Document:

Execution
Version 

 

EXHIBIT
10.1

 

Securities
Purchase Agreement

 

This
Securities Purchase Agreement (the “Agreement”) dated as of May 5, 2021 (the “Effective Date”)
between:

 

(a)
Harrow Health, Inc., a Delaware corporation (the “Company”) and

 

(b)
B. Riley Securities, Inc. (together with any participating affiliates, the “Purchaser”).

 

The
Company and the Purchaser are individually, a “Party” and are collectively the “Parties.”

 

Background

 

A.
The Company desires to issue and sell (the “Offering”) 440,000 shares of the Company’s Series B Cumulative Preferred
Stock (the “Securities”), having a liquidation preference of $25.00 per share for a purchase price equal to $10,670,000.00
(the “Consideration”).

 

B.
The Offering is being conducted pursuant to the exemptions from the registration provisions of the Securities Act of 1933, as amended
(the “Securities Act”) provided by Section 4(a)(2) of the Securities Act and Rule 506(b) (“Rule 506”)
of Regulation D thereunder.

 

C.
The Purchaser desires to purchase the Securities.

 

NOW
THEREFORE, in consideration of the mutual promises contained herein and other good and valuable consideration, the receipt of which
is hereby acknowledged, the parties to this Agreement agree as follows:

 

1.
Definitions. Capitalized terms not otherwise defined in this Agreement will have
the meanings set forth in this Section 1.

 

1.1
“Intellectual Property” means all of the following: (A) patents, patent applications, patent disclosures and inventions
(whether or not patentable and whether or not reduced to practice); (B) trademarks, service marks, trade dress, trade names, corporate
names, logos, slogans and Internet domain names, together with all goodwill associated with each of the foregoing; (C) copyrights and
copyrightable works; (D) registrations, applications and renewals for any of the foregoing; and (E) proprietary computer software (including
but not limited to data, data bases and documentation).

 

    	 

     

    

 

1.2
“Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, encumbrance, charge or security
interest of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, (b) the interest
of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having
substantially the same economic effect as any of the foregoing) relating to such asset and (c) in the case of securities, any purchase
option, call or similar right of a third party with respect to such securities.

 

1.3
“Material Adverse Effect” means a material adverse effect on (i) the assets, liabilities, results of operations, condition
(financial or otherwise), business, or prospects of the Company and its Subsidiaries taken as a whole, or (ii) the ability of the Company
to perform its obligations under this Agreement.

 

1.4
“Person” means an individual, corporation, partnership, limited liability company, trust, business trust, association,
joint stock company, joint venture, sole proprietorship, unincorporated organization, governmental authority or any other form of entity
not specifically listed herein.

 

1.5
“Subsidiary” of any Person means another Person, an amount of the voting securities, other voting ownership or voting
partnership interests of which is sufficient to elect at least a majority of its board of directors or other governing body (or, if there
are no such voting interests, 50% or more of the equity interests of which) is owned directly or indirectly by such first Person.

 

2.
Purchase and Sale of Securities. In exchange for the Consideration paid by the Purchaser, the Company will sell and issue to the
Purchaser the Securities.

 

3.
Closing. The closing of the sale of the Securities in return for the Consideration paid by the Purchaser (the “Closing”)
will take place remotely via the exchange of documents and signatures on the date of this Agreement, or at such other time and place
as the Company and the Purchaser agree upon by email or in writing. The Company shall file the Certificate of Designations for the Securities,
in the form attached hereto as Exhibit A (the “COD”), with the Secretary of State of the State of Delaware,
accompanied by all fees required to be paid therewith, and cause the COD to become effective on or prior to the Closing.

 

At
the Closing:

 

(i)
the Purchaser will deliver the Consideration to the Company in immediately available funds in accordance with wire instructions provided
to the Purchaser in writing in advance of the Closing;

 

(ii)
the Company will deliver to the Purchaser the Securities in return for the Consideration paid to the Company; and

 

(iii)
counsel to the Company shall deliver an opinion to the Purchaser as to the due execution and delivery of this Agreement, the due issuance,
full payment and validity of the Securities, and such other customary matters as reasonably requested by the Purchaser.

 

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4.
Representations and Warranties of the Company. The Company hereby represents and warrants to the Purchaser that, except as set
forth in the SEC Reports (as such term is defined below):

 

4.1
Organization, Good Standing and Qualification. The Company and its Subsidiaries are each duly organized and validly existing as
a corporation or other legal entity in good standing under the laws of the jurisdiction of their incorporation or organization. Each
of the Company and its Subsidiaries is duly qualified to do business as a foreign corporation or entity and is in good standing in each
jurisdiction in which its ownership or lease of its properties or the conduct of its business requires such qualification and has all
power and authority (corporate or other) necessary to own or hold its properties and to conduct the businesses in which each is engaged,
except where the failure to so qualify or have such power or authority would not have a Material Adverse Effect.

 

4.2
Authorization and Enforceability. The Company has all corporate power and authority and has taken all requisite action on the
part of the Company, its officers, directors and stockholders necessary for (i) the authorization, execution and delivery of this Agreement,
(ii) the authorization of the performance of all obligations of the Company hereunder, and (iii) the authorization, issuance and delivery
of the Securities. The Securities will entitle the holders thereof to the rights and benefits provided in the COD. This Agreement, upon
execution and delivery thereof by the Company, will constitute the legal, valid and binding obligations of the Company, enforceable against
the Company in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar
laws of general applicability, relating to or affecting creditors’ rights generally and to general equitable principles.

