Document:

ex10-22.htm

 

EXHIBIT 10.22

 

 

COPSYNC, INC.

 

and

 

NEVADA AGENCY AND TRANSFER COMPANY,

 

WARRANT AGREEMENT

 

Dated as of [                                ], 2015

 

 

THIS WARRANT AGREEMENT (this “Agreement”), dated as of [                                                                                                                                ], 2015 is by and between COPsync, Inc., a Delaware corporation (the “Company”), and Nevada Agency and Transfer Company, a Nevada corporation, as warrant agent (the “Warrant Agent”, also referred to herein as the “Transfer Agent”).

 

WHEREAS, the Company is engaged in a public offering (the “Offering”) of the Company’s Common Stock (as defined below) together with Warrants (as defined below) to purchase Common Stock and, in connection therewith, has determined to issue and deliver up to [ ] Warrants (including up to [] Warrants subject to the Over-allotment Option) to investors in the Offering (the “Warrants”). Each Warrant entitles the holder thereof to purchase [one] share of common stock of the Company $0.0001 par value per share (“Common Stock” and, together with the Warrants and the shares of  Common Stock underlying the Warrants, the “Securities”), for $[   ] per share, subject to adjustment as described herein; and

 

WHEREAS, the Company has filed with the Securities and Exchange Commission (the “Commission”) a registration statement on Form S-1, No. 333-206460 (the “Registration Statement”) and prospectus (the “Prospectus”), for the registration, under the Securities Act of 1933, as amended (the “Securities Act”), of the Securities; and

 

WHEREAS, the Company desires the Warrant Agent to act on behalf of the Company, and the Warrant Agent is willing to so act, in connection with the issuance, registration, transfer, exchange, redemption and exercise of the Warrants; and

 

WHEREAS, the Company desires to provide for the form and provisions of the Warrants, the terms upon which they shall be issued and exercised, and the respective rights, limitation of rights, and immunities of the Company, the Warrant Agent, and the holders of the Warrants; and

 

WHEREAS, all acts and things have been done and performed which are necessary to make the Warrants, when executed on behalf of the Company and countersigned by or on behalf of the Warrant Agent, as provided herein, the valid, binding and legal obligations of the Company, and to authorize the execution and delivery of this Agreement.

NOW, THEREFORE, in consideration of the mutual agreements herein contained, the parties hereto agree as follows:

 

1.           Appointment of Warrant Agent. The Company hereby appoints the Warrant Agent to act as agent for the Company for the Warrants, and the Warrant Agent hereby accepts such appointment and agrees to perform the same in accordance with the terms and conditions set forth in this Agreement.

 

  

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2.           Warrants.

 

2.1.           Form of Warrant. Each Warrant shall be issued in registered form only and shall be in substantially the form of Exhibit A hereto, the provisions of which are incorporated herein and shall be signed by, or bear the facsimile signature of, the Chairman of the Board, President, Chief Executive Officer, Chief Financial Officer, Secretary or other authorized officer of the Company.   In the event the person whose facsimile signature has been placed upon any Warrant shall have ceased to serve in the capacity in which such person signed the Warrant before such Warrant is issued, it may be issued with the same effect as if he or she had not ceased to be such at the date of issuance.

 

2.2.           Effect of Countersignature. Unless and until countersigned by the Warrant Agent pursuant to this Agreement, a Warrant shall be invalid and of no effect and may not be exercised by the holder thereof.

 

2.3.           Registration.

 

2.3.1.           Warrant Register. The Warrant Agent shall maintain books (the “Warrant Register”), for the registration of original issuance and the registration of transfer of the Warrants. Upon the initial issuance of the Warrants, the Warrant Agent shall issue and register the Warrants in the names of the respective holders thereof in such denominations and otherwise in accordance with instructions delivered to the Warrant Agent by the Company or its representatives.

 

2.3.2.           Registered Holder. Prior to due presentment to the Warrant Agent for registration of transfer of any Warrant, the Company and the Warrant Agent may deem and treat the person in whose name such Warrant is registered in the Warrant Register (the “Registered Holder”) as the absolute owner of such Warrant and of each Warrant represented thereby (notwithstanding any notation of ownership or other writing on the Warrant Certificate (as defined below) made by anyone), for the purpose of any exercise thereof, and for all other purposes, and neither the Company nor the Warrant Agent shall be affected by any notice to the contrary.

 

2.4          Additional Warrants to be Issued. At any time following the consummation of the Offering, Warrant Agent may issue additional warrants to purchase Common Stock (“Additional Warrants”) on the same terms and conditions as the Warrants in the Offering, upon receipt of joint written instructions from the Company and Maxim Group LLC for the issuance thereto.  Such Additional Warrants, and the obligations of the Company and Warrant Agent thereto, shall be subject to the terms and conditions set forth in this Agreement in all respects.

3.           Terms and Exercise of Warrants.

 

3.1.           Exercise Price. Each Warrant shall, when countersigned by the Warrant Agent, entitle the Registered Holder thereof, subject to the provisions of such Warrant and of this Agreement, to purchase from the Company the number of shares of Common Stock stated therein, at the price of $[ ] per share, subject to the adjustments provided in Section 4 hereof and in the last sentence of this Section 3.1. The term “Exercise Price” as used in this Agreement shall mean the price per share at which shares of Common Stock may be purchased at the time a Warrant is exercised. The Company in its sole discretion may lower the Exercise Price at any time prior to the Expiration Date (as defined below) for a period of not less than twenty (20) Business Days, provided, that the Company shall provide at least twenty (20) days prior written notice of such reduction to Registered Holders of the Warrants and, provided further that any such reduction shall be identical among all of the Warrants.

 

  

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3.2.           Duration of Warrants. A Warrant may be exercised only during the period (the “Exercise Period”) commencing immediately upon the closing of the Offering and terminating at 5:00 p.m., New York City time on the Expiration Date; provided, however, that the exercise of any Warrant shall be subject to the satisfaction of any applicable conditions, as set forth in subsection 3.3.2 below with respect to an effective registration statement.  For purposes of this Warrant Agreement, the “Expiration Date” shall mean [           ], 2020.  Each Warrant not exercised on or before the Expiration Date shall become void, and all rights thereunder and all rights in respect thereof under this Warrant Agreement shall cease at 5:00 p.m. New York City time on the Expiration Date.  The Company in its sole discretion may extend the duration of the Warrants by delaying the Expiration Date; provided, that the Company shall provide at least twenty (20) days prior written notice of any such extension to Registered Holders of the Warrants and, provided further that any such extension shall be identical in duration among all the Warrants.

 

3.3.           Exercise of Warrants.

 

3.3.1.           Payment. Subject to the provisions of the Warrant and this Agreement, a Warrant, when countersigned by the Warrant Agent, may be exercised by the Registered Holder thereof by surrendering it, at the office of the Warrant Agent, or at the office of its successor as Warrant Agent, in Reno, Nevada, with the election to purchase form, as set forth in the Warrant, duly executed, and by paying in full the Exercise Price for each full share of Common Stock as to which the Warrant is exercised and any and all applicable taxes due in connection with the exercise of the Warrant.  The aggregate Exercise Price shall be paid:

 

(a)            in good certified check or money order payable to the order of the Company; or

 

(b)           as provided in Section 7.4 hereof.

 

3.3.2.           Issuance of Shares of Common Stock on Exercise. As soon as practicable after the exercise of any Warrant and receipt of payment of the Exercise Price (if payment is pursuant to subsection 3.3.1(a)), the Warrant Agent shall direct the Company’s transfer agent to (i) provided that the transfer agent is participating in The Depository Trust Company (“DTC”) Fast Automated Securities Transfer Program credit such aggregate number of shares of Common Stock to which the Holder is entitled pursuant to such exercise to the Holder’s or its designee’s balance account with DTC through its Deposit/Withdrawal at Custodian System, or (ii) if the transfer agent is not participating in the DTC Fast Automated Securities Transfer Program, issue to the Registered Holder of such Warrant a certificate or certificates for the number of full shares of Common Stock to which he, she or it is entitled, registered in such name or names as may be directed by him, her or it, and if such Warrant shall not have been exercised in full, a new countersigned Warrant for the number of shares as to which such Warrant shall not have been exercised. Notwithstanding the foregoing, the Company shall not be obligated to deliver any shares of Common Stock pursuant to the exercise of a Warrant and shall have no obligation to settle such Warrant exercise unless a registration statement under the Securities Act with respect to the shares of Common Stock underlying the Warrants (the “Warrant Shares”) is then effective and a prospectus relating thereto is current, subject to the Company’s satisfaction of its obligations under Section 7.4. Subject to Section 4.6 of this Agreement, a Registered Holder of Warrants may exercise its Warrants only for a whole number of shares of Common Stock. In no event will the Company be required to net cash settle the Warrant.  If, by reason of any exercise of warrants on a “cashless basis”, the holder of any Warrant would be entitled, upon the exercise of such Warrant, to receive a fractional interest in a share, the Company shall round up to the nearest whole number, the number of shares to be issued to such holder.

 

  

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3.3.3.           Valid Issuance. All shares of Common Stock issued or issuable upon the proper exercise of a Warrant in conformity with this Agreement shall be validly issued, fully paid and nonassessable.

 

3.3.4.           Date of Issuance. Each person in whose name any certificate for shares of Common Stock is issued shall receive a stock certificate dated no later than the date the Warrant Agent receives the surrendered Warrant, the signed and completed election to purchase form and, other than in the case of a Cashless Exercise, payment of the Exercise Price.

