Document:

Galenfeha, Inc.: Exhibit 10.1 - Filed by newsfilecorp.com

GALENFEHA, INC.
2013 EMPLOYEE STOCK COMPENSATION
PLAN

     1. PURPOSE. The purpose of
this Compensation Plan for Employees, Officers, Directors and Consultants (the
“Plan”) is to assist Galenfeha, Inc. (the “Company”) in attracting, motivating,
retaining and rewarding high-quality executives and other employees, officers,
directors and consultants to acquire or increase a proprietary interest in the
Company in order to strengthen the mutuality of interests between such persons
and the Company's stockholders, and providing such persons with performance
incentives to expend their maximum efforts in the creation of shareholder
value.

     2. ELIGIBLE PERSONS. The
only persons eligible to receive stock awards under this Plan and to become
participants under this Plan (“Eligible Persons”) shall be officers, directors,
employees and consultants of the Company and/or one or more of its
subsidiaries.

     3. ADMINISTRATION. This
Plan shall not become effective until it is approved by the Company’s Board of
Directors. Once the Plan has been approved by the Company’s Board of Directors,
the Plan shall be administered by a compensation committee (“Committee”)
consisting of at least one person to be appointed by the Board of Directors, or
in the absence of such a Committee, the Plan shall be administered by the Board
of Directors. References herein to “Committee” shall be deemed to refer to the
Company’s Board of Directors at any time there is no Committee appointed. The
Committee shall have full and final authority, in each case subject to and
consistent with the provisions of the Plan, to select Eligible Persons to become
participants under the Plan, grant stock awards to those participants, determine
the terms and conditions of, and all other matters relating to awards of Company
stock under the Plan, and rules and regulations for the administration of the
Plan, construe and interpret the Plan and correct defects, supply omissions or
reconcile inconsistencies therein, and to make all other decisions and
determinations as the Committee may deem necessary or advisable for the
administration of the Plan. The Committee shall be entitled to, in good faith,
rely or act upon any report or other information furnished to him or her by any
other officer or employee of the Company or a subsidiary, the Company’s
independent auditors, consultants or any other agents assisting in the
administration of the Plan. The Committee and members of the Board of Directors,
and any officer or employee of the Company or a subsidiary acting at the
direction or on behalf of the Committee shall not be personally liable for any
action or determination taken or made in good faith with respect to the Plan,
and shall, to the extent permitted by law, be fully indemnified and protected by
the Company with respect to such action or determination.

     4. STOCK SUBJECT TO PLAN;
OVERALL NUMBER OF SHARES SUBJECT TO AWARDS. Subject to adjustment as
provided herein, the total number of shares of Company common stock that may be
subject to the granting of stock awards under the Plan at any point in time
during the term of the Plan shall be equal to 50,000,000 shares. Any shares of
common stock delivered under the Plan may consist, in whole or in part, of
authorized and unissued shares or treasury shares. The number of shares
authorized under this Plan shall be subject to adjustment in the event that any
dividend or other distribution (whether in the form of cash, stock or other
property), recapitalization, forward or reverse stock split, reorganization,
merger, consolidation, spin-off, combination, repurchase, share exchange,
liquidation, dissolution or other similar corporate transaction or event that
affects the Company’s common stock such that an adjustment is determined by the
Board of Directors of the Company to be appropriate in order to prevent dilution
or enlargement of the rights of participants under the Plan. In its discretion,
the Board shall, in such manner as it may deem equitable, adjust any or all of:
(a) the number of shares of stock which may be delivered in connection with
stock awards granted thereafter; (b) the exercise price, grant price or purchase
price relating to any stock award and/or make provision for payment of cash or
other property in respect of any outstanding stock award.

     5. ELIGIBILITY; PER-PERSON
AWARD LIMITATIONS. Stock awards may be granted under the Plan only to
Eligible Persons. There shall be no limitation on the number of shares of the
Company’s common stock that an Eligible Person may receive as a stock award
under the Plan during any particular fiscal year of the Company, except that the
total number of shares of the Company’s common stock that may be issued pursuant
to the Plan shall not exceed 50,000,000. 

