, while under the Company's employ pursuant to this Agreement.  Notwithstanding the foregoing sentence, the following activities shall not be prohibited by this Section 3.2: (i) less than a five percent (5%) ownership interest by Executive in another competing business entity (where such ownership does not constitute Control and where Executive does not act as a director, officer, consultant or otherwise provide services to such entity), (ii) Executive's service on the board of directors of any charitable, non-profit or educational institution without compensation (other than reimbursement of out-of-pocket expenses) or any for-profit entity that does not compete with the Business, provided that Executive has obtained advance authorization by the Board to serve in such capacity, such authorization to be given or withheld in the Board's discretion; provided, however, that any such services shall be insubstantial and shall not include any active involvement in the management of such entity and provided further that such service or ownership shall not detract from Executive's performance of his duties to the Company or, except in the case of Section 3.2(i), be in direct competition with the Business.
 3.3    Indemnification: The Company shall, to the maximum extent permitted by the Company's bylaws and applicable law, indemnify and hold harmless Executive for any loss, injury, damage, expense (including reasonable attorneys' fees, and costs), and claim or demand, arising out of, connected with, or in any manner related to, any act, omission, or decision made in good faith while performing services for the Company from and after the Effective Date.
4.0    TERM.
4.1    Term: Subject to Sections 4.2, 4.3, 4.4, 4.5 and 4.6, the term of this Agreement shall be three (3) years commencing on the Effective Date, unless terminated earlier pursuant to the terms herein (the “Initial Term”); provided that, unless earlier terminated pursuant to the terms herein, the Initial Term shall be automatically extended for additional one-year terms (each, a “Renewal Term”) upon the expiration of the Initial Term or any such Renewal Term unless the Company or Executive delivers to the other at least thirty (30) days prior to the expiration of the Initial Term or the then-current Renewal Term, as the case may be, a written notice specifying that the term of Executive's employment will not be renewed at the end of the Initial Term or the then-current Renewal Term, as the case may be. The Initial Term or, in the event that Executive's employment hereunder is terminated earlier pursuant to the terms herein or renewed pursuant to this Section 4.1, such shorter or longer period, as the case may be, is referred to herein as the “Term.”  In the event that (i) the Company elects not to renew this Agreement and (ii) this Agreement terminates by expiration of the Initial Term, or by expiration of either of the first two Renewal Terms, if any, then the Company shall have no payment obligation to Executive except for (i) payment of sums specified in Section 4.2; and (ii) payment to Executive of the Without Cause Severance Pay, provided that the Conditions (defined in Section 4.4. below) are met.  If the Agreement terminates by expiration of the Term in any other instance except those outlined in the foregoing sentence, the Company's only obligation shall be payment of sums specified in Section 4.2.
4.2    Payments Upon Termination.  In the event Executive's employment under this Agreement is terminated for any reason, Executive shall be paid for all accrued, unpaid base salary and all accrued, unused vacation, in each case through the date of termination, in accordance with applicable law.  Executive shall also be reimbursed for any expenses incurred in accordance with Section 5.3 of this Agreement.  
4.3    Discharge For Cause: Executive's employment under this Agreement may be immediately terminated by the Company for Cause, without further obligation by the Company, except for payment of sums specified in Section 4.2, upon written notice to Executive of a Discharge For Cause. The Company shall provide Executive in such written notification such facts as shall be reasonably necessary to apprise Executive of the basis for such Discharge For Cause.
4.4    Discharge Without Cause or Termination for Good Reason:  Executive's employment under this Agreement may be immediately terminated by the Company upon written notice to Executive of a Discharge Without Cause or immediately terminated by Executive upon written notice to the Company of a Termination for Good Reason. In the event of such termination and subject to the Conditions (defined in this Section 4.4 below), the Company shall continue to pay to Executive an amount equal to Executive's base salary, as provided in Section 5.1, at the annual rate in effect at the time of termination, over a period equal to twelve (12) months from the date of such termination (“Without Cause Severance Pay”). Without Cause Severance Pay shall also include, in addition to the foregoing, (i) a bonus equal to a pro rata portion of the bonus amount that would have been paid to Executive for the current bonus period had Executive not been terminated, which bonus amount is determined by multiplying the bonus that would have been earned for the then-current twelve (12) month bonus period by a fraction, the numerator of which is number of calendar days in the then-current bonus period that have elapsed as of the date of termination and the denominator of which is 365, such bonus to be paid at the time that comparable executives at the Company are paid bonuses for the bonus period; and (ii) to the extent Executive is eligible under and elects to continue his health care coverage under COBRA, the Company shall continue to pay Executive's COBRA continuation premiums for medical and dental insurance pursuant to Section 5.4 for twelve (12) months from the date of such termination or, if sooner, the date Executive becomes eligible to receive health care pursuant to a subsequent employer's group health care plan. Other than the foregoing, Executive shall not be entitled to any payment for subsequent periods after the effective date of any Discharge Without Cause or Termination for Good Reason. Without Cause Severance Pay, except as specified above, shall be payable to Executive in accordance with the Company's general payroll practices as the same may exist from time to time. As a condition to receiving any payment under this Section 4.4, Executive must comply with his post employment obligations under Section 4.7 and 4.8 and must execute and not revoke a  release of claims in the form attached hereto as Exhibit A within 45 days of Executive's termination of employment, collectively (the “Conditions”).  