 

3.3.6           Share Delivery Failure.  If the Company shall fail, for any reason except the shareholder’s brokers failure to initiate the DWAC request, to issue to the Holder within three (3) trading days after receipt of the applicable exercise notice (the “Share Delivery Deadline”), a certificate for the number of shares of Common Stock to which the Holder is entitled upon Holder’s exercise of a Warrant or credit the Holder’s balance account with DTC for such number of shares of Common Stock to which the Holder is entitled upon the Holder’s exercise of this Warrant (as the case may be, but in each case without a restrictive legend) (a “Delivery Failure”), and if on such or after such Share Delivery Deadline the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of all or any portion of the number of shares of Common Stock issuable upon such exercise that the Holder so anticipated receiving from the Company, then, in addition to all other remedies available to it, the Company shall, within three (3) Business Days after the Holder’s request and in the Holder’s discretion, either (i) pay cash to the Holder in an amount equal to 100% of the Holder’s total purchase price (including brokerage commissions and other out-of-pocket expenses, if any) for the shares of Common Stock so purchased (including, without limitation, by any other person in respect, or on behalf, of the Holder) (the “Buy-In Price”), at which point the Company’s obligation to so issue and deliver such certificate or credit the Holder’s balance account with DTC for the number of shares of Common Stock to which the Holder is entitled upon the Holder’s exercise hereunder (as the case may be) (and to issue such shares of Common Stock) shall terminate, or (ii) promptly honor its obligation to so issue and deliver to the Holder a certificate or certificates representing such shares of Common Stock or credit the Holder’s balance account with DTC for the number of shares of Common Stock to which the Holder is entitled upon the Holder’s exercise hereunder (as the case may be) and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Common Stock multiplied by (B) the lowest Closing Sale Price of the shares of Common Stock on any trading day during the period commencing on the date of the applicable exercise notice and ending on the date immediately preceding the date of such issuance and payment under this clause (ii).

 

3.3.7.           Maximum Percentage. A holder of a Warrant may notify the Company in writing in the event it elects to be subject to the provisions contained in this subsection 3.3.6; however, no holder of a Warrant shall be subject to this subsection 3.3.6 unless he, she or it makes such election. If the election is made by a holder, the Warrant Agent shall not effect the exercise of the holder’s Warrant, and such holder shall not have the right to exercise such Warrant, to the extent that after giving effect to such exercise, such person (together with such person’s affiliates), to the Warrant Agent’s actual knowledge, would beneficially own in excess of [9.9]% (the “Maximum Percentage”) of the shares of Common Stock outstanding immediately after giving effect to such exercise. For purposes of the foregoing sentence, the aggregate number of shares of Common Stock beneficially owned by such person and its affiliates shall include the number of shares of Common Stock issuable upon exercise of the Warrant with respect to which the determination of such sentence is being made, but shall exclude shares of Common Stock that would be issuable upon exercise or conversion of the unexercised or unconverted portion of any other securities of the Company beneficially owned by such person and its affiliates (including, without limitation, any convertible notes or convertible preferred stock or warrants) subject to a limitation on conversion or exercise analogous to the limitation contained herein. Except as set forth in the preceding sentence, for purposes of this paragraph, beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  Solely the holder of this Warrant shall determine the extent to which the Warrant is exercisable in accordance with this Section 3.3.6, and neither the Company nor the Transfer Agent shall have any obligation to verify or confirm the accuracy of such determination. For purposes of the Warrant, in determining the number of outstanding shares of Common Stock, the holder may rely on the number of outstanding shares of Common Stock as reflected in (1) the Company’s most recent annual report on Form 10-K, quarterly report on Form 10-Q, current report on Form 8-K or other public filing with the Commission as the case may be, (2) a more recent public announcement by the Company or (3) any other notice by the Company or the Transfer Agent (or its successor) setting forth the number of shares of Common Stock outstanding. For any reason at any time, upon the written request of the holder of the Warrant, the Company shall, within three (3) Business Days, confirm orally and in writing to such holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of equity securities of the Company by the holder and its affiliates since the date as of which such number of outstanding shares of Common Stock was reported. By written notice to the Company, the holder of a Warrant may from time to time increase or decrease the Maximum Percentage applicable to such holder to any other percentage specified in such notice; provided, however, that (i) any such increase shall not be effective until the sixty-first (61st) day after such notice is delivered to the Company, and (ii) any such increase or decrease will only apply to the registered Holder.  For purposes of clarity, the Common Stock underlying any Warrant in excess of the Maximum Percentage for a Registered Holder shall not be deemed to be beneficially owned by that Registered Holder for any purpose including for purposes of Section 13(d) or Rule 16a-1(a)(1) of the Exchange Act.  The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 3.3.6 to the extent necessary to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended beneficial ownership limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation.

 

  

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4.           Adjustments.

 

4.1.            Stock Dividends.

 

4.1.1.           Split-Ups. If after the date hereof the number of outstanding shares of Common Stock is increased by a stock dividend payable in shares of Common Stock on Common Stock, or by a split-up of shares of Common Stock or other similar event, then, on the effective date of such stock dividend, split-up or similar event, the number of shares of Common Stock issuable on exercise of each Warrant shall be increased in proportion to such increase in the outstanding shares of Common Stock. A rights offering to holders of the Common Stock entitling holders to purchase shares of Common Stock at a price less than the “Fair Market Value” (as defined below) shall be deemed a stock dividend of a number of shares of Common Stock equal to the product of (i) the number of shares of Common Stock actually sold in such rights offering (or issuable under any other equity securities sold in such rights offering that are convertible into or exercisable for the Common Stock) multiplied by (ii) one (1) minus the quotient of (x) the price per share of Common Stock paid in such rights offering divided by (y) the Fair Market Value. For purposes of this subsection 4.1.1, (i) if the rights offering is for securities convertible into or exercisable for Common Stock, in determining the price payable for Common Stock, there shall be taken into account any consideration received for such rights, as well as any additional amount payable upon exercise or conversion and (ii) “Fair Market Value” means the volume weighted average price of the Common Stock as reported during the ten (10) trading day period ending on the trading day prior to the first date on which the shares of Common Stock trade on the applicable exchange or in the applicable market, regular way, without the right to receive such rights.

 

  

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4.1.2.           Extraordinary Dividends. If the Company, at any time while the Warrants are outstanding and unexpired, shall pay a dividend or make a distribution in cash, securities or other assets to the holders of the Common Stock as a class on account of such shares of Common Stock (or other shares of the Company’s capital stock into which the Warrants are convertible), other than (a) as described in subsection 4.1.1 above or (b) Ordinary Cash Dividends (as defined below) (any such non-excluded event being referred to herein as an “Extraordinary Dividend”), then the Exercise Price shall be decreased, effective immediately after the effective date of such Extraordinary Dividend, by the amount of cash and/or the fair market value (as determined by the Board, in good faith) of any securities or other assets paid on each share of Common Stock (or other shares of the Company’s capital stock into which the Warrants are convertible) in respect of such Extraordinary Dividend. For purposes of this subsection 4.1.2, “Ordinary Cash Dividends” means any cash dividend or cash distribution to the extent which, when combined on a per share basis, with the per share amounts of all other cash dividends and cash distributions paid on the Common Stock during the 365-day period ending on the date of declaration of such dividend or distribution (as adjusted to appropriately reflect any of the events referred to in other subsections of this Section 4 and excluding cash dividends or cash distributions that resulted in an adjustment to the Exercise Price or to the number of shares of Common Stock issuable on exercise of each Warrant) does not exceed $[    ] (being 5% of the offering price of the Securities in the Offering).

 

4.2.           Aggregation of Shares. If after the date hereof, and subject to the provisions of Section 4.6 hereof, the number of outstanding shares of Common Stock is decreased by a consolidation, combination, reverse stock split or reclassification of shares of Common Stock or other similar event, then, on the effective date of such consolidation, combination, reverse stock split, reclassification or similar event, the number of shares of Common Stock issuable on exercise of each Warrant shall be decreased in proportion to such decrease in outstanding shares of Common Stock.

 

4.3.           Adjustments in Exercise Price. Whenever the number of shares of Common Stock purchasable upon the exercise of the Warrants is adjusted, as provided in subsection 4.1.1 or 4.2 above, the Exercise Price shall be adjusted (to the nearest cent) by multiplying such Exercise Price immediately prior to such adjustment by a fraction (x) the numerator of which shall be the number of shares of Common Stock purchasable upon the exercise of the Warrants immediately prior to such adjustment, and (y) the denominator of which shall be the number of shares of Common Stock so purchasable immediately thereafter.

 

4.4.            Replacement of Securities upon Reorganization, etc. In case of any reclassification or reorganization of the outstanding shares of Common Stock (other than a change under subsections 4.1.1 or 4.1.2 or Section 4.2 hereof or that solely affects the par value of such shares of Common Stock), or in the case of any merger or consolidation of the Company with or into another corporation (other than a consolidation or merger in which the Company is the continuing corporation and that does not result in any reclassification or reorganization of the outstanding shares of Common Stock), or in the case of any sale or conveyance to another corporation or entity of the assets or other property of the Company as an entirety or substantially as an entirety in connection with which the Company is dissolved, the holders of the Warrants shall thereafter have the right to purchase and receive, upon the basis and upon the terms and conditions specified in the Warrants and in lieu of the shares of Common Stock of the Company immediately theretofore purchasable and receivable upon the exercise of the rights represented thereby, the kind and amount of shares of stock or other securities or property (including cash) receivable upon such reclassification, reorganization, merger or consolidation, or upon a dissolution following any such sale or transfer, that the holder of the Warrants would have received if such holder had exercised his, her or its Warrant(s) immediately prior to such event (the “Alternative Issuance”); provided, however, that (i) if the holders of the Common Stock were entitled to exercise a right of election as to the kind or amount of securities, cash or other assets receivable upon such consolidation or merger, then the kind and amount of securities, cash or other assets constituting the Alternative Issuance for which each Warrant shall become exercisable shall be deemed to be the weighted average of the kind and amount received per share by the holders of the Common Stock in such consolidation or merger that affirmatively make such election, and (ii) if a tender, exchange or redemption offer shall have been approved or authorized by the Company’s Board of Directors and made to and accepted by the holders of the Common Stock under circumstances in which, upon completion of such tender or exchange offer, the maker thereof, together with members of any group (within the meaning of Rule 13d-5(b)(1) under the Exchange Act) of which such maker is a part, and together with any affiliate or associate of such maker (within the meaning of Rule 12b-2 under the Exchange Act) and any members of any such group of which any such affiliate or associate is a part, own beneficially (within the meaning of Rule 13d-3 under the Exchange Act) more than 50% of the outstanding shares of Common Stock, the holder of a Warrant shall be entitled to receive as the Alternative Issuance, the highest amount of cash, securities or other property to which such holder would actually have been entitled as a stockholder if such Warrant holder had exercised the Warrant prior to the expiration of such tender or exchange offer, accepted such offer and all of the Common Stock held by such holder had been purchased pursuant to such tender or exchange offer, subject to adjustments (from and after the consummation of such tender or exchange offer) as nearly equivalent as possible to the adjustments provided for in this Section 4.  The provisions of this Section 4.4 shall similarly apply to successive reclassifications, reorganizations, mergers or consolidations, sales or other transfers.

