Document:

Avanex Corporation 1998 Stock Plan, as amended and restated

 Exhibit 10.1 
  
 AVANEX CORPORATION 
  
 1998 STOCK PLAN 
  
 (as amended and restated effective October 27, 2005) 
  
 1. Purposes of the Plan.    The purposes of this 1998 Stock Plan are: 
  

	 	•	 	to attract and retain the best available personnel for positions of substantial responsibility, 

  

	 	•	 	to provide additional incentive to Employees, Directors and Consultants, and 

  

	 	•	 	to promote the success of the Company’s business. 

  
 Options granted under the Plan may be Incentive Stock Options or Nonstatutory Stock Options, as determined by the Administrator at the time of grant.
Stock Purchase Rights and Restricted Stock Units may also be granted under the Plan. 
  
 2. Definitions.    As used herein, the following definitions shall apply: 
  
 (a) “Administrator” means the Board or any of its Committees as shall be administering the Plan, in accordance with
Section 4 of the Plan. 
  
 (b) “Annual
Revenue” means the Company’s, a business unit’s or a specific geographic area of the Company’s net sales for the Fiscal Year; provided, however, that prior to the Fiscal Year, the Committee shall determine whether any
significant item(s) shall be excluded or included from the calculation of Annual Revenue with respect to one or more Participants. 
  
 (c) “Applicable Laws” means the requirements relating to the administration of equity plans under U. S. state corporate
laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any foreign country or jurisdiction where Awards are, or will be, granted under
the Plan. 
  
 (d) “Award” means,
individually or collectively, a grant under the Plan of Options, Stock Purchase Rights or Restricted Stock Units. 
  
 (e) “Award Agreement” means the written or electronic agreement setting forth the terms and provisions applicable to each
Award granted under the Plan. The Award Agreement is subject to the terms and conditions of the Plan. 
  
 (f) “Awarded Stock” means the Common Stock subject to an Award. 
  
 (g) “Board” means the Board of Directors of
the Company. 
  
 (h) “Cash
Position” means as to any Performance Period, the Company’s level of cash and cash equivalents. 
  
 (i) “Code” means the Internal Revenue Code of 1986, as amended. 
  
 (j) “Committee” means a committee of
Directors appointed by the Board in accordance with Section 4 of the Plan. 
  
 (k) “Common Stock” means the common stock of the Company or, in the case of certain Restricted Stock Units, the cash equivalent thereof. 
  
 (l) “Company” means Avanex Corporation, a Delaware corporation. 
  
 (m) “Consultant” means any person,
including an advisor, engaged by the Company or a Parent or Subsidiary to render services to such entity. 
  
 (n) “Director” means a member of the Board. 
  
  

 (o) “Disability” means total and permanent disability as defined in
Section 22(e)(3) of the Code. 
  
 (p)
“Earnings Per Share” means as to any Performance Period, the Company’s or a business unit’s Net Income, divided by a weighted average number of Common Stock outstanding and dilutive common equivalent Shares deemed
outstanding. 
  
 (q) “Employee”
means any person, including Officers and Directors, employed by the Company or any Parent or Subsidiary of the Company. A Service Provider shall not cease to be an Employee in the case of (i) any leave of absence approved by the Company or (ii)
transfers between locations of the Company or between the Company, its Parent, any Subsidiary, or any successor. For purposes of Incentive Stock Options, no such leave may exceed ninety days, unless reemployment upon expiration of such leave is
guaranteed by statute or contract. If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, on the 181st day of such leave any Incentive Stock Option held by the Optionee shall cease to be treated as an
Incentive Stock Option and shall be treated for tax purposes as a Nonstatutory Stock Option. Neither service as a Director nor payment of a director’s fee by the Company shall be sufficient to constitute “employment” by the Company.

  
 (r) “Exchange Act” means the
Securities Exchange Act of 1934, as amended. 
  
 (s) “Fair Market Value” means, as of any date, the value of Common Stock determined as follows: 
  
 (i) If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system for the last market
trading day prior to the time of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; 
  
 (ii) If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value
of a Share of Common Stock shall be the mean between the high bid and low asked prices for the Common Stock on the last market trading day prior to the day of determination, as reported in The Wall Street Journal or such other source as the
Administrator deems reliable; or 
  
 (iii) In the
absence of an established market for the Common Stock, the Fair Market Value shall be determined in good faith by the Administrator. 
  
 (t) “Fiscal Year” means the fiscal year of the Company. 
  
 (u) “Incentive Stock Option” means an Option intended to qualify as an incentive stock
option within the meaning of Section 422 of the Code and the regulations promulgated thereunder. 
  
 (v) “Individual Performance Objective” means as to a Participant for any Performance Period, the objective and measurable
goals set by a “management by objectives” process and approved by the Administrator (in its discretion). 
  
 (w) “IPO Effective Date” means the date upon which the Securities and Exchange Commission declares the initial public
offering of the Company’s common stock as effective. 
  
 (x) “Marketing and Sales Expenses as a Percentage of Sales” means as to any Performance Period, the Company’s or a business unit’s marketing and sales expenses stated as a percentage of
sales. 
  
 (y) “Net Income as a
Percentage of Sales” means as to any Performance Period, the Company’s or a business unit’s Net Income stated as a percentage of sales. 
  
 (z) “Net Income” means as to any Performance Period, the income after taxes of the Company or a business unit, provided
that prior to the beginning of the Performance Period, the Administrator shall determine whether any significant item(s) shall be included or excluded from the calculation of Net Income with respect to one or more Participants. 
  
 (aa) “Nonstatutory Stock Option” means an
Option not intended to qualify as an Incentive Stock Option. 

 (bb) “Notice of Grant” means a written or electronic notice evidencing
certain terms and conditions of an individual Award. The Notice of Grant is part of the Award Agreement. 
  
 (cc) “Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and
the rules and regulations promulgated thereunder. 
  
 (dd) “Operating Cash Flow” means as to any Performance Period, the Company’s or a business unit’s sum of Net Income plus depreciation and amortization less capital expenditures plus changes in working capital
comprised of accounts receivable, inventories, other current assets, trade accounts payable, accrued expenses, product warranty, advance payments from customers and long-term accrued expenses. 
  
 (ee) “Operating Income” means as to any
Performance Period, the Company’s or a business unit’s income from operations but excluding any unusual items. 
  
 (ff) “Option” means a stock option granted pursuant to the Plan. 
  
 (gg) “Option Exchange Program” means a
program whereby outstanding Options are surrendered in exchange for Options with a lower exercise price. 
  
 (hh) “Optionee” means the holder of an outstanding Option granted under the Plan. 
  
 (ii) “Parent” means a “parent
corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code. 
  
 (jj) “Participant” means the holder of an outstanding Award granted under the Plan. 
  
 (kk) “Performance Goals” means the goal(s)
(or combined goal(s)) determined by the Administrator (in its discretion) to be applicable to a Participant with respect to an Award. As determined by the Administrator, the Performance Goals applicable to an Award may provide for a targeted level
or levels of achievement using one or more of the following measures: (a) Annual Revenue, (b) Cash Position, (c) Earnings Per Share, (d) Individual Performance Objectives, (e) Marketing and Sales Expenses as a Percentage of Sales, (f) Net Income as
a Percentage of Sales, (g) Net Income, (h) Operating Cash Flow, (i) Operating Income, (j) Return on Assets, (k) Return on Equity, (l) Return on Sales, and (m) Total Shareholder Return. The Performance Goals may differ from Participant to Participant
and from Award to Award. Within any timeframe required to comply with the requirements of Section 162(m) of the Code, the Administrator shall determine whether any significant element(s) shall be included in or excluded from the calculation of any
Performance Goal with respect to any Participant. For example (but not by way of limitation), the Administrator may determine that the measures for one or more Performance Goals shall be based upon the Company’s pro-forma results and/or results
in accordance with generally accepted accounting principles. The Administrator shall appropriately adjust any evaluation of performance under a Performance Goal to exclude (i) any extraordinary non-recurring items as described in Accounting
Principles Board Opinion No. 30 and/or in management’s discussion and analysis of financial conditions and results of operations appearing in the Company’s annual report to shareholders for the applicable year, or (ii) the effect of any
changes in accounting principles affecting the Company’s or a business units’ reported results. Any criteria used may be measured, as applicable, (i) in absolute terms, (ii) in relative terms (including, but not limited to, passage of time
and/or against another company or companies), (iii) on a per-share basis, (iv) against the performance of the Company as a whole or of a business unit of the Company, and/or (v) to the extent not otherwise specified by the definition of the
Performance Goal, on a pre-tax or after-tax basis. 
  
 (ll) “Performance Period” means the time period of any Fiscal Year or such longer period as determined by the Administrator in its sole discretion during which the performance objectives must be met. 
  
 (mm) “Plan” means this 1998 Stock Plan, as
may be amended from time to time. 
  
 (nn)
“Restricted Stock” means shares of Common Stock acquired pursuant to a grant of Stock Purchase Rights under Section 11 of the Plan. 
  
 (oo) “Restricted Stock Unit” means a bookkeeping entry representing an amount equal to the Fair Market Value of one
Share, granted pursuant to Section 12. Each Restricted Stock Unit represents an unfunded and unsecured obligation of the Company. 