 

4.3
Capitalization. The Company’s Annual Report on Form 10-K for the year ended December 31, 2020 (the “10-K”)
sets forth as of its date: (i) the authorized and outstanding capital stock of the Company; (ii) the number of shares of capital stock
issuable pursuant to the Company’s stock plans; and (iii) the number of shares of capital stock issuable and reserved for issuance
pursuant to securities exercisable for, or convertible into or exchangeable for any shares of capital stock of the Company. All of the
issued and outstanding shares of the Company’s capital stock have been duly authorized and validly issued and are fully paid, nonassessable
and free of pre-emptive rights and were issued in full compliance with applicable state and federal securities law and any rights of
third parties. All of the issued and outstanding shares of capital stock of the Subsidiaries have been duly authorized and validly issued
and are fully paid, nonassessable and free of pre-emptive rights, were issued in full compliance with applicable state and federal securities
law and any rights of third parties and are owned by the Company, beneficially and of record, subject to no Lien (as defined above).
No Person is entitled to pre-emptive or similar statutory or contractual rights with respect to any securities of the Company. Except
as disclosed in the SEC Reports, there are no outstanding warrants, options, convertible securities or other rights, agreements or arrangements
of any character under which the Company is or may be obligated to issue any securities of any kind. Except as disclosed in the SEC Reports,
there are no voting agreements, buy-sell agreements, option or right of first purchase agreements or other agreements of any kind among
the Company and any of the securityholders of the Company relating to the securities of the Company held by them. Except as disclosed
in the SEC Reports, no Person has the right to require the Company to register any securities of the Company under the Securities Act,
whether on a demand basis or in connection with the registration of securities of the Company for its own account or for the account
of any other Person.

 

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4.4
Governmental Approval. No action, consent or approval of, registration or filing with or any other action by any federal, state,
local or foreign court or governmental agency, authority, instrumentality or regulatory body (collectively, “Governmental Authority”)
is or will be required in connection with the transactions contemplated hereby, except for such as have been made or obtained and are
in full force and effect and post-sale filings pursuant to applicable state and federal securities laws which the Company undertakes
to file within the applicable time periods.

 

4.5
Accuracy of Filings. Neither the 10-K nor any of the Company’s reports, schedules, forms, statements and other documents
filed with the Securities and Exchange Commission (the “SEC”) since the filing of the 10-K (collectively, the “SEC
Reports”), contains any untrue statement of a material fact or omitted to state a material fact required to make the statements
contained therein, in light of the circumstances in which they were made, not misleading, except to the extent that such statements have
been modified or superseded by later SEC Reports filed on a non-confidential basis filed prior to the date hereof.

 

4.6
No Material Adverse Effect. Since December 31, 2020, except as identified and described in the SEC Reports, no Material Adverse
Effect has occurred with respect to the business, assets, liabilities, operations, condition (financial or otherwise), or operating results
of the Company or its Subsidiaries, taken as a whole.

 

4.7
Title to Properties. The Company has good and marketable title to all real properties and all other properties and assets owned
by it, in each case free from Liens that would materially affect the value thereof or materially interfere with the use made or currently
planned to be made thereof by them.

 

4.8
Intellectual Property.

 

(a)
All Intellectual Property of the Company necessary for the operation of the business as currently conducted is in material compliance
with all legal requirements (including timely filings, proofs and payments of fees) and is valid and enforceable. No Intellectual Property
of either the Company or its Subsidiaries, which is necessary for the conduct of Company’s and such Subsidiary’s respective
businesses as currently conducted or as currently proposed to be conducted, has been or is now involved in any cancellation, dispute
or litigation, and, to the Company’s knowledge, no such action is threatened. No patent of either the Company or its Subsidiaries
has been or is now involved in any interference, reissue, re-examination or opposition proceeding.

 

(b)
The Company and its Subsidiaries own or have the valid right to use all of the Intellectual Property that is necessary for the conduct
of the Company’s and each Subsidiary’s respective businesses as currently conducted or as currently proposed to be conducted
and for the ownership, maintenance and operation of the Company’s and each Subsidiary’s properties and assets, free and clear
of all Liens, adverse claims or obligations to license all such owned Intellectual Property and trade secrets, confidential information
and know-how (including but not limited to ideas, formulae, compositions, processes, procedures and techniques, research and development
information, computer program code, performance specifications, support documentation, drawings, specifications, designs, business and
marketing plans, and customer and supplier lists and related information) (collectively, “Confidential Information”),
other than licenses entered into in the ordinary course of the Company’s and each Subsidiary’s businesses. The Company and
each Subsidiary has a valid and enforceable right to use all third-party Intellectual Property and Confidential Information used or held
for use in the respective businesses of the Company and its Subsidiaries.

 

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(c)
To the knowledge of the Company, the conduct of the Company’s and each Subsidiary’s businesses as currently conducted does
not infringe or otherwise impair or conflict with (collectively, “Infringe”) any Intellectual Property rights of any
third party or any confidentiality obligation owed to a third party, and, to the Company’s knowledge, the Intellectual Property
and Confidential Information of the Company and each Subsidiary which are necessary for the conduct of Company’s and such Subsidiary’s
respective businesses as currently conducted or as currently proposed to be conducted are not being Infringed by any third party. There
is no litigation or order pending or outstanding or, to the Company’s knowledge, threatened, that seeks to limit or challenge or
that concerns the ownership, use, validity or enforceability of any Intellectual Property or Confidential Information of the Company
and its Subsidiaries and the Company’s and each Subsidiary’s use of any Intellectual Property or Confidential Information
owned by a third party, and, to the Company’s knowledge, there is no valid basis for the same.

 

(d)
The consummation of the transactions contemplated hereby will not result in the alteration, loss, impairment of or restriction on the
Company’s ownership or right to use any of the Intellectual Property or Confidential Information which is necessary for the conduct
of Company’s business as currently conducted or as currently proposed to be conducted.

 

(e)
The Company has taken reasonable steps to protect the Company’s rights in its Intellectual Property and Confidential Information.
Each employee, consultant and contractor who has had access to Confidential Information which is necessary for the conduct of the Company’s
business as currently conducted or as currently proposed to be conducted has executed an agreement to maintain the confidentiality of
such Confidential Information and has executed appropriate agreements that are substantially consistent with the Company’s standard
forms thereof. Except under confidentiality obligations, there has been no material disclosure of any of the Company’s Confidential
Information to any third party.