 

  

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4.5           Purchase Rights.  If at any time the Company grants, issues or sells any options, convertible securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Maximum Percentage) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Maximum Percentage, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Maximum Percentage, at which time or times the Holder shall be granted such right (and any Purchase Right granted, issued or sold on such initial Purchase Right or on any subsequent Purchase Right to be held similarly in abeyance) to the same extent as if there had been no such limitation).

4.6.           Notices of Changes in Warrant. Upon every adjustment of the Exercise Price or the number of shares issuable upon exercise of a Warrant, the Company shall give written notice thereof to the Warrant Agent, which notice shall state the Exercise Price resulting from such adjustment and the increase or decrease, if any, in the number of shares purchasable at such price upon the exercise of a Warrant, setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based. Upon the occurrence of any event specified in Sections 4.1, 4.2, 4.3 or 4.4, the Company shall give written notice of the occurrence of such event to each holder of a Warrant, at the last address set forth for such holder in the Warrant Register, of the record date or the effective date of the event. Failure to give such notice, or any defect therein, shall not affect the legality or validity of such event.

 

4.7.           No Fractional Shares. Notwithstanding any provision contained in this Agreement to the contrary, the Company shall not issue fractional shares upon the exercise of Warrants. If, by reason of any adjustment made pursuant to this Section 4, the holder of any Warrant would be entitled, upon the exercise of such Warrant, to receive a fractional interest in a share, the Company shall, upon such exercise, round up to the nearest whole number the number of shares of Common Stock to be issued to such holder.

 

  

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4.8.           Form of Warrant. The form of Warrant need not be changed because of any adjustment pursuant to this Section 4, and Warrants issued after such adjustment may state the same Exercise Price and the same number of shares as is stated in the Warrants initially issued pursuant to this Agreement; provided, however, that the Company may at any time in its sole discretion make any change in the form of Warrant that the Company may deem appropriate and that does not affect the substance thereof, and any Warrant thereafter issued or countersigned, whether in exchange or substitution for an outstanding Warrant or otherwise, may be in the form as so changed.

 

4.9.             Other Events. In case any event shall occur affecting the Company as to which none of the provisions of preceding subsections of this Section 4 are strictly applicable, but which would require an adjustment to the terms of the Warrants in order to (i) avoid an adverse impact on the Warrants and (ii) effectuate the intent and purpose of this Section 4, then, in each such case, the Company shall appoint a firm of independent public accountants, investment banking or other appraisal firm of recognized national standing, which shall give its opinion as to whether or not any adjustment to the rights represented by the Warrants is necessary to effectuate the intent and purpose of this Section 4 and, if they determine that an adjustment is necessary, the terms of such adjustment.  The Company shall adjust the terms of the Warrants in a manner that is consistent with any adjustment recommended in such opinion.

 

5.           Transfer and Exchange of Warrants.

 

5.1.            Registration of Transfer. The Warrant Agent shall register the transfer, from time to time, of any outstanding Warrant upon the Warrant Register, upon surrender of such Warrant for transfer, properly endorsed with signatures properly guaranteed and accompanied by appropriate instructions for transfer. Upon any such transfer, a new Warrant representing an equal aggregate number of Warrants shall be issued and the old Warrant shall be cancelled by the Warrant Agent. The Warrants so cancelled shall be delivered by the Warrant Agent to the Company from time to time upon request.

5.2.           Procedure for Surrender of Warrants. Warrants may be surrendered to the Warrant Agent, together with a written request for exchange or transfer, and thereupon the Warrant Agent shall issue in exchange therefor one or more new Warrants as requested by the Registered Holder of the Warrants so surrendered, representing an equal aggregate number of Warrants.

 

5.3.            Fractional Warrants. The Warrant Agent shall not be required to effect any registration of transfer or exchange which shall result in the issuance of a warrant certificate for a fraction of a warrant.

 

5.4.           Service Charges. The Company shall pay for any service charge assessed by the Warrant Agent for any exchange or registration of transfer of Warrants.

 

5.5.           Warrant Execution and Countersignature. The Warrant Agent is hereby authorized to countersign and to deliver, in accordance with the terms of this Agreement, the Warrants required to be issued pursuant to the provisions of this Section 5, and the Company, whenever required by the Warrant Agent, shall supply the Warrant Agent with Warrants duly executed on behalf of the Company for such purpose.

 

6.           [Intentionally omitted.]

 

7.           Other Provisions Relating to Rights of Holders of Warrants.

 

  

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7.1.           No Rights as Stockholder. A Warrant does not entitle the Registered Holder thereof to any of the rights of a stockholder of the Company, including, without limitation, and except as otherwise set forth herein or in any Warrant, the right to receive dividends, or other distributions, exercise any preemptive rights to vote or to consent or to receive notice as stockholders in respect of the meetings of stockholders or the election of directors of the Company or any other matter.

 

7.2.           Lost, Stolen, Mutilated, or Destroyed Warrants. If any Warrant is lost, stolen, mutilated, or destroyed, the Company and the Warrant Agent may on such terms as to indemnity or otherwise as they may in their discretion impose (which shall, in the case of a mutilated Warrant, include the surrender thereof), issue a new Warrant of like denomination and tenor as the Warrant so lost, stolen, mutilated, or destroyed.   Any such new Warrant shall constitute a substitute contractual obligation of the Company, whether or not the allegedly lost, stolen, mutilated, or destroyed Warrant shall be at any time enforceable by anyone.

7.3.           Reservation of Common Stock. The Company shall at all times reserve and keep available a number of its authorized but unissued shares of Common Stock that shall be sufficient to permit the exercise in full of all outstanding Warrants issued pursuant to this Agreement.

 

7.4.           Registration of Common Stock; Cashless Exercise.   The Company shall use its reasonable best efforts to maintain the effectiveness of the Registration Statement, and a current prospectus relating thereto, until the expiration of the Warrants in accordance with the provisions of this Agreement.   In addition, the Company agrees to use its reasonable best efforts to qualify for the listing of the Securities on The Nasdaq Stock Market and to register such Securities under the blue sky laws of the states of residence of the exercising Warrant holders to the extent an exemption from such registration is not available.  Unless and until all of the Warrants have been exercised, the Company shall continue to be obligated to comply with its registration obligations under this Section 7.4.

 

7.4.1           If at any time, a registration statement for the Warrant Shares is not effective and available and Rule 144 is not available to cover the resale of such shares of Common Stock due to the failure of the Company to be currently reporting under the Securities Exchange Act of 1934 (“Public Information Failure”), then the Company shall pay in cash by wire transfer of immediately available funds an amount per month equal to 1% of the aggregate VWAP of the shares into which a Warrant is converted which are not able to be delivered without legend because of such Public Information Failure to the Holder thereof until such shares are able to be delivered without legend (to be pro-rated for any periods which are less than one month).

 

7.4.2           During any period when the Company shall fail to have maintained an effective Registration Statement covering the Warrant Shares, Registered Holders shall have the right to exercise such Warrants on a “cashless basis,” by exchanging the Warrants being exercised (in accordance with Section 3(a)(9) of the Securities Act or another exemption) for that number of shares of Common Stock equal to the quotient obtained by dividing (x) the product of the number of shares of Common Stock underlying the Warrants being exercised, multiplied by the difference between the Exercise Price and the “Fair Market Value” (as defined below) by (y) the Fair Market Value. Solely for purposes of this subsection 7.4.2, “Fair Market Value” shall mean the volume weighted average price of the Common Stock as reported during the ten (10) trading day period ending on the trading day prior to the date that notice of exercise is received by the Company from the holder of such Warrants or its securities broker or intermediary.  In the event Registered Holder elects to exercise Warrants on a cashless basis, Registered Holder shall provide notice of such election to the Company, and the Company shall cause the Warrant Agent to issue the number of shares of Common Stock to such Registered Holder in accordance with the cashless exercise calculation described in this subsection 7.4.2.  The date that notice of cashless exercise is received by the Company shall be conclusively determined by the Company. In connection with the “cashless exercise” of a Warrant, the Company shall, upon request, provide the Warrant Agent with an opinion of counsel for the Company (which shall be an outside law firm with securities law experience) stating that (i) the exercise of the Warrants on a cashless basis in accordance with this subsection 7.4.2 is not required to be registered under the Securities Act and (ii) the shares of Common Stock issued upon such exercise may be transferred without restrictions under the Securities Act by anyone who is not an affiliate (as such term is defined in Rule 144 under the Securities Act) of the Company and, accordingly, shall not be required to bear a restrictive legend.