 (pp) “Return on Assets” means as to any Performance Period, the
percentage equal to the Company’s or a business unit’s Operating Income before incentive compensation, divided by average net Company or business unit, as applicable, assets. 
  
 (qq) “Return on Equity” means as to any Performance Period, the percentage equal to the
Company’s Net Income divided by average stockholder’s equity. 
  
 (rr) “Return on Sales” means as to any Performance Period, the percentage equal to the Company’s or a business unit’s Operating Income before incentive compensation, divided by the
Company’s or the business unit’s, as applicable, revenue. 
  
 (ss) “Rule 16b-3” means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect when discretion is being exercised with respect to the Plan. 
  
 (tt) “Section 16(b)” means Section 16(b) of
the Exchange Act. 
  
 (uu) “Service
Provider” means an Employee, Director or Consultant. 
  
 (vv) “Share” means a share of the Common Stock, as adjusted in accordance with Section 14 of the Plan. 
  
 (ww) “Stock Purchase Right” means the right to purchase Common Stock pursuant to Section 11 of the Plan, as evidenced by
a Notice of Grant. 
  
 (xx)
“Subsidiary” means a “subsidiary corporation”, whether now or hereafter existing, as defined in Section 424(f) of the Code. 
  
 (yy) “Total Stockholder Return” means as to any Performance Period, the total return (change in Share price plus
reinvestment of any dividends) of a Share. 
  
 3. Stock Subject
to the Plan.    Subject to the provisions of Section 14 of the Plan, the maximum aggregate number of Shares that may be optioned and sold under the Plan is 29,550,000 Shares, plus an annual increase to be added on the first
day of the Company’s fiscal year beginning on July 1, 2000, equal to the lesser of (i) 6,000,000 shares, (ii) 4.9% of the outstanding shares on such date or (iii) a lesser amount determined by the Board. The Shares may be authorized, but
unissued, or reacquired Common Stock. 
  
 If an Award expires or
becomes unexercisable without having been exercised in full, or is surrendered pursuant to an Option Exchange Program, or, with respect to Restricted Stock or Restricted Stock Units is forfeited back to or repurchased by the Company, the unpurchased
Shares (or with respect to Awards other than Options, the forfeited or repurchased Shares) which were subject thereto shall become available for future grant or sale under the Plan (unless the Plan has terminated); provided, however, that
Shares that have actually been issued under the Plan under any Award shall not be returned to the Plan and shall not become available for future distribution under the Plan, except that if Shares of Restricted Stock or Restricted Stock Units are
repurchased by the Company at their original purchase price or are forfeited to the Company, such Shares shall become available for future grant under the Plan. To the extent an Award under the Plan is paid out in cash rather than stock, such cash
payment shall not reduce the number of Shares available for issuance under the Plan. 
  
 4. Administration of the Plan. 
  
 (a) Procedure. 
  
 (i) Multiple Administrative Bodies.    Different Committees with respect to different groups of Service Providers may administer the Plan. 
  
 (ii) Section 162(m).    To the extent that the Administrator determines it to be
desirable to qualify Awards granted hereunder as “performance-based compensation” within the meaning of Section 162(m) of the Code, the Plan shall be administered by a Committee of two or more “outside directors” within the
meaning of Section 162(m) of the Code. 
  
 (iii)
Rule 16b-3.    To the extent desirable to qualify transactions hereunder as exempt under Rule 16b-3, the transactions contemplated hereunder shall be structured to satisfy the requirements for exemption under Rule 16b-3.

 (iv) Other Administration.    Other than as provided above,
the Plan shall be administered by (A) the Board or (B) a Committee, which committee shall be constituted to satisfy Applicable Laws. 
  
 (b) Powers of the Administrator.    Subject to the provisions of the Plan, and in the case of a Committee,
subject to the specific duties delegated by the Board to such Committee, the Administrator shall have the authority, in its discretion: 
  
 (i) to determine the Fair Market Value; 
  
 (ii) to select the Service Providers to whom Awards may be granted hereunder; 
  
 (iii) to determine the number of shares of Common Stock to
be covered by each Award granted hereunder; 
  
 (iv) to approve forms of agreement for use under the Plan; 
  
 (v) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder. Such terms and conditions include, but are not limited to, the exercise price, the time or times
when Awards may be exercised or purchased (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture or repurchase restrictions, and any restriction or limitation regarding any Award or the shares of Common Stock
relating thereto, based in each case on such factors as the Administrator, in its sole discretion, shall determine; 
  
 (vi) to reduce the exercise price of any Option, Stock Purchase Right or Restricted Stock Unit to the then current Fair Market Value if
the Fair Market Value of the Common Stock covered by such Option, Stock Purchase Right or Restricted Stock Unit shall have declined since the date the Option, Stock Purchase Right or Restricted Stock Unit was granted; 
  
 (vii) to institute an Option Exchange Program; 

 
 (viii) to construe and interpret the terms of the Plan
and Awards granted pursuant to the Plan; 
  
 (ix)
to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose of qualifying for preferred tax treatment under foreign tax laws or satisfying applicable
foreign laws; 
  
 (x) to modify or amend each
Award (subject to Section 16(c) of the Plan), including the discretionary authority to extend the post-termination exercisability period of Awards longer than is otherwise provided for in the Plan; 
  
 (xi) to allow Participants to satisfy withholding tax
obligations by electing to have the Company withhold from the Shares or cash to be issued upon exercise or vesting of an Award that number of Shares or cash having a Fair Market Value equal to the amount required to be withheld. The Fair Market
Value of the Shares to be withheld shall be determined on the date that the amount of tax to be withheld is to be determined. All elections by a Participant to have Shares or cash withheld for this purpose shall be made in such form and under such
conditions as the Administrator may deem necessary or advisable; 
  
 (xii) to authorize any person to execute on behalf of the Company any instrument required to effect the grant of an Award previously granted by the Administrator; 
  
 (xiii) to make all other determinations deemed necessary or
advisable for administering the Plan. 
  
 (c)
Effect of Administrator’s Decision.    The Administrator’s decisions, determinations and interpretations shall be final and binding on all Participants and any other holders of Awards. 
  
 5. Eligibility.    Nonstatutory Stock Options,
Stock Purchase Rights and Restricted Stock Units may be granted to Service Providers. Incentive Stock Options may be granted only to Employees. 

 6. Limitations. 
  
 (a) Each Option shall be designated in the Award Agreement as either an Incentive Stock Option or a
Nonstatutory Stock Option. However, notwithstanding such designation, to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are exercisable for the first time by the Optionee during any
calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such Options shall be treated as Nonstatutory Stock Options. For purposes of this Section 6(a), Incentive Stock Options shall be taken into account in
the order in which they were granted. The Fair Market Value of the Shares shall be determined as of the time the Option with respect to such Shares is granted. 
  

(b) Neither the Plan nor any Award shall confer upon a Participant any right with respect to continuing the Participant’s
relationship as a Service Provider with the Company, nor shall they interfere in any way with the Participant’s right or the Company’s or its Parent or Subsidiary’s right to terminate such relationship at any time, with or without
cause. 
  
 (c) The following limitations shall
apply to grants of Options: 
  
 (i) No Service
Provider shall be granted, in any fiscal year of the Company, Options to purchase more than 1,500,000 Shares. 
  
 (ii) In connection with his or her initial service, a Service Provider may be granted Options to purchase up to an additional 4,500,000
Shares, which shall not count against the limit set forth in subsection (i) above. 
  
 (iii) The foregoing limitations shall be adjusted proportionately in connection with any change in the Company’s capitalization as
described in Section 14. 
  
 (iv) If an Option is
cancelled in the same fiscal year of the Company in which it was granted (other than in connection with a transaction described in Section 14), the cancelled Option will be counted against the limits set forth in subsections (i) and (ii) above. For
this purpose, if the exercise price of an Option is reduced, the transaction will be treated as a cancellation of the Option and the grant of a new Option. 
  
 7. Term of Plan.    Subject to Section 20 of the Plan, the amendment and restatement of the Plan shall become effective upon
the IPO Effective Date. It shall continue in effect for a term of ten (10) years from the date of obtaining stockholder approval of the Plan in December, 1999, unless terminated earlier under Section 16 of the Plan. 
  
 8. Term of Option.    The term of each Option
shall be stated in the Award Agreement. In the case of an Incentive Stock Option, the term shall be ten (10) years from the date of grant or such shorter term as may be provided in the Award Agreement. Moreover, in the case of an Incentive Stock
Option granted to an Optionee who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Parent or Subsidiary, the term
of the Incentive Stock Option shall be five (5) years from the date of grant or such shorter term as may be provided in the Award Agreement. 
  
 9. Option Exercise Price and Consideration. 
  
 (a) Exercise Price.    The per Share exercise price for the Shares to be issued pursuant to exercise of an
Option shall be determined by the Administrator, subject to the following: 
  
 (i) In the case of an Incentive Stock Option 
  
 (A) granted to an Employee who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or
Subsidiary, the per Share exercise price shall be no less than 110% of the Fair Market Value per Share on the date of grant. 

 (B) granted to any Employee other than an Employee described in paragraph (A)
immediately above, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the date of grant. 
  