4.5    Termination Upon Death: This Agreement shall be immediately terminated without action or notice by either party upon the death of Executive and without further obligation by the Company, except for payment of sums specified in Section 4.2
4.6    Termination Upon Permanent Disability: Executive's employment under this Agreement may be immediately terminated by the Company upon written notice of a termination for the Permanent Disability of Executive. Upon termination pursuant to this Section 4.6 and in addition to payment of the sums specified in Section 4.2, the Company shall continue to pay to Executive an amount equal to Executive's base salary, as provided in Section 5.1, at the annual rate in effect at the time of termination, for a period equal to three (3) months from the date of termination (“Permanent Disability Severance Pay”), provided that Executive complies with the Conditions outlined in Section 4.4 above.  Permanent Disability Severance Pay shall be reduced by the amount of any disability benefits paid during and for the same period to Executive under any disability insurance policy provided by the Company as a benefit to Executive. Permanent Disability Severance Pay shall be payable to Executive, in accordance with the Company's general payroll practices as the same may exist from time to time, upon Executive's termination pursuant to this Section 4.6. 
4.7    Confidential and Proprietary Information: Executive agrees that he will not, either directly or indirectly, both during and after the termination of his employment with the Company, and Executive will not permit any Covered Entity which is Controlled by Executive to, either directly or indirectly, divulge to any person or use any of the Confidential and Proprietary Information, except (i) as required in connection with the performance of such Executive's duties to the Company, (ii) as required to be included in any report, statement or testimony requested by any municipal, state or national regulatory body having jurisdiction over Executive or any Covered Entity which is Controlled by Executive, (iii) as required in response to any summons or subpoena or in connection with any litigation, (iv) to the extent necessary in order to comply with any law, order, regulation, ruling or governmental request applicable to Executive or any Covered Entity which is Controlled by Executive, (v) as required in connection with an audit by any taxing authority, or (vi) is made with the express written consent of the Board of Directors. In the event that Executive or any such Covered Entity which is Controlled by Executive is required to disclose Confidential and Proprietary Information pursuant to the foregoing exceptions (ii) through (v) inclusive, Executive shall promptly notify the Company of such pending disclosure and assist the Company (at the Company's expense) in seeking a protective order or in objecting to such request, summons or subpoena with regard to the Confidential and Proprietary Information. If the Company does not obtain such relief after a period that is reasonable under the circumstances, Executive (or such Covered Entity) may disclose that portion of the Confidential and Proprietary Information which counsel to such party advises such party that they are legally compelled to disclose or else stand liable for contempt or suffer censure or penalty. In such cases, Executive shall promptly provide the Company with a copy of the Confidential and Proprietary Information so disclosed.
4.8    Non-Compete and Non-Solicitation:  
(i)    During the term of Executive's employment with the Company or any Affiliate of the Company and for one (1) year thereafter, regardless of the reason for the termination of Executive's employment, Executive shall not either directly or indirectly, and will not permit any Covered Entity which is Controlled by Executive to either directly or indirectly, compete with the Business in the Territory or otherwise participate in, assist, aid or advise in any way, any competitive business or enterprise that competes with the Business in the Territory.
(ii)    During the term of Executive's employment with the Company or any Affiliate of the Company and one (1) year thereafter, Executive will not, either directly or indirectly and will not permit any Covered Entity which is Controlled by Executive to, either directly or indirectly, (a) (1) attempt in any manner to solicit the business of any franchisee of the Company or Affiliates of the Company, or (2) solicit the business of any financial institution or other creditors with which the Company or its Affiliates has had a relationship, except that Executive may solicit such institutions or creditors if doing so would not violate his obligations under Section 4.8(i); or (b) hire, solicit, take away, or attempt to hire, solicit or take away (either on such Executive's behalf or on behalf of any other person or entity) any person (1) who is then an employee of the Company or any Affiliate of the Company or an employee or a franchisee of the Company; or (2) who has terminated his or her employment with the Company or any Affiliate of the Company within the previous ninety (90) days.
(iii)    Executive acknowledges that the foregoing geographic restriction on competition is fair and reasonable, given the nature and geographic scope of the Company's business operations and the nature of Executive's position with the Company.  Executive also acknowledges that while employed by the Company, Executive will have access to information that would be valuable or useful to the Company's competitors, and therefore acknowledges that the foregoing restrictions on Executive's future employment and business activities are fair and reasonable.  Executive acknowledges and is prepared for the possibility that Executive's standard of living may be reduced during the one-year period following the termination of Executive's employment, and assumes and accepts any risk associated with that possibility.
(iv)    Executive acknowledges the following provisions of Colorado law, set forth in Colorado Revised Statutes § 8-2-113(2):
Any covenant not to compete which restricts the right of any person to receive compensation for performance of skilled or unskilled labor for any employer shall be void, but this subsection (2) shall not apply to:
...
(b)    Any contract for the protection of trade secrets;