 

4.9
Compliance with Laws. Except as described in the SEC Reports, there are no actions, suits or proceedings at law or in equity or
by or before any Governmental Authority now pending or, to the knowledge of the Company, threatened against or affecting the Company
or any of its business, property or rights (i) that involve this Agreement or the Securities or (ii) as to which, if adversely determined,
could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect to the Company. Neither the Company
nor its Subsidiaries nor any of its or their respective properties or assets is in violation of, nor will the continued operation of
its and their properties and assets as currently conducted violate, any law, rule or regulation (including any applicable environmental
law, ordinance, code or approval) or any restrictions of record or agreements affecting the properties, or is in default with respect
to any judgment, writ, injunction, decree or order of any Governmental Authority, where such violation or default could reasonably be
expected to result in a Material Adverse Effect to the Company or its Subsidiaries. The Company possesses adequate certificates, authorities
or permits issued by appropriate Governmental Authorities necessary to conduct the business now operated by it, except where such failure
has not had and could not reasonably be expected to have a Material Adverse Effect, individually or in the aggregate, and the Company
has not received any notice of proceedings relating to the revocation or modification of any such certificate, authority or permit that,
if determined adversely to the Company, could reasonably be expected to have a Material Adverse Effect, individually or in the aggregate.

 

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4.10
Tax Returns. The Company has filed all material federal, state and foreign income and franchise tax returns or has properly requested
extensions thereof and has paid all material taxes required to be paid by it and, if due and payable, any related or similar assessment,
fine or penalty levied against it except as may be being contested in good faith and by appropriate proceedings.

 

4.11
Rule 506 Compliance. To the Company’s knowledge, neither the Company nor any director, executive officer, other officer
of the Company participating in the offering, any beneficial owner of 20% or more of the Company’s outstanding voting equity securities,
calculated on the basis of voting power, and any promoter connected with the Company in any capacity on the date hereof (each, an “Insider”)
is subject to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the Securities Act
(a “Disqualification Event”), except for a Disqualification Event covered by Rule 506(d)(2)(i) or (d)(3) of the Securities
Act. The Company is not disqualified from relying on Rule 506 for any of the reasons stated in Rule 506(d) in connection with the issuance
and sale of the Securities to the Purchaser pursuant to this Agreement. The Company has exercised reasonable care, including without
limitation, conducting a factual inquiry that is appropriate in light of the circumstances, into whether any such disqualification under
Rule 506(d) exists. The Company has furnished to the Purchaser, a reasonable time prior to the date hereof, a description in writing
of any matters relating to the Company and the Insiders that would have triggered disqualification under Rule 506(d) but which occurred
before September 23, 2013, in each case, in compliance with the disclosure requirements of Rule 506(e).

 

5.
Representations and Warranties of the Purchaser. In connection with the transactions contemplated by this Agreement, Purchaser
hereby represents and warrants to the Company as follows:

 

5.1
Authorization. Purchaser has full power and authority to enter into this Agreement and to perform all obligations required to
be performed by it hereunder. This Agreement, when executed and delivered by the Purchaser, will constitute Purchaser’s valid and
legally binding obligation, enforceable in accordance with its terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance and any other laws of general application affecting enforcement of creditors’ rights generally,
and (b) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies.

 

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5.2
Purchase Entirely for Own Account. The Purchaser acknowledges that this Agreement is made with the Purchaser in reliance upon
the Purchaser’s representation to the Company, which the Purchaser confirms by executing this Agreement, that the Securities will
be acquired for investment for the Purchaser’s own account, not as a nominee or agent (unless otherwise specified on the Purchaser’s
signature page hereto), and not with a view to the resale or distribution of any part thereof, and that the Purchaser has no present
intention of selling, granting any participation in, or otherwise distributing the same. By executing this Agreement, the Purchaser further
represents that the Purchaser does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or
grant participations to such person or to any third person, with respect to the Securities.

 

5.3
Investment Experience. The Purchaser is an experienced investor in securities and acknowledges that it is able to fend for itself,
can bear the economic risk of its investment and has such knowledge and experience in financial or business matters that it is capable
of evaluating the merits and risks of the investment in the Securities.

 

5.4
Accredited Investor. The Purchaser is an “accredited investor” within the meaning of Rule 501 of Regulation D promulgated
under the Securities Act. The Purchaser agrees to furnish any additional information requested by the Company to assure compliance with
applicable U.S. federal and state securities laws in connection with the purchase and sale of the Securities.

 

5.5
Restricted Securities. The Purchaser understands that the Securities have not been, and will not be, registered under the Securities
Act or any state securities laws, by reason of specific exemptions under the provisions thereof which depend upon, among other things,
the bona fide nature of the investment intent and the accuracy of the Purchaser’s representations as expressed herein. The Purchaser
understands that the Securities are “restricted securities” under U.S. federal and applicable state securities laws and that,
pursuant to these laws, the Purchaser must hold the Securities indefinitely unless they are registered with the SEC and registered or
qualified by state authorities, or an exemption from such registration and qualification requirements is available. The Purchaser acknowledges
that the Company has no obligation to register or qualify the Securities for resale and further acknowledges that, if an exemption from
registration or qualification is available, it may be conditioned on various requirements including, but not limited to, the time and
manner of sale, the holding period for the Securities, and on requirements relating to the Company which are outside of the Purchaser’s
control, and which the Company is under no obligation, and may not be able, to satisfy.

 

5.6
No Public Market. The Purchaser understands that no public market now exists for the Securities and that no public market will
ever exist for the Securities.

 

6.
Miscellaneous.

 

6.1
Successors and Assigns. Except as otherwise provided herein, the terms and conditions of this Agreement will inure to the benefit
of, and be binding upon, the respective successors and assigns of the parties; provided, however, that the Company may not assign its
obligations under this Agreement without the written consent of the Purchaser. This Agreement is for the sole benefit of the parties
hereto and their respective successors and permitted assigns, and nothing herein, express or implied, is intended to or will confer upon
any other person or entity any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

 

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6.2
Choice of Law. This Agreement and the Securities, and all matters arising out of or relating to this Agreement, whether sounding
in contract, tort, or statute will be governed by and construed in accordance with the internal laws of the State of Delaware, without
giving effect to the conflict of laws provisions thereof to the extent such principles or rules would require or permit the application
of the laws of any jurisdiction other than those of the State of Delaware.

 

6.3
Counterparts. This Agreement may be executed in counterparts, each of which will be deemed an original, but all of which together
will be deemed to be one and the same agreement. Counterparts may be delivered via facsimile, email (including PDF or www.docusign.com)
or other transmission method, and any counterpart so delivered will be deemed to have been duly and validly delivered and be valid and
effective for all purposes.