 (ii) In the case of a Nonstatutory Stock Option, the per Share exercise price shall be determined by the Administrator. In the case of a
Nonstatutory Stock Option intended to qualify as “performance-based compensation” within the meaning of Section 162(m) of the Code, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the date of
grant. 
  
 (iii) Notwithstanding the foregoing,
Options may be granted with a per Share exercise price of less than 100% of the Fair Market Value per Share on the date of grant pursuant to a merger or other corporate transaction. 
  
 (b) Waiting Period and Exercise Dates.    At the time an Option is granted, the
Administrator shall fix the period within which the Option may be exercised and shall determine any conditions that must be satisfied before the Option may be exercised. 
  
 (c) Form of Consideration.    The Administrator shall determine the acceptable
form of consideration for exercising an Option, including the method of payment. In the case of an Incentive Stock Option, the Administrator shall determine the acceptable form of consideration at the time of grant. Such consideration may consist
entirely of: 
  
 (i) cash; 
  
 (ii) check; 
  
 (iii) promissory note; 
  
 (iv) other Shares which (A) in the case of Shares acquired
upon exercise of an option, have been owned by the Optionee for more than six months on the date of surrender, and (B) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Option
shall be exercised; 
  
 (v) consideration
received by the Company under a cashless exercise program implemented by the Company in connection with the Plan; 
  
 (vi) a reduction in the amount of any Company liability to the Optionee, including any liability attributable to the Optionee’s
participation in any Company-sponsored deferred compensation program or arrangement; 
  
 (vii) any combination of the foregoing methods of payment; or 
  
 (viii) such other consideration and method of payment for the issuance of Shares to the extent permitted by
Applicable Laws. 
  
 10. Exercise of Option. 
  
 (a) Procedure for Exercise; Rights as a
Shareholder.    Any Option granted hereunder shall be exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Administrator and set forth in the Award Agreement. Unless
the Administrator provides otherwise, vesting of Options granted hereunder shall be tolled during any unpaid leave of absence. An Option may not be exercised for a fraction of a Share. 
  
 An Option shall be deemed exercised when the Company receives: (i) written or electronic notice of exercise (in accordance
with the Award Agreement) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised. Full payment may consist of any consideration and method of payment authorized by the
Administrator and permitted by the Award Agreement and the Plan. Shares issued upon exercise of an Option shall be issued in the name of the Optionee or, if requested by the Optionee, in the name of the Optionee and his or her spouse. Until the
Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the 

 
Company), no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the Awarded Stock, notwithstanding the
exercise of the Option. The Company shall issue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are
issued, except as provided in Section 14 of the Plan. 
  
 Exercising an Option in any manner shall decrease the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised. 
  
 (b) Termination of Relationship as a Service
Provider.    If an Optionee ceases to be a Service Provider, other than upon the Optionee’s death or Disability, the Optionee may exercise his or her Option within such period of time as is specified in the Award
Agreement to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement). In the absence of a specified time in the Award Agreement, the
Option shall remain exercisable for three (3) months following the Optionee’s termination. If, on the date of termination, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall
revert to the Plan. If, after termination, the Optionee does not exercise his or her Option within the time specified by the Administrator, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. 
  
 (c) Disability of Optionee.    If
an Optionee ceases to be a Service Provider as a result of the Optionee’s Disability, the Optionee may exercise his or her Option within such period of time as is specified in the Award Agreement to the extent the Option is vested on the date
of termination (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement). In the absence of a specified time in the Award Agreement, the Option shall remain exercisable for twelve (12) months
following the Optionee’s termination. If, on the date of termination, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan. If, after termination, the
Optionee does not exercise his or her Option within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. 
  
 (d) Death of Optionee.    If an Optionee dies while a Service Provider, the
Option may be exercised within such period of time as is specified in the Award Agreement (but in no event later than the expiration of the term of such Option as set forth in the Notice of Grant), by the Optionee’s estate or by a person who
acquires the right to exercise the Option by bequest or inheritance, but only to the extent that the Option is vested on the date of death. In the absence of a specified time in the Award Agreement, the Option shall remain exercisable for twelve
(12) months following the Optionee’s termination. If, at the time of death, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall immediately revert to the Plan. The Option may
be exercised by the executor or administrator of the Optionee’s estate or, if none, by the person(s) entitled to exercise the Option under the Optionee’s will or the laws of descent or distribution. If the Option is not so exercised within
the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. 
  
 (e) Buyout Provisions.    The Administrator may at any time offer to buy out for a payment in cash or Shares an
Option previously granted based on such terms and conditions as the Administrator shall establish and communicate to the Optionee at the time that such offer is made. 
  
 11. Stock Purchase Rights. 
  

(a) Grant of Stock Purchase Rights.    The Administrator, in its sole discretion, will determine the number
of Shares to be granted to each Participant under Stock Purchase Rights, provided that during any Fiscal Year, no Participant will receive more than an aggregate of 750,000 Shares subject to Stock Purchase Rights. Notwithstanding the foregoing
limitation, in connection with a Participant’s initial service as an Employee, an Employee may be granted an aggregate of up to an additional 2,250,000 Shares subject to Stock Purchase Rights. The foregoing limitations shall be adjusted
proportionately in connection with any change in the Company’s capitalization as described in Section 14. If an Award is cancelled in the same fiscal year of the Company in which it was granted (other than in connection with a transaction
described in Section 14), the cancelled Award will be counted against the limits set forth in this Section 11(a). 

 (b) Rights to Purchase.    Stock Purchase Rights may be issued
either alone, in addition to, or in tandem with other Awards granted under the Plan and/or cash awards made outside of the Plan. After the Administrator determines that it will offer Stock Purchase Rights under the Plan, it shall advise the offeree
in writing or electronically, by means of a Notice of Grant, of the terms, conditions and restrictions related to the offer, including the number of Shares that the offeree shall be entitled to purchase, the price to be paid, and the time within
which the offeree must accept such offer. The offer shall be accepted by execution of an Award Agreement in the form determined by the Administrator. 
  
 (c) Repurchase Option.    Unless the Administrator determines otherwise, the Award Agreement shall grant the
Company a repurchase option exercisable upon the voluntary or involuntary termination of the purchaser’s service with the Company for any reason (including death or Disability). The purchase price for Shares repurchased pursuant to the Award
Agreement shall be the original price paid by the purchaser and may be paid by cancellation of any indebtedness of the purchaser to the Company. The repurchase option shall lapse at a rate determined by the Administrator. 
  
 (d) Other Provisions.    The
Award Agreement shall contain such other terms, provisions and conditions not inconsistent with the Plan as may be determined by the Administrator in its sole discretion. 
  
 (i) General Restrictions.    The Administrator may set restrictions based upon
the achievement of specific performance objectives (Company-wide, divisional, or individual), applicable federal or state securities laws, or any other basis determined by the Administrator in its discretion. 
  
 (ii) Section 162(m) Performance
Restrictions.    For purposes of qualifying grants of Stock Purchase Rights as “performance-based compensation” under Section 162(m) of the Code, the Administrator, in its discretion, may set restrictions based upon
the achievement of Performance Goals. The Performance Goals will be set by the Administrator on or before the latest date permissible to enable the Stock Purchase Rights to qualify as “performance-based compensation” under
Section 162(m) of the Code. In granting Stock Purchase Rights which are intended to qualify under Section 162(m) of the Code, the Administrator will follow any procedures determined by it from time to time to be necessary or appropriate to
ensure qualification of the Stock Purchase Rights under Section 162(m) of the Code (e.g., in determining the Performance Goals). 
  
 (e) Rights as a Shareholder.    Once the Stock Purchase Right is exercised, the purchaser shall have the rights
equivalent to those of a shareholder, and shall be a shareholder when his or her purchase is entered upon the records of the duly authorized transfer agent of the Company. No adjustment will be made for a dividend or other right for which the record
date is prior to the date the Stock Purchase Right is exercised, except as provided in Section 14 of the Plan. 
  
 12. Restricted Stock Units. 
  
 (a) Grant.    Restricted Stock Units may be granted at any time and from time to time as determined by the
Administrator. Each Restricted Stock Unit grant shall be evidenced by an Award Agreement that shall specify such other terms and conditions as the Administrator, in its sole discretion, shall determine, including all terms, conditions, and
restrictions related to the grant and the form of payout, which, subject to Section 12(d), may be left to the discretion of the Administrator. The Administrator, in its sole discretion, will determine the number of Restricted Stock Units to be
granted to each Participant, provided that during any Fiscal Year, no Participant will receive more than an aggregate of 750,000 Restricted Stock Units. Notwithstanding the foregoing limitation, in connection with a Participant’s initial
service as an Employee, an Employee may be granted an aggregate of up to an additional 2,250,000 Restricted Stock Units. The foregoing limitations shall be adjusted proportionately in connection with any change in the Company’s capitalization
as described in Section 14. If an Award is cancelled in the same fiscal year of the Company in which it was granted (other than in connection with a transaction described in Section 14), the cancelled Award will be counted against the limits set
forth in this Section 12(a). 
  
 (b) Vesting
Criteria and Other Terms.    The Administrator shall set vesting or other restriction criteria in its discretion, which, depending on the extent to which the criteria are met, will determine the number of Restricted Stock
Units that will be paid out to the Participant. 

