Document:

ex10-1.htm

 

Exhibit 10.1

 

SETTLEMENT AGREEMENT

 

This SETTLEMENT AGREEMENT (the “Agreement”) is made and entered into as of March 25, 2016, by and between Arotech Corporation, a Delaware corporation (“Arotech”), and Ephraim Fields (“Fields”).

 

RECITALS

 

WHEREAS, on December 10, 2015, Fields gave notice (the “Nomination Notice”) to Arotech of his intention to nominate director candidates at Arotech’s 2016 annual meeting of stockholders (the “2016 Annual Meeting”); and

 

WHEREAS, Fields is a participant in a solicitation of proxies in favor of the election at the 2016 Annual Meeting of the Nominees (the “Proxy Contest”); and

 

WHEREAS, on March 25, 2016, Dr. Jay M. Eastman, a Class II director of Arotech’s board of directors (the “Board”) gave notice, in accordance with the terms of Arotech’s Amended and Restated bylaws (the “Bylaws”), of his intention to resign as a Class II director, which shall be effective as of the date of this Agreement; and

 

WHEREAS, subject to the terms hereof, Arotech is willing to appoint an individual selected by Fields to fill the vacancy created by Dr. Eastman’s resignation; and

 

WHEREAS, subject to the terms hereof, Fields is willing to withdraw and rescind the Nomination Notice and Fields is willing to terminate the Proxy Contest;

 

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

 

ARTICLE I

AGREEMENTS

 

Section 1.1.  Certain Definitions.  For purposes of this Agreement, the following terms shall have the following meanings:

 

“2016 Annual Meeting” shall mean the annual meeting of Arotech’s stockholders to be held in 2016, or any special meeting of stockholders held prior to or in lieu thereof at which directors are to be elected to the Board.

 

“2017 Annual Meeting” shall mean the annual meeting of Arotech’s stockholders to be held in 2017, or any special meeting of stockholders held prior to or in lieu thereof at which directors are to be elected to the Board.

 

 “Affiliate” shall mean (a) with respect to any Person (including Fields), any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such first Person and (b) with respect to Fields, any officers, directors or members of any entity controlled by Fields.

 

  

  

  

 

“Common Stock” shall mean the common stock, par value $.01 per share, of Arotech (together with any securities into which such common stock may hereafter be reclassified, whether by merger, charter amendment or otherwise).

 

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

 

“Fields Group” shall mean (a) Fields; (b) any and all Affiliates of Fields, (c) any Person as to which beneficial ownership of Common Stock, directly or indirectly, is controlled or shared by Fields; and (d) any managing members (or Persons serving in equivalent capacities) or other controlling person of any Person described in clauses (a) or (b) above.

 

“Governmental or Regulatory Authority” shall mean any court, tribunal, arbitrator, authority, agency, commission, official or other instrumentality of the United States, any foreign country or any domestic or foreign state, county, city or other political subdivision, or any stock exchange or market in which the Common Stock is listed for trading or traded.

 

“Management Proposal” shall mean a proposal presented by the Board for consideration at an annual meeting of Arotech’s stockholders that is anything other than for the election of directors or ratification of the appointment of Arotech’s independent auditors.  For the avoidance of doubt, a Management Proposal shall include, without limitation, any proposal for an amendment, modification or restatement of Arotech’s certificate of incorporation or the Bylaws.

 

 “Nominating Committee” shall mean the Nominating and Governance Committee of the Board.

 

“Person” shall mean any individual, corporation, limited liability company, partnership, trust, other entity or group (within the meaning of Section 13(d)(3) of the Exchange Act.

 

“Replacement Director” shall have the meaning given thereto in Section 1.2(e) of this Agreement.

 

“Resignation Date” shall mean the first date on which Fields or any other member of the Fields Group shall engage in, or publicly announce an intention to engage in, any Restricted Activity with respect to the election of directors at the 2016 Annual Meeting.

 

 “Restricted Activity” shall mean (i) soliciting proxies or consents for the voting of any shares of Common Stock or otherwise becoming a “participant,” directly or indirectly, in any “solicitation” of “proxies” or consents to vote, or becoming a “participant” in any “election contest” with respect to the election of directors at the 2016 Annual Meeting (all terms used herein and defined in Regulation 14A under the Exchange Act having the meanings assigned to them therein), (ii) seeking to advise or influence any person with respect to the voting of any shares of Common Stock in a manner other than as recommended by the Board with respect to the election of directors at the 2016 Annual Meeting, or (iii) otherwise engaging in any course of conduct with the purpose of causing any other stockholder of Arotech to vote contrary to the recommendation of the Board with respect to the election of directors at the 2016 Annual Meeting.

 

  

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“SEC” shall mean the United States Securities and Exchange Commission.

 

Section 1.2.  2016 Annual Meeting and Director Appointment.

 

(a)           Fields hereby withdraws and rescinds the Nomination Notice and agrees, on his behalf and on behalf of any Affiliate of Fields, not to nominate any nominees for election at the 2016 Annual Meeting and shall not engage in any other Restricted Activity in connection with the 2016 Annual Meeting.

 

(b)           In accordance with the terms of Arotech’s By-Laws, Mr. Lawrence F. Hagenbuch (the “New Director”) shall be appointed to Arotech’s Board to serve as a Class II director to fill the vacancy created by Dr. Eastman’s resignation as soon as possible upon Dr. Eastman’s resignation, but in any event no later than a Board Action Date (as defined below). If subsequent to the date of this Agreement and prior to the New Director being appointed to the Board Arotech seeks to take any action that requires or should require the approval of the Board (the “Board Action Date”), then the New Director shall immediately be appointed to the Board, and the Board shall not take any action until the New Director has been so appointed.  The New Director will serve as a director until the 2017 Annual Meeting and until his successor is duly elected and qualified.