 

  

9

  

 

7.5           Nasdaq Listing.  The Company will ensure the Securities are listed for trading on The Nasdaq Stock Market and shall use its reasonable best efforts to maintain such listing.  Unless and until all of the Warrants have been exercised, the Company shall continue to be obligated to comply with its listing obligations under this Section 7.5.

 

8.           Concerning the Warrant Agent and Other Matters.

 

8.1.           Payment of Taxes. The Company shall from time to time promptly pay all taxes and charges that may be imposed upon the Company or the Warrant Agent in respect of the issuance or delivery of shares of the Warrant Shares, but the Company shall not be obligated to pay any transfer taxes in respect of the Warrants or Warrant Shares.

 

8.2.           Resignation, Consolidation, or Merger of Warrant Agent.

 

8.2.1.            Appointment of Successor Warrant Agent. The Warrant Agent, or any successor to it hereafter appointed, may resign its duties and be discharged from all further duties and liabilities hereunder after giving sixty (60) days’ notice in writing to the Company. If the office of the Warrant Agent becomes vacant by resignation or incapacity to act or otherwise, the Company shall appoint in writing a successor Warrant Agent in place of the Warrant Agent. If the Company shall fail to make such appointment within a period of thirty (30) days after it has been notified in writing of such resignation or incapacity by the Warrant Agent or by the holder of a Warrant (who shall, with such notice, submit his Warrant for inspection by the Company), then the holder of any Warrant may apply to the Supreme Court of the State of New York for the County of New York for the appointment of a successor Warrant Agent at the Company’s cost. Any successor Warrant Agent, whether appointed by the Company or by such court, shall be an entity organized and existing under the laws of a state of the United States, in good standing under the laws of its jurisdiction of organization and having its principal office in a state of the United States, and authorized under  applicable U.S. laws to exercise corporate trust powers and subject to supervision or examination by federal or state authority. After appointment, any successor Warrant Agent shall be vested with all the authority, powers, rights, immunities, duties, and obligations of its predecessor Warrant Agent with like effect as if originally named as Warrant Agent hereunder, without any further act or deed; but if for any reason it becomes necessary or appropriate, the predecessor Warrant Agent shall execute and deliver, at the expense of the Company, an instrument transferring to such successor Warrant Agent all the authority, powers, and rights of such predecessor Warrant Agent hereunder; and upon request of any successor Warrant Agent the Company shall make, execute, acknowledge, and deliver any and all instruments in writing for more fully and effectually vesting in and confirming to such successor Warrant Agent all such authority, powers, rights, immunities, duties, and obligations.

8.2.2.           Notice of Successor Warrant Agent. In the event a successor Warrant Agent shall be appointed, the Company shall give notice thereof to the predecessor Warrant Agent and the Transfer Agent for the Common Stock not later than the effective date of any such appointment.

 

  

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8.2.3.            Merger or Consolidation of Warrant Agent. Any corporation into which the Warrant Agent may be merged or with which it may be consolidated or any corporation resulting from any merger or consolidation to which the Warrant Agent shall be a party shall be the successor Warrant Agent under this Agreement without any further act.

 

8.3.           Fees and Expenses of Warrant Agent.

 

8.3.1.           Remuneration. The Company agrees to pay the Warrant Agent reasonable remuneration for its services as such Warrant Agent hereunder and any transfer agent fees which are in addition thereto and shall, pursuant to its obligations under this Agreement, reimburse the Warrant Agent upon demand for all expenditures that the Warrant Agent may reasonably incur in the execution of its duties hereunder.

 

8.3.2.           Further Assurances. The Company agrees to perform, execute, acknowledge, and deliver or cause to be performed, executed, acknowledged, and delivered all such further and other acts, instruments, and assurances as may reasonably be required by the Warrant Agent for the carrying out or performing of the provisions of this Agreement.

 

8.4.           Liability of Warrant Agent.

 

8.4.1.           Reliance on Company Statement. Whenever in the performance of its duties under this Agreement, the Warrant Agent shall deem it necessary or desirable that any fact or matter be proved or established by the Company prior to taking or suffering any action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a statement signed by the Chief Executive Officer or other authorized officer of the Company and delivered to the Warrant Agent. The Warrant Agent may rely upon such statement for any action taken or suffered in good faith by it pursuant to the provisions of this Agreement.

 

8.4.2.           Indemnity. The Warrant Agent shall be liable hereunder only for its own gross negligence, willful misconduct or bad faith. The Company agrees to indemnify the Warrant Agent and save it harmless against any and all liabilities, including judgments, costs and reasonable counsel fees, for anything done or omitted by the Warrant Agent in the execution of this Agreement, except as a result of the Warrant Agent’s gross negligence, willful misconduct or bad faith.

 

8.4.3.           Exclusions. The Warrant Agent shall have no responsibility with respect to the validity of this Agreement or with respect to the validity or execution of any Warrant (except its countersignature thereof). The Warrant Agent shall not be responsible for any breach by the Company of any covenant or condition contained in this Agreement or in any Warrant. The Warrant Agent shall not be responsible to make any adjustments required under the provisions of Section 4 hereof or responsible for the manner, method, or amount of any such adjustment or the ascertaining of the existence of facts that would require any such adjustment; nor shall it by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any shares of Common Stock to be issued pursuant to this Agreement or any Warrant or as to whether any Warrant Shares, when issued, be valid and fully paid and nonassessable.

 

8.5.           Acceptance of Agency. The Warrant Agent hereby accepts the agency established by this Agreement and agrees to perform the same upon the terms and conditions herein set forth and among other things, shall account promptly to the Company with respect to Warrants exercised and concurrently account for, and forward to the Company, all monies received by the Warrant Agent for the purchase of Warrant Shares.

 

  

11

  

 

9.           Miscellaneous Provisions.

 

9.1.           Successors. All the covenants and provisions of this Agreement by or for the benefit of the Company or the Warrant Agent shall bind and inure to the benefit of their respective successors and assigns.

 

9.2.           Notices. Any notice, statement or demand authorized by this Agreement to be given or made by the Warrant Agent or by the holder of any Warrant to or on the Company shall be sufficiently given when so delivered if by hand or overnight delivery or if sent by certified mail or private courier service within five (5) days after deposit of such notice, postage prepaid, addressed (until another address is filed in writing by the Company with the Warrant Agent), as follows:

COPsync, Inc.

16415 Addison Road, Suite 300

Addison, Texas 75001

Attention: Ronald A. Woessner, Chief Executive Officer

 

Any notice, statement or demand authorized by this Agreement to be given or made by the holder of any Warrant or by the Company to or on the Warrant Agent shall be sufficiently given when so delivered if by hand or overnight delivery or if sent by certified mail or private courier service within five (5) days after deposit of such notice, postage prepaid, addressed (until another address is filed in writing by the Warrant Agent with the Company), as follows:

Nevada Agency and Transfer Company

50 West Liberty Street, Suite 880

Reno, NV 89501

Attention: Amanda Cardinalli

9.3.           Applicable Law. The validity, interpretation, and performance of this Agreement and of the Warrants shall be governed in all respects by the laws of the State of New York, without giving effect to conflicts of law principles that would result in the application of the substantive laws of another jurisdiction. The Company hereby agrees that any action, proceeding or claim against it arising out of or relating in any way to this Agreement shall be brought and enforced in the courts of the State of New York or the United States District Court for the Southern District of New York, and irrevocably submits to such jurisdiction, which jurisdiction shall be exclusive. The Company hereby waives any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum.

 

9.4.           Persons Having Rights under this Agreement. Nothing in this Agreement shall be construed to confer upon, or give to, any person or entity other than the parties hereto and the Registered Holders of the Warrants any right, remedy, or claim under or by reason of this Agreement or of any covenant, condition, stipulation, promise, or agreement hereof. All covenants, conditions, stipulations, promises, and agreements contained in this Agreement shall be for the sole and exclusive benefit of the parties hereto and their successors and assigns and of the Registered Holders of the Warrants.

 

9.5.           Examination of the Warrant Agreement. A copy of this Agreement shall be available at all reasonable times at the office of the Warrant Agent at 50 West Liberty Street, Suite 880, Reno, NV 89501, for inspection by the Registered Holder of any Warrant. The Warrant Agent may require any such holder to submit his Warrant for inspection by it.

 

  

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9.6.           Counterparts. This Agreement may be executed in any number of original or facsimile counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.

 

9.7.           Effect of Headings. The section headings herein are for convenience only and are not part of this Agreement and shall not affect the interpretation thereof.

 

9.8.           Amendments. This Agreement may be amended by the parties hereto without the consent of any Registered Holder for the purpose of curing any ambiguity, or curing, correcting or supplementing any defective provision contained herein or adding or changing any other provisions with respect to matters or questions arising under this Agreement as the parties may deem necessary or desirable and that the parties deem shall not adversely affect the interest of the Registered Holders. All other modifications or amendments, including any amendment to increase the Exercise Price or shorten the Exercise Period, shall require the vote or written consent of the Company and Registered Holders of more than 50% of the then outstanding Warrants.  Notwithstanding the foregoing, the Company may lower the Exercise Price or extend the duration of the Exercise Period pursuant to Sections 3.1 and 3.2, respectively, without the consent of the Registered Holders.  No consideration shall be offered by the Company to any Registered Holder in connection with a modification, amendment or waiver of this Agreement or any Warrant without also offering the same consideration to all Registered Holders.

9.9.           Severability. This Agreement shall be deemed severable, and the invalidity or unenforceability of any term or provision hereof shall not affect the validity or enforceability of this Agreement or of any other term or provision hereof. Furthermore, in lieu of any such invalid or unenforceable term or provision, the parties hereto intend that there shall be added as a part of this Agreement a provision as similar in terms to such invalid or unenforceable provision as may be possible and be valid and enforceable.

 

  

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.

COPSYNC, INC.