 (i) The Administrator may set vesting or other restriction criteria based upon the
achievement of Company-wide, departmental, business unit, or individual goals (including, but not limited to, continued employment or service), applicable federal or state securities laws, or any other basis determined by the Administrator in its
discretion. 
  
 (ii) Section 162(m)
Performance Restrictions.    For purposes of qualifying grants of Restricted Stock Units as “performance-based compensation” under Section 162(m) of the Code, the Administrator, in its discretion, may set
performance objectives based upon the achievement of Performance Goals. The Performance Goals shall be set by the Administrator on or before the latest date permissible to enable the Restricted Stock Units to qualify as “performance-based
compensation” under Section 162(m) of the Code. In granting Restricted Stock Units that are intended to qualify under Section 162(m) of the Code, the Administrator shall follow any procedures determined by it from time to time to be necessary
or appropriate to ensure qualification of the Restricted Stock Units under Section 162(m) of the Code (e.g., in determining the Performance Goals). 
  
 (c) Earning Restricted Stock Units.    Upon meeting the applicable vesting or other restriction criteria, the
Participant shall be entitled to receive a payout as specified in the Award Agreement. Notwithstanding the foregoing, at any time after the grant of Restricted Stock Units, the Administrator, in its sole discretion, may reduce or waive any vesting
or other restriction criteria that must be met to receive a payout. 
  
 (d) Form and Timing of Payment.    Payment of earned Restricted Stock Units shall be made as soon as practicable after the date(s) set forth in the Award Agreement. The Administrator, in its
sole discretion, may pay earned Restricted Stock Units in cash, Shares, or a combination thereof. Shares represented by Restricted Stock Units that are fully paid in cash again shall be available for grant under the Plan. 
  
 (e) Cancellation.    On the date
set forth in the Award Agreement, all unearned Restricted Stock Units shall be forfeited to the Company. 
  
 13. Non-Transferability of Awards.    Unless determined otherwise by the Administrator, an Award may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Participant, only by the Participant. If the Administrator makes an Award
transferable, such Award shall contain such additional terms and conditions as the Administrator deems appropriate. 
  
 14. Adjustments Upon Changes in Capitalization, Dissolution, Merger or Asset Sale. 
  
 (a) Changes in Capitalization.    Subject to any required action by the
shareholders of the Company, the number of shares of Common Stock covered by each outstanding Award, and the number of shares of Common Stock which have been authorized for issuance under the Plan but as to which no Awards have yet been granted or
which have been returned to the Plan upon cancellation or expiration of an Award, as well as the price per share of Common Stock covered by each such outstanding Award, and the numerical Share limits in Sections 6, 11, and 12 shall be
proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from a stock split, reverse stock split, stock dividend, spin-off, combination or reclassification of the Common Stock, or any other
increase or decrease in the number of issued shares of Common Stock effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been
“effected without receipt of consideration.” Such adjustment shall be made by the Board, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares
of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock subject to an Award. 
  
 (b) Dissolution or
Liquidation.    In the event of the proposed dissolution or liquidation of the Company, the Administrator shall notify each Participant as soon as practicable prior to the effective date of such proposed transaction. The
Administrator in its discretion may provide for a Participant to have the right to exercise his or her Option until ten (10) days prior to such transaction as to all of the Awarded Stock 

 
covered thereby, including Shares as to which the Option would not otherwise be exercisable. In addition, the Administrator may provide that any Company
repurchase option or forfeiture rights applicable to any Award shall lapse 100% and that any Award vesting shall accelerate 100%, provided the proposed dissolution or liquidation takes place at the time and in the manner contemplated. To the extent
it has not been previously exercised (with respect to Options and Stock Purchase Rights) or vested (with respect to other Awards), an Award will terminate immediately prior to the consummation of such proposed action. 
  
 (c) Merger or Asset Sale.    In
the event of a merger of the Company with or into another corporation, or the sale of all or substantially all of the assets of the Company, each outstanding Award shall be assumed or an equivalent award substituted by the successor corporation or a
Parent or Subsidiary of the successor corporation. In the event that the successor corporation refuses to assume or substitute for the Award, the Participant shall (i) fully vest in and have the right to exercise the Option or Stock Purchase Right
as to all of the Awarded Stock, including Shares as to which it would not otherwise be vested or exercisable, and (ii) fully earn and receive a payout with respect to other Awards. If an Award is not assumed or substituted for in the event of a
merger or sale of assets, the Administrator shall notify the Participant in writing or electronically that (i) the Option or Stock Purchase Right shall be fully vested and exercisable for a period of fifteen (15) days from the date of such notice,
and (ii) all outstanding Options and Stock Purchase Rights shall terminate upon the expiration of such period and (iii) all other outstanding Awards shall be paid out immediately prior to the merger or sale of all or substantially all of the assets.
For the purposes of this paragraph, the Award shall be considered assumed if, following the merger or sale of assets, the award confers the right to purchase or receive, for each Share of Awarded Stock subject to the Award immediately prior to the
merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were
offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the merger or sale of assets is not solely common stock of the
successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise (or payout or vesting, as applicable) of the Award, for each Share of Awarded
Stock subject to the Award, to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the merger or sale of assets. 
  
 15. Date of Grant.    The date of grant of an
Award shall be, for all purposes, the date on which the Administrator makes the determination granting such Award, or such other later date as is determined by the Administrator. Notice of the determination shall be provided to each Participant
within a reasonable time after the date of such grant. 
  
 16.
Amendment and Termination of the Plan. 
  
 (a) Amendment and Termination.    The Board may at any time amend, alter, suspend or terminate the Plan. 
  
 (b) Shareholder Approval.    The Company shall obtain shareholder approval of any Plan amendment to the extent
necessary and desirable to comply with Applicable Laws. 
  
 (c) Effect of Amendment or Termination.    No amendment, alteration, suspension or termination of the Plan shall impair the rights of any Participant, unless mutually agreed otherwise
between the Participant and the Administrator, which agreement must be in writing and signed by the Participant and the Company. Termination of the Plan shall not affect the Administrator’s ability to exercise the powers granted to it hereunder
with respect to Options granted under the Plan prior to the date of such termination. 
  
 17. Conditions Upon Issuance of Shares. 
  
 (a) Legal Compliance.    Shares shall not be issued pursuant to the exercise of an Award unless the exercise of
such Award and the issuance and delivery of such Shares (or with respect to certain Restricted 

 
Stock Units, the cash equivalent thereof) shall comply with Applicable Laws and shall be further subject to the approval of counsel for the Company with
respect to such compliance. 
  
 (b) Investment
Representations.    As a condition to the exercise of an Award, the Company may require the person exercising such Award to represent and warrant at the time of any such exercise or receipt that the Shares are being purchased
only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required. 
  
 18. Inability to Obtain Authority.    The inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares (or with respect to certain Restricted Stock Units, the cash equivalent thereof) hereunder,
shall relieve the Company of any liability in respect of the failure to issue or sell such Shares (or with respect to certain Restricted Stock Units, the cash equivalent thereof) as to which such requisite authority shall not have been obtained.

  
 19. Reservation of Shares.    The
Company, during the term of this Plan, will at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan. 
  
 20. Shareholder Approval.    The Plan shall be subject to approval by the shareholders of the
Company within twelve (12) months after the date the Plan is adopted. Such shareholder approval shall be obtained in the manner and to the degree required under Applicable Laws.EMPLOYMENT AGREEMENT

 Exhibit 10.1 
  
 Employment Agreement 
  
 This Employment Agreement (the “Agreement”), dated as of October 28, 2005 (the “Commencement Date”), by and between
Sunset Financial Resources, Inc., a Maryland real estate investment trust (the “Company”), and Stacy Riffe, an individual (the “Executive”). 
  
 WHEREAS, the Executive and the Company deem it in their respective best interests to enter into an employment agreement for
the Executive to serve as the Executive Vice President and Chief Financial Officer of the Company on the terms and subject to the conditions set forth herein. 
  

NOW, THEREFORE, in consideration of the mutual covenants and conditions contained herein, the parties agree as follows: 
  
 1. Definitions. For purposes of this Agreement, the following terms
shall have the following definitions: 
  
 (a)
“Business” shall mean the acquisition and management of portfolios of residential and commercial mortgage loans in the United States. 
  
 (b) “Cause” shall mean any one or more of the following: 
  
 (i) the continued and intentional failure by the Executive to substantially perform her duties with the
Company, other than any such failure resulting from the Executive’s Disability; provided, however, that no termination of the Executive’s employment shall be for Cause as set forth in this clause (i) until there shall
have been delivered to the Executive written notice setting forth that the Executive committed the conduct set forth in this clause (i) and specifying the particulars thereof in reasonable detail; 
  
 (ii) a breach by the Executive of her fiduciary duties as an
officer of the Company, or a material breach by the Executive of any written rule, regulation, policy or procedure of the Company; 
  
 (iii) the Executive’s excessive absenteeism not related to illness; 
  
 (iv) the Executive’s conviction of or plea of nolo contendere to a felony or final
non-appealable conviction of any other crime that incarcerates the Executive for a period of one year or longer; or 
  
 (v) the Executive’s commission of a fraudulent act, embezzlement, theft or felony, in any case, whether or not involving the Company
or the Executive’s performance of her duties under this Agreement, that, in the reasonable opinion of the Board, renders the Executive’s continued employment harmful to the Company. 
  
