Document:

ex10_3.htm

    
      

    

    Exhibit
10.3

    

    Amendment
No. 2 to Employment Agreement

    

    

    Amendment
Number 2 to the Employment Agreement dated as of December 21, 2004 (the
“Agreement”) by and between Active Health Management Inc. (“Company”), a
Delaware corporation and Lonny Reisman, M.D. (“Executive”).

    

    WHEREAS, the Company and
Executive have previously entered into the Agreement;

    

    WHEREAS, Executive Aetna Inc.,
a Pennsylvania Corporation (“Aetna”) and the Company have entered into amendment
to the Agreement dated May 12, 2005;

    

    WHEREAS, Aetna and Executive
wish to further amend the Agreement to comply with Section 409A of the Internal
Revenue Code of 1986 and the regulations issued thereunder (“Section
409A”);

    

    NOW, THEREFORE, the Agreement
is hereby amended effective December 31, 2008, as follows:

    

    1.      New
Paragraph 24 is added as follows:

    

    “24.   409A
Compliance.

    

    When used
in connection with any payments subject to Section 409A required to be made
hereunder, the phrase “termination of employment” and correlative terms shall
mean separation from service as defined in Section 409A.   In
addition, to the extent any payment payable hereunder constitutes “deferred
compensation” within the meaning of Section 409A and is payable or commences to
be payable hereunder upon and solely by reason of Executive’s termination of
employment, such payment shall commence or be payable as soon as, but not later
than, the date Executive experiences a “Separation from Service”, subject to
Paragraph 7(b).

    

    Nothing
in this Agreement shall require the Company to, and the Company shall not,
accelerate the payment of any amount that constitutes “deferred compensation”
within the meaning of Section 409A, except to the extent permitted under Section
409A.

    

    Any
reimbursements or in-kind benefits provided under this Agreement shall be
administered in accordance with Section 409A, such that:  (I) the
amount of expenses eligible for reimbursement, or in-kind benefits provided,
during one year shall not affect the expenses eligible for reimbursement or the
in-kind benefits provided in any other year; (II) reimbursement of eligible
expenses shall be made on or before December 31 of the year following the year
in which the expense was incurred; and

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (III) the
Executive’s right to reimbursement or in-kind benefits shall not be subject to
liquidation or to exchange for another benefit.

    

    For
purposes of Section 409A, Executive’s right to receive any installment payments
pursuant to this Agreement shall be treated as a right to receive a series of
separate and distinct payments.

    

    To the
extent Executive is a “Specified Employee” as defined in Section 409A at the
time of separation from service, then notwithstanding any provision of any plan
or this Agreement, to the extent required by Section 409A, any payment of
deferred compensation otherwise payable to Executive hereunder as a result of
such separation from service shall be deferred and accumulated for a period of
six months and paid in a lump sum on the first day of the seventh month (or, if
earlier, Executive’s death)”

    

    

    

    IN WITNESS WHEREOF, the
undersigned has caused this Amendment to be executed this 31st day of December,
2008

    

    
 

    
      

      Aetna
Inc.

      

      
        
          
            
              	
                      By:

                    	
                      /s/
      Elease E. Wright

                    	 
      
	 
      	
                      Elease
      E. Wright

                    	 
      
	
                      Its:

                    	
                      Senior
      Vice President, Human Resources

                    	 
      

            

          

        

      

      

      

      

      

      Executive

      

      
        
          	 
      	
                  /s/
      Lonny Reisman

                	 
      
	 
      	
                  Lonny
      Reismanex4_4.htm

    
      

    

    
      Exhibit 4.4

      

      WARRANT,
AS MODIFIED ON APRIL 14, 2009

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      
        WARRANT

      

      
         

         

      

      
        to
purchase

      

      
        

      

      
        

      

      
        154,242

      

      
        

      

      
        

      

      
        Shares
of Common Stock

      

      
        

      

      
        

      

      
        of
Bank of Marin Bancorp

      

      
        

      

      
        

      

      
        

      

      
        

      

      
        

      

      
        

      

      
        Issue Date: December 5, 2008

      

      
        

      

      
        1.        
 Definitions. Unless
the context otherwise requires, when used herein the following terms shall have
the meanings indicated.

      

      
        

      

      
        "Affiliate" has the meaning
ascribed to it in the Purchase Agreement.

      

      
        

      

      
        "Appraisal Procedure" means a
procedure whereby two independent appraisers, one chosen by the Company and one
by the Original Warrantholder, shall mutually agree upon the determinations then
the subject of appraisal. Each party shall deliver a notice to the other
appointing its appraiser within 15 days after the Appraisal Procedure is
invoked. If within 30 days after appointment of the two appraisers they are
unable to agree upon the amount in question, a third independent appraiser shall
be chosen within 10 days thereafter by the mutual consent of such first two
appraisers. The decision of the third appraiser so appointed and chosen shall be
given within 30 days after the selection of such third appraiser. If three
appraisers shall be appointed and the determination of one appraiser is
disparate from the middle determination by more than twice the amount by which
the other determination is disparate from the middle determination, then the
determination of such appraiser shall be excluded, the remaining two
determinations shall be averaged and such average shall be binding and
conclusive upon the Company and the Original Warrantholder; otherwise, the
average of all three determinations shall be binding upon the Company and the
Original Warrantholder. The costs of conducting any Appraisal Procedure shall be
borne by the Company.

      

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      
         

      

      
        "Board of Directors" means
the board of directors of the Company, including any duly authorized committee
thereof.

      

      
        

      

      
        "Business Combination" means
a merger, consolidation, statutory share exchange or similar transaction that
requires the approval of the Company's stockholders.

      

      
        

      

      
        "business day" means any day
except Saturday, Sunday and any day on which banking institutions in the State
of New York generally are authorized or required by law or other governmental
actions to close.

      

      
        

      

      
        "Capital Stock" means (A)
with respect to any Person that is a corporation or company, any and all shares,
interests, participations or other equivalents (however designated) of capital
or capital stock of such Person and (B) with respect to any Person that is not a
corporation or company, any and all partnership or other equity interests of
such Person.