 

6.4
Titles and Subtitles. The titles and subtitles used in this Agreement are included for convenience only and are not to be considered
in construing or interpreting this Agreement.

 

6.5
Notices. All notices and other communications given or made pursuant hereto will be in writing and will be deemed effectively
given: (a) upon personal delivery to the party to be notified; (b) when sent by email or confirmed facsimile; (c) five (5) days after
having been sent by registered or certified mail, return receipt requested, postage prepaid; or (d) one (1) day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with written verification of receipt.

 

6.6
Expenses. Each party will pay all costs and expenses that it incurs with respect to the negotiation, execution, delivery and performance
of this Agreement.

 

6.7
Attorneys’ Fees. If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the
prevailing party will be entitled to reasonable attorneys’ fees, costs and necessary disbursements in addition to any other relief
to which such party may be entitled.

 

6.8
Entire Agreement; Amendments and Waivers. This Agreement, the Securities and the other documents delivered pursuant hereto constitute
the full and entire understanding and agreement among the parties with regard to the subjects hereof and thereof. Notwithstanding the
foregoing, any term of this Agreement or the Securities may be amended and the observance of any term of this Agreement or the Securities
may be waived (either generally or in a particular instance and either retroactively or prospectively) with the written consent of the
Company and the Purchaser. Any waiver or amendment effected in accordance with this Section 6.8 will be binding upon each party to this
Agreement.

 

6.9
Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree
to renegotiate such provision in good faith, in order to maintain the economic position enjoyed by each party as close as possible to
that under the provisions rendered unenforceable. In the event that the parties cannot reach a mutually agreeable and enforceable replacement
for such provisions, such provisions will be excluded from this Agreement and the balance of the Agreement will be interpreted as if
such provisions were so excluded and this Agreement will be enforceable in accordance with its terms.

 

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6.10
Legends. The Purchaser understands and acknowledges that the Securities shall bear the following legend:

 

THIS
INSTRUMENT AND THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”). THEY MAY
NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT OR UPON RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER
THE ACT.

 

6.11
Further Assurances. From time to time, each of the parties agrees to execute and deliver such additional documents and to provide
such additional information as may reasonably be required to carry out the terms of this Agreement.

 

6.12
Waiver of Jury Trial. EACH PARTY HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF THIS AGREEMENT, THE SECURITIES OR THE SUBJECT MATTER HEREOF OR THEREOF. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING
OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING, WITHOUT
LIMITATION, CONTRACT CLAIMS, TORT CLAIMS (INCLUDING NEGLIGENCE), BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.
THIS SECTION HAS BEEN FULLY DISCUSSED BY EACH OF THE PARTIES HERETO AND THESE PROVISIONS WILL NOT BE SUBJECT TO ANY EXCEPTIONS. EACH
PARTY HERETO HEREBY FURTHER REPRESENTS AND WARRANTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.

 

[SIGNATURE
PAGES FOLLOW]

 

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IN
WITNESS WHEREOF, the parties hereto have executed this Securities Purchase Agreement as of the date set forth above.

 

	 	HARROW
    HEALTH, INC.
	 	 	 
	 	By:	/s/
    Andrew R. Boll
	 	 	Andrew
    R. Boll
	 	 	Chief
    Financial Officer 
	 	 	and
    Secretary 

  

    	 

     

    

 

IN
WITNESS WHEREOF, the parties hereto have executed this Securities Purchase Agreement as of the date set forth above.

 

	 	B.
    RILEY SECURITIES, INC.
	 	 	 
	 	By:	/s/
    Patrice McNicoll
	 	Name:	Patrice
    McNicoll
	 	Title:	Co-Head
    of Investment Banking

  

    	 

     

    

 

EXHIBIT
A

Certificate
of Designations

 

[See Exhibit 3.1 to the Current Report on Form
8-K filed by Harrow Health, Inc. on May 5, 2021.]formofsplitdollaragreeme

1  HERITAGE BANK  ENDORSEMENT METHOD  SPLIT DOLLAR AGREEMENT  (By and Between HERITAGE BANK and _______________) Insurer/Policy:  Employer/Bank  Insured:  Relationship of Insured to Bank:  Effective Date:  __________________________________ HERITAGE BANK  __________________________________ Executive  ___________, 2021 The respective rights and duties of Heritage Bank (hereinafter the “Bank”), a state  chartered commercial bank with its principal offices located in the city of Olympia, Washington,  and __________________ (“Insured”) in the above-referenced Policy(ies) shall be pursuant to the terms set forth below:  A. Insured is currently an employee and officer of the Bank and the Bank desires to retain the  services of the Insured for a considerable period.  B. The Bank desires to provide Insured with certain death benefits under a life insurance policy that the Bank has purchased on the life of Insured.  NOW, THEREFORE, the parties hereto, for and in consideration of the mutual  promises contained herein and for other good and valuable consideration, the receipt and  sufficiency of which are hereby acknowledged, intending to be legally bound hereby, do hereby  agree as follows:  1. DEFINITIONS. Refer to the Policy’s(ies’) contract for the definition of any terms in this Heritage Bank Endorsement Method Split Dollar Agreement (hereinafter, this “Agreement”) that are not defined herein. If the definition of a term in the Policy(ies) is inconsistent with the definition of a term in this Agreement, then the definition of the term as set forth in this Agreement shall supersede and replace the definition of the terms as set forth in the Policy(ies). A. Accelerated Benefit. The term “Accelerated Benefit” shall mean amounts requested and received pursuant to any Policy(ies’) rider permitting the policy owner or Insured access to portions of the eligible death benefit in the event the Insured is diagnosed with a chronic or terminal illness [as required by the 

 

