Document:

snc_Ex_109

		
			EXHIBIT 10.9
		

		
			 
		

		
			Cash Performance Bonus Opportunity Agreement
		

		
			This Cash Performance Bonus Opportunity Agreement (this “Agreement”) is made as of June 1, 2013, by and between T.B.A. Insurance Group, Ltd., a Texas limited partnership (the “Employer”), and you, the undersigned executive employee of the Employer (the “Employee” or “you”).
		

			
					
						 

					
					
						 

				
	
					
						Agreement

					
					
						This Agreement and the Notice of Award of Cash Performance Bonus Opportunity (the “Notice”) that was provided to you by the Employer along with this Agreement govern the award of the contingent cash bonus opportunity specified in the Notice, which contingent cash bonus opportunity, as so specified, shall hereinafter be referred to as the “Award.”  The Notice is hereby incorporated into and made a part of this Agreement.  Capitalized terms not defined in this Agreement are defined in the Notice.  In the event of a conflict between the terms of this Agreement and the Notice, the terms of this Agreement shall prevail.

				
	
					
						
Vesting; Amount of
Bonus

					
					
						
No part of the cash bonus specified in the Award will be paid to you unless and until you satisfy the vesting conditions set forth in the Notice.  If you satisfy the conditions specified in the Notice, the amount of the bonus is determined from the table in Exhibit A to this Agreement.

					
						 

					
						If you die or you terminate your employment with the Employer on account of Disability before June 1, 2016, but on or after December 31, 2015, then, even though your employment will have terminated before June 1, 2016, you or your estate will nevertheless be entitled to the same bonus you would have become entitled to if you had remained employed by the Employer until June 1, 2016.  

					
						 

					
						If you die or you terminate employment on account of Disability before December 31, 2015, then, if the Performance Goal is attained, you or your estate will be entitled to a reduced bonus equal to (a) the bonus you would have been entitled to if you had not ceased to be employed by the Employer before June 1, 2016, multiplied by (b) a fraction, the numerator of which is the number of consecutive days commencing with January 1, 2013 and ending with the date on which you died or terminated employment on account of Disability, and the denominator of which is 1,096.

				
	
					
						
Forfeiture

					
					
						
Generally and except as otherwise expressly provided in this Agreement, if either (a) 2013-15 CCUM is not at least $80 million, or (b) your employment terminates for any reason other than death or Disability before June 1, 2016, then you will not receive any portion of the cash bonus that is the subject of the Award, and you will receive no 

				

		
			 
		

		
			
		

		
			

		 

 

 
		

			
					
						 

					
					
						
payment or other benefit to compensate you for your failure to receive any portion of the cash bonus.  The Employer will determine when your employment has terminated and whether your termination of employment was on account of death or Disability.

				
	
					
						
Definition of
Disability

					
					
						
For the purposes of this Agreement, “Disability” means a condition in which you are unable, by reason of a medically determinable physical or mental impairment, to discharge substantially all of the duties of your position with the Employer, which condition, in the opinion of a physician selected by the Employer, is expected to have a duration of 180 days or more.

				
	
					
						
Leaves of Absence
and Part-Time
Work

					
					
						
For the purposes of the Award, your employment will not terminate when you go on military leave, sick leave, or any  other bona fide leave of absence, but only if and to the extent that continued crediting of service for purposes of the Award is required by applicable law, or the leave is approved by the Employer and continued crediting of service for purposes of the Award is specified in a written agreement between you and the Employer governing or supplementing the written terms of the leave.  However, your employment will be treated as being terminated when the leave ends, unless you immediately return to active work for the Employer.  

					
						 

					
						If you go on a leave of absence or begin working on a part-time basis, then except as required by law, the Employer may in its discretion reduce the amount of your bonus (including to $0), except to the extent it is prohibited from doing so by law or by the terms of a written agreement between you and the Employer governing or supplementing the written terms of your leave or part-time schedule.  

				
	
					
						
Confidentiality and
Ownership of
Information; Pre-
and Post-
Employment
Restrictive
Covenants

					
					
						
During the course of your employment, you will have access to and become familiar with various confidential information, including the Employer’s and/or its affiliates’ proprietary information, technical data, trade secrets, confidential knowledge, know-how or any other confidential technical or business information (“Confidential Information”).  By way of example, the term “Confidential Information” may include:  formulas, patterns, devices, secret inventions, processes, computer programs, compilations of information, records, specifications, sales procedures, customer requirements, pricing techniques, customer (and prospective customer) and supplier lists, methods of doing business, research,  designs, data, charts, budgets, distributor names, pricing and cost information, development information, production and manufacturing information, sales and marketing information and other confidential information.  You acknowledge that such Confidential Information is owned and shall continue to be owned solely by the Employer and/or its respective

				

		
			 
		

		
			
		

		
			

		 

 

 
		

			
					
						 

					
					
						affiliate, and you agree that you do not have any ownership or other rights in or to the Confidential Information.