      

      
        

      

      
        "Charter" means, with respect
to any Person, its certificate or articles of incorporation, articles of
association, or similar organizational document.

      

      
        

      

      
        "Common Stock" has the
meaning ascribed to it in the Purchase Agreement.

      

      
        

      

      
        "Company" means the Person
whose name, corporate or other organizational form and jurisdiction of
organization is set forth in Item 1 of Schedule A hereto.

      

      
        

      

      
        "conversion" has the meaning
set forth in Section 13(B).

      

      
        

      

      
        "convertible securities" has
the meaning set forth in Section 13(B). "CPP" has the meaning
ascribed to it in the Purchase Agreement.

      

      
        

      

      
        "Exchange Act" means the
Securities Exchange Act of 1934, as amended, or any successor statute, and the
rules and regulations promulgated thereunder.

      

      
        

      

      
        "Exercise Price" means the
amount set forth in Item 2 of Schedule A hereto. "Expiration Time" has the
meaning set forth in Section 3.

      

      
        

      

      
        "Fair Market Value" means,
with respect to any security or other property, the fair market value of such
security or other property as determined by the Board of Directors, acting in
good faith or, with respect to Section 14, as determined by the Original
Warrantholder acting in good faith. For so long as the Original Warrantholder
holds this Warrant or any portion thereof, it may object in writing to the Board
of Director's calculation of fair market value within 10 days of receipt of
written notice thereof. If the Original Warrantholder and the Company are unable
to agree on fair market value during the 10-day period following the delivery of
the Original Warrantholder's objection, the Appraisal Procedure may be invoked
by either party to determine Fair Market Value by delivering written
notification thereof not later than the 30th day
after delivery of the Original Warrantholder's objection.

      

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

      
         

      

      
        "Governmental Entities" has
the meaning ascribed to it in the Purchase Agreement.

      

      
        

      

      
        "Initial Number" has the
meaning set forth in Section 13(B).

      

      
        

      

      
        "Issue Date " means the date
set forth in Item 3 of Schedule A hereto.

      

      
        

      

      
        "Market Price" means, with
respect to a particular security, on any given day, the last reported sale price
regular way or, in case no such reported sale takes place on such day, the
average of the last closing bid and ask prices regular way, in either case on
the principal national securities exchange on which the applicable securities
are listed or admitted to trading, or if not listed or admitted to trading on
any national securities exchange, the average of the closing bid and ask prices
as furnished by two members of the Financial Industry Regulatory Authority, Inc.
selected from time to time by the Company for that purpose. "Market Price" shall
be determined without reference to after hours or extended hours trading. If
such security is not listed and traded in a manner that the quotations referred
to above are available for the period required hereunder, the Market Price per
share of Common Stock shall be deemed to be (i) in the event that any portion of
the Warrant is held by the Original Warrantholder, the fair market value per
share of such security as determined in good faith by the Original Warrantholder
or (ii) in all other circumstances, the fair market value per share of such
security as determined in good faith by the Board of Directors in reliance on an
opinion of a nationally recognized independent investment banking corporation
retained by the Company for this purpose and certified in a resolution to the
Warrantholder. For the purposes of determining the Market Price of the Common
Stock on the "trading day" preceding, on or following the occurrence of an
event, (i) that trading day shall be deemed to commence immediately after the
regular scheduled closing time of trading on the New York Stock Exchange or, if
trading is closed at an earlier time, such earlier time and (ii) that trading
day shall end at the next regular scheduled closing time, or if trading is
closed at an earlier time, such earlier time (for the avoidance of doubt, and as
an example, if the Market Price is to be determined as of the last trading day
preceding a specified event and the closing time of trading on a particular day
is 4:00 p.m. and the specified event occurs at 5:00 p.m. on that day, the Market
Price would be determined by reference to such 4:00 p.m. closing
price).

      

      
        

      

      
        "Ordinary Cash Dividends"
means a regular quarterly cash dividend on shares of Common Stock out of
surplus or net profits legally available therefor (determined in accordance with
generally accepted accounting principles in effect from time to time), provided that Ordinary Cash
Dividends shall not include any cash dividends paid subsequent to the Issue Date
to the extent the aggregate per share dividends paid on the outstanding Common
Stock in any quarter exceed the amount set forth in Item 4 of Schedule A hereto,
as adjusted for any stock split, stock dividend, reverse stock split,
reclassification or similar transaction.

      

      
        

      

      
        "Original Warrantholder"
means the United States Department of the Treasury. Any actions specified
to be taken by the Original Warrantholder hereunder may only be taken by such
Person and not by any other Warrantholder.

      

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

      
         

      

      
        "Permitted Transactions" has
the meaning set forth in Section 13(B).

      

      
        

      

      
        "Person" has the meaning
given to it in Section 3(a)(9) of the Exchange Act and as used in Sections
13(d)(3) and 14(d)(2) of the Exchange Act.

      

      
        

      

      
        "Per Share Fair Market Value"
has the meaning set forth in Section 13(C).

      

      
        

      

      
        "Preferred Shares" means the
perpetual preferred stock issued to the Original Warrantholder on the Issue Date
pursuant to the Purchase Agreement.

      

      
        

      

      
        "Pro Rata Repurchases" means
any purchase of shares of Common Stock by the Company or any Affiliate thereof
pursuant to (A) any tender offer or exchange offer subject to Section 13(e) or
14(e) of the Exchange Act or Regulation 14E promulgated thereunder or (B) any
other offer available to substantially all holders of Common Stock, in the case
of both (A) or (B), whether for cash, shares of Capital Stock of the Company,
other securities of the Company, evidences of indebtedness of the Company or any
other Person or any other property (including, without limitation, shares of
Capital Stock, other securities or evidences of indebtedness of a subsidiary),
or any combination thereof, effected while this Warrant is outstanding. The
"Effective Date" of a
Pro Rata Repurchase shall mean the date of acceptance of shares for purchase or
exchange by the Company under any tender or exchange offer which is a Pro Rata
Repurchase or the date of purchase with respect to any Pro Rata Repurchase that
is not a tender or exchange offer.