By:                                                      

       Name:

       Title:

NEVADA AGENCY AND TRANSFER COMPANY, as Warrant Agent

By:                                                      

       Name:

       Title:

 

[Signature Page to Warrant Agreement]

 

  

 

 

EXHIBIT A

 

[Form of Warrant Certificate]

 

[FACE]

 

Number

 

Warrants

 

THIS WARRANT SHALL BE VOID IF NOT EXERCISED PRIOR TO

THE EXPIRATION OF THE EXERCISE PERIOD PROVIDED FOR

IN THE WARRANT AGREEMENT DESCRIBED BELOW

 

COPSYNC, INC.

Incorporated Under the Laws of the State of Delaware

 

CUSIP [    ]

 

Warrant Certificate

 

This Warrant Certificate certifies that ___________, or [its] registered assigns, is the registered holder of warrant(s) (the “Warrants” and each, a “Warrant”) to purchase shares of Common Stock, $0.0001 par value per share (“Common Stock”), of COPsync, Inc., a Delaware corporation (the “Company”).  Each Warrant entitles the holder, upon exercise during the period set forth in the Warrant Agreement referred to below, to receive from the Company that number of fully paid and nonassessable shares of Common Stock as set forth below, at the exercise price (the “Exercise Price”) as determined pursuant to the Warrant Agreement, payable in lawful money (or through “cashless exercise” as provided for in the Warrant Agreement) of the United States of America upon surrender of this Warrant Certificate and payment of the Exercise Price at the office or agency of the Warrant Agent referred to below, subject to the conditions set forth herein and in the Warrant Agreement. Defined terms used in this Warrant Certificate but not defined herein shall have the meanings given to them in the Warrant Agreement (as defined on the reverse hereof).

 

Each Warrant is initially exercisable for one fully paid and non-assessable share of Common Stock. The number of the shares of Common Stock issuable upon exercise of the Warrants is subject to adjustment upon the occurrence of certain events set forth in the Warrant Agreement.

The initial Exercise Price per share of Common Stock for any Warrant is equal to $ per share. The Exercise Price is subject to adjustment upon the occurrence of certain events set forth in the Warrant Agreement.

 

Subject to the conditions set forth in the Warrant Agreement, the Warrants may be exercised only during the Exercise Period and to the extent not exercised by the end of such Exercise Period, such Warrants shall become void.

 

Reference is hereby made to the further provisions of this Warrant Certificate set forth on the reverse hereof and such further provisions shall for all purposes have the same effect as though fully set forth at this place.

 

This Warrant Certificate shall not be valid unless countersigned by the Warrant Agent, as such term is used in the Warrant Agreement.

  

 

  

 

This Warrant Certificate shall be governed by and construed in accordance with the internal laws of the State of New York, without regard to conflicts of laws principles thereof.

	  	  	  
	
 

COPSYNC, INC.

	  	  
	
 

By:

	  	  
	  	  	
Name:

	  	  	
Title:

	  	  	  
	
NEVADA AGENCY AND TRANSFER COMPANY, as Warrant Agent

	  	  
	
 

By:

	  	  
	  	  	
Name:

	  	  	
Title:

 

[Signature Page to Warrant Certificate]

 

  

 

[Form of Warrant Certificate]

 

[Reverse]

 

The Warrants evidenced by this Warrant Certificate are part of a duly authorized issue of Warrants entitling the holder on exercise to receive shares of Common Stock and are issued or to be issued pursuant to a Warrant Agreement dated as of [], 2015 (the “Warrant Agreement”), duly executed and delivered by the Company to Nevada Agency and Transfer Company, a [] corporation, as warrant agent (the “Warrant Agent”), which Warrant Agreement is hereby incorporated by reference in and made a part of this instrument and is hereby referred to for a description of the rights, limitation of rights, obligations, duties and immunities thereunder of the Warrant Agent, the Company and the holders (the words “holders” or “holder” meaning the Registered Holders or Registered Holder) of the Warrants. A copy of the Warrant Agreement may be obtained by the holder hereof upon written request to the Company. Defined terms used in this Warrant Certificate but not defined herein shall have the meanings given to them in the Warrant Agreement.

 

Warrants may be exercised at any time during the Exercise Period set forth in the Warrant Agreement. The holder of Warrants evidenced by this Warrant Certificate may exercise them by surrendering this Warrant Certificate, with the form of election to purchase set forth hereon properly completed and executed, together with payment of the Exercise Price as specified in the Warrant Agreement (or through “cashless exercise” as provided for in the Warrant Agreement) at the principal corporate office of the Warrant Agent. In the event that upon any exercise of Warrants evidenced hereby the number of Warrants exercised shall be less than the total number of Warrants evidenced hereby, there shall be issued to the holder hereof or his, her or its assignee, a new Warrant Certificate evidencing the number of Warrants not exercised.

 

Notwithstanding anything else in this Warrant Certificate or the Warrant Agreement, no Warrant may be exercised unless at the time of exercise (i) a registration statement covering the shares of Common Stock to be issued upon exercise is effective under the Securities Act and (ii) a prospectus thereunder relating to the shares of Common Stock is current, except through “cashless exercise” as provided for in the Warrant Agreement.

 

The Warrant Agreement provides that upon the occurrence of certain events the number of shares of Common Stock issuable upon exercise of the Warrants set forth on the face hereof may, subject to certain conditions, be adjusted. If, upon exercise of a Warrant, the holder thereof would be entitled to receive a fractional interest in a share of Common Stock, the Company shall, upon exercise, round up to the nearest whole number of shares of Common Stock to be issued to the holder of the Warrant.

 

Warrant Certificates, when surrendered at the principal corporate office of the Warrant Agent by the Registered Holder thereof in person or by legal representative or attorney duly authorized in writing, may be exchanged, in the manner and subject to the limitations provided in the Warrant Agreement, for another Warrant Certificate or Warrant Certificates of like tenor evidencing in the aggregate a like number of Warrants.

Upon due presentation for registration of transfer of this Warrant Certificate at the office of the Warrant Agent a new Warrant Certificate or Warrant Certificates of like tenor and evidencing in the aggregate a like number of Warrants shall be issued to the transferee(s) in exchange for this Warrant Certificate, subject to the limitations provided in the Warrant Agreement, except for any tax or other governmental charge imposed in connection therewith.

 

The Company and the Warrant Agent may deem and treat the Registered Holder(s) hereof as the absolute owner(s) of this Warrant Certificate (notwithstanding any notation of ownership or other writing hereon made by anyone), for the purpose of any exercise hereof, of any distribution to the holder(s) hereof, and for all other purposes, and neither the Company nor the Warrant Agent shall be affected by any notice to the contrary. Neither the Warrants nor this Warrant Certificate entitles any holder hereof to any rights of a stockholder of the Company.

 

  

 

  

 

Election to Purchase

 

(To Be Executed Upon Exercise of Warrant)

 

The undersigned hereby irrevocably elects to exercise the rights under this Warrant Certificate with respect to ____________ shares of Common Stock, to receive shares of Common Stock and [herewith tenders payment for such shares to the order of COPsync, Inc. (the “Company”) in the amount of $ in accordance with the terms hereof. The undersigned requests that a certificate for such shares be registered in the name of , whose address is and that such shares be delivered to whose address is . If said number of shares is less than all of the shares of Common Stock purchasable hereunder, the undersigned requests that a new Warrant Certificate representing the remaining balance of such shares be registered in the name of , whose address is , and that such Warrant Certificate be delivered to , whose address is .

 

In the event that the Warrant is to be exercised on a “cashless” basis pursuant to Section 7.4 of the Warrant Agreement, the number of shares that this Warrant is exercisable for shall be determined in accordance with Section 7.4 of the Warrant Agreement.

 

	  	  	  	  	  	  	  
	  	  	  	  
	
Date: ____________, 20

	  	  	  	  	  	
(Signature)

	  	  	  	  	  	  	  
	  	  	  	  	  	  	  
	  	  	  	  
	  	  	  	  	  	  	  
	  	  	  	  
	  	  	  	  	  	  	  
	  	  	  	  	  	  	
(Address)

	  	  	  	  	  	  	  
	  	  	  	  	  	  	  
	  	  	  	
 (Phone Number)

	  	  	  	  
	  	  	  	  	  	  	  