				
	
					
						 

					
					
						During your employment with the Employer, you shall not, without the prior written consent of the Employer, either directly or indirectly:  (a) disclose or divulge to any person, firm, corporation or other entity any of the Confidential Information of the Employer and/ or its affiliates or use such information for any purpose whatsoever except as required in the course and scope of your employment under this Agreement; (b) make known to any person, firm, corporation or other entity the names and/or addresses of any of the customers or prospective customers of the Employer or any of its affiliates or any other confidential or business information pertaining to said customers or prospective customers; (c) invest, participate, or engage in any business that is competitive with that of the Employer or any of its affiliates or otherwise accept employment with or render services to a competitor of the Employer or any of its affiliates as a director, manager, officer, agent, employee, consultant, or otherwise; (d) solicit or attempt to solicit or accept business that is competitive with the business being conducted by the Employer or any of its affiliates from any of the customers or prospective customers of the Employer or its affiliates; or (e) engage in other activity or conduct which creates a conflict of interest between you and the business interests of the Employer and/or its affiliates.

				
	
					
						 

					
					
						All files, records, documents, drawings, specifications, information, data and similar items relating to the business of the Employer and/or its affiliates, whether prepared by you or otherwise coming into your possession, shall remain the exclusive property of the Employer and/or such applicable affiliate.  Under no circumstances shall you remove from the premises of the Employer or any of its affiliates any of the Employer’s or the respective affiliate’s books, records, documents or customer (or prospective customer) lists without the prior written permission of the Employer, nor shall you make any copies of such books, records, documents or customer (or prospective customer) lists for use outside of the Employer’s office, except as specifically authorized in writing by Employer.  Any such books, records, documents or other materials or copies thereof in your possession or under your control shall be immediately returned to the Employer upon termination or cessation of your employment.

				
	
					
						 

					
					
						In consideration of the mutual promises herein, including the Employer’s promise to provide you with Confidential Information, upon termination or cessation of employment with the Employer for any reason and for a period of two (2) years immediately thereafter (except with respect to sub-section (a) of this section, which covenant period

				

		
			 
		

		
			
		

		
			

		 

 

 
		

			
					
						 

					
					
						shall be perpetual), you shall not, without the prior written consent of the Employer, directly or indirectly:

					
						(a)     disclose or divulge to any person, firm, company, corporation or other entity any of the Confidential Information of the Employer unless compelled to disclose such information by law, or otherwise use such information for any purpose whatsoever;

					
						(b)     within the states the Employer and/or any of its affiliates now or hereafter conducts business or actively prospects for business (the “Territory”), invest or engage in, start, conduct, operate, manage, or control any business that is competitive with the Employer or any of its affiliates, including any business that markets products and/or performs services in competition with those marketed and/or performed by Employer and/or its affiliates within the Territory;

					
						(c)     within the Territory, accept employment with or render services to a competitor of the Employer or any of its affiliates as a director, manager, officer, agent, employee, consultant or otherwise, including accepting employment with or rendering services to a person, firm, company, corporation or other entity that markets products and/or performs services in competition with those marketed and/or performed by the Employer and/or its affiliates within the Territory;

					
						(d)     disclose to any person, firm, company, corporation or other entity the names and/or addresses of any of the customers or prospective customers of the Employer or any of its affiliates or any other Confidential Information or business information acquired by you during the course of your employment with the Employer pertaining to said customers or prospective customers;

					
						(e)     on your own behalf or on the behalf of any person, firm, company, corporation or other entity, contact, call on, solicit or take away or attempt to contact, call on, solicit or take away, or accept business from, any of the customers or prospective customers of the Employer or any of its affiliates or any other person, firm, company, corporation or other entity whose business the Employer or any of its affiliates was soliciting; or

					
						(f)     on your own behalf or on the behalf of any other person, firm, company, corporation or other entity, hire or solicit or in any manner whatsoever attempt to influence or induce any current employee of the Employer or its affiliates, or any person

				

		
			 
		

		
			
		

		
			

		 

 

 
		

			
					
						 

					
					
						who has been an employee of the Employer and/or one of its affiliates at any time during the twelve (12) months prior to your date of termination or cessation of employment, to leave the employment of the Employer or its affiliates.

					
						The post-employment restrictive covenants contained in this Agreement are intended to limit your right to compete only to the extent necessary to protect the Employer’s business and goodwill.  The parties hereto agree that if any post-employment restrictive covenant set forth in this Agreement is found to be unreasonable as to scope, time period, territorial restraint or otherwise by a court of competent jurisdiction, then you and Employer agree and submit to the reduction thereof to such scope, time period, or territory as is deemed reasonable by such court.

					
						You hereby acknowledge that your employment with the Employer is not for any definite period or successions of periods and that no representative of the Employer, other than the President or Chief Executive Officer of the Employer, has any authority to enter into any agreement for employment for any specified period of time or to make an agreement contrary to the terms and provisions of this Agreement.  You further acknowledge: (a) that in the event your employment with Employer terminates for any reason, you will be able to earn a livelihood without violating the post-employment restrictive covenants contained in this Agreement; (b) that you are capable of pursuing a career and earning a livelihood in other businesses or industries within the Territory which are not competitive with the business of the Employer or its affiliates; and (c) that your ability to earn a livelihood without violating such restrictive covenants is a material condition to the Employer’s extending this bonus opportunity to you.  