      

      
        

      

      
        "Purchase Agreement" means
the Securities Purchase Agreement - Standard Terms incorporated into the Letter
Agreement, dated as of the date set forth in Item 5 of Schedule A hereto, as
amended from time to time, between the Company and the United States Department
of the Treasury (the "Letter
Agreement"), including all annexes and schedules
thereto.

      

      
        

      

      
        "Qualified Equity Offering"
has the meaning ascribed to it in the Purchase
Agreement.

      

      
        

      

      
        "Regulatory Approvals" with
respect to the Warrantholder, means, to the extent applicable and required to
permit the Warrantholder to exercise this Warrant for shares of Common Stock and
to own such Common Stock without the Warrantholder being in violation of
applicable law, rule or regulation, the receipt of any necessary approvals and
authorizations of, filings and registrations with, notifications to, or
expiration or termination of any applicable waiting period under, the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules
and regulations thereunder.

      

      
        

      

      
        "SEC" means the U.S.
Securities and Exchange Commission.

      

      
        

      

      
        "Securities Act” means the
Securities Act of 1933, as amended, or any successor statute, and the rules and
regulations promulgated thereunder.

      

      
        

      

      
        "Shares" has the meaning set
forth in Section 2.

      

      
        

      

      
        "trading day" means (A) if
the shares of Common Stock are not traded on any national or regional securities
exchange or association or over-the-counter market, a business day or (B) if the
shares of Common Stock are traded on any national or regional securities
exchange or association or over-the-counter market, a business day on which
such relevant exchange or quotation system is scheduled to be open for business
and on which the shares of Common Stock (i) are not suspended from trading on
any national or regional securities exchange or association or over-the-counter
market for any period or periods aggregating one half hour or longer; and (ii)
have traded at least once on the national or regional securities exchange or
association or over-the-counter market that is the primary market for the
trading of the shares of Common Stock.

      

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

      
         

      

      
        "U.S. GAAP" means United
States generally accepted accounting principles.

      

      
        

      

      
        "Warrantholder" has the
meaning set forth in Section 2.

      

      
        

      

      
        "Warrant" means this Warrant,
issued pursuant to the Purchase Agreement.

      

      
        

      

      
        2.       Number of Shares; Exercise
Price. This certifies that, for value received, the United States
Department of the Treasury or its permitted assigns (the "Warrantholder") is entitled,
upon the terms and subject to the conditions hereinafter set forth, to acquire
from the Company, in whole or in part, after the receipt of all applicable
Regulatory Approvals, if any, up to an aggregate of the number of fully paid and
nonassessable shares of Common Stock set forth in Item 6 of Schedule A
hereto, at a purchase price per share of Common Stock equal to the Exercise
Price. The number of shares of Common Stock (the "Shares") and the Exercise
Price are subject to adjustment as provided herein, and all references to
"Common Stock," "Shares" and "Exercise Price" herein shall be deemed to include
any such adjustment or series of adjustments.

      

      
        

      

      
        3.          Exercise of Warrant;
Term. Subject to Section 2, to the extent permitted by applicable
laws and regulations, the right to purchase the Shares represented by this
Warrant is exercisable, in whole or in part by the Warrantholder, at any time or
from time to time after the execution and delivery of this Warrant by the
Company on the date hereof, but in no event later than 5:00 p.m., New York City
time on the tenth anniversary of the Issue Date (the "Expiration Time"), by (A) the surrender
of this Warrant and Notice of Exercise annexed hereto, duly completed and
executed on behalf of the Warrantholder, at the principal executive office of
the Company located at the address set forth in Item 7 of Schedule A hereto
(or such other office or agency of the Company in the United States as it
may designate by notice in writing to the Warrantholder at the address of
the Warrantholder appearing on the books of the Company), and (B) payment
of the Exercise Price for the Shares thereby purchased:

      

      
        

      

      
        (i) by having the
Company withhold, from the shares of Common Stock that would otherwise be
delivered to the Warrantholder upon such exercise, shares of Common stock
issuable upon exercise of the Warrant equal in value to the aggregate Exercise
Price as to which this Warrant is so exercised based on the Market Price of the
Common Stock on the trading day on which this Warrant is exercised and the
Notice of Exercise is delivered to the Company pursuant to this Section 3,
or

      

      
        

      

      
        (ii) with the
consent of both the Company and the Warrantholder, by tendering in cash, by
certified or cashier's check payable to the order of the Company, or by wire
transfer of immediately available funds to an account designated by the
Company.

      

      
        
           

        

        
          5

          
            

          

        

        
           

        

      

      
         

      

      
        If
the Warrantholder does not exercise this Warrant in its entirety,
theWarrantholder will be entitled to receive from the Company within a
reasonable time, and in any event not exceeding three business days, a new
warrant in substantially identical form for the purchase of that number of
Shares equal to the difference between the number of Shares subject to this
Warrant and the number of Shares as to which this Warrant is so exercised.
Notwithstanding anything in this Warrant to the contrary, the Warrantholder
hereby acknowledges and agrees that its exercise of this Warrant for Shares is
subject to the condition that the Warrantholder will have first received any
applicable Regulatory Approvals.