2  individual Policy]. Individual accelerated benefit or chronic illness rider terms  may vary, however a sample rider is attached hereto and incorporated by  reference herein as “Exhibit A”.  B. Beneficiary. The term “Beneficiary” shall mean that person or those persons, trusts, estates or other entities, designated in accordance with the terms of Paragraph 3 below that are entitled to receive benefits under this Agreement upon the death of Insured. C. Beneficiary Designation Form. The “Beneficiary Designation Form” means the form established from time to time by the Bank and the Administrator, which an Insured completes, signs and returns in order to designate one or more Beneficiaries. D. Board.  The term “Board” shall mean the Board of Directors of the Bank. E. Change in Control. The term “Change in Control” shall mean any of the following:  (i) The acquisition in one or more transactions by any “person” (as such term is defined in Section 13(d) or 14(d) of the 1934 Act) of “beneficial ownership” (as defined in Rule 13d-3 promulgated under the Securities Exchange Act of 1934) of fifty percent (50%) or more of the combined voting power of the Company’s then outstanding Voting Securities (defined as any Company Security that ordinarily possesses the power to vote in the election of directors without any pre-condition or contingency); provided however, that for the purposes of this definition, the Voting Securities acquired directly from the Company by any person shall be excluded from the determination of such person’s beneficial ownership of Voting Securities (but such Voting Securities shall be included in the calculation of the total number of Voting Securities then outstanding); (ii) During any twelve (12) month period, the individuals who are members of the incumbent Board cease for any reason to constitute more than fifty percent (50%) of the Board; provided, however, that if the election, or nomination for election by the Company’s shareholders, of any new director was approved by a vote of at least two-thirds of the incumbent Board, such new director shall, for purposes of the Plan, be considered as a member of the incumbent Board, but excluding for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Board; or (iii) The consummation of a merger or consolidation involving the Company if the Company’s shareholders immediately before such merger or 

 

3  consolidation do not own, directly or indirectly immediately following  such merger or consolidation, more than fifty percent (50%)  of the  combined voting power of the outstanding Voting Securities of the  corporation resulting from such merger or consolidation in substantially  the same proportion as their ownership of the Voting Securities  immediately before such merger or consolidation; or  (iv) The consummation of a complete liquidation or dissolution of the Company or an agreement for the sale or other disposition of all or substantially all of the assets of the Company; or (v) Acceptance by the Company’s shareholders of shares in a share exchange if the Company’s shareholders immediately before such exchange do not own, directly or indirectly immediately following such share exchange, more than fifty percent (50%) of the combined voting power of the outstanding Voting Securities of the corporation resulting from such share exchange in substantially the same proportion as their ownership of the Voting Securities outstanding immediately before such exchange. Notwithstanding the forgoing, a Change in Control shall not be deemed to  occur solely because fifty percent (50%) or more of the then outstanding  Voting Securities is acquired by (A) a trustee or other fiduciary holding  securities under one (1) or more employee benefit plans maintained by the  Company or any of its affiliates, or (B) any corporation that, immediately  prior to such acquisition, is owned directly or indirectly by the Company’s  shareholders in the same proportion as their ownership of stock in the  Company immediately prior to such acquisition.   Moreover, notwithstanding the forgoing, a Change in Control shall not be  deemed to occur solely because any one person (“subject person”)  acquires beneficial ownership of more than the permitted amount of the  outstanding Voting Securities as a result of the acquisition of Voting  Securities by the Company that, by reducing the number of Voting  Securities outstanding, increases the proportional number of shares  beneficially owned by the subject person, provided that if a Change in  Control would occur (but for the operation of this sentence) as a result of  the acquisition of Voting Securities by the Company, and after such share  acquisition by the Company, the subject person becomes the beneficial  owner of any additional Voting Securities that increases the percentage of  then outstanding Voting Securities beneficially owned by the subject  person, then a Change in Control shall be deemed to have occurred.   F. Claimant.  The term “Claimant” shall have the meaning assigned to an individual who makes a claim pursuant to the provisions of Paragraph 11 below. 

 

4  G. Code. The “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time. H. ERISA. The term "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended. I. Final Base Salary.  The term “Final  Base Salary" shall mean the Insured’s annual rate of salary on the date of death,  including salary Insured could have received in cash in lieu of (i)  contributions made on Insured's behalf to a qualified plan maintained by the Bank or to any cafeteria plan under Section 125 of the Code maintained by the Bank and (ii) deferrals of compensation made at the Insured's election pursuant to a plan or arrangement of the Bank or an  affiliate, but excluding any bonuses, incentive pay or special awards. J. Insurer.  The term “Insurer” shall mean each life insurance carrier that has issued a Policy that has been made part of and is subject to this Agreement. K. NEO.  The term “NEO” shall mean each named executive officer set forth in Heritage Financial Corporation’s annual proxy statement for the applicable year. L. Net Amount-at-Risk.  The term “Net Amount-at-Risk” (hereinafter “NAR”) shall be defined as the total proceeds of the Policy(ies) less the cash value of the Policy(ies). M. Plan. The term “Plan” refers to this arrangement, as evidenced by this Agreement, whereby Insured (or Insured’s Beneficiary) is entitled to receive a benefit. N. Policy(ies).  The term “Policy(ies)” shall mean that life insurance policy or those policies referenced above and have been made part of, and are subject to, this Agreement. O. Separation From Service. The term “Separation from Service” (or “Separates From Service”) shall mean the termination of Insured’s employment or service with the Company and its affiliates for reasons other than death. Whether a Separation from Service occurs shall be determined in accordance with Code Section 409A based on whether the facts and circumstances indicate that the Company and the Insured reasonably anticipate that no further services will be performed after a certain date or that the level of bona fide services the Insured will perform after such date (whether as an employee or as an independent contractor) will permanently decrease to no more than forty-nine percent (49%) of the average level of bona fide services performed (whether as an employee or an independent contractor) over the immediately preceding twelve (12) month period (or the full period of services to the Company if the Insured has been providing services to the Company less than twelve (12) months. For periods during which the Insured is on a paid bona fide leave of absence (as defined in Treasury 

 