					
						The obligations contained in this Agreement regarding confidentiality, documents, and restrictive covenants shall survive cessation of employment and the termination of this Agreement.  In addition, the termination of this Agreement shall not affect any of the rights or obligations of either party arising prior to or at the time of the termination of this Agreement.  The existence of any claim or cause of action that you may have against the Employer, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Employer of the restrictive covenants contained in this Agreement.

					
						You and Employer agree that the services to be rendered by you on behalf of Employer are strictly personal and that you have special and peculiar fitness and experience therefor, and as a result of a breach of any of the restrictive covenants set forth in this Agreement, the

				

		
			 
		

		
			
		

		
			

		 

 

 
		

			
					
						 

					
					
						Employer will suffer irreparable harm which cannot be adequately or solely measured by rules of law.  Therefore, you and the Employer agree that, in the event you shall breach or violate any of the restrictive covenants set forth in this Agreement, the Employer, in addition to all the remedies which may be available to it, and without waiver of any claim for money damages or the necessity of securing or posting a bond or any other security in connection with such remedy, may proceed against you by injunction or other appropriate remedy to prevent you from violating such provisions.  

					
						 

				
	
					
						
Nontransferability

					
					
						
This Award represents your personal contingent right to receive a cash payment in the future from the Employer, if certain conditions are satisfied.  This Award is not transferable by you except to your estate following your death, and as otherwise required by law.  

				
	
					
						
Change of Control

					
					
						
Reference is hereby made to that certain agreement, dated June 1, 2013 by and between Employee and Employer (the “Severance Agreement”), which, among other things, provides for certain payments in connection with a Change of Control (as defined in the Severance Agreement).  Notwithstanding anything to the contrary herein, if Employee has not received a payment pursuant to this Agreement and the Award, and this Agreement is in effect, and Employee is entitled to receive a Severance Payment (as defined in the Severance Agreement) pursuant to the terms and upon the events specified in the Severance Agreement, Employee shall be entitled to receive $300,000 in lieu, substitution and replacement of any other amounts or payments pursuant to this Agreement and the Notice (the “Change of Control Payment”). The Change of Control Payment shall be due and payable in a single, lump sum cash payment to Employee at the same time the Severance Payment is due and payable under Section 9(b) of the Severance Agreement. In addition, if, in connection with a Change of Control, this Agreement is terminated (in accordance with Treasury Regulation Section 1.409A-3(j)(4)(ix)(B)) and not replaced by a plan, agreement or arrangement that offers substantially similar compensation or payments to Employee under terms similar to the terms of this Agreement, Employee shall be entitled to receive $300,000 in lieu, substitution and replacement of any other amounts or payments pursuant to this Agreement and the Notice (the “Change of Control Termination Payment”).  The Change of Control Termination Payment shall be due and payable in a single, lump sum cash payment to Employee within thirty (30) days of the effective date of (i) the Change of Control, if this Agreement is terminated on or within thirty (30) days before the Change of Control, or (ii) the termination of this Agreement following the Change of Control. Notwithstanding any provision herein to the 

				

		
			 
		

		
			
		

		
			

		 

 

 
		

			
					
						 

					
					
						contrary, in the case of a Change of Control Payment, on the one hand, or a Change of Control Termination Payment, on the other hand, the exact date of payment shall be determined by the Company in its sole discretion and the Change of Control must be considered a change of control under Treasury Regulation Section 1.409A-3(a)(5).  Notwithstanding any provision herein to the contrary, Employee may, in accordance with the foregoing, be entitled to a Change of Control Payment or a Change of Control Termination Payment, but not both such payments.

				
	
					
						
Effect of Employer’s
Change of Control,
or Dissolution;
Ability of Employer
to Terminate Award
Prematurely for
Any Reason

					
					
						
If the Employer is a party to a Change of Control, then the Award will be subject to Change of Control, but generally must either (a) remain an obligation of the Employer or (b) become an obligation of any successor to, or assignee of, the Employer, either by express written contract or by operation of law.

					
						If the Employer is dissolved or liquidated (in accordance with Treasury Regulation Section 1.409A-3(j)(4)(ix)(A)) before June 1, 2016, and you are still employed by the Employer on the date of such dissolution or liquidation, or you terminated employment with the Employer before the date of such dissolution or liquidation on account of death or Disability, then you will vest in the Award on the date of such dissolution or liquidation, but (a) the definition of 2013-15 CCUM shall be changed so that it means the Employer’s cumulative corporate underwriting margin for each year or fraction of a year in the period beginning with January 1, 2013 and ending with the date of dissolution or liquidation, (b) all of the amounts in each of the three columns in Exhibit A shall be adjusted by multiplying each such amount by a fraction the numerator of which is the number of days in the period beginning January 1, 2013 and ending with the date of dissolution or liquidation and the denominator of which is 1,096, and (c) the resulting bonus amount will be paid in a single payment as soon as administratively feasible following the Employer’s dissolution or liquidation.