...
(d)    Executive and management personnel and officers and employees who constitute professional staff to executive and management personnel.

Executive acknowledges that this agreement is a contract for the protection of trade secrets within the meaning of § 8-2-113(2)(b) and is intended to protect the Confidential Information and Confidential Records identified above and that Executive is an executive or manager, or professional staff to an executive or manager,  within the meaning of § 8-2-113(2)(d).

(v)    Executive agrees that the payment of any Without Cause Severance Pay is conditioned on Executive's compliance with this Section 4.8 and that the Company will have the right to withhold payment, and/or seek to recover any payments already made, if Executive is in breach of this Section 4.8.
(vi)    Notwithstanding the provisions of Sections 4.8(i) and (ii) above, (a) Executive's ownership of less than a five percent (5%) ownership interest in another competing business entity (where such ownership does not constitute Control and where Executive does not act as a director, officer, consultant or otherwise provide services to such entity), or (b) Executive's service on the board of directors of any charitable, non-profit or educational institution without compensation (other than reimbursement of out-of-pocket expenses) or any entity that does not compete with the Business, shall not constitute a violation of this Section 4.8, provided, however, that any such services shall be insubstantial and shall not include any active involvement in the management of such entity and provided further that such service or ownership shall not detract from Executive's performance of his duties to the Company or, except in the case of Section 4.8(iv)(a), be in direct competition with the Business.
4.9    Enforcement; Remedies: Executive acknowledges that Executive's expertise in the Business is of a special and unique character which gives this expertise a particular value, and that a breach of Sections 4.7 or 4.8 by Executive will cause serious and potentially irreparable harm to the Company. Executive therefore acknowledges that a breach of Sections 4.7 or 4.8 by Executive cannot be adequately compensated in an action for damages at law, and equitable relief would be necessary to protect the Company from a violation of this Agreement and from the harm which this Agreement is intended to prevent. By reason thereof, Executive acknowledges that the Company is entitled, in addition to any other remedies it may have under this Agreement or otherwise, to preliminary and permanent injunctive and other equitable relief to prevent or curtail any breach of this Agreement. Executive acknowledges, however, that no specification in this Agreement of a specific legal or equitable remedy may be construed as a waiver of or prohibition against pursuing other legal or equitable remedies in the event of a breach of this Agreement by Executive. Executive's sole and exclusive remedy in the event of a breach of this Agreement by the Company shall be payment of the Without Cause Severance Pay or Good Reason Severance Pay.
4.10      Limitations Under Code Section 409A
.              (i)    If at the time of Executive's separation from service, (i) Executive is a specified employee (within the meaning of Section 409A and using the identification methodology selected by the Company from time to time), and (ii) the Company makes a good faith determination that an amount payable hereunder constitutes deferred compensation (within the meaning of Section 409A) the payment of which is required to be delayed pursuant to the six-month delay rule set forth in Section 409A in order to avoid taxes or penalties under Section 409A, then the Company will not pay such amount on the otherwise scheduled payment date but will instead pay it in a lump sum on the first business day after such six-month period, together with interest for the period of delay, compounded annually, equal to the prime rate (as published in the Wall Street Journal) in effect as of the dates the payments should otherwise have been provided.