      

      
        

      

      
        4.         
Issuance of Shares;
Authorization; Listing. Certificates for Shares issued upon exercise
of this Warrant will be issued in such name or names as the Warrantholder
may designate and will be delivered to such named Person or Persons within
a reasonable time, not to exceed three business days after the date on
which this Warrant has been duly exercised in accordance with the terms of
this Warrant. The Company hereby represents and warrants that any Shares
issued upon the exercise of this Warrant in accordance with the provisions of
Section 3 will be duly and validly authorized and issued, fully paid and
nonassessable and free from all taxes, liens and charges (other than liens or
charges created by the Warrantholder, income and franchise taxes incurred
in connection with the exercise of the Warrant or taxes in respect of
any transfer occurring contemporaneously therewith). The Company agrees
that the Shares so issued will be deemed to have been issued to the
Warrantholder as of the close of business on the date on which this Warrant and
payment of the Exercise Price are delivered to the Company in accordance with
the terms of this Warrant, notwithstanding that the stock transfer books of the
Company may then be closed or certificates representing such Shares may not be
actually delivered on such date. The Company will at all times reserve and keep
available, out of its authorized but unissued Common Stock, solely for the
purpose of providing for the exercise of this Warrant, the aggregate number of
shares of Common Stock then issuable upon exercise of this Warrant at any
time. The Company will (A) procure, at its sole expense, the listing of
the Shares issuable upon exercise of this Warrant at any time, subject to
issuance or notice of issuance, on all principal stock exchanges on which the
Common Stock is then listed or traded and (B) maintain such listings of such
Shares at all times after issuance. The Company will use reasonable best efforts
to ensure that the Shares may be issued without violation of any applicable law
or regulation or of any requirement of any securities exchange on which
the Shares are listed or traded.

      

      
        

      

      
        5.          No Fractional Shares or
Scrip. No fractional Shares or scrip representing fractional Shares
shall be issued upon any exercise of this Warrant. In lieu of any fractional
Share to which the Warrantholder would otherwise be entitled, the Warrantholder
shall be entitled to receive a cash payment equal to the Market Price of
the Common Stock on the last trading day preceding the date of exercise less the
pro-rated Exercise Price for such fractional share.

      

      
        

      

      
        6.          No Rights as Stockholders;
Transfer Books. This Warrant does not entitle the Warrantholder to
any voting rights or other rights as a stockholder of the Company prior to
the date of exercise hereof. The Company will at no time close its transfer
books against transfer of this Warrant in any manner which interferes with the
timely exercise of this Warrant.

      

      
        
           

        

        
          6

          
            

          

        

        
           

        

      

      
         

      

      
        7.          Charges, Taxes and
Expenses. Issuance of certificates for Shares to the Warrantholder
upon the exercise of this Warrant shall be made without charge to
the Warrantholder for any issue or transfer tax or other incidental expense
in respect of the issuance of such certificates, all of which taxes and
expenses shall be paid by the Company.

      

      
        

      

      
        8.          Transfer/Assignment.

      

      

      
        (A)        Subject
to compliance with clause (B) of this Section 8, this Warrant and all rights
hereunder are transferable, in whole or in part, upon the books of the Company
by the registered holder hereof in person or by duly authorized attorney,
and a new warrant shall be made and delivered by the Company, of the same
tenor and date as this Warrant but registered in the name of one or more
transferees, upon surrender of this Warrant, duly endorsed, to the office or
agency of the Company described in Section 3. All expenses (other than
stock transfer taxes) and other charges payable in connection with the
preparation, execution and delivery of the new warrants pursuant to this
Section 8 shall be paid by the Company.

      

      
        

      

      
        (B)        The
transfer of the Warrant and the Shares issued upon exercise of the Warrant are
subject to the restrictions set forth in Section 4.4 of the Purchase Agreement.
If and for so long as required by the Purchase Agreement, this Warrant
shall contain the legends as set forth in Sections 4.2(a) and 4.2(b) of the
Purchase Agreement.

      

      

      
        9.          Exchange and Registry of
Warrant. This Warrant is exchangeable, upon the surrender hereof by
the Warrantholder to the Company, for a new warrant or warrants of
like tenor and representing the right to purchase the same aggregate number
of Shares. The Company shall maintain a registry showing the name and
address of the Warrantholder as the registered holder of this Warrant. This
Warrant may be surrendered for exchange or exercise in accordance with its
terms, at the office of the Company, and the Company shall be entitled to rely
in all respects, prior to written notice to the contrary, upon such
registry.

      

      
        

      

      
        10.        Loss, Theft, Destruction or
Mutilation of Warrant. Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of
this Warrant, and in the case of any such loss, theft or destruction, upon
receipt of a bond, indemnity or security reasonably satisfactory to the
Company, or, in the case of any such mutilation, upon surrender and cancellation
of this Warrant, the Company shall make and deliver, in lieu of such lost,
stolen, destroyed or mutilated Warrant, a new Warrant of like tenor and
representing the right to purchase the same aggregate number of Shares as
provided for in such lost, stolen, destroyed or mutilated
Warrant.

      

      
        

      

      
        11.        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
business day, then such action may be taken or such right may be exercised
on the next succeeding day that is a business day.

      

      
        
           

        

        
          7

          
            

          

        

        
           

        

      

      
         

      

      
        12.        Rule 144 Information.
The Company covenants that it will use its reasonable best efforts to timely
file all reports and other documents required to be filed by it under the
Securities Act and the Exchange Act and the rules and regulations promulgated by
the SEC thereunder (or, if the Company is not required to file such
reports, it will, upon the request of any Warrantholder, make publicly
available such information as necessary to permit sales pursuant to Rule 144
under the Securities Act), and it will use reasonable best efforts to take such
further action as any Warrantholder may reasonably request, in each case to the
extent required from time to time to enable such holder to, if permitted by the
terms of this Warrant and the Purchase Agreement, sell this Warrant without
registration under the Securities Act within the limitation of the exemptions
provided by (A) Rule 144 under the Securities Act, as such rule may be amended
from time to time, or (B) any successor rule or regulation hereafter adopted by
the SEC. Upon the written request of any Warrantholder, the Company will deliver
to such Warrantholder a written statement that it has complied with such
requirements.