					
						Additionally, the Employer is free to terminate this Award (in accordance with Treasury Regulation Section 1.409A-3(j)(4)(ix)(C)) at any time before June 1, 2016, without your consent, but in such a case, unless you have previously terminated employment other than on account of death or Disability, you will vest in the same adjusted bonus amount that you would have if the Employer had dissolved or liquidated on the date on which the Employer provides you with a written notice of such termination of the Award, and the entire resulting bonus will be paid in a single payment as soon as administratively feasible following the Employer’s written notice to you of the termination of the Award.

				

		
			 
		

		
			
		

		
			

		 

 

 
		

			
					
						Federal Income Tax
Treatment

					
					
						No portion of the bonus that is the subject of the Award is includable in your or, if paid after your death, your beneficiary’s gross income for Federal income tax purposes until such portion is paid to you or your estate in cash.  However, when the bonus is paid to you in cash, it will be ordinary income to you and will be included in an IRS Form W-2, Wage and Tax Statement, issued to you by the Employer for the calendar year in which the payment occurs.  

					
						 

					
						Because of Section 409A of the Internal Revenue Code of 1986, as amended, generally neither you nor the Employer may defer any portion of the bonus to a taxable year other than the taxable year in which it would otherwise be paid pursuant to the Notice and this Agreement.  

					
						 

					
						You understand that you (and not the Employer) are responsible for your own Federal, state, local, or foreign tax liabilities and any other tax consequences that may arise as a result of the bonus that is the subject of this Agreement.

				
	
					
						
Withholding of
Taxes

					
					
						
The Employer will withhold from the amount of any payment that otherwise would be paid to you on account of this Award the amount of your withholding tax liability (generally, Federal income tax and FICA tax withholding) and pay the withheld amount to the Internal Revenue Service on your behalf.

				
	
					
						
No Right to
Continued
Employment

					
					
						
Neither the Award nor this Agreement gives you any right to be retained by the Employer in any capacity until June 1, 2016 or any earlier or later date. 

				
	
					
						
Applicable Law

					
					
						
This Agreement will be interpreted and enforced under the laws of the State of Texas, without regard to its choice of law provisions.

				
	
					
						
Notices from
Employer

					
					
						
The Employer may deliver by email, personal delivery by hand of a paper copy, or first class mail, all electronic or paper documents relating to the Award, either at the Employer’s premises (including your work email address) or at your home address (including a personal email address) as contained in the Employer’s then current personnel records.

				
	
					
						
Entire
Understanding; No
Changes Unless
Agreed To In
Writing

					
					
						
This Agreement and the Notice constitute the entire understanding between you and the Employer regarding the Award.  This Agreement may be amended only by another written agreement between the parties.

				

		
			 
		

		
			(Remainder of Page Intentionally Left Blank – Signature Page Follows)
		

		
			
		

		
			

		 

 

 
		

		
			IN WITNESS WHEREOF, this Agreement has been duly executed and delivered as of the date first set forth above.
		

		
			 
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						EMPLOYEE:

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						       /s/ David Cleff

				
	
					
						 

					
					
						David Cleff

				

		
			 
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						T.B.A. INSURANCE GROUP, LTD.

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						    By:  SNC Financial GP, LLC, its general partner

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						    By: 

					
					
						    /s/ Terry L. Ledbetter

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						    Name:

					
					
						    Terry Ledbetter

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						    Title:

					
					
						    President

				

		
			 
		

		
			
		

		
			

		 

 

Exhibit A
		

		
			 
		

			
					
						If 2013-15 CCUM
is equal to or greater than

					
					
						    

					
					
						But less than

					
					
						    

					
					
						The bonus
amount will be

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						NA

					
					
						 

					
					
						$80 million

					
					
						 

					
					
						$0

					
					
						 

				
	
					
						$80 million

					
					
						 

					
					
						$81 million

					
					
						 

					
					
						$150,000

					
					
						 

				
	
					
						$81 million

					
					
						 

					
					
						$82 million

					
					
						 

					
					
						$165,000

					
					
						 

				
	
					
						$82 million

					
					
						 

					
					
						$83 million

					
					
						 

					
					
						$180,000

					
					
						 

				
	
					
						$83 million

					
					
						 

					
					
						$84 million

					
					
						 

					
					
						$195,000

					
					
						 

				
	
					
						$84 million

					
					
						 

					
					
						$85 million

					
					
						 

					
					
						$210,000

					
					
						 

				
	
					
						$85 million

					
					
						 

					
					
						$86 million

					
					
						 

					
					
						$225,000

					
					
						 

				
	
					
						$86 million

					
					
						 

					
					
						$87 million

					
					
						 

					
					
						$240,000

					
					
						 

				
	
					
						$87 million

					
					
						 

					
					
						$88 million

					
					
						 

					
					
						$255,000

					
					