5  Regulation Section l.409A-l(h)(l)(i)) and has not otherwise terminated  employment, the Insured shall be treated as providing bona fide services at a level  equal to the level of services that the Insured would have been required to perform  to receive the compensation paid with respect to such leave of absence. Periods  during which the Insured is on an unpaid bona fide leave of absence (as defined in  Treasury Regulation Section l.409A-l(h)(l)(i)) and has not otherwise terminated  employment are disregarded for purposes of this definition (including for  purposes of determining the applicable 12 month period).  P. Termination For Cause. The term “Termination For Cause” shall have the same meaning as is used in the Bank’s Employee Handbook or any Employment Agreement the parties have entered into. If there is no definition of a “For Cause” termination appearing in a Bank Employee Handbook, or in the event Insured has no Employment Agreement, then a Separation From Service which is initiated by the Bank and is due to any of the following shall be considered a “Termination For Cause”: (i) A conviction of, or a plea of nolo contendere by Insured to a felony or to fraud, embezzlement or misappropriation of funds; (ii) The commission of a fraudulent act or omission, breach of trust or fiduciary duty, or insider abuse with regard to the Bank, that has had a material adverse effect on the Bank; (iii) A material violation by Insured of any applicable federal banking law or regulation that has had a material adverse effect on the Bank. 2. POLICY(IES) TITLE AND OWNERSHIP. Title and ownership of the Policy(ies) shall reside in the Bank for its use and for the use of the Insured all in accordance with this Agreement. The Bank, in its sole discretion, may surrender or terminate the Policy(ies) at any time and for any reason and may borrow from or withdraw cash value from the Policy(ies) at any time in its sole discretion. Where the Bank and the Insured (or assignee, with the consent of the Insured) mutually agree to exercise the right to increase the coverage under the subject Policy(ies), then, in such event, the rights, duties and benefits of the parties to such increased coverage shall continue to be subject to the terms of this Agreement. For as long as Insured is entitled to receive a benefit under this Agreement, then in the  event the Bank (or the trustee, in the event of the establishment of a Rabbi Trust, at the  direction of the Bank) sells, surrenders or transfers ownership of the Policy to the Insurer  or any third party, then the Bank (or Trustee) shall replace the Policy with a life insurance  policy or policies on the life of the Insured providing death and chronic illness benefits  that are at least as much as that of the Policy being replaced. The rights, duties and  benefits of the Bank, the Insured or the trustee with respect to any such replacement  policy shall be subject to the terms of this Agreement. At the request of the Bank, the  Insured shall take any and all actions that the Bank determines may be reasonably  

 

6  necessary for the sale, surrender or transfer of the Policy, the issuance of a replacement  policy(ies), and subjecting the replacement policy(ies) to the terms of this Agreement.   3. BENEFICIARY DESIGNATION RIGHTS. The Insured (or assignee) shall have the right and power to designate one or more “Beneficiary” or “Beneficiaries” to receive the Insured’s share of the proceeds payable upon the death of the Insured, and to elect and change a payment option for such Beneficiary, subject to any right or interest the Bank may have in such proceeds, as provided in this Agreement. A divorce will automatically revoke the portion of a Beneficiary Designation Form  designating the former spouse as a Beneficiary. The former spouse will be a Beneficiary  under this Agreement only if a new Beneficiary Designation Form naming the former  spouse as Beneficiary is filed after the date the dissolution decree is entered. In the event  the Insured fails to designate a Beneficiary, any benefits hereunder shall be payable to the  estate of the Insured.  4. PREMIUM PAYMENT METHOD. Subject to the Bank’s absolute right to surrender or terminate the Policy(ies) at any time and for any reason, the Bank shall pay the premium required for each Policy as it becomes due. 5. TAXABLE BENEFIT/REPORTING REQUIREMENTS. Annually the Insured will receive a taxable benefit equal to the assumed cost of insurance as required by the Internal Revenue Service. The Bank will report to the Insured the amount of imputed income each year on Form W-2 or its equivalent so that the Insured can properly include such amounts in taxable income. Other than with respect to any NEO’s, at the end of each calendar year, the Bank shall pay to the Insured an amount equal to an estimate of all federal and state income taxes incurred by Insured as a result of the taxable benefit under this Paragraph (the "Gross-up"). If, as a result of any Gross- up payments made to Insured, Insured incurs additional tax liability, then the Bank shall provide an additional Gross-up payment to Insured to offset any additional tax liability ("Double Gross-up"). 6. DIVISION OF DEATH PROCEEDS. Subject to Paragraphs 7 and 8 herein, the division of the death proceeds of the Policy(ies) is as follows: A. In the event Insured has not yet Separated From Service at the time of death, then, upon the death of Insured, Insured’s Beneficiary(ies) shall be entitled to receive an amount equal to the lesser of (i) one hundred percent (100%) NAR or (ii) one times the Final Base Salary. B. Should the Insured Separate From Service for any reason other than death (the circumstances of which are governed by Paragraph 6A, then neither the Insured nor the Insured’s Beneficiary(ies) shall be entitled to receive any amount upon 

 

7  Insured’s death and pursuant to this paragraph 6; however, Insured may still be  entitled to receive amounts pursuant to the provisions of Paragraph 7.   C. The Bank may select which Policy(ies) shall be used to pay benefits due under this Agreement. D. The Bank shall be entitled to the proceeds of any Policy(ies) payable after payment to the Insured’s Beneficiary(ies) under Paragraph 6A. E. The Bank and the Insured (or assignees) shall share in any interest due on the death proceeds on a pro rata basis as the proceeds due each respectively bears to the total proceeds, excluding any such interest. F. Any refund of unearned premium as provided in any Policy(ies) shall be paid to the Bank. 7. ACCELERATED BENEFIT IN THE EVENT OF TERMINAL OR CHRONIC ILLNESS (AS APPLICABLE) AND DIVISION OF CASH SURRENDER VALUE OF THE POLICY(IES). A. Employment Qualifications. In order to have the right to request and receive an Accelerated Benefit under this Agreement, any one the following requirements must first be satisfied: (i) Insured has not Separated From Service; or (ii) Insured Separates From Service on or after attaining the age of Sixty-Two (62); or (iii) A Change in Control has occurred prior to Insured’s Separation From Service. B. Contractual Qualifications. In addition to the forgoing, the following requirements must also be satisfied in order for Insured to be entitled to request and receive an Accelerated Benefit: (i) Insured’s right to receive benefits under this Agreement has not terminated pursuant to the provisions of Paragraph 8 herein; (ii) The Policy(ies) provides for such option through an Accelerated Benefit rider; and (iii) Insured must qualify (physically and/or mentally) to receive an Accelerated Benefit as required under the Policy(ies); C. Provided Insured satisfies the requirements specified in 7A and B above, then Insured shall have the right to request (in writing) and to receive (assuming the carrier approves such request) an amount equal to the following: the lesser of Five Hundred Thousand Dollars ($500,000) or an amount which would result in the minimum required death benefit being maintained, such that the Policy(ies) will 