 

 (c)           Fields agrees that, as promptly as reasonably practical following the execution of this Agreement, but no later than March 31, 2016, Fields shall use his reasonable efforts to submit or cause the New Director to return to Arotech its standard directors’ and officers’ questionnaire delivered to the New Director for the purpose of eliciting the information required to be included in the proxy statement for the 2016 Annual Meeting (which questionnaire shall contain Arotech’s standard consent to serve as a director).

 

 (d)           A reasonable time prior to the filing thereof, Arotech shall provide to Fields a draft of the Form 8-K to be filed with respect to this Agreement and the appointment of the New Director, and Arotech shall consider in good faith any comments of Fields.

 

 (e)           If at any time on or before the earlier of (i) the Resignation Date and (ii) the conclusion of the 2017 Annual Meeting, there shall occur a vacancy in the Board seat held by the New Director (or by any Replacement Director appointed pursuant to this Section 1.2(e)), for any reason, then, unless Fields does not wish to fill such vacancy, Arotech shall take all necessary action to promptly fill such vacancy with an individual (a “Replacement Director”) proposed in writing by Fields who is (x) in the case of a vacancy resulting from a voluntary resignation, acceptable to the Nominating Committee in its sole discretion or (y) in the case of a vacancy resulting from any other circumstance, reasonably acceptable to the Nominating Committee; provided that Fields shall not be eligible to serve as a Replacement Director.  In connection with the appointment or election of a Replacement Director, Fields shall promptly submit to Arotech the name of the proposed Replacement Director, together with such information reasonably requested by the Nominating Committee in order to make a determination if such individual is acceptable or reasonably acceptable, as the case may be, to the Nominating Committee, as well as such individual’s agreement to meet with Arotech’s Nominating Committee at its request (such request shall be made within 5 Business Days of Fields submitting the name). The Nominating Committee, in good faith and consistent with its fiduciary duties, shall consider such candidate within 20 Business Days after such candidate has delivered to the Nominating Committee the information requested and, if applicable, met with the Nominating Committee (the “Review Period”). Subject to the Nominating Committee’s approval as provided above, the Board shall vote to appoint such candidate within five Business Days following the conclusion of the Review Period.  In the event that the Nominating Committee reasonably determines in good faith that any Replacement Director is not acceptable or reasonably acceptable to it, as the case may be, Fields shall promptly propose in writing, and the Nominating Committee shall promptly consider, another Replacement Director to be appointed in accordance with the provisions of this Section 1.2(e).

 

  

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(f)           Arotech agrees that the New Director (or any Replacement Director, as the case may be) shall receive (i) the benefits of director and officer insurance, and any indemnity, expense advancement and exculpation agreements or other arrangements available to other directors on the Board and (ii) receive compensation for his or her service as a director equal to the standard compensation received by other directors on the Board. Arotech shall reimburse the New Director (or any Replacement Director, as the case may be) for reasonable and documented travel expenses, including for reasonable and necessary transportation, meals and lodging, incurred in connection with such Director’s attendance at meetings of the Board or any of its committees, in according with its policies applicable to its independent directors generally.

 

(g)           As a condition precedent to any obligation of Arotech to appoint any New Director or Replacement Director to the Board in accordance with the terms of this Agreement, Arotech shall have received from any such New Director or Replacement Director a written acknowledgement and agreement, reasonably satisfactory in form and substance to Arotech, that such New Director or Replacement Director agrees to serve as a director of Arotech, subject to and in accordance with the provisions of this Agreement and the written policies, including any conflict of interest policy, of (i) the Board, (ii) any committees thereof and (iii) Arotech, in each case, that are generally applicable to Board members.

 

(h)           As a condition precedent to the obligation of Arotech to nominate or appoint any New Director or Replacement Director to the Board in accordance with the terms of this Agreement, Arotech shall have received from any such New Director or Replacement Director a written irrevocable resignation as a director of Arotech, to be accepted or rejected in the discretion of the Board, effective immediately upon the Resignation Date (a “Resignation Letter”), reasonably satisfactory in form and substance to Arotech.  Each Resignation Letter shall agree and acknowledge that such Resignation Letter shall serve as such New Director’s or Replacement Director’s formal resignation delivered to Arotech and that no additional agreement, notice or action shall be necessary to immediately effectuate such resignation in accordance therewith. Such Resignation Letter shall be given to Rob Fink and/or Brett Maas of Hayden IR to hold, and shall be delivered to Arotech only in the event of a breach of the terms of Section 1.6 below by any of the Fields Group.

 

  

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(i)           The parties agree that, except as expressly provided in this Section 1.2 of this Agreement, Arotech shall not be required to appoint any New Director, any Replacement Director or any other person pursuant to this Agreement to stand for election at any annual meeting of Arotech’s stockholders subsequent to the 2016 Annual Meeting.

 

Section 1.3.  Board Size.  Through the date of the 2017 Annual Meeting, neither the Board nor Arotech shall hereafter take any action to increase the size of the Board from its current size of eight directors without the affirmative vote of the New Director or any Replacement Director.

 

Section 1.4.  Admiralty Partners Voting Agreement.  Within ten (10) business days of the date hereof, Arotech hereby agrees to take any and all actions necessary in accordance with the terms of the Stock Purchase Agreement by and between Arotech and Admiralty Partners, Inc., a Delaware corporation, dated February 2, 2016, as amended, to decrease the term of the voting agreement described therein by one (1) year to July 31, 2017.

 

Section 1.5.  Board Committees.  Commencing with the appointment of the New Director to the Board, or any appointment of a Replacement Director in accordance with the terms of Section 1.2(e), the Board and committees of the Board will take all actions necessary pursuant to the terms of the Arotech By-Laws and applicable committee charters, to appoint the New Director, or the Replacement Director, if applicable, to each of Arotech’s Nominating Committee, Compensation Committee and Executive and Finance Committee.