						 

				
	
					
						$88 million

					
					
						 

					
					
						$89 million

					
					
						 

					
					
						$270,000

					
					
						 

				
	
					
						$89 million

					
					
						 

					
					
						$90 million

					
					
						 

					
					
						$285,000

					
					
						 

				
	
					
						$90 million

					
					
						 

					
					
						$91 million

					
					
						 

					
					
						$300,000

					
					
						 

				
	
					
						$91 million

					
					
						 

					
					
						$92 million

					
					
						 

					
					
						$322,500

					
					
						 

				
	
					
						$92 million

					
					
						 

					
					
						$93 million

					
					
						 

					
					
						$345,000

					
					
						 

				
	
					
						$93 million

					
					
						 

					
					
						$94 million

					
					
						 

					
					
						$367,500

					
					
						 

				
	
					
						$94 million

					
					
						 

					
					
						$95 million

					
					
						 

					
					
						$390,000

					
					
						 

				
	
					
						$95 million

					
					
						 

					
					
						$96 million

					
					
						 

					
					
						$412,500

					
					
						 

				
	
					
						$96 million

					
					
						 

					
					
						$97 million

					
					
						 

					
					
						$435,000

					
					
						 

				
	
					
						$97 million

					
					
						 

					
					
						$98 million

					
					
						 

					
					
						$457,500

					
					
						 

				
	
					
						$98 million

					
					
						 

					
					
						$99 million

					
					
						 

					
					
						$480,000

					
					
						 

				
	
					
						$99 million

					
					
						 

					
					
						$100 million

					
					
						 

					
					
						$502,500

					
					
						 

				
	
					
						$100 million

					
					
						 

					
					
						$101 million

					
					
						 

					
					
						$525,000

					
					
						 

				
	
					
						$101 million

					
					
						 

					
					
						$102 million

					
					
						 

					
					
						$547,500

					
					
						 

				
	
					
						$102 million

					
					
						 

					
					
						$103 million

					
					
						 

					
					
						$570,000

					
					
						 

				
	
					
						$103 million

					
					
						 

					
					
						$104 million

					
					
						 

					
					
						$592,500

					
					
						 

				
	
					
						$104 million

					
					
						 

					
					
						$105 million

					
					
						 

					
					
						$615,000

					
					
						 

				
	
					
						$105 million

					
					
						 

					
					
						$106 million

					
					
						 

					
					
						$637.500

					
					
						 

				
	
					
						$106 million

					
					
						 

					
					
						$107 million

					
					
						 

					
					
						$660,000

					
					
						 

				
	
					
						$107 million

					
					
						 

					
					
						$108 million

					
					
						 

					
					
						$682,500

					
					
						 

				
	
					
						$108 million

					
					
						 

					
					
						$109 million

					
					
						 

					
					
						$705,000

					
					
						 

				
	
					
						$109 million

					
					
						 

					
					
						$110 million

					
					
						 

					
					
						$727.500

					
					
						 

				
	
					
						$110 million

					
					
						 

					
					
						NA

					
					
						 

					
					
						$750,000

					
					
						 

				

		
			 
		

		
			
		

		
			

		 

 

 
		

		
			Amendment to 
		

		
			Cash Performance Bonus Opportunity Agreement
		

		
			This Amendment (this “Amendment”) is dated as of May _20_, 2014, and confirms the discussions between David Cleff (“Employee”) and T.B.A. Insurance Group, Ltd., a Texas limited partnership (the “Employer”), regarding, among other things, the possible bonus payable to Employee based on the Employer’s cumulative corporate underwriting margin over the 2013-2015 period.
		

		
			 
		

		
			WHEREAS, Employer  and Employee are parties to that certain Cash Performance Bonus Opportunity Agreement dated as of June 1, 2013 (the “Bonus Agreement”);
		

		
			 
		

		
			WHEREAS, Employer and Employee now desire to amend the Bonus Agreement in certain respects; and
		

		
			 
		

		
			WHEREAS, the Bonus Agreement provides that it may be amended pursuant to a written agreement between Employee and the Employer:
		

		
			 
		

		
			NOW, THEREFORE, BE IT RESOLVED that for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties covenant and agree to amend the Bonus Agreement in the following respects:
		

		
			 
		

			
	
			
				 1.
			

			
	
			
			The Section of the Bonus Agreement entitled “Change of Control” is deleted in its entirety.

		
			 
		

			
	
			
				 2.
			

			
	
			
			The Section of the Bonus Agreement entitled “Effect of Employer’s Change of Control, or Dissolution; Ability of Employer to Terminate Award Prematurely for Any Reason” is amended by adding at the end thereof the following new paragraph:

		
			 
		

		
			For purposes of this Agreement, the term “Change of Control” shall have the meaning set forth in the State National Companies, Inc. 2014 Long-Term Incentive Plan.
		

		
			 
		

		
			
		

		 

 

			
	
			
				 3.
			