 

8  not be disqualified for the purposes of acting as “life Insurance” under the Internal  Revenue Code. Furthermore, all amounts referenced in this Paragraph 7 shall be  subject to any further limitations imposed by the individual Policy(ies). (See  Exhibit “A” attached hereto and incorporated by reference herein, an excerpt from  the Insurer’s Accelerated Benefit rider, as an example of the limiting language  that may apply). Finally, any Accelerated Benefit paid to the Insured  hereunder shall be deducted from any amounts to which Insured or his  Beneficiary(ies) is or may be entitled pursuant to the provisions of Paragraph 6  above should Insured not have Separated From Service at the time of his death.    Neither the Bank nor Corrigan & Company make any representations or  warranties about the tax consequences of such a request for accelerated or living  benefits.  D. Subject to the forgoing, at all times prior to the Insured’s death, the Bank shall be entitled to an amount equal to the Policy(ies)’s cash value, as that term is defined in the Policy(ies) contract, less any Policy loans, accelerated benefits and unpaid interest or cash withdrawals previously incurred by the Bank and any applicable surrender charges. Such cash value shall be determined as of the date of surrender or death as the case may be. 8. TERMINATION OF AGREEMENT. A. Right to receive Death Benefit. Insured’s right to receive death benefit proceeds pursuant to the provisions of Paragraph 6 shall terminate upon Insured’s Separation From Service. B. Right to Receive an Accelerated Benefit. If Insured either requests payment of an Accelerated Benefit before Separating From Service and receives payment of such amounts thereafter or, if Insured maintains the right to receive an Accelerated Benefit after Separation From Service by virtue of satisfying the requirements of Paragraph 7A, then this Agreement shall terminate in its entirety only upon (i) the mutual written agreement of the Bank and the Insured, or (ii) upon Insured requesting and receiving an Accelerated Benefit in the full amount he is (or may be) entitled to receive pursuant to the provisions of Paragraph 7 above. C. Termination By Operation. Notwithstanding the forgoing, this Agreement shall immediately terminate in its entirety in the event Insured is Terminated For Cause at any time or in the event Insured is no longer entitled to a benefit as addressed in Paragraphs 8A and B above. 9. INSURED’S OR ASSIGNEE’S ASSIGNMENT RIGHTS. Insured may not, without the written consent of the Bank, assign to any individual, trust or other organization, any right, title or interest in the subject Policy(ies) nor any rights, options, privileges or duties created under this Agreement. 

 

9  10. AGREEMENT BINDING UPON THE PARTIES. This Agreement shall bind the Insured and the Bank, their heirs, successors, personal representatives and assigns. 11. ADMINISTRATIVE AND CLAIMS PROVISIONS. The following provisions are part of this Agreement and are intended to satisfy  ERISA claims requirements: A. Named Fiduciary and Plan Administrator. The Named Fiduciary and Plan Administrator (hereinafter “Administrator) of this Agreement shall be the Board. The Administrator may designate a replacement Administrator at any time, or may delegate to others certain  responsibilities, including the employment of advisors and the delegation of any ministerial duties to qualified individuals. B. Powers and Duties of Administrator. (i) Construe and interpret the provisions of this Agreement; (ii) Adopt, amend or revoke rules and regulations for the administration of this Agreement, provided they are not inconsistent with the provisions of this Agreement; (iii) Provide appropriate parties with such returns, reports, descriptions and statements as may be required by law, within the times prescribed by law and to make them available to the Insured (or the Insured’s Beneficiary) when required by law; (iv) Take such other action as may be reasonably required to administer this Agreement in accordance with its terms or as may be required by law; (v) Withhold applicable taxes and file with the Internal Revenue Service appropriate information returns with respect to any payments and/or benefits provided hereunder; (vi) Appoint and retain such persons as may be necessary to carry out its duties as administrator. C. Dispute Over Benefits. In the event a dispute arises over the benefits under this Plan and benefits are not paid to the Insured (or to the Insured’s Beneficiary(ies), if applicable) and such claimants feel they are entitled to receive such benefits, then a written claim must be made to the Administrator named above in accordance with the following procedures: (i) Written Claim. The claimant may file a written request for such benefit to the Plan Administrator. (ii) Claim Decision. Upon receipt of such claim, the Administrator shall respond to such claimant within ninety (90) days after receiving the claim. If the Administrator determines that special circumstances require 

 

10  additional time for processing the claim, the Administrator can extend the  response period by an additional ninety (90) days for reasonable cause by  notifying the claimant in writing, prior to the end of the initial ninety (90)  day period, that an additional period is required. The notice of extension  must set forth the special circumstances and the date by which the  Administrator expects to render its decision.  If the claim is denied in whole or in part, the Administrator shall notify the  claimant in writing of such denial. The Administrator shall write the  notification in a manner calculated to be understood by the claimant.  The  notification shall set forth:  (a) The specific reasons for the denial; (b) The specific reference to pertinent provisions of the Agreement on which the denial is based; (c) A description of any additional information or material necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary; (d) Appropriate information as to the steps to be taken if the claimant wishes to submit the claim for review and the time limits applicable to such procedures; and (e) A statement of the claimant’s right to bring a civil action under ERISA Section 502(a) following an adverse benefit determination on review. (iii) Request for Review. Within sixty (60) days after receiving notice from the Administrator that a claim has been denied (in part or all of the claim), then  claimant (or their duly authorized representative) may file with the Administrator, a written request for a review of the denial of the claim. The claimant (or his duly authorized representative) shall then have the  opportunity to submit written comments, documents, records and other  information relating to the claim. The Administrator shall also provide the  claimant, upon request and free of charge, reasonable access to, and copies  of, all documents, records and other information relevant (as defined in  applicable ERISA regulations) to the claimant’s claim for benefits.  (iv) Decision on Review. The Administrator shall respond in writing to such claimant within sixty (60) days after receiving the request for review.  If the Administrator determines that special circumstances require an extension of time for processing the claim, written notice of the extension shall be furnished to the claimant prior to the termination of the initial sixty (60) day period. In no event shall such extension exceed a period of sixty (60) days from the end of the initial period. The notice of extension must set forth the special circumstances requiring an extension of time and the date by which the Administrator expects to render its decision. 