 

Section 1.6.  Restricted Activities; Voting Agreement.

 

(a)           Neither Fields nor any Affiliate of Fields shall, and each such party shall use all commercially reasonable efforts to cause each other member of the Fields Group not to, directly or indirectly, engage in any Restricted Activity;

 

(b)           Fields and his Affiliates shall, and shall cause each other member of the Fields Group as to which such parties have voting control over such other members’ Common Stock to, cause all shares of Common Stock beneficially owned by each of them to be present at the 2016 Annual Meeting for purposes of establishing a quorum and to be voted for the nominees recommended by the Board (provided the Board’s director nominations conform to the requirements of this Agreement);

 

(c)           no later than five (5) business days prior to the 2016 Annual Meeting, Fields and his Affiliates shall, and shall cause each other member of the Fields Group as to which such parties have voting control over such other members’ Common Stock to, vote in accordance with this Section 1.6; and

 

(d)           neither Fields nor his Affiliates shall, and shall not cause each other member of the Fields Group to, revoke or change any vote in connection with the 2016 Annual Meeting unless such revocation or change is required or permitted in accordance with this Section 1.6.

 

  

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Section 1.7.  Joint Press Release.  Promptly following the execution and delivery of this Agreement, Arotech and Fields shall prepare and issue a joint press release in the form mutually agreed to by Arotech and Fields.

 

Section 1.8.  Mutual Non-Disparagement.  From the date hereof through July 20, 2017, Arotech and Fields shall not, and Arotech shall use all commercially reasonable efforts to cause each of its directors (other than any New Director or Replacement Director) and officers not to, and Fields and his Affiliates shall use all commercially reasonable efforts to cause each other member of the Fields Group not to, make any public statement, written or oral, with respect to the subject matters to be agreed between the parties in a separate letter signed by both parties, (a) reasonably likely to be harmful to the other party or parties or its or their officers, directors or employees or to be injurious to the goodwill, reputation or business standing of the other party or parties and its or their officers, directors or employees or (b) that is disparaging or defamatory about Arotech or Fields, as the case may be, or their respective officers, directors or employees.  For the avoidance of doubt, this Section 1.8 shall not preclude (x) any party or its representatives from (i) any good faith response to any inquiries under oath or in response to inquiry by a Governmental or Regulatory Authority or (ii) reporting possible violations of federal law or regulation to any Governmental or Regulatory Authority, or (y) any director, in the exercise of his or her fiduciary duties, from making statements during meetings of the Board or any committees thereof of which he or she is a member, or in conversations with other directors.

 

Section 1.9.  Covenant Not to Sue. Except with respect to the performance and enforcement of this Agreement, Fields and his Affiliates, on the one hand, and Arotech, on the other hand, agree, and Fields agree to use their reasonable best efforts to cause their Affiliates, not to sue or otherwise commence or continue in any manner, directly or indirectly, any suit, claim, action, right or cause of action relating to any acts or omissions in connection with the 2016 Annual Meeting, including, without limitation, the nomination or election of directors, the solicitation of proxies or any acts or filings in connection therewith.

 

Section 1.10.  Expenses. Arotech shall reimburse Fields for his reasonable, documented out of pocket fees and expenses (including legal expenses) incurred in connection with the matters related to the 2016 Annual Meeting and the negotiation and execution of this Agreement, provided that such reimbursement shall not exceed $25,000 in the aggregate. Payment shall be made within ten business days of receipt of the documentation evidencing the expenses.

 

ARTICLE II

MISCELLANEOUS PROVISIONS

 

Section 2.1.  Representations and Warranties.  Each of the parties hereto represents and warrants to the other parties that:

 

  

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(a)           such party has all requisite authority and power to execute and deliver this Agreement and to consummate the transactions contemplated hereby,

 

(b)           the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized by all required action on the part of such party and no other proceedings on the part of such party are necessary to authorize the execution and delivery of this Agreement or to consummate the transactions contemplated hereby,

 

(c)           the Agreement has been duly and validly executed and delivered by such party and constitutes the valid and binding obligation of such party enforceable against such party in accordance with their respective terms, and

 

(d)           the execution, delivery and performance of this Agreement by it and the settlement of the Proxy Contest on the terms contained herein will not (i) conflict with or result in a breach or violation of (a) any of the terms and provisions of, or constitute a default under such party’s certificate of incorporation, bylaws or other organizational agreements or instruments, or (b) any statute, rule, regulation or order of any governmental agency or body or any court, domestic or foreign, having jurisdiction over such party and its Affiliates or any of their respective assets or properties, or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any lien, encumbrance, payment obligation or other adverse claim upon any of the properties or assets of such party or its Affiliates or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) under any agreement, plan, arrangement or understanding to which such party or any of its Affiliates is a party or by which such party or any of its Affiliates may otherwise be bound.

 

Section 2.2.  Acknowledgment.  The parties hereto acknowledge, warrant and represent that they have carefully read this Agreement, understand it, have consulted with and received the advice of counsel regarding this Agreement, agree with its terms, are duly authorized to execute it and freely, voluntarily and knowingly execute it.

 

Section 2.3.  General.

 

(a)           This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and the respective successors, personal representatives and assigns of the parties hereto.

 

(b)           This Agreement contains the entire agreement between the parties with respect to the subject matter hereof and thereof and supersedes all prior and contemplated arrangements and understandings with respect thereto.

 

(c)           This Agreement may be signed in counterparts, each of which shall constitute an original and all of which together shall constitute one and the same Agreement. Signatures to this Agreement transmitted by facsimile transmission, by electronic mail in “portable document format” (“.pdf”) form, or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, shall have the same effect as physical delivery of the paper document bearing the original signature.