      

      
        

      

      
        13.       
Adjustments and Other
Rights. The Exercise Price and the number of Shares issuable upon
exercise of this Warrant shall be subject to adjustment from time to time as
follows; provided, that
if more than one subsection of this Section 13 is applicable to a single event,
the subsection shall be applied that produces the largest adjustment and no
single event shall cause an adjustment under more than one subsection of this
Section 13 so as to result in duplication:

      

      
        

      

      
        (A)        Stock Splits, Subdivisions,
Reclassifications or Combinations. If the Company shall (i) declare and
pay a dividend or make a distribution on its Common Stock in shares of Common
Stock, (ii) subdivide or reclassify the outstanding shares of Common Stock into
a greater number of shares, or (iii) combine or reclassify the outstanding
shares of Common Stock into a smaller number of shares, the number of
Shares issuable upon exercise of this Warrant at the time of the record date for
such dividend or distribution or the effective date of such subdivision,
combination or reclassification shall be proportionately adjusted so that the
Warrantholder after such date shall be entitled to purchase the number of shares
of Common Stock which such holder would have owned or been entitled to
receive in respect of the shares of Common Stock subject to this Warrant
after such date had this Warrant been exercised immediately prior to such
date. In such event, the Exercise Price in effect at the time of the record
date for such dividend or distribution or the effective date of such
subdivision, combination or reclassification shall be adjusted to the number
obtained by dividing (x) the product of (1) the number of Shares issuable upon
the exercise of this Warrant before such adjustment and (2) the Exercise Price
in effect immediately prior to the record or effective date, as the case may be,
for the dividend, distribution, subdivision, combination or reclassification
giving rise to this adjustment by (y) the new number of Shares issuable upon
exercise of the Warrant determined pursuant to the immediately preceding
sentence.

      

      
        

      

      
        (B)        Certain Issuances of Common
Shares or Convertible Securities. Until the earlier of (i) the date on
which the Original Warrantholder no longer holds this Warrant or any portion
thereof and (ii) the third anniversary of the Issue Date, if the Company shall
issue shares of Common Stock (or rights or warrants or other securities
exercisable or convertible into or exchangeable (collectively, a "conversion") for shares of
Common Stock) (collectively, "convertible securities")
(other than in Permitted Transactions (as defined below) or
a transaction to which subsection (A) of this Section 13 is applicable)
without consideration or at a consideration per share (or having a
conversion price per share) that is less than 90% of the Market Price on the
last trading day preceding the date of the agreement on pricing such
shares (or such convertible securities) then, in such
event:

      

      
        
           

        

        
          8

          
            

          

        

        
           

        

      

      
         

      

      
        (A) the number
of Shares issuable upon the exercise of this Warrant immediately prior to
the date of the agreement on pricing of such shares (or of such
convertible securities) (the "Initial Number") shall be
increased to the number obtained by multiplying the Initial Number by a fraction
(A) the numerator of which shall be the sum of (x) the number of shares of
Common Stock of the Company outstanding on such date and (y) the number of
additional shares of Common Stock issued (or into which convertible securities
may be exercised or convert) and (B) the denominator of which shall be the sum
of (I) the number of shares of Common Stock outstanding on such date and (II)
the number of shares of Common Stock which the aggregate consideration
receivable by the Company for the total number of shares of Common Stock so
issued (or into which convertible securities may be exercised or convert) would
purchase at the Market Price on the last trading day preceding the date of
the agreement on pricing such shares (or such convertible securities);
and

      

      
        

      

      
        (B) the
Exercise Price payable upon exercise of the Warrant shall be adjusted
by multiplying such Exercise Price in effect immediately prior to the date
of the agreement on pricing of such shares (or of such convertible securities)
by a fraction, the numerator of which shall be the number of shares of
Common Stock issuable upon exercise of this Warrant prior to such date and the
denominator of which shall be the number of shares of Common Stock issuable upon
exercise of this Warrant immediately after the adjustment described in
clause (A) above.

      

      
        

      

      
        For purposes of the
foregoing, the aggregate consideration receivable by the Company in connection
with the issuance of such shares of Common Stock or convertible securities shall
be deemed to be equal to the sum of the net offering price (including the Fair
Market Value of any non-cash consideration and after deduction of any related
expenses payable to third parties) of all such securities plus the minimum
aggregate amount, if any, payable upon exercise or conversion of any such
convertible securities into shares of Common Stock; and "Permitted Transactions"
shall mean issuances (i) as consideration for or to fund the acquisition
of businesses and/or related assets, (ii) in connection with employee benefit
plans and compensation related arrangements in the ordinary course and
consistent with past practice approved by the Board of Directors, (iii) in
connection with a public or broadly marketed offering and sale of Common Stock
or convertible securities for cash conducted by the Company or its affiliates
pursuant to registration under the Securities Act or Rule 144A thereunder on a
basis consistent with capital raising transactions by comparable financial
institutions and (iv) in connection with the exercise of preemptive rights on
terms existing as of the Issue Date. Any adjustment made pursuant to this
Section 13(B) shall become effective immediately upon the date of such
issuance.

      

      
        
           

        

        
          9

          
            

          

        

        
           

        

      

      
         

      

      
        (C)        Other Distributions.
In case the Company shall fix a record date for the making of a distribution to
all holders of shares of its Common Stock of securities, evidences of
indebtedness, assets, cash, rights or warrants (excluding Ordinary Cash
Dividends, dividends of its Common Stock and other dividends or distributions
referred to in Section 13(A)), in each such case, the Exercise Price in effect
prior to such record date shall be reduced immediately thereafter to the price
determined by multiplying the Exercise Price in effect immediately prior to the
reduction by the quotient of (x) the Market Price of the Common Stock on the
last trading day preceding the first date on which the Common Stock trades
regular way on the principal national securities exchange on which the
Common Stock is listed or admitted to trading without the right to receive such
distribution, minus the amount of cash and/or the Fair Market Value of the
securities, evidences of indebtedness, assets, rights or warrants to be so
distributed in respect of one share of Common Stock (such amount and/or Fair
Market Value, the "Per Share
Fair Market Value") divided by (y) such Market Price on such date
specified in clause (x); such adjustment shall be made successively whenever
such a record date is fixed. In such event, the number of Shares issuable upon
the exercise of this Warrant shall be increased to the number obtained by
dividing (x) the product of (1) the number of Shares issuable upon the exercise
of this Warrant before such adjustment, and (2) the Exercise Price in effect
immediately prior to the distribution giving rise to this adjustment by (y) the
new Exercise Price determined in accordance with the immediately preceding
sentence. In the case of adjustment for a cash dividend that is, or is
coincident with, a regular quarterly cash dividend, the Per Share Fair Market
Value would be reduced by the per share amount of the portion of the cash
dividend that would constitute an Ordinary Cash Dividend. In the event that such
distribution is not so made, the Exercise Price and the number of Shares
issuable upon exercise of this Warrant then in effect shall be readjusted,
effective as of the date when the Board of Directors determines not to
distribute such shares, evidences of indebtedness, assets, rights, cash or
warrants, as the case may be, to the Exercise Price that would then be in effect
and the number of Shares that would then be issuable upon exercise of this
Warrant if such record date had not been fixed.