(ii)    It is the intention of the parties that payments or benefits payable under this Agreement not be subject to the additional tax imposed pursuant to Section 409A of the Code.  To the extent such potential payments or benefits could become subject to such Section, the parties shall cooperate to amend this Agreement with the goal of giving Executive the economic benefits described herein in a manner that does not result in such tax being imposed.

(iii)    With respect to payments under this Agreement, for purposes of Section 409A of the Code of 1986, each severance payment and COBRA continuation reimbursement payment will be considered one of a series of separate payments.

         (iv)    Executive will be deemed to have a termination of employment for purposes of determining the timing of any payments that are classified as deferred compensation only upon a “separation from service” within the meaning of Section 409A.  
    
(v)    Any amount that Executive is entitled to be reimbursed under this Agreement will be reimbursed to Executive as promptly as practical and in any event not later than the last day of the calendar year after the calendar year in which the expenses are incurred, and the amount of the expenses eligible for reimbursement during any calendar year will not affect the amount of expenses eligible for reimbursement in any other calendar year.

(vi)    If on the due date for any payment pursuant to Section 4 (except for payments under Section 4.2), the release has not been executed and delivered and all revocation periods with respect to the release have not yet expired, such payment will not be made until such revocation period has expired and if such revocation period has not expired by the end of the calendar year in which the payment would have otherwise been made, the payment shall be forfeited.  To the extent not forfeited pursuant to the prior sentence, the Company will pay all amounts that would have otherwise been paid pursuant to Section 4 prior to the executive's delivery and lapse of the revocation periods for the release within five days after satisfaction of these requirements.

5.0    COMPENSATION AND BENEFITS. For Executive's services, the Company agrees to pay Executive compensation as follows:

5.1    Salary: Base compensation equal to an annual salary of $650,000 (Six Hundred Fifty Thousand Dollars) to be paid according to the Company's general payroll practices as same may exist from time to time. Executive's base compensation will be subject to annual reviews and increases as approved by the Board of Directors or the Compensation Committee. Such annual reviews will be conducted on or about Executive's normal anniversary date of hire in accordance with past practice of the Company.
5.2    Incentive Compensation Program: During the Term, Executive shall be eligible for an annual discretionary performance-based bonus with a target bonus of 100% of base salary, and based upon the actual performance of the Company in relation to projected EBITDA milestones, other tangible financial metrics, and management bonus objectives to be established by the Compensation Committee of the Board of Directors (the “Compensation Committee”) after consultation with the Chairman of the Board. Any bonus payable as a performance bonus shall be in the amount and paid in the manner, as determined by the Compensation Committee or the Board of Directors in its sole discretion.  Any such bonus payable shall be paid within fifteen (15) days of the delivery of the Company annual audit but in any event by the end of the calendar year after the calendar year to which the performance relates. Executive shall not be entitled to any bonus for the calendar year in which Executive's employment with the Company is terminated for any reason, except as provided in Sections 4.1 and 4.4.     
5.34    Reimbursement of Expenses: The Company shall reimburse Executive for any reasonable business expenses incurred by Executive in the ordinary course of the Company's business in accordance with the Company's reimbursement policies then in effect. These expenses shall be substantiated by invoices and receipts, to be submitted by Executive within thirty (30) days after incurrence.
5.4    Benefits: During the Term, Executive shall be entitled to receive all benefits of employment generally available to the Company's other executive employees when and as such benefits, if any, become available and Executive becomes eligible for them, including any vacation and sick leave, medical, dental, life and disability insurance benefits, long term incentive plan, stock option plan, pension plan and/or profit-sharing plan, and parking.  
5.5    Vacation: During the Term, Executive shall be entitled to four (4) weeks (160 hours) of paid vacation each year during the Term, accrued on a pro rata basis through each full year of the Term. Executive will use his reasonable efforts to schedule vacation periods to minimize disruption of the Company's business.  Any accrued vacation time that is not used by December 31st of each calendar year will not roll over to the following year absent written approval by the Chairman of the Board.
5.6    Withholding: Executive authorizes the Company to make any and all applicable withholdings of federal and state taxes and other items the Company may be required to deduct, as such items may exist under this Agreement or otherwise from time to time.
6.0    SUCCESSORS AND ASSIGNS. This Agreement is intended to bind and inure to the benefit of and be enforceable by Executive, the Company and their respective heirs, successors and assigns, except that Executive shall not have any right to assign or otherwise transfer this Agreement, or any of Executive's rights, duties or any other interest herein to any party without the prior written consent of the Company, and any such purported assignment shall be null and void.
7.0    SURVIVAL OF RIGHTS AND OBLIGATIONS. The rights and obligations of the parties as stated herein shall survive the termination of this Agreement.
8.0    ENTIRE AGREEMENT.
8.1    Sole Agreement: This Agreement (including any attachments and exhibits hereto) contain the parties' sole and entire agreement regarding the subject matter hereof, and supersedes any and all other agreements, statements and representations of the parties.
8.2    No Other Representations: The parties acknowledge and agree that no party has made any representations (i) concerning the subject matter hereof, or (ii) inducing the other party to execute and deliver this Agreement, except those representations specifically referenced herein. The parties have relied on their own judgment in entering into this Agreement.
9.0    MODIFICATIONS OR WAIVERS. Waivers or modifications of this Agreement, or of any covenant, condition, or limitation contained herein, are valid only if in writing duly executed by the parties hereto.
10.0    GOVERNING LAW. This Agreement shall be governed pursuant to the laws of the State of Colorado.
11.0    SEVERABILITY. If any part, clause, or condition of this Agreement is held to be partially or wholly invalid, unenforceable, or inoperative for any reason whatsoever, such shall not affect any other provision or portion hereof, which shall continue to be effective as though such invalid, unenforceable or inoperative part, clause or condition had not been made.