 

  

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(d)           All notices and other communications required or permitted hereunder shall be effective upon receipt and shall be in writing and may be delivered in person, by telecopy, electronic mail, express delivery service or U.S. overnight mail, addressed to the party to be notified at the respective addresses set forth below, or at such other addresses which may hereinafter be designated in writing:

 

If to Arotech:

 

Arotech Corporation

1229 Oak Valley Drive

Ann Arbor, Michigan 48108

Attention:

Yaakov Har-Oz

Fax: 972-2-990-6688

email: yaakovh@arotech.com

with copies to:

 

Lowenstein Sandler LLP

1251 Avenue of the Americas

New York, New York 10020

Attention:

Steven M. Skolnick

Fax: 973-597-2477

email: sskolnick@lowenstein.com

 

 

If to Fields:

 

Ephraim Fields

Echo Lake Capital

888 Seventh Avenue, 17th Floor

New York, New York 10019

Fax:

Email: ef@echolakecapital.com

 

with a copy to:

 

Foley & Larder LLP

777 East Wisconsin Avenue

Suite 3800

Milwaukee, Wisconsin 53202

Attention:

Peter D. Fetzer

Fax: 414-297-4900

Email: pfetzer@foley.com

 

  

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(e)           This Agreement and the legal relations hereunder between the parties hereto shall be governed by and construed in accordance with the laws of the State of Delaware applicable to contracts made and performed therein, without giving effect to the principles of conflicts of law thereof.

 

(f)           Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid, but if any provision of this Agreement is held to be invalid or unenforceable in any respect, such invalidity or unenforceability shall not render invalid or unenforceable any other provision of this Agreement.

 

(g)           It is hereby agreed and acknowledged that it will be impossible to measure in money the damages that would be suffered if the parties fail to comply with any of the obligations herein imposed on them and that in the event of any such failure, an aggrieved person will be irreparably damaged and will not have an adequate remedy at law.  Any such person, therefore, shall be entitled to injunctive relief, including specific performance, to enforce such obligations, without the posting of any bond, and, if any action should be brought in equity to enforce any of the provisions of this Agreement, none of the parties hereto shall raise the defense that there is an adequate remedy at law.

 

(h)           Each party hereto shall do and perform or cause to be done and performed all such further acts and things and shall execute and deliver all such other agreements, certificates, instruments and documents as any other party hereto reasonably may request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

 

(i)           Each of the parties hereto hereby irrevocably and unconditionally consents to submit to the exclusive jurisdiction of the courts of the State of Delaware and of the United States of America, in each case located in the County of New Castle, for any action, proceeding or investigation in any court or before any governmental authority arising out of or relating to this Agreement and the transactions contemplated hereby (and agrees not to commence any action, proceeding or investigation relating thereto except in such courts), and further agrees that service of any process, summons, notice or document by registered mail to its respective address set forth in this Agreement shall be effective service of process for any action, proceeding or investigation brought against it in any such court.  Each of the parties hereto hereby irrevocably and unconditionally waives any objection to the laying of venue of any action, proceeding or investigation arising out of this Agreement or the transactions contemplated hereby in the courts of the [State of Delaware or the United States of America, in each case located in the County of New Castle], and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, proceeding or investigation brought in any such court has been brought in an inconvenient forum.

 

  

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IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the day and year first written above.

 

 

AROTECH CORPORATION.

 

 

By:  /s/ Steven Esses                                                                                   

Name: Steven Esses

Title:   President and CEO

 

EPHRAIM FIELDS

 

 

By:  /s/ Ephraim Fields                                                                                   

Name: Ephraim Fields

 

 

 

 

 

  

10EX-10.24

 Exhibit 10.24 

Qualified ISO 
 Employee

 Grant date:              20 

COMMERCE UNION BANCSHARES, INC. 

INCENTIVE STOCK OPTION AGREEMENT 

THIS INCENTIVE STOCK OPTION AGREEMENT (this “Agreement”) is dated as of the day of
            , 20     (the “Grant Date”), by and between Commerce Union Bancshares, Inc., a Tennessee corporation (the
“Company”), and                                     
    (the “Optionee”). 
 WHEREAS, the Option (as defined below) evidenced by this Agreement is
granted under the Commerce Union Bancshares, Inc. 2015 Equity Incentive Plan, dated June 18, 2015, as such plan may be amended from time to time (the “Plan”). 

NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter set forth, and in further consideration of the
services to be rendered by the Optionee to the Company or to a “parent corporation” or a “subsidiary corporation” thereof, as such terms are defined in Code Sections 424(e) and (f) (each, an “Affiliate”),
the Company and Optionee agree as follows: 
 1. Incorporation of the Plan; Capitalized Terms; Acceptance. 

(a) The provisions of the Plan are hereby incorporated herein by reference. Except as otherwise expressly set forth herein, this Agreement
shall be construed in accordance with the provisions of the Plan and any capitalized terms not otherwise defined in this Agreement shall have the definitions set forth in the Plan. The Board, or its designated committee, shall have the final
authority to interpret and construe the Plan and this Agreement and to make any and all determinations thereunder, and its decision shall be binding and conclusive upon Optionee and Optionee’s legal representative in respect of any questions
arising under the Plan or this Agreement. As used herein, the term “Board” shall be construed to mean the board of directors of Company or a committee of the Board with authority to administer the Plan. In the event of a discrepancy
between the Plan and this Agreement, the provisions of the Plan shall control. 
 (b) Optionee hereby acknowledges receipt of a copy of the
Plan and this Agreement as evidenced by Optionee’s separate execution of the Optionee’s Acceptance Form found at Exhibit A of this Agreement. Optionee has read and understands the terms and provisions thereof, and accepts the Option
subject to all of the terms and conditions of the Plan and this Agreement. Optionee acknowledges that there may be adverse tax consequences upon exercise of the Option (as defined below) or disposition of the underlying shares and that Optionee
should consult with Optionee’s tax advisor prior to such exercise or disposition. 
 2. Type and Grant of Option. Subject to the
terms and conditions of this Agreement and the Plan, Optionee shall have the right and option to purchase              shares of Company common stock, par value $1.00 per share (the
“Company Stock”), at the Option Price specified in Paragraph 3 below (the “Option”). The Option is intended to qualify as an Incentive Stock Option as set forth in Code Section 422 and any regulations
promulgated thereunder; provided, however, the Company makes no representation or guarantee that the Option will qualify as an Incentive Stock Option. To the extent that the aggregate Fair Market Value (determined as of the Grant Date) of the
shares of Company Stock with respect to which Incentive Stock Options are exercisable for the first time by the Optionee during any calendar year (under all plans of the Company and its Affliates) exceeds $100,000.00, the options or