			
	
			
			The Section of the Bonus Agreement entitled “Federal Income Tax Treatment” is amended by adding at the end thereof the following new paragraph:

		
			 
		

		
			Notwithstanding anything herein to the contrary, if the Employer reasonably anticipates that if a distribution were made as scheduled under the Agreement it would result in a loss of the Employer’s tax deduction due to the application of Section 162(m) of the Internal Revenue Code, such distribution may be delayed and paid during the Employer’s first taxable year in which the Employer reasonably anticipates that the Employer’s tax deduction will not be limited or eliminated by the application of Section 162(m) of the Internal Revenue Code.  Notwithstanding the foregoing, no distribution under the Agreement may be deferred in accordance with this paragraph unless all scheduled distributions to the Employee and all similarly situated individuals that could be delayed in accordance with Treas. Reg. Section 1.409A-2(b)(7)(i) are also delayed.
		

		
			 
		

		
			RESOLVED FURTHER that the amendments to the Bonus Agreement set forth above shall be effective immediately upon the closing of the proposed private common stock offering (the “Private Offering”) by the Company’s ultimate parent entity, State National Companies, Inc., a Delaware corporation (“SNCI”), provided (1) that such closing occurs prior to July 30, 2014 and (2) the purchase price per share of common stock sold to investors in the Private Offering implies an enterprise value for SNCI immediately prior to such closing of at least $300 million.  If the Private Offering is not completed upon these terms, this Amendment shall be void ab initio and of no further force or effect and the Bonus Agreement shall remain in effect unchanged.
		

		
			 
		

		
			(Remainder of Page Intentionally Left Blank – Signature Page Follows)
		

		
			 
		

		
			
		

		
			

		 

 

IN WITNESS WHEREOF, this Amendment has been duly executed and delivered as of the date first set forth above.
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						EMPLOYEE:

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						       /s/ David Cleff

				
	
					
						 

					
					
						David Cleff

				

		
			 
		

		
			 
		

			
					
						 

					
					
						T.B.A. INSURANCE GROUP, LTD.

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						    By:  SNC Financial GP, LLC, its general partner

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						    By: 

					
					
						      /s/ Terry Ledbetter

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						    Name:

					
					
						     Terry Ledbetter

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						    Title:

					
					
						     PresidentExhibit 4.3

 

COMMON STOCK PURCHASE WARRANT

 

COMBIMATRIX CORPORATION

 

	
Warrant No.: WF-[·]
    	
Initial Exercise Date:   [·], 2016
    
	
CUSIP: 20009T147
    	
Issue   Date: [·], 2016
    

 

THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, [·] or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date hereof (the “Initial Exercise Date”) and on or prior to the close of business on the five year anniversary of the Initial Exercise Date (the “Termination Date”) but not thereafter, to subscribe for and purchase from CombiMatrix Corporation, a Delaware corporation (the “Company”), up to one (1) share (as subject to adjustment and certain limitations hereunder, the “Warrant Shares”) of Common Stock.  The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).

 

Section 1.                                           Definitions.  In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms have the meanings set forth in this Section 1:

 

“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person as such terms are used in and construed under Rule 405 under the Securities Act of 1933, as amended.

 

“Business Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.

 

“Common Stock” means the common stock of the Company, par value $0.001 per share, and any other class of securities into which such securities may hereafter be reclassified or changed.

 

“Common Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

 

“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

 

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“Trading Day” means a day on which the principal Trading Market is open for trading.

 

“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange or the OTC Bulletin Board (or any successors to any of the foregoing).

 

“Transfer Agent” means Computershare, the current transfer agent of the Company with a mailing address of 520 Pike Street, Suite 1220, Seattle, Washington 98101 and a facsimile number of (206) 674-3059, and any successor transfer agent of the Company.

 

“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b)  if the OTC Bulletin Board is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board, (c) if the Common Stock is not then listed or quoted for trading on the OTC Bulletin Board and if prices for the Common Stock are then reported in the “Pink Sheets” published by Pink OTC Markets, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holders of Warrants representing not less than a majority of the Common Stock obtainable upon exercise of all such Warrants then outstanding, and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

 

“Warrants” means the substantially identical warrants initially issued by the Company on or about the date first written above and having the same exercise price as this Warrant.

 

Section 2.                                           Exercise.

 

a)                                     Exercise of Warrant.  Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Company) of a duly executed facsimile copy of the Notice of Exercise Form annexed hereto.  Within three (3) Trading Days following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank unless the cashless exercise procedure specified in Section 2(c) below is specified in the 

 

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applicable Notice of Exercise.  No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise form be required. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased.  The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise Form within one (1) Business Day of receipt of such notice.  The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

 

b)                                     Exercise Price.  The exercise price per share of the Common Stock under this Warrant shall be $[·], subject to adjustment hereunder (the “Exercise Price”).