 Notwithstanding the foregoing, no failure to perform by the Executive after a Notice of
Termination is given by the Executive shall constitute Cause for purposes of this Agreement. 

 (c) “Change of Control” shall mean any one or more of the following: 
  
 (i) at any time during any 12-month period, the Board of
Directors of the Company (the “Board”) in office at the beginning of such period shall have ceased to constitute a majority of the Board without the approval of the nomination of such directors by a majority of the Board consisting
of directors who were serving at the beginning of such period; 
  
 (ii) any person (as defined in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act) (other than the Company, any of its subsidiaries or any trustee, fiduciary or other person holding securities under
any employee share ownership plan or any other employee benefit plan of the Company or any of its subsidiaries), together with its affiliates and associates (as such terms are defined in Rule 12b-2 under the Exchange Act) shall have become the
beneficial owner (as defined in Rule 13d-3 of the Exchange Act) of securities representing 25% or more of the combined voting power of the Voting Shares; 
  
 (iii) the Company shall have filed a schedule, report or proxy statement with the Securities and Exchange Commission pursuant to the
Exchange Act disclosing that a change in control of the Company has occurred; 
  
 (iv) a merger or consolidation of the Company shall have been consummated, other than (x) a merger or consolidation that would result in the Voting Shares outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least 50% of the combined voting power of the voting securities of the surviving entity or (y) a merger or consolidation
effected to implement a recapitalization of the Company (or similar transaction) in which no person acquires more than 50% of the Voting Shares; 
  
 (v) any person, other than a subsidiary of the Company, shall have acquired more than 50% of the combined assets of the Company and its
subsidiaries; or 
  
 (vi) the shareholders of the
Company shall have approved the complete liquidation or dissolution of the Company. 
  
 (d) “Confidential Information” shall mean all confidential information of the Company and/or its subsidiaries, excluding any information that is available in the public domain and including trade
secrets and, by way of illustration, whether or not labeled or otherwise identified as “confidential,” the Company’s: 
  
 (i) acquisition, expansion, marketing, financial and other business strategies, information and plans; 
  
 (ii) compilations of data; 
  
 (iii) computer programs and/or records; 
  

 2 

 (iv) confidential information developed by consultants and contractors; 
  
 (v) employee information; and 
  
 (vi) manuals, memoranda, projections and minutes. 

 
 (e) “Disability” shall mean the physical or mental
incapacity of the Executive that, even with reasonable accommodation, has prevented the execution of the duties of her office, as outlined in Section 2, for three consecutive months or for more than 180 business days in the aggregate in
any 18-month period and that, in either case, in the determination of the Board after consultation with a medical doctor licensed to practice medicine in the State of Florida appointed by the Board and the Executive, may be expected to prevent the
Executive for any period of time thereafter from devoting substantial time and energies to the duties of her office, as outlined in Section 2. The Executive agrees to submit to reasonable requests for medical examinations to determine
whether a Disability exists. 
  
 (f) “Employee
Benefits” shall mean the perquisites, benefits and service credit for benefits as provided under any and all employee retirement income and welfare benefit policies, plans, programs or arrangements in which the Executive is entitled to
participate, including, without limitation, any share option, share purchase, share appreciation, dividend equivalent rights, savings, pension, supplemental executive retirement or other retirement income or welfare benefit, deferred compensation,
incentive compensation, group or other life, health, medical/hospital or other insurance (whether funded by actual insurance or self-insured by the Company), disability, salary continuation, expense reimbursement, and other employee benefit
policies, plans, programs or arrangements that may now exist or any equivalent successor policies, plans, programs or arrangements that may be adopted hereafter by the Company, providing perquisites, benefits and service credit for benefits at least
as great in the aggregate as are payable thereunder prior to a Termination Date or Change of Control Date, as the case may be. 
  
 (g) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended. 
  
 (h) “Good Reason” shall mean any one or more of the
following: 
  
 (i) a reduction by the Company
without the Executive’s consent in the Executive’s position, duties, responsibilities or status with the Company that represents a substantial adverse change from her position, duties, responsibilities or status, or a removal of the
Executive from or any failure to reelect the Executive to any of the positions referred to in Section 2, but specifically excluding any action in connection with the termination of the Executive’s employment for death, Disability,
Cause, or by the Executive for normal retirement; 
  
 (ii) a reduction by the Company without the Executive’s consent of the Base Salary; 
  

 3 

 (iii) a relocation of the Executive by the Company without the Executive’s consent
to a location more than 25 miles from the Jacksonville, Florida metropolitan area, other than for travel reasonably required in the performance of the Executive’s responsibilities; 
  
 (iv) any material breach by the Company of any provision of this Agreement or any other agreement between
the Company or any of its subsidiaries and the Executive that, in any case, is not cured within 14 days of written notice to the Company of such breach; 
  
 (v) the insolvency of or the filing (by any party, including the Company, but excluding the Executive) of a petition for bankruptcy of the
Company, which petition is not dismissed within 60 days; or 
  
 (vi) the failure by the Company to obtain the assumption of this Agreement by any successor or assign of the Company. 
  
 (i) “Severance Period” shall mean the period of time commencing on the Change of Control Date or the Termination Date, as the case may
be, and ending on the first anniversary thereof. 
  
 (j)
“Termination Date” shall mean (i) in the case of the Executive’s death, her date of death; (ii) in the case of a termination by the Executive for Good Reason, the last day of her employment; and (iii) in all
other cases, the date specified in the Notice of Termination (as defined below) or, if no Notice of Termination is sent, the last day of her employment; provided, however, that if the Executive’s employment is terminated by the
Company due to Disability, the date specified in the Notice of Termination shall be the 30th day after receipt of
the Notice of Termination by the Executive, provided that the Executive shall not have returned to the full-time performance of her duties within 30 days after such receipt. 
  
 (k) “Voting Shares” shall mean the securities of the Company entitled to vote generally in the election of
directors of the Company. 
  
 2. Employment and Duties.

  
 (a) Employment. Pursuant to the terms and subject to
the conditions of this Agreement, the Company agrees to employ the Executive during the Employment Term (as defined below) as Executive Vice President and Chief Financial Officer of the Company, and the Executive accepts such employment. 

 
 (b) Duties. During the Employment Term, the Executive will perform
the executive and managerial duties customarily associated with the office set forth in Section 2(a) under the control and at the direction of the Chief Executive Officer and the Board and other such executive and managerial duties as
may, from time to time, reasonably be assigned to her by the Chief Executive Officer or the Board that are consistent with such position. During the Employment Term, the Executive may also be required to perform services for one or more 

  

 4 

 
affiliates of the Company. During the Employment Term, the Executive shall be located in or about Jacksonville, Florida and shall travel to such geographical
locations as may be appropriate from time to time to carry out the duties of the office as outlined in this Section 2. 
  
 (c) Scope of Employment. During the Employment Term, the Executive will devote such time, energy, skill and knowledge to the performance of her
duties for the Company and for the benefit of the Company as may be necessary or required for the effective conduct and operation of the Business. Furthermore, the Executive shall exercise due diligence and care in the performance of her duties to
the Company under this Agreement. Notwithstanding the foregoing, during the Employment Term, the Executive may serve on civic or charitable boards and may serve as an officer, director, shareholder, or limited partner in any business venture so long
as such activities do not interfere with the performance of the Executive’s duties under this Agreement and do not directly compete with the Business. 
  
 3. Employment Term. The term of employment shall begin on the Commencement Date. Unless earlier terminated pursuant to Section 4, this
Agreement will expire on October 28, 2007 (the “Expiration Date”); provided, however, that on the Expiration Date and each subsequent anniversary of the Expiration Date, the Expiration Date shall automatically be
extended by one additional year unless either the Executive or the Company shall have given written notice of expiration of this Agreement to the other party at least 180 days prior to the date of automatic renewal of this Agreement. The
Commencement Date through and including the Expiration Date (as so extended) is hereinafter referred to as the “Employment Term.” 
  
 4. Termination. 
  
 (a) Death. The Executive’s employment will terminate automatically upon the Executive’s death. 
  
 (b) Disability. Upon the good faith determination by the Company that
the Disability of the Executive has occurred, the Company may terminate the Executive’s employment under this Agreement by notice pursuant to Section 4(e). During the period of incapacitation, the salary otherwise payable to the
Executive may, at the absolute discretion of the Board, be reduced by the amount of any disability benefits or payments received by the Executive, excluding health insurance benefits or other reimbursement of medical expenses for the Executive.

  
 (c) By the Company. The Company may terminate the
Executive’s employment under this Agreement for Cause, or without Cause, by notice pursuant to Section 4(e), subject to the severance obligations set forth in Section 8. 
  
 (d) By the Executive. The Executive may terminate her employment under
this Agreement for Good Reason, or without Good Reason, by notice pursuant to Section 4(e). 
  