 
portions thereof that exceed such limit (according to the order in which they were granted) shall be treated as Non-Qualified Stock Options. Except as otherwise indicated by the context, the term
“Optionee,” as used in this Agreement, shall be deemed to include any person who acquires the right to exercise this Option validly under the terms of this Agreement and the Plan. 

3. Option Price. The exercise price for shares of Company Stock subject to the Option shall be
$             per share (the “Option Price”). The Option Price represents the Fair Market Value of the Company Stock on the Grant Date. In the event that the Optionee is a
“ten percent shareholder” as defined by Code Section 422(c), then the Option Price for shares of Company Stock subject to the Option shall be $             per share, which
Option Price represents 110% of the Fair Market Value of the Company Stock on the Grant Date. 
 4. Vesting. 

(a) The Option will become exercisable (“vest”) at a rate of approximately     % of the total number of
shares subject to the Option on the first anniversary of the Grant Date and as to an additional     % of the original number of shares subject to the Option on each of succeeding anniversaries for
            years, provided that Optionee is still employed by the Company or any Affliate thereof. There shall be no proportional or partial vesting in the period prior to each vesting
date, and all vesting shall occur only on the appropriate vesting date. The right of exercise shall be cumulative so that to the extent that the Option is not exercised in any period to the maximum extent permissible, it shall continue to be
exercisable, in whole or in part, with respect to all shares for which it is vested until the earlier of the Expiration Date or the termination of this Option under the Plan. 

(b) Notwithstanding anything to the contrary in subparagraph 4(a) above, in the event a Change in Control occurs, the Option shall
immediately vest as to any Option shares that have not previously vested in accordance with said subparagraph 4(a). 
 (c)
Notwithstanding anything to the contrary in subparagraph 4(a) above, in the event of the Disability of the Optionee prior to the Expiration Date, as defined in Paragraph 5 below, the Option shall immediately vest as to any option
shares that have not previously vested in accordance with said subparagraph 3(a). The term “Disability” shall have the meaning set out in the Plan; provided, however, the parties agree that, to the extent necessary to comply
with Code Section 409A , the definition of “Disability” hereunder shall be amended to the definition of “disability” required by Code Section 409A. 

(d) Notwithstanding anything to the contrary in subparagraph 4(a) above, in the event of the Optionee’s Retirement, the Option
shall immediately vest as to any Option shares that have not previously vested in accordance with said subparagraph 4(a) above. 
 5.
Option Term. Subject to the terms of Paragraph 6 hereof, the Option may be exercised at any time, with respect to shares of Company Stock as to which it has vested, prior to the close of business on the 10th anniversary of the Grant Date (the “Expiration Date”); provided, however, if Optionee is a “ten percent shareholder” of the Company, the Expiration Date shall occur
on the 5th anniversary of the Grant Date. To the extent not exercised, the Option shall expire as of the Expiration Date. 

6. Exercise of Option. 

(a) Except as provided below, provided Optionee’s service to the Company, or to any Affliate thereof, has not been terminated, as defined
in the Plan, Optionee may exercise any vested portion of the Option prior to the applicable Expiration Date by transmitting notice of exercise, the form 

  
 2 

 
of which is attached hereto as Exhibit B, and the required payment by mail, wire transfer, or hand delivery to the chief executive officer, president, or chief financial officer of the
Company, specifying the number of shares of Company Stock to be purchased and the aggregate Option Price tendered in payment for the shares in accordance with subparagraph 6(e) below. Such exercise shall be deemed effective upon Optionee
placing in the United States mail or hand delivering such written notice together with the required payment. 
 (b) Except as provided in
subparagraphs 6(c) and 6(d) below, in the event the employment of Optionee by the Company, or any Affliate thereof, is voluntarily or involuntarily terminated, including without limitation, in the event of the Retirement of Optionee as
defined in the Plan, Optionee may exercise any vested portion of the Option within three (3) months after such termination, but in no event later than the applicable Expiration Date, unless such termination is for Cause, as defined in
the Plan. In the event Optionee’s employment is terminated for Cause, Optionee may not exercise any portion of the Option, vested or unvested. 