 

c)                                      Cashless Exercise.  If at the time of exercise hereof there is no effective registration statement registering, or the prospectus contained therein is not available for the issuance of the Warrant Shares to the Holder and all of the Warrant Shares are not then registered for resale by Holder into the market at market prices from time to time on an effective registration statement for use on a continuous basis (or the prospectus contained therein is not available for use), then this Warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

 

	
(A) = 
    	
the VWAP on the Trading   Day immediately preceding the date on which Holder elects to exercise this   Warrant by means of a “cashless exercise,” as set forth in the applicable   Notice of Exercise;
    
	
 
    	
 
    
	
(B) = 
    	
the Exercise Price of   this Warrant, as adjusted hereunder; and
    
	
 
    	
 
    
	
(X) = 
    	
the number of Warrant   Shares that would be issuable upon exercise of this Warrant (or portion   thereof if a partial exercise) in accordance with the terms of this Warrant   if such exercise were by means of a cash exercise rather than a cashless   exercise.
    

 

d)                                     Mechanics of Exercise.

 

i.                              Delivery of Warrant Shares Upon Exercise.  The Warrant Shares purchased hereunder shall be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s prime broker with 

 

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The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by the Holder or (B) this Warrant is being exercised via cashless exercise, and otherwise by physical delivery to the address specified by the Holder in the Notice of Exercise by the date that is three (3) Trading Days after the latest of (A) the delivery to the Company of the Notice of Exercise, (B) surrender of this Warrant (if required), and (C) payment of the aggregate Exercise Price as set forth above (including by cashless exercise, if permitted) (such date, the “Warrant Share Delivery Date”).  The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein (in compliance with applicable securities laws) shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised, with payment to the Company of the Exercise Price (or by cashless exercise, if permitted) and all taxes required to be paid by the Holder, if any, pursuant to Section 2(d)(vi) prior to the issuance of such shares, having been paid.

 

ii.                           Delivery of New Warrants Upon Exercise.  If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

 

iii.                        Rescission Rights.  If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.

 

iv.                       Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise.  In addition to any other rights available to the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to an exercise within two (2) Trading Days after the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue 

 

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and that were sold times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder.  For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss.  Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.

 

v.                          No Fractional Shares or Scrip.  No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant.  As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.

 

vi.                       Charges, Taxes and Expenses.  Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder in compliance with applicable securities laws; provided, however, that in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.  The Company shall pay all Transfer Agent fees required for processing of any Notice of Exercise.

 

vii.                    Closing of Books.  The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

 

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e)                                      Holder’s Exercise Limitations.  The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below).  For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Common Stock Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates.  Except as set forth in the preceding sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith.  To the extent that the limitation contained in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination.  In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder.  For purposes of this Section 2(e), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Securities and Exchange Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding.  Upon the written or oral request of a Holder, the Company shall within two Trading Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding.  In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, 

 

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including this Warrant, by the Holder or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported.  The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant.  Notwithstanding anything to the contrary contained herein, upon delivery to the Company of an executed waiver in the form attached hereto as Annex A by a Holder prior to such Holder’s acquisition of this Warrant, the Beneficial Ownership Limitation applicable to such Holder’s Warrant shall be 9.99% or 19.99%, as applicable, of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions of this Section 2(e) shall continue to apply. Further, a Holder, upon not less than 61 days’ prior notice to the Company (which notice may not be waived), may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(e), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions of this Section 2(e) shall continue to apply.  Any such increase or decrease will not be effective until the 61st day after such notice is delivered to the Company and shall only apply to such Holder and no other Holder.  The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(e) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.

 

Section 3.                                           Certain Adjustments.

 

a)                                     Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a stock distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged.  Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

 

b)                                     Subsequent Rights Offerings.  In addition to any adjustments pursuant to the other subsections of this Section 3, if at any time the Company grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the 

 

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“Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

 

c)                                      Pro Rata Distributions.  During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided, however, to the extent that the Holder’s right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).  To the extent that this Warrant has not been partially or completed exercised at the time of such Distribution, such portion of the Distribution shall be held in abeyance for the benefit of the Holder until the Holder has exercised this Warrant.

 

d)                                     Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which 

 

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holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (other than a reclassification under Section 3(a)), or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction.  For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration.  If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant in accordance with the provisions of this Section 3(d). Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant with the same effect as if such Successor Entity had been named as the Company herein.

 

e)                                      Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.

 

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f)                                       Notice to Holder.

 

i.                  Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly deliver to the Holder a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.

 

ii.               Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be delivered to the Holder at its last address as it shall appear upon the Warrant Register of the Company, at least 10 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice.  The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice through the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.

 

Section 4.                                           Transfer of Warrant.

 

a)                                     Transferability.  This Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with

 

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a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer.  Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled.  The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

 

b)                                     New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney.  Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the original Issue Date and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.

 

c)                                      Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time.  The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

 

Section 5.                                           Miscellaneous.

 

a)                                     No Rights as Stockholder Until Exercise.  This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth in Section 3.

 

b)                                     Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

 

c)                                      Saturdays, Sundays, Holidays, etc.  If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a 

 

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Business Day, then, such action may be taken or such right may be exercised on the next succeeding Business Day.

 

d)                                     Authorized Shares.