 (e) Notice of Termination. Any termination of the Executive’s employment by the Company or by the Executive (other than a termination upon the
Executive’s death, which does not require notice) must be communicated by written notice (the “Notice of Termination”) 

  

 5 

 
to the other party given in accordance with the notice provisions of this Agreement. The Notice of Termination must (i) indicate the specific
termination provision of this Agreement relied upon; (ii) set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provisions so indicated; and
(iii) if the Termination Date is other than the date of receipt of such Notice of Termination, specify the Termination Date (which date shall be not more than 30 days after the date of giving of such Notice of Termination). The failure by the
Company or the Executive to set forth in the Notice of Termination any fact or circumstance that contributes to a showing of the basis for termination will not waive any right of such party hereunder or preclude such party from asserting such fact
or circumstance in enforcing her or its rights hereunder. 
  
 5.
Compensation. During the Employment Term, for all services rendered by the Executive to the Company, the Company shall pay to the Executive: 
  
 (a) Base Salary. For services rendered, the Company shall pay the Executive a salary of $200,000 per calendar year (such annual salary, as adjusted
from time to time pursuant to this Section 5(a), the “Base Salary”), payable in accordance with the Company’s normal payroll practices. The Board shall conduct an annual review of the Executive’s Base Salary.
The Executive shall be entitled to receive increases in the Base Salary, if any, that may be determined by the Board or an authorized committee thereof in its sole discretion. Any increases to the Base Salary shall be effective January 1 for
each calendar year of the Employment Term. In no event shall the Executive’s Base Salary be reduced without the Executive’s consent, except as provided in Section 4(c). 
  
 (b) Annual Bonus. In further consideration of the Executive’s
service, the Executive shall be eligible to receive an annual bonus award in an amount to be determined by the Board or an authorized committee thereof in its sole discretion. 
  
 (c) Taxes. All compensation paid to the Executive shall be subject to applicable employment, payroll and withholding
taxes, including taxes resulting from a determination that any portion of any benefits supplied to the Executive may be reimbursing personal as well as business expenses. 
  
 (d) Stock Grant. On the date of the Agreement, or as soon as practical thereafter, Executive shall receive, a
restricted share grant of 10,000 shares of common stock pursuant to the Company’s 2003 Share Incentive Plan (the “Plan”), subject to the terms and conditions of the Plan. The shares shall vest at a rate of 1/36 each month over
a period of thirty-six (36) months following the grant date. 
  
 (e) Relocation Expenses. In order to assist Executive in her relocation to the Jacksonville area, Sunset agrees to pay to Executive or the corresponding provider of services the following expenses and related amounts incurred by
Executive in connection with her relocation. Such amounts shall be paid to Executive within three (3) days of submission of the respective amounts. 
  

 6 

	 	(i)	The packing, transportation and unpacking of Executive’s household items to Jacksonville; 

  

	 	(ii)	Temporary housing for up to 90 days, at an approved location; 

  

	 	(iii)	The brokerage fee (up to 6.0% of selling price) for selling Executive’s primary residence in connection with her relocation to Jacksonville; 

  

	 	(iv)	The closing costs associated with the purchase of Executive’s primary residence in the Jacksonville area; 

  

	 	(v)	Provide dual living expenses to Executive of $100 per week for up to twelve (12) weeks; 

  

	 	(vi)	Final transportation expenses for a personal vehicle from Dallas to Jacksonville; 

  

	 	(vii)	A one-time relocation expense grant to Executive of $2,500 to cover any miscellaneous relocation-related expenses, deposits or other relocation items not otherwise anticipated in
this Agreement. This grant is considered taxable income by the Internal Revenue Service; and 

  

	 	(viii)	Provide a tax gross-up in an amount necessary to make the after tax benefit received in respect of these relocation benefits equal to the pre-tax benefit of the payments.

  
 In the event Executive terminates this Agreement without Good
Reason within twelve (12) months from the Commencement Date, Executive agrees to reimburse Sunset, within fourteen (14) days of the date of termination, for all relocation expenses and payments listed above paid by Sunset directly to
Executive or paid by Sunset directly to a third party on behalf of Executive. 
  
 6. Employee Benefits. 
  
 (a) Benefits. The Executive shall receive group health/dental insurance, life insurance, disability insurance and other similar benefits available to the Company’s executive officers. Benefits may be changed, modified or revoked
at the sole discretion of the Company. The Executive shall not be deemed to have a vested interest in any of the Company’s plans or programs. The Executive may receive benefits not generally provided to Company employees from time to time at
the sole discretion of the Board or an authorized committee thereof. 
  
 (b) Vacation. The Executive is entitled to receive 20 business days paid vacation annually for each calendar year of the Employment Term. Such vacation shall be taken at such times that are consistent with the reasonable business
needs of the Company. All vacation shall be subject to the policies and procedures of the Company. 
  

 7 

 (c) Fringe Benefits. The Executive shall receive fringe benefits as such benefits may exist from
time to time at the sole discretion of the Board or any committee thereof. 
  
 7. Business Expenses. The Executive is authorized to incur reasonable, ordinary and necessary business expenses in the performance of the duties outlined above during the Employment Term in accordance with
policies established by the Company. The Executive shall account to the Company for all such expenses. The Company shall reimburse the Executive or pay the expenses in accordance with the policies established by the Company. 
  
 8. Compensation Upon Termination or Change of Control. In all events,
the Company will pay to the Executive all Base Salary and benefits accrued to the Executive through and including the Termination Date. 
  
 (a) Termination Without Cause, For Good Reason or Upon a Change of Control. Upon (i) the occurrence of the first event constituting a Change
of Control (the “Change of Control Date”) and the termination or non-renewal of Executive’s employment during the Severance Period (other than for Cause) or (ii) if the Executive’s employment is terminated (x) by
the Company without Cause, (y) by reason of Disability or (z) by the Executive for Good Reason (any event specified in the foregoing clauses (i) or (ii), a “Severance Event”), the Company shall pay or provide to the
Executive the following: 
  
 (i) The Company shall
pay to the Executive as severance pay and in lieu of any further compensation for periods subsequent to the Termination Date or the Change of Control Date, as the case may be, an amount in cash (the “Severance Benefit”) equal
to the product of 2.0 times the amount of the Base Salary. 
  
 (ii) During the Severance Period, the Company will provide or arrange to provide the Executive with Employee Benefits that are welfare benefits (but not share options, share purchase, share appreciation, dividend
equivalent rights or similar compensatory benefits) substantially similar to those that the Executive was receiving or entitled to receive immediately prior to the Change of Control Date or the Termination Date, as the case may be. The Severance
Period will be considered service with the Company for the purpose of determining service credits and benefits due and payable to the Executive under the Company’s retirement income, supplemental executive retirement, and other benefit plans
applicable to the Executive, the Executive’s dependents or the Executive’s beneficiaries immediately prior to the Change of Control Date or the Termination Date, as the case may be. If and to the extent that any benefit described in the
immediately preceding sentence is not or cannot be paid or provided under any policy, plan, program or arrangement of the Company, then the Company will itself pay or provide for the payment of such Employee Benefits to the Executive, and, if
applicable, the Executive’s dependents and beneficiaries. Employee Benefits otherwise receivable by the Executive pursuant to this Section 8(a)(ii) will be reduced to the extent comparable welfare benefits are actually received by
the Executive from another employer during the Severance Period. 
  
 (iii) Vesting of benefits shall be treated as described in Section 8(d)(i). 
  

 8 

 (b) Termination By Reason of Disability. If the Employment Term is terminated by reason of
Disability, the Company shall pay to the Executive as severance pay and in lieu of any further compensation for periods subsequent to the Termination Date an amount in cash equal to the Severance Benefit. Vesting of benefits shall be treated as
described in Section 8(d)(i). The Executive shall continue to receive, so long as the Disability continues, all benefits provided under any long-term disability program(s) of the Company in effect at the time of such termination, subject
to the terms and conditions of any such program(s), as may be amended, changed, modified or terminated for all employees of the Company. 
  
 (c) Payment of the Severance Benefit. The Company shall pay the Severance Benefit to the Executive (i) in a single lump sum in immediately
available funds, in United States Dollars, within five business days after the Change of Control Date; or (ii) in all other circumstances, in 12 equal monthly installments following the Termination Date. 
  
 (d) Treatment of Award Grants. 
  
 (i) Vesting of Benefits. Notwithstanding any other
provision of this Agreement, the Company’s employee benefit plans, any agreement entered into under such plans, or any retirement, pension, profit sharing or other similar plan (collectively, the “Plans”), upon the occurrence
of a Severance Event, all deferred or unvested portions of any award made to the Executive under any of the Plans shall automatically become fully vested as of the Termination Date or the Change of Control Date, as the case may be, and shall be in
effect and redeemable by or payable to the Executive, or the Executive’s designated beneficiary or estate, on the same conditions (other than vesting) as would have applied had the Severance Event not occurred. 
  
 (ii) Clarification Regarding Treatment of Award
Grants. The Plans may contain language regarding the effects of certain changes of control of the Company or certain terminations of the Executive’s employment. Notwithstanding such language in the Plans, for so long as this Agreement is in
effect, the Company will be obligated, if the terms of this Agreement are more favorable in this regard than the terms of the Plans, to take the actions required under Section 8(d)(i) upon the happening of the circumstances described
therein. Notwithstanding the definition of “Change of Control,” “Cause” or any other term relating to the vesting or exercise of awards made under any Plan that may appear in such Plan, for so long as this Agreement
is in effect, the definitions and other provisions set forth in this Agreement relating thereto shall control and be binding on the Company and its affiliates. 
  