(c) In the event Optionee’s employment by the Company, or any Affliate thereof, terminates as a result of Optionee’s Disability,
Optionee may exercise the vested portion of the Option, but only within such period of time beginning on the date of termination and ending on the earlier of (i) the date twelve (12) months following Optionee’s
termination for Disability, or (ii) the Expiration Date. 
 (d) If Optionee dies while actively employed by the Company, or by any
Affliate thereof, or within three (3) months following termination of Optionee’s active employment by the Company, or any Affliate thereof, any vested portion of the Option may be exercised by the personal representative of the
estate of Optionee or by any person who has acquired the Option from Optionee by bequest or inheritance, but only within such period of time ending on the earlier of (i) the date twelve (12) months following Optionee’s
death or (ii) the Expiration Date. 
 (e) Payment of the Option Price for the number of shares of Company Stock as to which the Option
is exercised, to the extent permitted by applicable statutes and regulations, shall be paid: 
  

	 	i.	In cash, certified or cashier’s check, or wire transfer payable to the order of the Company, in an amount equal to the Option Price per share multiplied by the number of shares as to which the Option is exercised.
The Company shall have the right to require a cash payment upon the exercise of the Option in connection with an obligation, if any, of the Company to withhold taxes; 

 

	 	ii.	By delivery to the Company of other shares of Company Stock, duly endorsed for transfer to the Company, with a Fair Market Value on the date of delivery equal to the aggregate Option Price (or portion thereof) due for
the number of shares being acquired, or by means of attestation whereby the Optionee identifies for delivery specific shares that have a Fair Market Value on the date of attestation equal to the Option Price (or portion thereof) and receives a
number of shares equal to the difference between the number of shares thereby purchased and the number of identified attestation shares; 

  

	 	iii.	Through a cashless exercise program established with a broker; provided however, the Option will lose its Incentive Stock Option status if certain holding requirements are not met through a cashless exercise
program; 

  

	 	iv.	By any combination of the foregoing methods; or 

  

	 	v.	In any other form of legal consideration acceptable to the Company. 

  
 3 

 7. Adjustment Upon Changes in Capitalization. 

(a) If at any time during the period when the Option may be exercised the Company shall declare a dividend payable in shares of Company Stock
(or any security convertible into or granting rights to purchase shares of Company Stock) or split the then outstanding shares of Company Stock into a greater number of shares, the number of shares of Company Stock which may be purchased upon the
exercise of the Option at the time of the record date for such dividend or at the time of such stock split shall be proportionately increased and the Option Price per share proportionately decreased as of such time, and, conversely, if at any time
the Company shall reduce the number of outstanding shares of Company Stock by combining such shares into a smaller number of shares, the number of shares of Company Stock which may be purchased upon the exercise of the Option shall at the time of
such action be proportionately decreased and the Option Price per share proportionately increased. 
 (b) If the Company consolidates or
merges with or into another corporation (whether or not the Company shall be the surviving entity), or sells all or substantially all of its assets as part of a reorganization within the meaning of Code Section 368, or reclassifies or
reorganizes its capital structure (except a stock dividend, split, or combination covered by subparagraph 7(a) hereof, the number of shares of Company Stock subject to the Option shall be increased or decreased to reflect the number of shares
which the Optionee would have been entitled to receive in connection with such transaction if the shares of Company Stock subject to the Option had been issued and held by Optionee on the date immediately prior to the date the transaction is
consummated (the “Transaction Date”). Notice of such consolidation, merger, sale, reclassification, or reorganization and of said provisions proposed to be made shall be mailed to Optionee not less than 15 days prior to such
Transaction Date. As a condition to any reorganization, reclassification, consolidation, merger, or sale, in which the Company is not the survivor, the Company or any successor, surviving, or purchasing corporation, as the case may be, shall agree
that it is bound by the Option, that it will satisfy all of the obligations of the Company hereunder, and that Optionee shall have the right, upon exercise of the Option on the terms and conditions hereof, to receive the kind and amount of stock,
securities, or assets receivable upon such reorganization, reclassification, consolidation, merger, or sale, including the number of shares of Company Stock issuable upon exercise of the Option immediately prior to such reorganization,
reclassification, consolidation, merger, or sale, subject to adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this subparagraph 7(b). Notwithstanding the foregoing provisions of this
subparagraph 7(b), in the event of any such consolidation, merger, sale, reclassification or reorganization, the Board, or its designated committee, may, in its discretion and upon at least 15 days’ advance notice to Optionee, cancel the
Option and pay to Optionee the value of the Option based upon the price per share of Company Stock received or to be received by other shareholders of the Company in the transaction provided, that if at the time of the transaction, the Option Price
of the Option equals or exceeds the price paid or to be paid for a share of Company Stock in connection with the transaction, the Board, or its designated committee, may cancel the Option without the payment of any consideration therefor. 

8. Tax Liability and Withholding. Notwithstanding any action the Company takes with respect to any or all income tax, social security
insurance, payroll tax or other tax-related withholding (“Tax-Related Items”), the ultimate liability for all Tax-Related Items is and remains the Optionee’s responsibility, and the Company makes no representations or
undertakings regarding the treatment of any Tax-Related Items in connection with the grant, vesting, or exercise of the Option or the subsequent sale of any shares acquired on exercise. Further, the Company does not commit to structure the Option to
reduce or eliminate the Optionee’s liability for Tax-Related Items. If the Company, in its discretion, determines that it is obligated to withhold any tax in connection with the exercise of the Option, the Optionee must make arrangements
satisfactory to the Company to pay or provide for any applicable federal, state and local withholding obligations of the Company. The Optionee may satisfy any federal, state or local tax withholding obligation relating to the exercise of the Option
by any of the following 

  
 4 

 
means: (a) tendering a cash payment; or (b) delivering to the Company previously owned and unencumbered shares of Company Stock. The Company has the right to withhold from any
compensation paid to the Optionee. 
 9. Qualification as Incentive Stock Option. It is understood that this Option is intended to
qualify as an Incentive Stock Option as defined in Code Section 422 to the extent permitted under applicable law. Accordingly, the Optionee understands that in order to obtain the benefits of an Incentive Stock Option, no sale or other
disposition may be made of shares for which Incentive Stock Option treatment is desired within one (1) year following the date of exercise of the Option or within two (2) years from the Grant Date. The Optionee understands and agrees that
the Company shall not be liable or responsible for any additional tax liability the Optionee incurs in the event that the Internal Revenue Service for any reason determines that the Option does not qualify as an Incentive Stock Option within the
meaning of the Code. 
 10. Disqualifying Disposition. If Optionee disposes of the shares of Company Stock received upon the exercise
of the Option prior to the expiration of either two (2) years from the Grant Date or one (1) year from the date the shares are transferred to Optionee pursuant to the exercise of the Option (a “Disqualifying Disposition”),
Optionee shall notify the Company in writing within 30 days after such disposition of the date and terms of such disposition. Optionee also agrees to provide the Company with any information concerning any such disposition as the Company requires
for tax purposes. The Company is under no obligation (a) to recognize any Disqualifying Disposition; (b) to transfer on its books any of the shares of Company Stock which shall have been sold or transferred in violation of any of the
provisions set forth herein; or (c) to treat as owner of such shares or to pay dividends to any transferee to whom any such shares shall have been so sold or transferred. 