12.0    INTERPRETATION.
12.1    Section headings: The section and subsection heading of this Agreement are included for purposes of convenience only, and shall not affect the construction or interpretation of any of its provisions.
12.2    Gender and Number: Whenever required by the context, the singular shall include the plural, the plural shall include the singular, and the masculine gender shall include the neuter and feminine genders and vice versa.
13.0    NOTICES. All notices and other communications under or in connection with this Agreement shall be in writing and shall be deemed given (i) if delivered personally, upon delivery, (ii) if delivered by registered or certified mail (return receipt requested), upon the earlier of actual delivery or three (3) days after being mailed, (iii) if given by overnight courier with receipt acknowledgment requested, the next business day following the date sent, or (iv) if given by telecopy, upon confirmation of transmission by telecopy, in each case to the parties at the following addresses:
To the Company:        SquareTwo Financial Corporation
4340 S. Monaco, Second Floor
Denver, CO 80237
Attention:    Chairman of the Board
Facsimile:     (303) 713-2509

with a copy to:        KRG Capital Partners, LLC 
1800 Larimer Street
Suite 2200
Denver, Colorado 80202
Facsimile: (303) 390-5015 
Attention: Christopher Lane
     Bennett Thompson

To Executive:        To the address listed on the signature page hereto.

14.0    JOINT PREPARATION. All parties to this Agreement have negotiated it at length, and have had the opportunity to consult with and be represented by their own competent counsel. This Agreement is therefore deemed to have been jointly prepared by the parties, and any uncertainty or ambiguity existing in it shall not be interpreted against any party, but rather shall be interpreted according to the rules generally governing the interpretation of contracts.
 15.0    THIRD-PARTY BENEFICIARIES. No term or provision of this Agreement is intended to be, or shall be, for the benefit of any person, firm, organization or corporation not a party hereto, and no such other person, firm, organization or corporation shall have any right or cause of action hereunder.
16.0    COOPERATION AND FURTHER ACTIONS. The parties agree to perform any and all acts and to execute and deliver any and all documents necessary or convenient to carry out the terms of this Agreement.
17.0    ATTORNEYS' FEES. In the event of any dispute related to or based upon this Agreement, the prevailing party shall be entitled to recover from the other party its reasonable attorneys' fees and costs.
18.0    COUNTERPARTS. This Agreement may be executed in one or more counterparts, including electronically transmitted counterparts, each of which shall be deemed an original and all of which shall be considered one and the same instrument.
19.0    RESOLUTION OF DISPUTES AND CONSENT TO JURISDICTION. 
19.1    Litigation of Disputes Under Sections 4.7 and 4.8 of this Agreement.  All disputes under or related to the enforcement of Sections 4.7 and 4.8 of this Agreement, together with any other dispute under this Agreement that is related to whether Sections 4.7 and 4.8 have been or are threatened to be breached (including without limitation whether any termination under this Agreement was for Cause) shall be litigated as provided below.  Specifically, with respect to such disputes or enforcement actions, each party to this Agreement hereby (a) consents to the jurisdiction of the United States District Court for the District of Colorado or, if such court does not have jurisdiction over such matter, the applicable Colorado State or County Court that has jurisdiction, (b) consents to personal jurisdiction within the City and County of Denver, Colorado, and (c) accepts, generally and unconditionally, the exclusive jurisdiction and venue of the aforesaid courts and waives any defense of lack of personal jurisdiction or inconvenient forum or any similar defense, and irrevocably agrees to be bound by any non-appealable judgment rendered thereby.
19.2    Arbitration of Other Disputes Under this Agreement.