      

      
        

      

      
        (D)        Certain Repurchases of
Common Stock. In case the Company effects a Pro Rata Repurchase of
Common Stock, then the Exercise Price shall be reduced to the price determined
by multiplying the Exercise Price in effect immediately prior to the Effective
Date of such Pro Rata Repurchase by a fraction of which the numerator shall be
(i) the product of (x) the number of shares of Common Stock outstanding
immediately before such Pro Rata Repurchase and (y) the Market Price of a
share of Common Stock on the trading day immediately preceding the first public
announcement by the Company or any of its Affiliates of the intent to effect
such Pro Rata Repurchase, minus (ii) the aggregate purchase price of the
Pro Rata Repurchase, and of which the denominator shall be the product of (i)
the number of shares of Common Stock outstanding immediately prior to such
Pro Rata Repurchase minus the number of shares of Common Stock
so repurchased and (ii) the Market Price per share of Common Stock on the
trading day immediately preceding the first public announcement by the Company
or any of its Affiliates of the intent to effect such Pro Rata Repurchase.
In such event, the number of shares of Common Stock issuable upon the
exercise of this Warrant shall be increased to the number obtained by dividing
(x) the product of (1) the number of Shares issuable upon the exercise of this
Warrant before such adjustment, and (2) the Exercise Price in effect immediately
prior to the Pro Rata Repurchase giving rise to this adjustment by (y) the new
Exercise Price determined in accordance with the immediately preceding sentence.
For the avoidance of doubt, no increase to the Exercise Price or decrease in the
number of Shares issuable upon exercise of this Warrant shall be made
pursuant to this Section 13(D).

      

      
        
           

        

        
          10

          
            

          

        

        
           

        

      

      
         

      

      
        (E)        Business
Combinations. In case of any Business Combination or
reclassification of Common Stock (other than a reclassification of Common
Stock referred to in Section 13(A)), the Warrantholder's right to receive Shares
upon exercise of this Warrant shall be converted into the right to exercise
this Warrant to acquire the number of shares of stock or other securities or
property (including cash) which the Common Stock issuable (at the time of such
Business Combination or reclassification) upon exercise of this Warrant
immediately prior to such Business Combination or reclassification would have
been entitled to receive upon consummation of such Business Combination or
reclassification; and in any such case, if necessary, the provisions set forth
herein with respect to the rights and interests thereafter of the Warrantholder
shall be appropriately adjusted so as to be applicable, as nearly as may
reasonably be, to the Warrantholder's right to exercise this Warrant in exchange
for any shares of stock or other securities or property pursuant to this
paragraph. In determining the kind and amount of stock, securities or the
property receivable upon exercise of this Warrant following the consummation of
such Business Combination, if the holders of Common Stock have the right to
elect the kind or amount of consideration receivable upon consummation of such
Business Combination, then the consideration that the Warrantholder shall be
entitled to receive upon exercise shall be deemed to be the types and amounts of
consideration received by the majority of all holders of the shares of common
stock that affirmatively make an election (or of all such holders if none make
an election).

      

      
        

      

      
        (F)        Rounding of Calculations;
Minimum Adjustments. All calculations under this Section 13 shall be
made to the nearest one-tenth (1/10th) of a cent or to the nearest
one- hundredth (1/100th) of a share, as the case may be. Any provision of
this Section 13 to the contrary notwithstanding, no adjustment in the
Exercise Price or the number of Shares into which this Warrant is
exercisable shall be made if the amount of such adjustment would be
less than $0.01 or one-tenth (1/10th) of a share of Common Stock, but any
such amount shall be carried forward and an adjustment with respect thereto
shall be made at the time of and together with any subsequent adjustment
which, together with such amount and any other amount or amounts so carried
forward, shall aggregate $0.01 or 1/1 0th of a share of Common Stock,
or more.

      

      
        

      

      
        (G)        Timing of Issuance of
Additional Common Stock Upon Certain Adjustments. In any case in
which the provisions of this Section 13 shall require that an adjustment shall
become effective immediately after a record date for an event, the Company
may defer until the occurrence of such event (i) issuing to the Warrantholder of
this Warrant exercised after such record date and before the occurrence of such
event the additional shares of Common Stock issuable upon such exercise by
reason of the adjustment required by such event over and above the shares
of Common Stock issuable upon such exercise before giving effect to such
adjustment and (ii) paying to such Warrantholder any amount of cash in lieu
of a fractional share of Common Stock; provided, however, that the
Company upon request shall deliver to such Warrantholder a due bill or other
appropriate instrument evidencing such Warrantholder's right to receive
such additional shares, and such cash, upon the occurrence of the event
requiring such adjustment.

      

      
        

      

      
        (H)        [Intentionally
Omitted.]

      

      
        

      

      
        (I)         Other Events. For so
long as the Original Warrantholder holds this Warrant or any portion thereof, if
any event occurs as to which the provisions of this Section 13 are not strictly
applicable or, if strictly applicable, would not, in the good faith judgment of
the Board of Directors of the Company, fairly and adequately protect the
purchase rights of the Warrants in accordance with the essential intent and
principles of such provisions, then the Board of Directors shall make such
adjustments in the application of such provisions, in accordance with such
essential intent and principles, as shall be reasonably necessary, in the good
faith opinion of the Board of Directors, to protect such purchase rights as
aforesaid.

      

      
        
           

        

        
          11

          
            

          

        

        
           

        

      

      
         

      

      
        The Exercise Price
or the number of Shares into which this Warrant is exercisable shall not be
adjusted in the event of a change in the par value of the Common Stock or a
change in the jurisdiction of incorporation of the Company.