	  	  	  	  	  	  	
(Tax Identification Number)projectlighthouseformofs

   A-1-1   EXHIBIT A   FORM OF SUBORDINATED NOTE   THE INDEBTEDNESS EVIDENCED BY THIS SUBORDINATED NOTE IS   SUBORDINATED AND JUNIOR IN RIGHT OF PAYMENT TO THE CLAIMS OF   CREDITORS (OTHER THAN CREDITORS OF EXISTING SUBORDINATED DEBT) AND   DEPOSITORS OF CAMDEN NATIONAL CORPORATION (“COMPANY”), INCLUDING   OBLIGATIONS OF COMPANY TO ITS GENERAL AND SECURED CREDITORS AND IS   UNSECURED. IT IS INELIGIBLE AS COLLATERAL FOR ANY EXTENSION OF CREDIT   BY COMPANY OR ANY OF ITS SUBSIDIARIES. IN THE EVENT OF LIQUIDATION ALL   DEPOSITORS AND OTHER CREDITORS OF COMPANY SHALL BE ENTITLED TO BE   PAID IN FULL WITH SUCH INTEREST AS MAY BE PROVIDED BY LAW BEFORE ANY   PAYMENT SHALL BE MADE ON ACCOUNT OF PRINCIPAL OF OR INTEREST ON   THIS SUBORDINATED NOTE. AFTER PAYMENT IN FULL OF ALL SUMS OWING TO   SUCH DEPOSITORS AND CREDITORS, THE HOLDER OF THIS SUBORDINATED NOTE   SHALL BE ENTITLED TO BE PAID FROM THE REMAINING ASSETS OF COMPANY   THE UNPAID PRINCIPAL AMOUNT OF THIS SUBORDINATED NOTE PLUS ACCRUED   AND UNPAID INTEREST THEREON BEFORE ANY PAYMENT OR OTHER   DISTRIBUTION, WHETHER IN CASH, PROPERTY OR OTHERWISE, SHALL BE MADE   ON ACCOUNT OF ANY SHARES OF CAPITAL STOCK OF COMPANY.   THIS SUBORDINATED NOTE WILL BE ISSUED AND MAY BE TRANSFERRED ONLY   IN MINIMUM DENOMINATIONS OF $1,000 AND MULTIPLES OF $1,000 IN EXCESS   THEREOF. ANY ATTEMPTED TRANSFER OF THIS SUBORDINATED NOTE IN A   DENOMINATION OF LESS THAN $1,000 SHALL BE DEEMED TO BE VOID AND OF NO   LEGAL EFFECT WHATSOEVER. ANY SUCH PURPORTED TRANSFEREE SHALL BE   DEEMED NOT TO BE THE HOLDER OF THIS SUBORDINATED NOTE FOR ANY   PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF PAYMENTS ON   THIS SUBORDINATED NOTE, AND SUCH PURPORTED TRANSFEREE SHALL BE   DEEMED TO HAVE NO INTEREST WHATSOEVER IN THIS SUBORDINATED NOTE.    THIS SUBORDINATED NOTE MAY BE SOLD ONLY IN COMPLIANCE WITH   APPLICABLE FEDERAL AND STATE SECURITIES LAWS. THIS SUBORDINATED   NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS   AMENDED (THE “SECURITIES ACT”), OR ANY OTHER STATE SECURITIES LAWS OR   ANY OTHER APPLICABLE SECURITIES LAWS. NEITHER THIS SUBORDINATED   NOTE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED,   SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE   DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH   TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION   REQUIREMENTS OF THE SECURITIES ACT. THIS SUBORDINATED NOTE IS ISSUED   SUBJECT TO THE RESTRICTIONS ON TRANSFER AND OTHER PROVISIONS OF A   SUBORDINATED NOTE PURCHASE AGREEMENT DATED OCTOBER 8, 2015,   BETWEEN COMPANY AND THE PURCHASERS REFERRED TO THEREIN (THE   “PURCHASE AGREEMENT”), A COPY OF WHICH IS ON FILE WITH COMPANY.      

 

   A-1-2   CERTAIN ERISA CONSIDERATIONS:   THE HOLDER OF THIS SUBORDINATED NOTE, OR ANY INTEREST HEREIN, BY ITS   ACCEPTANCE HEREOF OR THEREOF AGREES, REPRESENTS AND WARRANTS THAT   IT IS NOT AN EMPLOYEE BENEFIT PLAN, INDIVIDUAL RETIREMENT ACCOUNT OR   OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE   RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), OR   SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE   “CODE”) (EACH A “PLAN”), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE   “PLAN ASSETS” BY REASON OF ANY PLAN’S INVESTMENT IN THE ENTITY, AND NO   PERSON INVESTING “PLAN ASSETS” OF ANY PLAN MAY ACQUIRE OR HOLD THIS   SUBORDINATED NOTE OR ANY INTEREST HEREIN, UNLESS SUCH PURCHASER OR   HOLDER IS ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE UNDER U.S.   DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION 96-23,   95-60, 91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION OR ITS PURCHASE   AND HOLDING OF THIS SUBORDINATED NOTE, OR ANY INTEREST HEREIN, ARE NOT   PROHIBITED BY SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE WITH   RESPECT TO SUCH PURCHASE AND HOLDING. ANY PURCHASER OR HOLDER OF   THIS SUBORDINATED NOTE OR ANY INTEREST HEREIN WILL BE DEEMED TO HAVE   REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT EITHER: (i) IT IS   NOT AN EMPLOYEE BENEFIT PLAN OR OTHER PLAN TO WHICH TITLE I OF ERISA   OR SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON   ACTING ON BEHALF OF ANY SUCH EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY   OTHER PERSON OR ENTITY USING THE “PLAN ASSETS” OF ANY SUCH EMPLOYEE   BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE OR (ii) SUCH PURCHASE   OR HOLDING WILL NOT RESULT IN A PROHIBITED TRANSACTION UNDER   SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE FOR WHICH FULL   EXEMPTIVE RELIEF IS NOT AVAILABLE UNDER APPLICABLE STATUTORY OR   ADMINISTRATIVE EXEMPTION.   ANY FIDUCIARY OF ANY PLAN WHO IS CONSIDERING THE ACQUISITION OF   THIS SUBORDINATED NOTE OR ANY INTEREST HEREIN SHOULD CONSULT   WITH HIS OR HER LEGAL COUNSEL PRIOR TO ACQUIRING THIS   SUBORDINATED NOTE OR ANY INTEREST HEREIN.     

 

   A-1-3   No. [●] CUSIP [●]1   CAMDEN NATIONAL CORPORATION   5.50% FIXED RATE SUBORDINATED NOTE DUE 2025   THE INDEBTEDNESS EVIDENCED BY THIS SUBORDINATED NOTE IS NOT A   DEPOSIT AND IS NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE   CORPORATION (THE “FDIC”) OR ANY OTHER GOVERNMENT AGENCY OR FUND.   1. Subordinated Notes. This Subordinated Note is one of an issue of notes of   Camden National Corporation, a Maine corporation (“Company”) designated as the “5.50%   Fixed Rate Subordinated Notes due 2025” (the “Subordinated Notes”).   2. Payment. Company, for value received, promises to pay to         , or its registered   assigns, the principal sum of            Dollars (U.S.) ($     ) on October 15, 2025 (the “Stated   Maturity”) and to pay interest thereon at the rate of 5.50% per annum from the original issue date   of the Subordinated Note, or from the most recent Interest Payment Date to which interest has   been paid or duly provided for, semiannually in arrears on April 15 and October 15 of each year   (each, an “Interest Payment Date”), commencing April 15, 2016, until the principal hereof is   paid or made available for payment, with such interest calculated on the basis of a 360-day year   consisting of twelve 30-day months and the number of days elapsed in any partial month. If any   payment of interest or principal is not paid in full when the same becomes due and payable, then   interest will be compounded quarterly.    Any payment of principal of or interest on this Subordinated Note that would otherwise   become due and payable on a day which is not a Business Day shall become due and payable on   the next succeeding Business Day, with the same force and effect as if made on the date for   payment of such principal or interest, and no interest will accrue in respect of such payment for   the period after such day. The term “Business Day” means any day other than a Saturday,   Sunday or any other day on which banking institutions in the State of Maine are permitted or   required by any applicable law or executive order to close.    3. Subordination. The indebtedness of Company evidenced by this Subordinated   Note, including the principal and interest on this Subordinated Note, shall be subordinate and   junior in right of payment to the prior payment in full of all existing claims of creditors and   depositors of Company, whether now outstanding or subsequently created, assumed, guaranteed   or incurred (collectively, “Senior Indebtedness”), which shall consist of principal of (and   premium, if any) and interest, if any, on: (a) all indebtedness and obligations of, or guaranteed or   assumed by, Company for money borrowed, whether or not evidenced by bonds, debentures,   securities, notes or other similar instruments, and including, but not limited to, deposits of   Company, and all obligations to Company’s general and secured creditors; (b) any deferred   obligations of Company for the payment of the purchase price of property, goods, materials,                                                      1 Accredited Investor CUSIP: 133034 AB4    QIB CUSIP: 133034 AA6        

 

   A-1-4   assets or services purchased or acquired (other than such obligations to trade creditors incurred   by Company in the ordinary course of business); (c) all obligations, contingent or otherwise, of   Company in respect of any letters of credit, bankers’ acceptances, security purchase facilities and   similar direct credit substitutes; (d) any capital lease obligations of Company; (e) all obligations   of Company in respect of interest rate swap, cap or other agreements, interest rate future or   option contracts, currency swap agreements, currency future or option contracts, commodity   contracts and other similar arrangements or derivative products; (f) any obligation of Company   to its general creditors, as defined for purposes of the capital adequacy regulations of the Board   of Governors of the Federal Reserve System (the “Federal Reserve”) applicable to Company, as   the same may be amended or modified from time to time (the “Capital Adequacy Regulations”);   (g) all obligations that are similar to those in clauses (a) through (f) of other persons for the   payment of which Company is responsible or liable as obligor, guarantor or otherwise; and (h)   all obligations of the types referred to in clauses (a) through (g) of other persons secured by a   lien on any property or asset of Company; and (i) in the case of (a) through (h) above, all   amendments, renewals, extensions, modifications and refunding’s of such indebtedness and   obligations; except “Senior Indebtedness” does not include (i) the Subordinated Notes, (ii) any   obligation that by its terms expressly is junior to, or ranks equally in right of payment with, the   Subordinated Notes, or (iii) any indebtedness between Company and any of its Significant   Subsidiaries or Affiliates. This Subordinated Note is not secured by any assets of Company.   In the event of liquidation of Company, all holders of Senior Indebtedness shall be   entitled to be paid in full with such interest as may be provided by law before any payment shall   be made on account of principal of or interest on this Subordinated Note. Additionally, in the   event of any insolvency, dissolution, assignment for the benefit of creditors or any liquidation or   winding up of or relating to Company, whether voluntary or involuntary, holders of Senior   Indebtedness shall be entitled to be paid in full before any payment shall be made on account of   the principal of or interest on the Subordinated Notes, including this Subordinated Note. In the   event of any such proceeding, after payment in full of all sums owing with respect to the Senior   Indebtedness, the registered holders of the Subordinated Notes from time to time (each a   “Noteholder” and, collectively, the “Noteholders”), together with the holders of any obligations   of Company ranking on a parity with the Subordinated Notes, shall be entitled to be paid from   the remaining assets of Company the unpaid principal thereof, and the unpaid interest thereon   before any payment or other distribution, whether in cash, property or otherwise, shall be made   on account of any capital stock.   If there shall have occurred and be continuing (a) a default in any payment with respect to   any Senior Indebtedness or (b) an event of default with respect to any Senior Indebtedness as a   result of which the maturity thereof is accelerated, unless and until such payment default or event   of default shall have been cured or waived or shall have ceased to exist, no payments shall be   made by Company with respect to the Subordinated Notes. The provisions of this paragraph shall   not apply to any payment with respect to which the immediately preceding paragraph of this   Section 3 would be applicable.   Nothing herein shall act to prohibit, limit or impede Company from issuing additional   debt of Company having the same rank as the Subordinated Notes or which may be junior or   senior in rank to the Subordinated Notes. Each Noteholder, by its acceptance hereof, agrees to   and shall be bound by the provisions of this Section 3. Each Noteholder, by its acceptance     