(i)    Any controversy, claim or dispute involving the parties (or their affiliated persons) concerning this Agreement, or the subject matter thereof, except as provided in Section 19.1, shall be finally settled by arbitration held in Denver, Colorado by one (1) arbitrator in accordance with the rules of employment arbitration then followed by the American Arbitration Association or any successor to the functions thereof. The arbitrator shall apply Colorado law in the resolution of all controversies, claims and disputes and shall have the right and authority to determine how his or her decision or determination as to each issue or matter in dispute may be implemented or enforced. Any decision or award of the arbitrator shall be final and conclusive on the parties to this Agreement and their respective affiliates, and there shall be no appeal therefrom other than from gross negligence or willful misconduct. Notwithstanding the foregoing, claims of employment discrimination, worker's compensation and unemployment compensation benefits shall not be subject to arbitration under this Agreement. The Company shall bear all costs of the arbitrator in any action brought under this Section 19.2.
(ii)    The parties hereto agree that any action to compel arbitration pursuant to this Section 19.2 may be brought in the appropriate Colorado court and in connection with such action to compel the laws of the State of Colorado shall control. Application may also be made to such court for confirmation of any decision or award of the arbitrator, for an order of the enforcement and for any other remedies which may be necessary to effectuate such decision or award. The parties hereto hereby consent to the jurisdiction of the arbitrator and of such court and waive any objection to the jurisdiction of such arbitrator and court.
[SIGNATURE PAGE FOLLOWS]
 

[SIGNATURE PAGE TO EXECUTIVE EMPLOYMENT AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have executed, or caused their duly authorized representatives to execute, this Agreement as of the Effective Date.
SQUARETWO FINANCIAL CORPORATION, 
a Delaware corporation

	
			
	By:
	 
	/s/ Christopher Lane

	Name:
	 
	Christopher Lane

	Title:
	 
	Chairman of the Board

EXECUTIVE

                        
	
	
	/s/ Paul A. Larkins

	PAUL A. LARKINS

    
	
			
	Address:
	 
	 

	 
	 
	 

	
			
	Facsimile:
	 
	 

 

EXHIBIT A
FORM OF MUTUAL RELEASE
Mutual Legal Release
This Mutual Legal Release ("Release") is between SquareTwo Financial Corporation (the "Company") and Paul A. Larkins ("Executive") (each a "Party," and together, the "Parties") and shall be effective on the day that Executive signs it, provided that such day is after Executive's last day of employment with the Company (“Effective Date”).
Recitals
1.Executive and the Company are parties to an Executive Employment Agreement to which this Release is appended as Appendix A (the “Agreement”).

2.Executive wishes to receive the Without Cause Severance Pay or Permanent Disability Severance Pay, as the case may be and as provided for and defined in the Agreement, and understands that receipt of such benefits are conditioned upon his execution of this Release and compliance with the terms of Sections 4.7 and 4.8 of the Agreement.

3.Executive and the Company wish to resolve, except as specifically set forth herein, all claims between them arising from or relating to any act or omission predating the Effective Date defined above.