(e) Additional Payments. 
  
 (i) Notwithstanding anything in this Agreement to the contrary, in the event it is determined (as hereafter provided) that any right or
interest that vests in the Executive, or any payment or distribution made by the Company to or for the benefit of the Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise pursuant to
or by reason of any other agreement, policy, Plan, program or arrangement, including without limitation any share option, 

  

 9 

 
share appreciation right, dividend equivalent right, restricted shares of similar right, the lapse or termination of any restriction on or the vesting or
exerciseability of any of the foregoing (any such right, interest, payment or distribution, a “Payment”), would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the
“Code”) (or any successor provision thereto), by reason of being considered an “excess parachute payment,” within the meaning of Section 280G of the Code (or any successor provision thereto) or to any similar tax
imposed by state or local law, or any interest or penalties with respect to such tax (such tax or taxes, together with any such interest and penalties, being hereafter collectively referred to as the “Excise Tax”), then the
Executive will be entitled to receive an additional payment or payments from the Company (collectively, a “Gross-Up Payment”). The Gross-Up Payment will be in an amount such that, after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to such taxes), including any Excise Tax imposed upon the Gross-Up Payment, the Executive will have received an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payment. 
  
 (ii) Subject to the provisions of
Section 8(e)(vi), all determinations required to be made under this Section 8(e), including whether an Excise Tax is payable by the Executive and the amount of such Excise Tax and whether a Gross-Up Payment is required to be
paid by the Company to the Executive and the amount of such Gross-Up Payment, if any, will be made by a nationally recognized accounting firm (the “Accounting Firm”) selected by the mutual written agreement of the Executive and the
Company. The parties hereto will direct the Accounting Firm to submit its determination and detailed supporting calculations to both the Company and the Executive within 30 calendar days after the Executive’s termination date, and any such
other time or times as may be requested by the Company or the Executive. If the Accounting Firm determines that any Excise Tax is payable by the Executive, the Company will pay the required Gross-Up Payment to the Executive within five business days
after receipt of such determination and calculations with respect to any payment to the Executive. If the Accounting Firm determines that no Excise Tax is payable by the Executive, it will, at the same time as it makes such determination, furnish
the Company and the Executive an opinion that the Executive has substantial authority not to report any Excise Tax on the Executive’s federal, state or local income or other tax return. As a result of the uncertainty in the application of
Section 4999 of the Code (or any successor provision thereto) and the possibility of similar uncertainty regarding applicable state or local tax law at the time of any determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Company should have been made (an “Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts or fails to pursue its remedies
pursuant to Section 8(e)(vi) and the Executive thereafter is required to make a payment of any Excise Tax, the parties will direct the Accounting Firm to determine the amount of the Underpayment that has occurred and to submit its
determination and detailed supporting calculations to both the Company and the Executive as promptly as possible. Any such Underpayment will be promptly paid by the Company to, or for the benefit of, 

  

 10 

 
the Executive within five business days after receipt of such determination and calculations. 
  
 (iii) The Company and the Executive will each provide the Accounting Firm access to and copies of any books,
records and documents in the possession of the Company or the Executive, as the case may be, reasonably requested by the Accounting Firm, and otherwise cooperate with the Accounting Firm in connection with the preparation of and issuance of the
determinations and calculations contemplated by Section 8(e)(ii). Any determination by the Accounting Firm as to the amount of the Gross-Up Payment will be binding upon the Company and the Executive. 
  
 (iv) The federal, state and local income or other tax returns
filed by the Executive will be prepared and filed on a consistent basis with the determination of the Accounting Firm with respect to the Excise Tax payable by the Executive. The Executive will make proper payment of the amount of any Excise Payment
and, at the request of the Company, provide to the Company true and correct copies (with any amendments) of the Executive’s federal tax return as filed with the Internal Revenue Service and corresponding state and local tax returns, if
relevant, as filed with the applicable taxing authority, and such other documents reasonably requested by the Company evidencing such payment. If, prior to the filing of the Executive’s federal income tax return, or corresponding state or local
tax return, if relevant, the Accounting Firm determines that the amount of the Gross-Up Payment should be reduced, the Executive will within five business days pay to the Company the amount of such reduction. 
  
 (v) The fees and expenses of the Accounting Firm for its
services in connection with the determinations and calculations contemplated herein will be borne by the Company. If such fees and expenses are initially paid by the Executive, the Company will reimburse the Executive the full amount of such fees
and expenses within five business days after receipt from the Executive of a statement therefor and reasonable evidence of the Executive’s payment thereof. 
  

(vi) The Executive will notify the Company in writing of any claim by the Internal Revenue Service or any other taxing authority that,
if successful, would require the payment by the Company of a Gross-Up Payment. Such notification will be given as promptly as practicable but no later than 10 business days after the Executive actually receives notice of such claim and the Executive
will further apprise the Company of the nature of such claim and the date on which such claim is requested to be paid (in each case, to the extent known by the Executive). The Executive will not pay such claim prior to the earlier of (x) the
expiration of the 30-calendar day period following the date on which the Executive gives such notice to the Company and (y) the date that any payment of amount with respect to such claim is due. If the Company notifies the Executive in writing
prior to the expiration of such period that it desires to contest such claim, the Executive will: 
  

	 	(A)	 provide the Company with any written records or documents in the 

  

 11 

	 	 
Executive’s possession relating to such claim reasonably requested by the Company; 

  

	 	(B)	take such action in connection with contesting such claim as the Company may reasonably request in writing from time to time, including without limitation accepting legal
representation with respect to such claim by an attorney competent in respect of the subject matter and reasonably selected by the Company; 

  

	 	(C)	cooperate with the Company in good faith in order effectively to contest such claim; and 

  

	 	(D)	permit the Company to participate in any proceedings relating to such claims; 

  

provided, however, that the Company will bear and pay directly all costs and expenses (including interest and penalties) incurred in
connection with such contest and will indemnify and hold harmless the Executive, on an after-tax basis, from and against any Excise Tax or income tax, including interest and penalties with respect thereto, imposed as a result of such representation
and payment of costs and expenses. Without limiting the foregoing provisions of this Section 8(e), the Company will control all proceedings taken in connection with the contest of any claim contemplated by this
Section 8(e)(vi) and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim (provided, however, that the Executive may
participate therein at the Executive’s own cost and expense) and may, at its option, either direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Executive will prosecute such
contest to a determination before any administrative tribunal, in a court of initial jurisdiction, and in one or more appellate courts, as the Company may determine; provided, however, that if the Company directs the Executive to pay
the tax claimed and sue for a refund, the Company will advance the amount of such payment to the Executive on an interest-free basis and will indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income or other
tax, including interest or penalties with respect thereto, imposed with respect to such advance; provided, further, that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to
which the contested amount if claimed to be due is limited solely to such contested amount. The Company’s control of any such contested claim will be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the
Executive will be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority. 
  
 (vii) If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 8(e)(vi), the Executive
receives any refund with respect to such claim, the Executive will (subject to the Company’s complying with the requirements of Section 8(e)(vi)) pay to the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto) within 30 calendar days after such receipt and the Company’s satisfaction of all accrued 

  

 12 

 
obligations under this Agreement. If, after the receipt by the Executive of any amount advanced by the Company pursuant to Section 8(e)(vi), a
determination is made that the Executive will not be entitled to any refund with respect to such claim and the Company does not notify the Executive in writing of its intent to contest such determination prior to the expiration of 30 calendar days
after such determination, then such advance will be forgiven and will not be required to be repaid and the amount of any such advance will offset, to the extent thereof, the amount of Gross-Up Payment required to be paid by the Company to the
Executive pursuant to this Section 8(e). 
  
 (viii) Notwithstanding any other provision of this Agreement, the Company shall pay to the Executive an amount equal to the Base Salary upon the occurrence of: (x) the Expiration Date; and (y) any failure for any reason of the
Expiration Date to be automatically extended by one additional year as prescribed by Section 3 of this Agreement. 
  
 (f) Nature of Payments. The amounts due under this Section 8 are in the nature of severance payments considered to be reasonable by the
Company and are not in the nature of a penalty. Such amounts are in full satisfaction of all claims that the Executive may have in respect of her employment by the Company or its affiliates and are provided as the sole and exclusive benefits to be
provided to the Executive in respect of her termination of Employment from the Company. Notwithstanding any other provisions herein, it shall be a condition precedent to the Company making any payments pursuant to this Section 8 that the
Executive has executed and delivered to the Company the release contemplated pursuant to Section 12. 
  
 (g) No Mitigation or Set-Off. The Executive will not be required to mitigate the amount of any payment provided for in this Agreement by seeking
other employment. There will be no right of set-off or counterclaim in respect of any claim, debt of obligation against any payment to or benefit for the Executive provided for in this Agreement, except as expressly provided herein. 
  
 9. Confidentiality and Non-Competition. 
  
 (a) Confidentiality. 
  
 (i) During the Employment Term, the Company agrees to provide
the Executive with access to Confidential Information. 
  
 (ii) The Executive acknowledges that the Confidential Information is valuable and proprietary to the Company or to third parties that have entrusted the Company and/or its subsidiaries with such Confidential Information. The Executive
agrees, except as required for the Executive to fulfill her duties hereunder, that the Executive shall not use, publish, disseminate or otherwise disclose any Confidential Information, no matter when learned or accessed, without the prior written
consent of the Company. 
  