 

   A-1-5   hereof, further acknowledges and agrees that the foregoing subordination provisions are, and are   intended to be, an inducement and a consideration for each holder of any Senior Indebtedness,   whether such Senior Indebtedness was created or acquired before or after the issuance of the   Subordinated Notes, to acquire and continue to hold, or to continue to hold, such Senior   Indebtedness, and such holder of Senior Indebtedness shall be deemed conclusively to have   relied on such subordination provisions in acquiring and continuing to hold or in continuing to   hold such Senior Indebtedness.   4. Redemption.    (a) Redemption Prior to Fifth Anniversary. This Subordinated Note shall not be   redeemable by Company in whole or in part prior to the fifth anniversary of the date upon which   this Subordinated Note was originally issued (the “Issue Date”), except in the event: (i) this   Subordinated Note no longer qualifies as Tier 2 Capital (as defined by the Federal Reserve) as a   result of a change in interpretation or application of law or regulation by any judicial, legislative   or regulatory authority that becomes effective after the date of issuance of this Subordinated   Note (“Tier 2 Capital Event”); (ii) of a Tax Event (as defined below); or (iii) Company becomes   required to register as an investment company pursuant to the Investment Company Act of 1940,   as amended (and “Investment Company Event”). Upon the occurrence of a Tier 2 Capital Event,   a Tax Event or an Investment Company Event, subject to Section 4(f), Company may redeem   this Subordinated Note in whole at any time, or in part from time to time, upon giving not less   than 10 days’ notice to the holder of this Subordinated Note at an amount equal to 100% of the   outstanding principal amount being redeemed plus accrued but unpaid interest to, but excluding,   the redemption date. “Tax Event” means the receipt by Company of an opinion of counsel to   Company that as a result of any amendment to, or change (including any final and adopted (or   enacted) prospective change) in, the laws (or any regulations thereunder) of the United States or   any political subdivision or taxing authority thereof or therein, or as a result of any official   administrative pronouncement or judicial decision interpreting or applying such laws or   regulations, there exists a material risk that interest payable by Company on the Subordinated   Notes is not, or within 120 days after the receipt of such opinion will not be, deductible by   Company, in whole or in part, for United States federal income tax purposes.   (b) Redemption on or after Fifth Anniversary. On or after the fifth anniversary of the   Issue Date, subject to Section 4(f), this Subordinated Note shall be redeemable at the option of   and by Company, in whole at any time, or in part upon any Interest Payment Date, at an amount   equal to 100% of the outstanding principal amount being redeemed plus accrued but unpaid   interest, to but excluding the redemption date, but in all cases in a principal amount with integral   multiples of $1,000.    (c) Partial Redemption. If less than the then outstanding principal amount of this   Subordinated Note is redeemed, (i) a new Subordinated Note shall be issued representing the   unredeemed portion without charge to the holder thereof and (ii) such redemption shall be   effected on a pro rata basis as to the Noteholders. For purposes of clarity, upon a partial   redemption, a like percentage of the principal amount of every Subordinated Note held by every   Noteholder shall be redeemed.      

 

   A-1-6   (d) No Redemption at Option of Noteholder. This Subordinated Note is not subject to   redemption at the option of the holder of this Subordinated Note.   (e) Effectiveness of Redemption. If notice of redemption has been duly given and   notwithstanding that this Subordinated Note has been called for redemption but has not yet been   surrendered for cancellation, on and after the date fixed for redemption interest shall cease to   accrue on this Subordinated Note, this Subordinated Note shall no longer be deemed outstanding   and all rights with respect to this Subordinated Note shall forthwith on such date fixed for   redemption cease and terminate unless Company shall default in the payment of the redemption   price, except only the right of the holder hereof to receive the amount payable on such   redemption, without interest.    (f) Regulatory Approvals. Any such redemption shall be subject to receipt of any and   all required federal and state regulatory approvals, including, but not limited to, the consent of   the Federal Reserve. In the case of any redemption of this Subordinated Note pursuant to   paragraphs (b) and (c) of this Section 4, Company will give the holder hereof notice of   redemption, which notice shall indicate the aggregate principal amount of Subordinated Notes to   be redeemed, not less than 30 nor more than 45 calendar days prior to the redemption date.   (g) Purchase and Resale of the Subordinated Notes. Subject to any required federal   and state regulatory approvals and the provisions of this Subordinated Note, Company shall have   the right to purchase any of the Subordinated Notes at any time in the open market, private   transactions or otherwise. If Company purchases any Subordinated Notes, it may, in its   discretion, hold, resell or cancel any of the purchased Subordinated Notes.   5. Events of Default; Acceleration; Compliance Certificate. Each of the following   events shall constitute an “Event of Default”:    (a) the entry of a decree or order for relief in respect of Company by a court having   jurisdiction in the premises in an involuntary case or proceeding under any applicable   bankruptcy, insolvency, or reorganization law, now or hereafter in effect of the United States or any   political subdivision thereof, and such decree or order will have continued unstayed and in effect   for a period of 60 consecutive days;   (b) the commencement by Company of a voluntary case under any applicable   bankruptcy, insolvency or reorganization law, now or hereafter in effect of the United States or any   political subdivision thereof, or the consent by Company to the entry of a decree or order for relief in   an involuntary case or proceeding under any such law;   (c) the failure of Company to pay any installment of interest on any of the Subordinated   Notes as and when the same will become due and payable, and the continuation of such failure for   a period of 30 days;   (d) the failure of Company to pay all or any part of the principal of any of the   Subordinated Notes as and when the same will become due and payable;   (e) the failure of Company to perform any other covenant or agreement on the part of   Company contained in the Subordinated Notes or the Purchase Agreement, and the continuation     

 

   A-1-7   of such failure for a period of 60 days after the date on which notice specifying such failure,   stating that such notice is a “Notice of Default” hereunder and demanding that Company remedy   the same, will have been given, in the manner set forth in Section 21, to Company by the   Noteholders of at least 25% in aggregate principal amount of the Subordinated Notes at the time   outstanding; or the default by Company under any bond, debenture, note or other evidence of   indebtedness for money borrowed by Company having an aggregate principal amount outstanding   of at least $30,000,000, whether such indebtedness now exists or is created or incurred in the future,   which default (i) constitutes a failure to pay any portion of the principal of such indebtedness when   due and payable after the expiration of any applicable grace period or (ii) results in such   indebtedness becoming due or being declared due and payable prior to the date on which it   otherwise would have become due and payable without, in the case of clause (i), such   indebtedness having been discharged or, in the case of clause (ii), without such indebtedness   having been discharged or such acceleration having been rescinded or annulled.   Unless the principal of this Subordinated Note already shall have become due and   payable, if an Event of Default set forth in subsections (a) or (b) above shall have occurred and   be continuing, the holder of this Subordinated Note, by notice in writing to Company, may   declare the principal amount of this Subordinated Note to be due and payable immediately and,   upon any such declaration the same shall become and shall be immediately due and payable.   Company waives demand, presentment for payment, notice of nonpayment, notice of protest, and   all other notices. Company, within 45 calendar days after the receipt of written notice from any   Noteholder of the occurrence of an Event of Default with respect to this Subordinated Note, shall   mail to all Noteholders, at their addresses shown on the Security Register (as defined in Section   13 below), such written notice of Event of Default, unless such Event of Default shall have been   cured or waived before the giving of such notice as certified by Company in writing.    6. Failure to Make Payments. In the event of failure by Company to make any   required payment of principal or interest on this Subordinated Note (and, in the case of payment   of interest, such failure to pay shall have continued for 30 calendar days), Company will, upon   demand of the holder of this Subordinated Note, pay to the holder of this Subordinated Note the   amount then due and payable on this Subordinated Note for principal and interest (without   acceleration of the Note in any manner), with interest on the overdue principal and interest at the   rate borne by this Subordinated Note, to the extent permitted by applicable law. If Company fails   to pay such amount upon such demand, the holder of this Subordinated Note may, among other   things, institute a judicial proceeding for the collection of the sums so due and unpaid and such   further amount as shall be sufficient to cover the costs and expenses of collection, including the   reasonable compensation, expenses, disbursements and advances of such holder of this   Subordinated Note, its agents and counsel, may prosecute such proceeding to judgment or final   decree and may enforce the same against Company and collect the amounts adjudged or decreed   to be payable in the manner provided by law out of the property of Company.   Upon the occurrence of a failure by Company to make any required payment of principal   or interest on this Subordinated Note, or an Event of Default until such Event of Default is cured   by Company, Company shall not: (a) declare or pay any dividends or distributions on, or redeem,   purchase, acquire, or make a liquidation payment with respect to, any of Company’s capital   stock; (b) make any payment of principal or interest or premium, if any, on or repay, repurchase   or redeem any debt securities of Company that rank equal with or junior to the Subordinated     

 