Agreement
The Parties agree as follows:
4.Confirmation of Severance Pay Obligation  The Company shall pay or provide to the Executive the [Without Case Severance Pay or Permanent Disability Severance pay] as, when and on the terms and conditions specified in the Agreement, including but not limited to continued compliance with Executive's obligations under Sections 4.7 and 4.8 of the Agreement.
5.Legal Releases.
(a)    Executive, on behalf of Executive and Executive's heirs, personal representatives and assigns, and any other person or entity that could or might act on behalf of Executive, including, without limitation, Executive's counsel (all of whom are collectively referred to as "Executive Releasers"), hereby fully and forever releases and discharges the Company, its present and future parents, affiliates, and subsidiaries, and each of their past, present and future officers, directors, employees, shareholders, investors, independent contractors, attorneys, insurers and any and all other persons or entities that are now or may become liable to any Executive Releaser due to any Executive Releasee's act or omission, (all of whom are collectively referred to as "Executive Releasees") of and from any and all actions, causes of action, claims, demands, costs and expenses, including attorneys' fees, of every kind and nature whatsoever, in law or in equity, whether now known or unknown, that Executive Releasers, or any person acting under any of them, may now have, or claim at any future time to have, based in whole or in part upon any act or omission relating to or arising out of Executive's employment relationship with, and/or service as a member of the Board of Directors (if any) for, the Company or its subsidiaries or affiliates occurring on or before the Effective Date, without regard to present actual knowledge of such acts or omissions, including specifically, but not by way of limitation, matters which may arise at common law, such as breach of contract, express or implied, promissory estoppel, wrongful discharge, tortious interference with contractual rights, infliction of emotional distress, defamation, or under federal, state or local laws, such as the Fair Labor Standards Act, the Employee Retirement Income Security Act, the National Labor Relations Act, Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Rehabilitation Act of 1973, the Equal Pay Act, the Americans with Disabilities Act, the Family and Medical Leave Act, and any civil rights law of any state or other governmental body, all as amended and to the extent releasable under the statute, and all claims relating to equity incentives of any kind, except as specifically set forth in the Agreement; PROVIDED, HOWEVER, that notwithstanding the foregoing or anything else contained in the Agreement or this Release, the release set forth in this Supplemental Release shall not extend to:  (i) any vested, unpaid rights under any pension, retirement, profit sharing or similar plan; or (ii) Executive's rights, if any, to indemnification, and/or defense under any Company certificate of incorporation, bylaw and/or policy or procedure, or under any insurance contract, in connection with Executive's acts an omissions within the course and scope of Executive's employment with the Company.  Executive hereby warrants that Executive has not assigned or transferred to any person any portion of any claim which is released, waived and discharged above.  Executive further states and agrees that Executive has not experienced any illness, injury, or disability that is compensable or recoverable under the worker's compensation laws of any state that was not reported to the Company by Executive before the Effective Date, and Executive agrees not to not file a worker's compensation claim asserting the existence of any such previously undisclosed illness, injury, or disability.  Executive has specifically consulted with counsel with respect to the agreements, representations, and declarations set forth in the previous sentence.  Executive understands and agrees that by signing this Agreement and Release, Executive is giving up any right to bring any legal claim against the Company concerning, directly or indirectly, Executive's employment relationship with the Company, including Executive's separation from employment.  Executive agrees that this legal release is intended to be interpreted in the broadest possible manner in favor of the Company, to include all actual or potential legal claims that Executive may have against the Company, except as specifically provided otherwise in this Agreement or Release.
(b)    Executive agrees and acknowledges that Executive: (i) understands the language used in this Release and its legal effect; (ii) understands that by signing this Release Executive is giving up the right to sue the Company for age discrimination;(iii) will receive compensation and/or benefits under the Agreement to which Executive would not have been entitled without signing this Release; (iv) has been 