 

The Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant.  The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant.  The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed.  The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

 

Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment.  Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.

 

Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

 

e)                                      Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by and construed and 

 

12

 

enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof.  If either party shall commence an action, suit or proceeding to enforce any provisions of this Warrant, other than pursuant to federal securities laws, then the prevailing party in such action, suit or proceeding shall be reimbursed by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.

 

f)                                       Restrictions.  The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered and the Holder does not utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.

 

g)                                      Nonwaiver and Expenses.  No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies, notwithstanding the fact that all rights hereunder terminate on the Termination Date.  If the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

 

h)                                     Notices.  Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be in writing and shall be deemed given, delivered and effective on the earliest of: (a) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto at or prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the third (3rd)  Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is required to be given.  The address for such notices and communications shall be as set forth on the signature pages attached hereto.

 

i)                                         Limitation of Liability.  No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

 

j)                                        Remedies.  The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant.  The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the 

 

13

 

provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.

 

k)                                     Successors and Assigns.  Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder.  The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.

 

l)                                         Amendment.  The provisions of this Warrant and all of the other Warrants may be amended and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained the written consent of the Persons holding Warrants representing not less than a majority of the Common Stock obtainable upon exercise of all such Warrants then outstanding; provided, that the number of Warrant Shares subject to this Warrant, the Exercise Price, the Initial Exercise Date and the Termination Date may not be amended, and the right to exercise this Warrant may not be altered or waived, without the written consent of the Holder. Any such amendment shall apply to all Warrants and be binding upon all registered holders of such Warrants whether or not they have consented (except only for those amendments that, pursuant the preceding sentence, require the written consent of the Holder).

 

m)                                 Severability.  Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

 

n)                                     Headings.  The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

 

********************

 

(Signature Page Follows)

 

14

 

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.

 

	
 
    	
COMBIMATRIX CORPORATION
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
Holder’s Address:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    

 

15

 

NOTICE OF EXERCISE

 

TO:                           COMBIMATRIX CORPORATION

 

(1)         The undersigned hereby elects to purchase          Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

 

(2)         Payment shall take the form of (check applicable box):

 

[  ] in lawful money of the United States; or

 

[ ] if permitted, the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).

 

(3)         Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:

 

 

The Warrant Shares shall be delivered to the following DWAC Account Number:

 

 

 

(4)         The undersigned represents and warrants to the Company that in giving effect to the exercise evidenced hereby, the undersigned will not own in excess of the number of shares of Common Stock permitted to be owned under Section 2(e) of this Warrant to which this notice relates.

 

[SIGNATURE OF HOLDER]

 

	
Name of Investing   Entity:
    	
 
    
	
Signature of Authorized   Signatory of Investing Entity:
    	
 
    
	
Name of Authorized   Signatory:
    	
 
    
	
Title of Authorized   Signatory:
    	
 
    
	
Date:
    	
 
    
						

 

 

 

ASSIGNMENT FORM

 

(To assign the foregoing warrant, execute
 this form and supply required information. 
 Do not use this form to exercise the warrant.)

 

FOR VALUE RECEIVED,      all of or         shares of the foregoing Warrant and all rights evidenced thereby are hereby assigned to

 

	
 
    	
 
    	
whose address is
    
	
 
    	
 
    
	
 
    	
 
    	
.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Dated:                 ,
    
				

 

	
Holder’s Signature:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Holder’s Address:
    	
 
    	
 
    
	
 
    	
 
    	
 
    

 

 

 

ANNEX A

 

WAIVER OF BENEFICIAL OWNERSHIP LIMITATION

 

The undersigned hereby elects to waive either the 4.99% Beneficial Ownership Limitation or the 9.99% Beneficial Ownership Limitation, as designated by the undersigned’s election below, applicable to the undersigned’s beneficial ownership of this Warrant of CombiMatrix Corporation, a Delaware corporation, as such Beneficial Ownership Limitation is defined under Section 2(e) of this Warrant.

 

o                                    The undersigned hereby elects to waive the 4.99% Beneficial Ownership Limitation applicable to the undersigned’s beneficial ownership of this Warrant.

 

o                                    The undersigned hereby elects to waive the 9.99% Beneficial Ownership Limitation applicable to the undersigned’s beneficial ownership of this Warrant.

 

The undersigned understands and agrees that, as a result of this waiver, the Beneficial Ownership Limitation applicable to this Warrant beneficially owned by the undersigned shall be (i) if the 4.99% Beneficial Ownership Limitation has been waived, 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the undersigned or (ii) if the 9.99% Beneficial Ownership Limitation has been waived, 19.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the undersigned, and, in each case, the provisions the provisions of Section 2(e) of this Warrant shall continue to apply.

 

The undersigned understands and agrees that by waiving the Beneficial Ownership Limitation, the undersigned may become subject to the reporting requirements and liability provisions of Sections 13 and 16 of the Securities Exchange Act of 1934.

 

	
 
    	
 
    
	
 
    	
 
    
	
 
    	
[HOLDER]
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00255-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00255-of-00352.parquet"}]]