     6. SPECIFIC TERMS OF
AWARDS.

     (a) GENERAL. Awards may be
granted on the terms and conditions set forth in this Section 6. In addition,
the Committee may impose on any Award or the exercise thereof, at the date of
grant or thereafter (subject to Section 9(b)), such additional terms and
conditions, not inconsistent with the provisions of the Plan, as the Committee
shall determine, including terms requiring forfeiture of awards in the event of
termination of employment by the participant and terms permitting a participant
to make elections relating to his or her award. The Committee shall retain full
power and discretion to accelerate, waive or modify, at any time, any term or
condition of an award that is not mandatory under the Plan. Except in cases in
which the Committee is authorized to require other forms of consideration under
the Plan, or to the extent other forms of consideration must be paid to satisfy
the requirements of Nevada law, no consideration other than services may be
required for the grant of any award.

     (b) BONUS STOCK AND AWARDS IN
LIEU OF OBLIGATIONS. The Committee is authorized to grant stock as a bonus,
or to grant stock or other awards in lieu of Company obligations to pay cash or
deliver other property under the Plan or under other plans or compensatory
arrangements, provided that, in the case of participants subject to Section 16
of the Exchange Act, the amount of such grants remains within the discretion of
the Committee to the extent necessary to ensure that acquisitions of stock or
other awards are exempt from liability under Section 16(b) of the
Exchange Act. Stock or awards granted hereunder shall be subject to such other
terms as shall be determined by the Committee.

     7. CERTAIN PROVISIONS APPLICABLE TO
AWARDS.

     (a) STAND-ALONE, ADDITIONAL,
TANDEM, AND SUBSTITUTE AWARDS. awards granted under the Plan may, in the
discretion of the Committee, be granted either alone or in addition to, in
tandem with, or in substitution or exchange for, any other award or any award
granted under another plan of the Company, any subsidiary, or any business
entity to be acquired by the Company or a subsidiary, or any other right of a
participant to receive payment from the Company or any subsidiary. Such
additional, tandem, and substitute or exchange awards may be granted at any
time. If an award is granted in substitution or exchange for another award, the
Committee shall require the surrender of such other award in consideration for
the grant of the new award. In addition, awards may be granted in lieu of cash
compensation, including in lieu of cash amounts payable under other plans of the
Company or any subsidiary, in which the value of stock subject to the award is
equivalent in value to the cash compensation (for example, restricted stock), or
in which the exercise price, grant price or purchase price of the award in the
nature of a right that may be exercised is equal to the fair market value of the
underlying stock minus the value of the cash compensation surrendered.

     (b) TERM OF AWARDS. The term of
each award shall be for such period as may be determined by the Committee.

     (c) FORM AND TIMING OF PAYMENT
UNDER AWARDS; DEFERRALS. Subject to the terms of the Plan and any applicable
award agreement, payments to be made by the Company or a subsidiary for award or
settlement of an award may be made in such forms as the Committee shall
determine, including, without limitation, cash, stock, other awards or other
property, and may be made in a single payment or transfer, in installments, or
on a deferred basis. The settlement of any award may be accelerated, and cash
paid in lieu of stock in connection with such settlement, in the discretion of
the Committee or upon occurrence of one or more specified events. Installment or
deferred payments may be required by the Committee (subject to Section 9(b) of
the Plan) or permitted at the election of the participant on terms and
conditions established by the Committee. Payments may include, without
limitation, provisions for the payment or crediting of a reasonable interest
rate on installment or deferred payments or the grant or crediting of dividend
equivalents or other amounts in respect of installment or deferred payments
denominated in stock.

     8. PERFORMANCE AWARDS.

     (a) PERFORMANCE
CONDITIONS. The right of a participant to exercise or receive a grant or
settlement of any award, and the timing thereof, may be subject to such
performance conditions as may be specified by the Committee. The Committee may
use such business criteria and other measures of performance as it may deem
appropriate in establishing any performance conditions, and may exercise its
discretion to reduce the amounts payable under any award subject to performance
conditions, except as limited under Section 8(b) hereof in the case of a
performance award.

     (b) PERFORMANCE AWARDS GRANTED
TO DESIGNATED COVERED EMPLOYEES. If and to the extent that the Committee
determines that a performance award to be granted to an Eligible Person who is
designated by the Committee as likely to be a covered employee should qualify as
"performance-based compensation" for purposes of Code Section 162(m), the grant,
exercise and/or settlement of such performance award shall be contingent upon
achievement of pre-established performance goals and other terms set forth in
this Section 8(b).