11. Compliance with Law. The exercise of the Option and the issuance and transfer of shares of Company Stock subject thereto shall be
subject to compliance by the Company and Optionee with all applicable requirements of federal and state securities laws and regulations and all applicable requirements of any stock exchange on which the Company’s shares of Company Stock may be
listed. No shares of Company Stock shall be issued pursuant to this Option unless and until any then applicable requirements of state or federal laws and regulatory agencies have been fully complied with to the satisfaction of the Company and its
counsel. 
 12. Delivery of Evidence of Ownership. As soon as practicable after an exercise hereunder, in whole or in part, the
Company at its expense shall cause to be issued in the name of and delivered to Optionee book entry evidence of the number of duly authorized, fully paid, and non-assessable shares of Company Stock to which Optionee is entitled upon such exercise.
All deliveries of evidence of ownership shall be subject to such stop transfer orders and other restrictions as the Company may deem advisable under the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock
exchange upon which the Company’s Stock is then listed, or any national securities exchange system upon whose system the Company’s Stock is then quoted, or any applicable federal, state or other securities law or other applicable corporate
law. The Company may make such notations in book entry format as required or appropriate to reference such restrictions. 
 13.
Reservation of Shares. Except as otherwise restricted by the Plan, the Company shall at all times reserve and keep available a number of authorized but unissued shares of Company Stock sufficient to permit the exercise in full of the Option.

 14. Reservation of Rights by Company. When the transfer of the Company Stock subject to the Option may, in the opinion of the
Company, conflict or be inconsistent with any applicable law or regulation of any governmental agency having jurisdiction, the Company reserves the right to refuse to transfer such Company Stock, and shall return any tendered Option Price therefor.

  
 5 

 15. No Rights or Liabilities as Shareholder. Optionee shall have no rights or any
obligations or liabilities as a shareholder of the Company with respect to any shares which may be purchased upon exercise of the Option unless and until such shares are duly issued to Optionee. 

16. No Employment Rights. Nothing in this Agreement, including the grant of the Option hereunder, shall confer on Optionee any right to
continue in the active employment of the Company, or any Affliate thereof, or interfere in any way with the right of the Company, or any Affliate thereof, at any time to terminate or modify the terms or conditions of such employment. 

17. Transferability. The Option shall not be transferable by Optionee otherwise than by last will and testament or by the laws of
descent and distribution. The Option may be exercised during Optionee’s lifetime only by Optionee. Without limiting the generality of the foregoing, the Option may not be assigned, transferred, pledged, or hypothecated (whether by operation of
law or otherwise) and shall not be subject to execution, attachment, or similar process. Any attempted assignment, transfer, pledge, hypothecation, or other disposition of the Option contrary to the provisions hereof, or by the levy of any
attachment or similar process upon Optionee, shall be void and of no force or effect and shall result in the forfeiture of any unexercised shares subject to the Option. 

18. Plan Terms. The terms of the Plan, pursuant to which this Agreement is made, are incorporated herein by reference and expressly
made a part of this Agreement. In the event of any contradiction or inconsistency between this Agreement and the Plan, the terms and conditions of the Plan shall control. Capitalized terms used but not defined herein shall have the meanings given to
such terms in the Plan. 
 19. Rule 16b-3. This Agreement and the Option granted hereunder shall be limited and construed in such
respects as may be necessary in order that it will receive the full benefit of the exemption from liability provided by Rule 16b-3 under the Securities Exchange Act of 1934, as amended, or any successor rule or regulation to the extent applicable.

 20. Code Section 409A. The intent of the parties is that benefits under this Agreement shall be exempt from the provisions of
Code Section 409A, and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be limited, construed and interpreted in accordance with such intent. In no event whatsoever shall the Company be liable for any
additional tax, interest or penalties that may be imposed on Optionee or any damages for failing to comply with Code Section 409A hereunder or otherwise. 

21. Governing Law. This Agreement is to be construed and enforced in accordance with and governed by the procedural provisions and
substantive law of the State of Tennessee, including, without limitation, that state’s law of privilege, without giving effect to its conflicts of law principles. 

22. Miscellaneous. 
 (a)
Amendment of Agreement. The Company has the right to amend, alter, suspend, discontinue or cancel the Option, prospectively or retroactively, without Optionee’s consent, unless such action adversely affects Optionee’s rights under
this Agreement. Notwithstanding the previous sentence, in no event shall the Company (i) re-price the Option such that the Option Price is less than the Fair Market Value at the time of re-pricing; (ii) extend the term of an
“in-the-money” Option beyond the shorter of the original Expiration Date or ten (10) years from the Grant Date; (iii) provide for deferral of 

  
 6 

 
Option gains or deferred payment of an exercisable Option; or (iv) make any other modification to this Agreement that would cause the Option to be subject to Code Section 409A. In the
event that any such modification(s) are made to the Option, the modification may be rescinded by the Company’s board of director or its compensation committee, as determined under the Plan, before the last day of the calendar year in which the
modification is made, or, if earlier, the date the Option is exercised. 
 (b) Notices. All notices under this Agreement shall be
mailed or delivered by hand to the Optionee at the Optionee’s address registered with the Company and to the Company at the physical address of the main office of the Company, or at such other addresses as the parties may from time to time
provide to each other in writing. 
 (c) Interpretation. Any dispute regarding the interpretation of this Agreement shall be
submitted by the Optionee or the Company to the Company’s Compensation Committee for review. The resolution of such dispute by the Compensation Committee shall be final and binding on the Optionee and the Company. 