      

      
        

      

      
        (J)        
Statement Regarding
Adjustments. Whenever the Exercise Price or the number of Shares into
which this Warrant is exercisable shall be adjusted as provided in Section 13,
the Company shall forthwith file at the principal office of the Company a
statement showing in reasonable detail the facts requiring such adjustment and
the Exercise Price that shall be in effect and the number of Shares into which
this Warrant shall be exercisable after such adjustment, and the Company shall
also cause a copy of such statement to be sent by mail, first class postage
prepaid, to each Warrantholder at the address appearing in the Company's
records.

      

      
        

      

      
        (K)      
 Notice of
Adjustment Event. In the event that the Company shall propose to take any
action of the type described in this Section 13 (but only if the action of the
type described in this Section 13 would result in an adjustment in the Exercise
Price or the number of Shares into which this Warrant is exercisable or a change
in the type of securities or property to be delivered upon exercise of this
Warrant), the Company shall give notice to the Warrantholder, in the manner set
forth in Section 13(J), which notice shall specify the record date, if any, with
respect to any such action and the approximate date on which such action is to
take place. Such notice shall also set forth the facts with respect thereto as
shall be reasonably necessary to indicate the effect on the Exercise Price and
the number, kind or class of shares or other securities or property which shall
be deliverable upon exercise of this Warrant. In the case of any action which
would require the fixing of a record date, such notice shall be given at least
10 days prior to the date so fixed, and in case of all other action, such notice
shall be given at least 15 days prior to the taking of such proposed action.
Failure to give such notice, or any defect therein, shall not affect the
legality or validity of any such action.

      

      
        

      

      
        (L)       
 Proceedings
Prior to Any Action Requiring Adjustment. As a condition precedent to the
taking of any action which would require an adjustment pursuant to this Section
13, the Company shall take any action which may be necessary, including
obtaining regulatory, New York Stock Exchange, NASDAQ Stock Market or other
applicable securities exchange or stockholder approvals or exemptions, in order
that the Company may thereafter validly and legally issue as fully paid and
nonassessable all shares of Common Stock that the Warrantholder is entitled to
receive upon exercise of this Warrant pursuant to this Section
13.

      

      
        
           

        

        
          12

          
            

          

        

        
           

        

      

      
         

      

      
        (M)       
Adjustment
Rules. Any adjustments pursuant to this Section 13 shall be made
successively whenever an event referred to herein shall occur. If an adjustment
in Exercise Price made hereunder would reduce the Exercise Price to an amount
below par value of the Common Stock, then such adjustment in Exercise Price made
hereunder shall reduce the Exercise Price to the par value of the Common
Stock.

      

      
        

      

      
        14.        Exchange. At any time
following the date on which the shares of Common Stock of the Company are no
longer listed or admitted to trading on a national securities exchange (other
than in connection with any Business Combination), the Original Warrantholder
may cause the Company to exchange all or a portion of this Warrant for an
economic interest (to be determined by the Original Warrantholder after
consultation with the Company) of the Company classified as permanent
equity under U.S. GAAP having a value equal to the Fair Market Value of the
portion of the Warrant so exchanged.   The Original Warrantholder
shall calculate any Fair Market Value required to be calculated pursuant to this
Section 14, which shall not be subject to the Appraisal
Procedure.

      

      
        

      

      
        15.        No Impairment. The
Company will not, by amendment of its Charter 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 to be observed or performed
hereunder by the Company, but will at all times in good faith assist in the
carrying out of all the provisions of this Warrant and in taking of all
such action as may be necessary or appropriate in order to protect the
rights of the Warrantholder.

      

      
        

      

      
        16.        Governing Law. This Warrant will be governed by and
construed in accordance with the federal law of
the United States if and to the extent such law is applicable, and otherwise in
accordance with the laws of the State of New York applicable to contracts made and to be performed
entirely within such
State. Each of the Company and the Warrantholder agrees (a) to
submit to the exclusive jurisdiction and venue of the United States District Court for the
District of Columbia for any civil action, suit or proceeding arising out of or
relating to this Warrant
or the transactions contemplated hereby, and (b) that notice may be served upon
the Company at the address in Section 20 below and upon the Warrantholder at the address for
the Warrantholder set forth in the registry maintained by the Company pursuant to
Section 9 hereof. To the extent permitted by applicable law, each of the Company
and the Warrantholder hereby unconditionally waives trial by jury in any civil
legal action or proceeding relating to the Warrant or the transactions
contemplated hereby or thereby.

      

      
        

      

      
        17.        Binding Effect. This
Warrant shall be binding upon any successors or assigns of the
Company.

      

      
        

      

      
        18.        Amendments. This
Warrant may be amended and the observance of any term of this Warrant may be
waived only with the written consent of the Company and
the Warrantholder.

      

      
        
           

        

        
          13

          
            

          

        

        
           

        

      

      
         

      

      
        19
..       Prohibited Actions.
The Company agrees that it will not take any action which would entitle the
Warrantholder to an adjustment of the Exercise Price if the total number of
shares of Common Stock issuable after such action upon exercise of this Warrant,
together with all shares of Common Stock then outstanding and all shares of
Common Stock then issuable upon the exercise of all outstanding options,
warrants, conversion and other rights, would exceed the total number of shares
of Common Stock then authorized by its Charter.

      

      
        

      

      
        20.        Notices. Any notice,
request, instruction or other document to be given hereunder by any party
to the other will be in writing and will be deemed to have been duly given (a)
on the date of delivery if delivered personally, or by facsimile, upon
confirmation of receipt, or (b) on the second business day following the date of
dispatch if delivered by a recognized next day courier service. All notices
hereunder shall be delivered as set forth in Item 8 of Schedule A hereto,
or pursuant to such other instructions as may be designated in writing by the
party to receive such notice.