 

11  In considering the review, the Administrator shall take into account all  materials and information the claimant submits relating to the claim,  without regard to whether such information was submitted or considered  in the initial benefit determination.  The Administrator shall notify the claimant in writing of its decision on  review. The Administrator shall write the notification in a manner  calculated to be understood by the claimant. The notification shall set  forth:  (a) The specific reasons for the denial; (b) A reference to the specific provisions of the Agreement on which the denial is based; (c) A statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to the claimant’s claim for benefits; and (d) A statement of the claimant’s right to bring a civil action under ERISA Section 502(a). (v) Disability Claims. In the event a claim above is a claim for disability benefits, then the applicable time periods for notifying claimants regarding benefits determinations shall be reduced as required by 29 CFR 2560.503- 1 (I.e., (a) the ninety (90) day response time with the possibility of a ninety (90) day extension in Section B above shall be shortened to a forty- five (45) day response time with the possibility of a thirty (30) day extension, and (b) the sixty (60) day response time with the possibility of a sixty (60) day extension in shall be shortened to a forty-five (45) day response time with the possibility of a forty-five (45) day extension). In addition, in the event of a disability claim, the Employer shall identify any medical or vocational expert whose advice was obtained by the Plan in connection with the initial benefit determination, without regard to whether the advice was relied upon. If the review is from an adverse benefit determination that was based in whole or in part on a medical judgment, the Administrator shall consult with a health care professional that has appropriate training and experience in the field of medicine involved in the medical judgment and who is neither the individual who was consulted in connection with the adverse benefit determination that is under review nor the subordinate of such individual.  Any review of the denial of a claim made on account of disability shall be conducted by a person or persons who neither had any part in the initial benefit determination nor are subordinates of the persons who did. 

 

12  12. GENDER. Whenever in this Agreement words are used in the masculine, feminine or neuter gender, they shall be read and construed as in the masculine, feminine or neuter gender, whenever they should so apply. 13. INSURANCE COMPANY NOT A PARTY TO THIS AGREEMENT. The Insurer shall not be deemed a party to this Agreement, but will respect the rights of the parties as herein developed upon receiving an executed copy of this Agreement. Payment or other performance in accordance with the Policy(ies) provisions shall fully discharge the Insurer from any and all liability. 14. SEVERABILITY AND INTERPRETATION. If a provision of this Agreement is held to be invalid or unenforceable, the remaining provisions shall nonetheless be enforceable according to their terms.  Further, in the event that any provision is held to be overbroad as written such provision shall be deemed amended to narrow its application to the extent necessary to make the provision enforceable according to law and enforced as amended. 15. APPLICABLE LAW. The laws of the State of Washington shall govern the validity and interpretation of this Agreement. 16. EFFECT OF THE LIFE INSURANCE POLICY’S CONTESTABILITY CLAUSES. The parties herein understand and agree that the payment of the benefits provided herein are subject to the Policy’s (Policies’) suicide and contestability clauses and other such clauses, and if such clauses preclude the Insurer from paying the full death proceeds, then, in such event, no death benefits of whatever nature shall be payable to Insured’s (or Insured’s assignee’s) Beneficiary(ies) under this Agreement. 17. OTHER AGREEMENTS. The benefits provided for herein for Insured are supplemental life insurance benefits and shall not be deemed to modify, affect or limit any salary or salary increases, bonuses, profit sharing or any other type of compensation of Insured in any manner whatsoever.  No provision contained in this Agreement shall in any way affect, restrict or limit any existing employment agreement between the Bank and Insured, nor shall any provision or condition contained in this Agreement create specific rights of Insured or limit the right of the Bank to discharge Insured with or without cause.  Except as otherwise provided therein, nothing contained in this Agreement shall affect the right of Insured to participate in or be covered by or under any qualified or non-qualified pension, profit sharing, group, bonus or other supplemental compensation, retirement or fringe benefit plan constituting any part of the Bank’s compensation structure whether now or hereinafter existing. 

 

13  18. WITHHOLDING. Notwithstanding any of the provisions hereof, the Bank may withhold from any payment to be made hereunder such amount as it may be required to withhold under any applicable federal, state or other law, and transmit such withheld amounts to the applicable taxing authority. 19. COUNTERPARTS. This Agreement may be executed simultaneously in any number of counterparts.  Each counterpart shall be deemed to be an original, and all such counterparts shall constitute one and the same instrument.  This Agreement may be executed and delivered by facsimile transmission of an executed counterpart. 20. ASSIGNMENT OF RIGHTS. None of the payments provided for by this Agreement shall be subject to seizure for payment of any debts or judgments against the Insured or any Beneficiary; nor shall the Insured or any Beneficiary have any right to transfer, modify, anticipate or encumber any rights or benefits hereunder; provided, however, that the undistributed portion of any benefit payable hereunder shall at all times be subject to set-off for debts owed by Insured to the Bank. 21. NOTICE. Any notice to be delivered to the Bank under this Agreement shall be sufficient if in writing and delivered by hand, or by first class, certified or registered mail at the address below: Human Resources Director  Heritage Bank  Olympia Main Office  201 5th Avenue SW  Olympia, WA  98501  Any notice to be delivered to the Insured under this Agreement shall be sufficient if in  writing and delivered by hand, or by first class, certified or registered mail at the last  known address of the Insured.  22. AMENDMENT. No amendments or additions to this Agreement shall be binding unless in writing and signed by all  parties.  No waiver of any provision contained in this Agreement shall be effective unless it is in writing and signed by the party against whom such waiver is asserted.  Notwithstanding the foregoing, the Bank may amend, modify or terminate this Agreement (and may do so retroactively) without the consent and or approval of the Insured or any Beneficiary of the Insured if such amendment, modification or termination is necessary to ensure compliance with Code Section 409A or in order to avoid the 

 

14  application of any penalties that may be imposed upon the Insured and any Beneficiary of  the Insured pursuant to the provisions of Code Section 409A.  This Agreement shall be effective as of the date first set forth above.   HERITAGE BANK  By:  By:   Date:  Title:    Date:

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