(d) Successors and Assigns. The Company may assign any of its rights or delegate any of its obligations under this Agreement without
the prior consent of the Optionee. The Agreement will be binding upon and inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth herein, this Agreement will be binding upon the Optionee
and the Optionee’s executors, administrators, and the person(s) to whom this Agreement may be transferred by will or the laws of descent or distribution. 

(e) Severability. The invalidity or unenforceability of any provision of the Plan or this Agreement shall not affect the validity or
enforceability of any other provision of the Plan or this Agreement, and each provision of the Plan and this Agreement shall be severable and enforceable to the extent permitted by law. 

(f) Discretionary Nature of Plan. The Plan is discretionary and may, subject to the terms of the Plan, be amended, cancelled, or
terminated by the Company at any time, in its discretion. The grant of the Option in this Agreement does not create any contractual right or other right to receive any options or other awards in the future. Future awards or grants, if any, will be
at the sole discretion of the Company. Any amendment, modification, or termination of the Plan shall not constitute a change or impairment of the terms and conditions of the Optionee’s employment with the Company or any Affliate thereof. 

(g) No Impact on Other Benefits. The value of the Optionee’s Option is not part of his or her normal or expected compensation for
purposes of calculating any severance, retirement, welfare, insurance or similar employee benefit. 
 (h) Counterparts. This
Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. Counterpart signature pages to this Agreement transmitted by facsimile transmission, by
electronic mail in portable document format (.pdf), or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, will have the same effect as physical delivery of the paper document
bearing an original signature. 
 (i) 

(Signature Page Follows) 

  
 7 

 IN WITNESS WHEREOF, the Company and Optionee have duly executed this Incentive Stock
Option Agreement as of the date first above written. 
  

									
	COMMERCE UNION BANCSHARES, INC.	 		 	OPTIONEE
					
	By:	 	  
	 		 	By:	 	  

		 	William R. DeBerry	 		 		 	
		 	Chairman and CEO	 		 		 	
		 		 		 	Print name:
                                         
                                         

  
 8 

 EXHIBIT A 

OPTIONEE’S ACCEPTANCE 
 I,
                                        , hereby
accept the foregoing Incentive Stock Option Agreement and agree to the terms and conditions thereof. Furthermore, I hereby acknowledge having received and read a copy of the Commerce Union Bancshares, Inc. 2015 Equity Incentive Plan, as amended, and
agree to comply with it and all applicable laws and regulations. 
  

					
		  		  	OPTIONEE
			
		  		  	  

		  		  	Signature
			
		  		  	  

		  		  	Print name
			
		  		  	  

			
		  		  	  

		  		  	Address

  
 9 

 EXHIBIT B 

[Optionee may use this form or any similar form that contains the required information.] 

Notice of Stock Option Exercise 
 Date:
                                        1 
 Commerce Union Bancshares, Inc. 

1736 Carothers Parkway, Suite 100 
 Brentwood, Tennessee 37027

 Attention: Chief Financial Officer 
 Dear Sir or Madam: 

I am the holder of
                                        2 Stock Option granted to me under the 2015 Commerce Union Bancshares, Inc. 2015 Equity Incentive Plan on
                        3 for the purchase of
            4 shares of Company Stock at the purchase price of
$                5 per share. 

I hereby exercise my option to purchase
                    6 shares of Company Stock for which I have enclosed
                    7 in the amount of
                    8. Please register my stock as follows: 

 

			
	Name(s):	 	  

		
		 	  

		
	Address:	 	  

	
	  

 Tax I.D. or Social Security Number:
                                         
                
 I represent, warrant and covenant as follows: 

 

	 	•	 	I am purchasing the shares for my own account for investment only and not with a view to, or for sale in connection with, any distribution of the shares in violation of the Securities Act of 1933 (the
“Securities Act”), or any rule or regulation under the Securities Act. 

  

	 	•	 	I have had such opportunity as I have deemed adequate to obtain from representatives of the Company such information as is necessary to permit me to evaluate the merits and risks of my investment in the Company.

  

	1 	Enter date of Exercise. 

	2 	Enter either “an Incentive” or “a Non-statutory.” 

	3 	Enter date of grant. 

	4 	Enter the total number of shares of Company Stock for which the Option was granted. 

	5 	Enter the Option Exercise Price per shares of Company Stock. 

	6 	Enter the number of shares of Company Stock to be purchased upon exercise of all or part of the Option. 

	7 	Enter “cash,” “wire transfer,” “personal check,” or if permitted by the Agreement and the Plan, “stock certificates Nos. XXXX and ZZZZ (or evidence of book entry ownership of such
shares). 

	8 	Enter the dollar mount (price per shares x the number of shares to be purchased), or the number of shares tendered. The Fair Market Value of shares tendered, together with cash or check, must cover the purchase price of
the shares issued upon exercise. 

  
 10 

	 	•	 	I have had sufficient experience in business, financial and investment matters to be able to evaluate the risks involved in the purchase of the shares and to make an informed investment decision with respect to such
purchase. 

  

	 	•	 	I can afford a complete loss of the value of the shares and am able to bear the economic risk of holding such shares for an indefinite period. 

 

	
	Very truly yours,
	
	   

	Signature

  
 11

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