      

      
        

      

      
        21.        Entire Agreement.
This Warrant, the forms attached hereto and Schedule A hereto (the terms of
which are incorporated by reference herein), and the Letter
Agreement (including all documents incorporated therein), contain the
entire agreement between the parties with respect to the subject matter
hereof and supersede all prior and contemporaneous arrangements or
undertakings with respect thereto.

      

      
        

      

      
        [Remainder
of page intentionally left blank]

      

      
        
           

        

        
          14

          
            

          

        

        
           

        

      

      
         

      

      
        [Form
of Notice of Exercise]

      

      
        

      

      
        Date:                      
 

      

      
        

      

      
        
          	
                  TO:

                	
                  Bank of Marin
      Bancorp

                

        

      

      
        

      

      
        
          	
                  RE:

                	
                  Election to
      Purchase Common Stock

                

        

      

      
        

      

      
        The undersigned,
pursuant to the provisions set forth in the attached Warrant, hereby agrees to
subscribe for and purchase the number of shares of the Common Stock set forth
below covered by such Warrant. The undersigned, in accordance with Section 3 of
the Warrant, hereby agrees to pay the aggregate Exercise Price for such shares
of Common Stock in the manner set forth below. A new warrant evidencing the
remaining shares of Common Stock covered by such Warrant, but not yet subscribed
for and purchased, if any, should be issued in the name set forth
below.

      

      
        

      

      
        Number of Shares of
Common Stock

      

      
        

      

      
        Method of Payment
of Exercise Price (note if cashless exercise pursuant to Section 3(i) of
the Warrant or cash exercise pursuant to Section 3(ii) of the Warrant, with
consent of the Company and the Warrantholder)

         

      

      
        
          
            
              	
                       

                    	 
    	 

            

          

        

      

      
        

      

      
        
          	
                  
                    Aggregate
      Exercise Price:

                  

                	 
    	 
    	 
	 
    	 
    	 
    	 
	 
    	
                  Holder:

                	 
    	 
	 
    	 
    	 
    	 
	 
    	
                  By:

                	 
    	 
	 
    	
                  Name:

                	 
    	 
	 
    	
                  Title:

                	 
    	 

        

      

      
        

          
            
               

            

            
              15

              
                

              

            

            
               

            

          

        

         

      

      
        IN
WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by a
duly authorized officer.

      

      
        

      

      
        Dated:
 December 5,
2008

      

      
        

      

      
        
          
            
              
                	 
    	
                        BANK
      OF MARIN BANCORP

                      
	 
    	 
    	 
    
	 
    	 
    	 
    
	 
    	
                        By:

                      	      
                        /s/ Russell
      A. Colombo

                      
	 
    	
                        Name:

                      	
                        Russell A.
      Colombo

                      
	 
    	
                        Title:

                      	
                        President and
      CEO

                      
	 
    	 
    	 
    
	 
    	 
    	 
    
	 
    	
                        Attest:

                      	 
    
	 
    	 
    	 
    
	 
    	 
    	 
    
	 
    	
                        By:

                      	      
                        /s/ Megan
      Carter

                      
	 
    	
                        Name:

                      	
                        Megan
      Carter

                      
	 
    	
                        Title:

                      	
                        AVP/Assistant
      Corporate
Secretary

                      

              

            

          

        

      

      

      

      
        [Signature
Page to Warrant]

      

      
        
           

        

        
          16

          
            

          

        

        
           

        

      

      
         

      

      
        SCHEDULE
A

      

      
        Item
1

      

      
        

      

      
        
          	
                  Name:

                	
                  Bank of Marin
      Bancorp

                

        

      

      
        

      

      
        
          	
                  Corporate or
      other organizational form:

                	
                  “C”
      Corporation

                

        

      

      
        

      

      
        
          	
                  Jurisdiction
      of organization:

                	
                  California

                

        

      

      
        

      

      
        Item
2

      

      
        

      

      
        Exercise Price:
$27.231

      

      
        

      

      
        tem
3

      

      
        

      

      
        
          	
                  Issue
      Date:

                	
                  December 5,
      2008

                

        

      

      
        

      

      
        Item
4

      

      
        

      

      
        
          	
                  Amount of
      last dividend declared prior to the Issue Date:

                	
                  $0.14/share,
      Paid 11/14/2008.

                

        

      

      
        

      

      
        Item
5

      

      
        

      

      
        Date of Letter
Agreement between the Company and the United States Department of the
Treasury:

      

      
        

      

      
        December 5,
2008

      

       

      
        
          ___________________________________

        

        
          
            	
                    1

                  	
                    Initial
      exercise price to be calculated based on the average of closing prices of
      the Common Stock on the trading days ending on the last trading day prior
      to the date the Company's application for participation in the Capital
      Purchase Program was approved by the United States Department of the
      Treasury.

                  

          

        

        
          

            
              
                 

              

              
                
                

                
                  

                

              

              
                 

              

            

          

           

        

      

      
        Item
6

      

      
        

      

      
        
          	
                  Number of
      shares of Common Stock:

                	
                  154,242

                

        

      

      
        

      

      
        Item
7

      

      
        

      

      
        Company's
address:

      

      
        

      

      
        Bank of Marin
Bancorp

      

      
        504 Redwood
Boulevard, Suite 100

      

      
        Novato, California
94947

      

      
        

      

      
        Item
8

      

      
        

      

      
        Notice
information:

      

      
        

      

      
        If
to the Company:

      

      
        

      

      
        Mr. Russell
Colombo

      

      
        Bank of Marin
Bancorp

      

      
        504 Redwood
Boulevard, Suite 100

      

      
        Novato, California
94947

      

      
        

      

      
        If
to the Warrantholder:

      

      
        

      

      
        
          
            
              
                
                  
                    	
                             

                          	 
    
	 
    	 
    
	
                             

                          	 
    
	 
    	 
    
	
                             

                          	 
    

                  

                

              

            

          

        

      

      
        

      

      
        

      

      
        
          	
                  1

                	
                  Initial
      exercise price to be calculated based on the average of closing prices of
      the Common Stock on the trading days ending on the last trading day prior
      to the date the Company's application for participation in the Capital
      Purchase Program was approved by the United States Department of the
      Treasury.

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