     (i) PERFORMANCE GOALS
GENERALLY. The performance goals for such performance awards shall consist
of one or more business criteria and a targeted level or levels of performance
with respect to each of such criteria, as specified by the Committee consistent
with this Section 8(b). Performance goals shall be objective and shall otherwise
meet the requirements of Code Section 162(m) and regulations thereunder
including the requirement that the level or levels of performance targeted by
the Committee result in the achievement of performance goals being
"substantially uncertain." The Committee may determine that such performance
awards shall be granted, exercised and/or settled upon achievement of any one
performance goal or that two or more of the performance goals must be achieved
as a condition to grant, exercise and/or settlement of such performance awards.
Performance goals may differ for performance awards granted to any one
participant or to different participants.

     (ii) BUSINESS CRITERIA.
One or more of the following business criteria for the Company, on a
consolidated basis, and/or specified subsidiaries or business units of the
Company (except with respect to the total stockholder return and earnings per
share criteria), shall be used exclusively by the Committee in establishing
performance goals for such performance awards: (1) total stockholder return; (2)
such total stockholder return as compared to total return (on a comparable
basis) of a publicly available index such as, but not limited to, the Standard
& Poor's 500 Stock Index or the S&P Specialty Retailer Index; (3) net
income; (4) pretax earnings; (5) earnings before interest expense, taxes,
depreciation and amortization; (6) pretax operating earnings after interest
expense and before bonuses, service fees, and extraordinary or special items;
(7) operating margin; (8) earnings per share; (9) growth in earnings per share;
(10) return on equity; (11) return on capital; (12) return on investment; (13)
operating earnings; (14) working capital or inventory; and (15) ratio of debt to
stockholders' equity.

     (iii) PERFORMANCE PERIOD;
TIMING FOR ESTABLISHING PERFORMANCE GOALS. Achievement of performance goals
in respect of such performance awards shall be measured over a performance
period of up to ten years, as specified by the Committee. Performance goals
shall be established not later than 90 days after the beginning of any
performance period applicable to such performance awards, or at such other date as may be
required or permitted for "performance-based compensation" under Code Section
162(m).

     9. GENERAL PROVISIONS.

     (a) COMPLIANCE WITH LEGAL AND
OTHER REQUIREMENTS. The Company may, to the extent deemed necessary or
advisable by the Committee, postpone the issuance or delivery of a stock award
or payment of other benefits under any stock award until completion of such
registration or qualification of such stock or other required action under any
federal or state law, rule or regulation, listing or other required action with
respect to any stock exchange or automated quotation system upon which the stock
or other Company securities are listed or quoted, or compliance with any other
obligation of the Company, as the Committee may consider appropriate, and may
require any participant to make such representations, furnish such information
and comply with or be subject to such other conditions as he or she may consider
appropriate in connection with the issuance or delivery of stock or payment of
other benefits in compliance with applicable laws, rules, and regulations,
listing requirements, or other obligations.

     (b) CHANGES TO THE PLAN AND
AWARDS. The Board of Directors may amend, alter, suspend, discontinue or
terminate the Plan or waive any conditions or rights under, or amend, alter,
suspend, discontinue or terminate any stock award theretofore granted and any
stock award agreement relating thereto; provided that, without the consent of an
affected participant, no such Board action may materially and adversely affect
the rights of such participant under any previously granted and outstanding
stock award.

     (c) UNFUNDED STATUS OF AWARDS;
CREATION OF TRUSTS. The Plan is intended to constitute an "unfunded" plan
for incentive and deferred compensation. With respect to any payments not yet
made to a participant or obligation to deliver stock pursuant to a stock award,
nothing contained in the Plan or any award shall give any such participant any
rights that are greater than those of a general creditor of the Company,
provided that the Board may authorize the creation of trusts and deposit therein
cash, stock, or other property, or make other arrangements to meet the Company's
obligations under the Plan. Such trusts or other arrangements shall be
consistent with the "unfunded" status of the Plan unless the Board of Directors
otherwise determines with the consent of each affected participant.

     (d) NONEXCLUSIVITY OF THE
PLAN. The adoption of the Plan by the Board of Directors shall not be
construed as creating any limitations on the power of the Board of Directors or
a committee or subcommittee thereof to adopt such other incentive arrangements
as it may deem desirable.