 13 

 (iii) All Confidential Information shall be the exclusive property of the Company and the
Executive shall have no rights in or to the Confidential Information upon any termination of this Agreement or her employment with the Company. Upon the termination of the Executive’s employment or upon the demand of the Company, the Executive
shall immediately deliver to the Company all plans, designs, drawings, specifications, listings, manuals, records, notebooks and similar repositories of or documents containing Confidential Information, including all copies, then in the
Executive’s possession or control, whether prepared by the Executive or others. Upon such termination, the Executive shall retain no copies of any such documents. 
  
 (iv) The provisions of this Section 9(a) shall survive the termination of this Agreement
indefinitely. 
  
 (b) Inducement/Enticement. During the
Employment Term and, in the case of (x) a termination by the Company for Cause, (y) a termination due to Disability or (z) a termination by the Executive other than for Good Reason, for a period of six months from the Termination
Date, the Executive shall not, directly or indirectly: 
  
 (i) induce, or attempt to induce, any employees or agents of, or consultants of or to, the Company or any subsidiary of the Company, to do anything from which the Executive is restricted by reason of Section 9(a); or 

 
 (ii) offer or aid others to offer employment to or recruit
or solicit or hire anyone who is an employee or agent of, or consultant of or to, the Company or a subsidiary of the Company at the time of termination of the Executive, unless such person’s employment was terminated by the Company or any such
subsidiary. 
  
 In the case of (x) a termination by the
Company for Cause, (y) a termination due to Disability or (z) a termination by the Executive other than for Good Reason, the provisions of this Section 9(b) shall survive the termination of the Executive’s employment.

  
 (c) Injunctive Relief. The Executive acknowledges that
a breach of any of the agreements contained in this Section 9 will give rise to irreparable injury to the Company, inadequately compensable in damages. Accordingly, the Company shall be entitled to injunctive relief to prevent or cure
breaches or threatened breaches of the provisions of this Section 9 and to enforce specific performance of the terms and provisions hereof in any court of competent jurisdiction, in addition to any other legal or equitable remedies that
may be available. The Executive further acknowledges and agrees that in the event of the termination of this Agreement, her experience and capabilities are such that she can obtain employment in business activities that are of a different or
noncompeting nature with her activities as an employee of the Company and that the enforcement of a remedy hereunder by way of injunction shall not prevent the Executive from earning a reasonable livelihood. The Executive further acknowledges and
agrees that the covenants contained herein are necessary for the protection of the Company’s legitimate business interests and are reasonable in scope and content. The Executive also acknowledges that the Company would not enter into this
Agreement or agree to provide her 

  

 14 

 
with access to its Confidential Information without the Executive’s promises contained in this Section 9. 
  
 10. Remedies for the Company. The termination of this Agreement by the
Company for Cause shall not be deemed to be a waiver by the Company of any breach by the Executive of this Agreement or any other obligation owed the Company, and, notwithstanding such a termination, the Executive shall be liable for all damages
attributable to such a breach. 
  
 11. Remedies for the
Executive. 
  
 (a) The termination of this Agreement by the
Executive for Good Reason shall not be deemed to be a waiver by the Executive of any breach by the Company of this Agreement or any other obligation owed the Executive, and, notwithstanding such a termination, the Company shall be liable for all
damages attributable to such a breach. 
  
 (b) In the event that
the Executive is terminated for Cause and it is ultimately determined that the Company lacked Cause, (i) the termination shall be treated as a termination other than for Cause; (ii) the Executive shall have the right to seek remedy for a
breach of this Agreement by the Company, including, but not limited to, any other such damages as may be suffered and/or incurred by the Executive, the Executive’s costs incurred during the dispute and reasonable attorneys’ fees in
connection with such dispute; and (iii) the Executive shall receive all Severance Benefits. 
  
 12. Full Satisfaction; Waiver and Release. As a condition to receiving the payments and benefits described in Section 8, the Executive
and the Company shall execute a document in form reasonably acceptable to them, releasing and waiving any and all claims, causes of actions and the like against the other party and its respective successors, subsidiaries, affiliates, shareholders,
officers, directors, managers, agents and employees, regarding all matters relating to the Executive’s service as an employee of the Company, its subsidiaries or any of their affiliates and the termination of such relationship. Such claims
include, without limitation, any claims arising under the Age Discrimination in Employment Act of 1967, as amended; Title VII of the Civil Rights Act of 1964, as amended; the Civil Rights Act of 1991, as amended; the Equal Pay Act of 1962; the
Americans with Disabilities Act of 1990; the Family and Medical Leave Act, as amended; the Employee Retirement Income Security Act of 1974, as amended; the Sarbanes-Oxley Act, or any other federal, state or local statute or ordinance, but exclude
any claims that arise out of an asserted breach of the terms of this Agreement and any benefits payable to the Executive under the Company’s benefit plans, practices and programs in which she participates. 
  
 13. No Waiver. No waiver or non-action by either party with respect to
any breach by the other party of any provision of this Agreement, nor the waiver or non-action with respect to the provisions of any similar agreement with other employees or the breach thereof, shall be deemed or construed to be a waiver of any
succeeding breach of such provision, or as a waiver of the provision itself. 
  

 15 

 14. Invalid Provisions. Should any portion of this Agreement be adjusted or held invalid,
unenforceable or void, such holding shall not have the effect of invalidating or voiding the remainder of this Agreement and the parties hereby agree that the portion so held invalid, unenforceable, or void shall, if possible, be deemed amended or
reduced in scope, or otherwise be stricken from this Agreement, to the extent required for the purposes of validity and enforcement thereof. 
  
 15. Successor and Assigns. Neither the Executive nor the Company may assign its rights, duties, or obligations hereunder without consent of the
other. 
  
 16. Survival. The provisions of Sections 9
and 21 of this Agreement shall survive the Executive’s termination of employment. Other provisions of this Agreement shall survive any termination of the Executive’s employment to the extent necessary to ensure the preservation of each
party’s respective rights and obligations. 
  
 17.
Governing Law. This Agreement shall be governed by, and interpreted in accordance with the internal substantive laws of the State of Florida, without giving effect to the principles of conflicts of law. Each party hereto hereby irrevocably
submits itself to the exclusive personal jurisdiction of the Federal and State courts sitting in the State of Florida, and hereby waives any claims it may have as to inconvenient forum. 
  
 18. No Oral Modifications. This Agreement may not be changed or terminated orally, and no change, termination or
waiver of this Agreement or of any of the provisions herein contained shall be binding unless made in writing and signed by both parties, and, in the case of the Company, by a person designated by the Board or any committee thereof. Without limiting
the foregoing, any change or changes, from time to time, in the Executive’s salary or duties or both shall not be, nor be deemed to be, a change, termination or waiver of this Agreement or of any of the provisions herein contained. 

 
 19. Notices. All notices and other communications required or
permitted hereunder shall be made in writing, and shall be deemed properly given if delivered personally, mailed by certified mail, postage prepaid and return receipt requested, sent by facsimile, or sent by Express Mail or Federal Express or other
nationally recognized express delivery service, as follows: 
  
 If
to the Company: 
  
 Sunset Financial Resources, Inc. 

10245 Centurion Parkway, Suite 305 
 Jacksonville, Florida 32256 
 Attention: Chairman of the Board 
  
 If to the Executive: 
  
 Stacy Riffe 
 939 West Greenbriar Lane

 Dallas, Texas 75208 
  

 16 

 Notice given by hand, Express Mail, Federal Express, or other such express delivery service shall be
effective upon actual receipt. Notice given by facsimile transmission shall be effective upon actual receipt during the recipient’s customary business hours, or at the beginning of the recipient’s next business day after receipt if not
received during the recipient’s customary business hours. All notices sent by facsimile transmission shall be confirmed promptly after transmission in writing by certified mail or personal delivery. 
  
 Any party may change any address to which notice shall be given to it by
giving notice as provided above of such change in address. 
  
 20.
Executive’s Representation and Warranties. The Executive represents and warrants that she is legally free to make and perform this Agreement, that she has no obligation to any other person or entity that would affect or conflict with any
of her obligations hereunder, and that the complete performance of her obligations hereunder will not violate any law, regulation, order, or decree of any governmental or jurisdictional body or contract by which she is bound. 
  
 21. Entire Agreement. The parties expressly agree that this Agreement
is contractual in nature and not a mere recital, and that it contains all the terms and conditions of the agreement between the parties with respect to the matters set forth herein. All prior negotiations, agreements, arrangements, understandings
and statements between the parties relating to the matters set forth herein that have occurred at any time or contemporaneously with the execution of this Agreement are superseded and merged into this completely integrated Agreement. The Recitals
set forth above shall be deemed to be part of this Agreement. 
  
 [The remainder of this page is intentionally left blank.] 
  

 17 

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

  

			
	 THE COMPANY:
  
 SUNSET FINANCIAL RESOURCES, INC.,
 a Maryland corporation

		
	By:	 	/s/ George Deehan
		
	Its:	 	Chief Executive Officer and President

  
  

			
	 THE EXECUTIVE:
  
 STACY RIFFE

	
	/s/ Stacy Riffe

  

 18

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