advised by the Company to consult with an attorney before signing the Agreement and this Release; and (iv) will be given no less than [twenty-one OR forty-five} days to consider whether to sign this Release. 
(c)    For a period of seven days after the Effective Date, Executive may, in Executive's sole discretion, rescind this Release, by delivering a written notice of recision to [insert contact] at the Company.  If Executive rescinds this Release within seven calendar days after the Effective Date, this Release shall be void, all actions taken pursuant to this Release shall be reversed, and neither this Release nor the fact of or circumstances surrounding its execution shall be admissible for any purpose whatsoever in any proceeding between the parties, except in connection with a claim or defense involving the validity or effective rescission of this Release.  If Executive does not rescind this Release within seven calendar days after the Effective Date, this Release shall become final and binding and shall be irrevocable.
(d)  The Company, for itself, its affiliates, and any other person or entity that could or might act on behalf of the Company, including, without limitation, the Company's counsel (all of whom are collectively referred to as "Company Releasers"), hereby fully and forever releases and discharges Executive and Executive's heirs, personal representatives and any and all other persons or entities that are now or may become liable to any Company Releaser due to any Company Releasee's act or omission, (all of whom are collectively referred to as "Company Releasees") of and from any and all actions, causes of action, claims, demands, costs and expenses, including attorneys' fees, of every kind and nature whatsoever, in law or in equity, whether now known or unknown, that Company Releasers, or any person acting under any of them, may now have, or claim at any future time to have, based in whole or in part upon any act or omission occurring within the course and scope of Executive's employment relationship with the Company or its subsidiaries and affiliates occurring on or before the Effective Date, without regard to present actual knowledge of such acts or omissions, including specifically, but not by way of limitation, matters which may arise at common law, such as breach of contract, express or implied, promissory estoppel, wrongful discharge, tortious interference with contractual rights, infliction of emotional distress, defamation, or under federal, state or local laws; PROVIDED, HOWEVER, that notwithstanding the foregoing or anything else contained in this Agreement, the release set forth in this paragraph shall not extend to:  (i) any rights of the Company or duties of the Executive pursuant to the Section 4.7, 4.8, or 4.9 of the Agreement, which sections shall survive the signing of this Release; (ii) to any Executive act or omission that was actively concealed from the Company by Executive or at Executive's direction; or (iii) to any acts of fraud, embezzlement, or other misappropriation of Company funds, assets, or property.  The Company hereby warrants that the Company has not assigned or transferred to any person any portion of any claim which is released, waived and discharged above.  The Company understands and agrees that by signing this Agreement the Company is giving up any right to bring any legal claim against Executive concerning, directly or indirectly, Executive's employment relationship with the Company, including Executive's separation from employment.  The Company agrees that this legal release is intended to be interpreted in the broadest possible manner in favor of Executive, to include all actual or potential legal claims that the Company may have against Executive, except as specifically provided otherwise in this Release or the Agreement.
6.Executive acknowledges that the Company paid Executive for all earned, unpaid wages and all accrued, unused vacation, less applicable withholdings, through his last day of employment, and that Executive is entitled to no further payments for wages, compensation, benefits, bonuses, equity, or any other type of compensation or benefit, except for the [Without Case Severance Pay or Permanent Disability Severance pay] Executive will receive if he signs and does not revoke this Release.    

4.    Executive covenants never to disparage or speak ill of the Company or any of the Company's products or services, or of any past or present employee, officer or director of the Company, nor shall Executive at any time harass or behave unprofessionally toward any past, present or future Company employee, officer or director.  If Executive breaches this non-disparagement obligation, Executive shall be liable to the Company for liquidated damages, not a penalty, in the amount of $10,000 for each breach. 
5.     Executive acknowledges that because of Executive's position with the Company, Executive may possess information that may be relevant to or discoverable in connection with claims, litigation or judicial, arbitral or investigative proceedings initiated by a private party or by a regulator, governmental entity, or self-regulatory organization, that relates to or arises from matters with which Executive was involved during Executive's employment with the Company, or that concern matters of which Executive has information or knowledge (collectively, a “Proceeding”).  Executive agrees that Executive shall testify truthfully in connection with any such Proceeding, shall cooperate with the Company in connection with every such Proceeding, and that Executive's duty of cooperation shall include an obligation to meet with the Company representatives and/or counsel concerning all such Proceedings for such purposes, and at such times and places, as the Company reasonably requests, and to appear for deposition and/or testimony upon the Company's reasonable request and without a subpoena.  The Company shall reimburse Executive for reasonable out-of-pocket expenses that Executive incurs in honoring Executive's obligation of cooperation under this paragraph.
 [SIGNATURES FOLLOW]

[SIGNATURE PAGE TO MUTUAL RELEASE]
	
							
	PAUL A. LARKINS
	 
	SQUARETWO FINANCIAL CORPORATION, 
a Delaware corporation
	 
	 

	 
	 
	 
	 
	 
	 
	 

	Date:
	 
	 
	 
	By:
As its:
Date:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00215-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00215-of-00352.parquet"}]]