     (e) FRACTIONAL SHARES. No
fractional shares of stock shall be issued or delivered pursuant to the Plan or
any stock award. The Committee shall determine whether cash, other awards or
other property shall be issued or paid in lieu of such fractional shares or
whether such fractional shares or any rights thereto shall be forfeited or
otherwise eliminated.

     (f) GOVERNING LAW. The
validity, construction and effect of the Plan, any rules and regulations under
the Plan, and any award agreement shall be determined in accordance with the
laws of the State of without giving effect to principles of conflicts of laws,
and applicable federal law.

     (g) PLAN EFFECTIVE DATE.
The Plan which has been approved by the Board of Directors, and became effective
on the Effective Date, October 16, 2013.

     10. REGISTRATION OF STOCK.
The shares of Company securities issuable under this Plan may, in the discretion
of the Board of Directors, be registered on a Form S-8 registration statement
filed with the U.S. Securities and Exchange Commission.ex10_1.htm

Exhibit 10.1

 

 

CONVERSION, WARRANT EXERCISE AND NOTE RETIREMENT AGREEMENT

 

This Conversion, Warrant Exercise and Note Retirement Agreement (“Agreement”), dated as of October 11, 2013 is entered into by and between GrowLife, Inc., a Delaware corporation having its principal place of business at 20301 Ventura Boulevard, Suite 126, Woodland Hills, CA 91364 (the “Company”), and Gemini Master Fund, Ltd., having an address at c/o Gemini Strategies LLC, Inc., 619 South Vulcan, Suite 203, Encinitas, CA 92024 (the “Holder”).

 

W I T N E S S E T H:

 

WHEREAS, the Holder is the holder of: (i) an OID Secured Bridge Note (the “Note”), issued by the Company to the Holder on May 1, 2013 in the original principal amount of $280,000 and (ii) a Warrant issued on May 1, 2013 to purchase shares of common stock through a cash or cashless exercise pursuant to the terms therein (the “Warrant”);

 

WHEREAS, the Company and the Holder have agreed to convert the Note and exercise the Warrant according to the terms herein;

 

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

 

	
1.  

	
Conversion of Note.

 

	
a.  

	
Conversion.  The Note will be immediately converted into 8,000,000 shares of common stock of the Company at $0.035 per share.

 

	
2.  

	
Warrant Exercise.

 

	
a.  

	
Exercise.  The Warrant will be immediately exercised on a cashless basis into 9,000,000 shares of stock of the Company.

 

	
3.  

	
Closing Condition and Note and Warrant Retirement.

 

	
  

	
Delivery of Stock Certificate.  Within five (5) business days from the date of this Agreement the Company will deliver to the Holder, at the address above, a stock certificate in the name of Gemini Master Fund, Ltd., for 17,000,000 shares, as detailed in Section 1(a) and 2(a) above (the “Stock Certificate”).

 

	
  

	
Note and Warrant Retirement.  Upon receipt by the Holder of the Stock Certificate, the Note will be deemed paid in full and the Warrant will be deemed exercised, and no further obligations of the Company will exist thereunder.  The Holder will promptly send the Note and the Warrant to the Company for retirement.

 

  

  

  

 

	
4.  

	
Holding Period.

	
a.  

	
Rule 144.  Pursuant to Rule 144 promulgated under the Securities Act of 1933, as amended (“Securities Act”), the holding period of the shares of common stock issued hereunder tack back to May 1, 2013 (the original issue date of the Note and Warrant).  The Company agrees not to take a position contrary to this paragraph.  The Company is not currently, and has never been, an issuer of the type described in Rule 144(i) under the Securities Act.

IN WITNESS WHEREOF, this Agreement is executed as of the date first set forth above.

	
COMPANY:

	  
	  	  
	
GROWLIFE, INC.

	  
	  	  
	  	  
	
By: /s/ Sterling Scott                    

	
   

	
Name:  Sterling Scott

	  
	
Title:  CEO

	
    

HOLDER:

GEMINI MASTER FUND, LTD.

By: GEMINI STRATEGIES LLC, Inc. as investment manager

	  	
By:

	/s/ Steven Winters                    
	 	
Name:

	Steven Winters
	  	
Title:

	
President

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