   A-1-8   Notes; or (c) make any payments under any guarantee that ranks equal with or junior to the   Subordinated Notes, other than (i) any dividends or distributions in shares of, or options,   warrants or rights to subscribe for or purchase shares of, any class of Company’s common stock;   (ii) any declaration of a dividend in connection with the implementation of a shareholders’ rights   plan, or the issuance of stock under any such plan in the future, or the redemption or repurchase   of any such rights pursuant thereto; (iii) as a result of a reclassification of Company’s capital   stock or the exchange or conversion of one class or series of Company’s capital stock for another   class or series of Company’s capital stock; (iv) the purchase of fractional interests in shares of   Company’s capital stock pursuant to the conversion or exchange provisions of such capital stock   or the security being converted or exchanged; or (v) purchases of any class of Company’s   common stock related to the issuance of common stock or rights under any benefit plans for   Company’s directors, officers or employees or any of Company’s dividend reinvestment plans.   7. Affirmative Covenants of Company.   (a) Payment of Principal and Interest. Company covenants and agrees for the benefit   of the holder of this Subordinated Note that it will duly and punctually pay the principal of, and   interest on, this Subordinated Note, in accordance with the terms hereof. Principal and interest will   be considered paid on the date due if Company or a subsidiary thereof, holds as of 11:00 a.m.,   Camden, Maine time, on any Interest Payment Date, an amount in immediately available funds   provided by Company that is designated for and sufficient to pay all principal and interest then due.    (b) Maintenance of Office. Company will maintain an office or agency in Camden,   Maine, where Subordinated Notes may be surrendered for registration of transfer or for exchange   and where notices and demands to or upon Company in respect of the Subordinated Notes may be   served.    Company may also from time to time designate one or more other offices or agencies where   the Subordinated Notes may be presented or surrendered for any or all such purposes and may   from time to time rescind such designations; provided that no such designation or rescission will in   any manner relieve Company of its obligation to maintain an office or agency in Camden,   Maine. Company will give prompt written notice to the Noteholders of any such designation or   rescission and of any change in the location of any such other office or agency.   (c) Corporate Existence. Company will do or cause to be done all things necessary to   preserve and keep in full force and effect: (i) the corporate existence of Company; (ii) the   existence (corporate or other) of each subsidiary of Company that is a “significant subsidiary”   as defined in Rule 1-02 of Regulation S-X promulgated by the U.S. Securities and Exchange   Commission (as such rule is in effect on the date hereof) (each, a “Significant Subsidiary”); and   (iii) the rights (charter and statutory), licenses and franchises of Company and each of its   Significant Subsidiaries; provided, however, that Company will not be required to preserve the   existence (corporate or other) of any of its Significant Subsidiaries or any such right, license or   franchise of Company or any of its Significant Subsidiaries if the Board of Directors of Company   determines that the preservation thereof is no longer desirable in the conduct of the business of   Company and its Significant Subsidiaries taken as a whole and that the loss thereof will not be   disadvantageous in any material respect to the Noteholders.     

 

   A-1-9   (d) Maintenance of Properties. Company will, and will cause each Significant   Subsidiary to, cause all its properties used or useful in the conduct of its business to be maintained   and kept in good condition, repair and working order and supplied with all necessary equipment   and will cause to be made all necessary repairs, renewals, replacements, betterments and   improvements thereof, all as in the judgment of Company may be necessary so that the business   carried on in connection therewith may be properly and advantageously conducted at all times;   provided, however, that nothing in this Section will prevent Company or any Significant   Subsidiary from discontinuing the operation and maintenance of any of their respective   properties if such discontinuance is, in the judgment of the Board of Directors of Company or of   any Significant Subsidiary, as the case may be desirable in the conduct of its business.   (e) Waiver of Certain Covenants. Company may omit in any particular instance to   comply with any term, provision or condition set forth in Section 7(a) or Section 7(b) above, with   respect to this Subordinated Note if before the time for such compliance the Noteholders of at least a   majority in principal amount of the outstanding Subordinated Notes, by act of such Noteholders,   either will waive such compliance in such instance or generally will have waived compliance with   such term, provision or condition, but no such waiver will extend to or affect such term, provision   or condition except to the extent so expressly waived, and, until such waiver will become effective,   the obligations of Company in respect of any such term, provision or condition will remain in full   force and effect.   (f) Company Statement as to Compliance. Company will deliver to the Noteholders,   within 120 days after the end of each fiscal year, an Officer’s Certificate covering the preceding   calendar year, stating whether or not, to the best of his or her knowledge, Company is in default in   the performance and observance of any of the terms, provisions and conditions of this Subordinated   Note (without regard to notice requirements or periods of grace) and if Company will be in default,   specifying all such defaults and the nature and status thereof of which he or she may have   knowledge.   (g) Tier 2 Capital. If all or any portion of the Subordinated Notes ceases to be deemed to   be Tier 2 Capital, other than due to the limitation imposed on the capital treatment of subordinated   debt during the 5 years immediately preceding the Maturity Date of the Subordinated Notes,   Company will immediately notify the Noteholders, and thereafter Company shall request, subject to   the terms hereof, that the Noteholders execute and deliver all agreements as reasonably necessary in   order to restructure the applicable portions of the obligations evidenced by the Subordinated Notes   to qualify as Tier 2 Capital.   8. Merger or Sale of Assets. Company shall not merge into another entity or convey,   transfer or lease substantially all of its properties and assets to any person, unless:   (a) the continuing entity into which Company is merged or the person which acquires   by conveyance or transfer or which leases substantially all of the properties and assets of   Company shall be a corporation, association or other legal entity organized and existing under   the laws of the United States of America, any State thereof or the District of Columbia and   expressly assumes the due and punctual payment of the principal of and any premium and   interest on the Subordinated Notes according to their terms, and the due and punctual     

 

   A-1-10   performance of all covenants and conditions hereof on the part of Company to be performed or   observed; and   (b) immediately after giving effect to such transaction, no Event of Default (as   defined below), and no event which, after notice or lapse of time or both, would become an   Event of Default, shall have happened and be continuing.   9. Denominations. The Subordinated Notes are issuable only in registered form   without interest coupons in minimum denominations of $1,000 and integral multiples of $1,000   in excess thereof.    10. Charges and Transfer Taxes. No service charge will be made for any registration   of transfer or exchange of this Subordinated Note, or any redemption or repayment of this   Subordinated Note, or any conversion or exchange of this Subordinated Note for other types of   securities or property, but Company may require payment of a sum sufficient to pay all taxes,   assessments or other governmental charges that may be imposed in connection with the transfer   or exchange of this Subordinated Note from the Noteholder requesting such transfer or exchange.   11. Payment Procedures. Payment of the principal and interest payable on the   Maturity Date will be made by check, or by wire transfer in immediately available funds to a   bank account in the United States designated by the registered holder of this Subordinated Note   if such Noteholder shall have previously provided wire instructions to Company, upon   presentation and surrender of this Subordinated Note at the Payment Office (as defined in   Section 21 below) or at such other place or places as Company shall designate by notice to the   registered Noteholders as the Payment Office, provided that this Subordinated Note is presented   to Company in time for Company to make such payments in such funds in accordance with its   normal procedures. Payments of interest (other than interest payable on the Maturity Date) shall   be made by wire transfer in immediately available funds or check mailed to the registered holder   of this Subordinated Note, as such person’s address appears on the Security Register (as defined   below). Interest payable on any Interest Payment Date shall be payable to the Noteholder in   whose name this Subordinated Note is registered at the close of business on the fifteenth   calendar day prior to the applicable Interest Payment Date, without regard to whether such date   is a Business Day (such date being referred to herein as the “Regular Record Date”), except that   interest not paid on the Interest Payment Date, if any, will be paid to the holder in whose name   this Subordinated Note is registered at the close of business on a special record date fixed by   Company (a “Special Record Date”), notice of which shall be given to the holder of this   Subordinated Note not less than 10 calendar days prior to such Special Record Date. (The   Regular Record Date and Special Record Date are referred to herein collectively as the “Record   Dates”). To the extent permitted by applicable law, interest shall accrue, at the rate at which   interest accrues on the principal of this Subordinated Note, on any amount of principal or interest   on this Subordinated Note not paid when due. All payments on this Subordinated Note shall be   applied first against costs and expenses of the holder of this Subordinated Note; then against   interest due hereunder; and then against principal due hereunder. The holder of this Subordinated   Note acknowledges and agrees that the payment of all or any portion of the outstanding principal   amount of this Subordinated Note and all interest hereon shall be pari passu in right of payment   and in all other respects to the other Subordinated Notes. In the event that the holder of this   Subordinated Note receives payments in excess of its pro rata share of Company’s payments to     

 

   A-1-11   the holders of all of the Subordinated Notes, then the holder of this Subordinated Note shall hold   in trust all such excess payments for the benefit of the holders of the other Subordinated Notes   and shall pay such amounts held in trust to such other holders upon demand by such holders.   12. Form of Payment. Payments of principal and interest on this Subordinated Note   shall be made in such coin or currency of the United States of America as at the time of payment   shall be legal tender for the payment of public and private debts.   13. Registration of Transfer, Security Register. Except as otherwise provided herein,   this Subordinated Note is transferable in whole or in part, and may be exchanged for a like   aggregate principal amount of Subordinated Notes of other authorized denominations, by the   holder of this Subordinated Note in person, or by his attorney duly authorized in writing, at the   Payment Office. Company shall maintain a register providing for the registration of the   Subordinated Notes and any exchange or transfer thereof (the “Security Register”). Upon   surrender or presentation of this Subordinated Note for exchange or registration of transfer,   Company shall execute and deliver in exchange therefor a Subordinated Note or Subordinated   Notes of like aggregate principal amount, each in a minimum denomination of $1,000 or any   amount in excess thereof which is an integral multiple of $1,000 (and, in the absence of an   opinion of counsel satisfactory to Company to the contrary, bearing the restrictive legend(s) set   forth hereinabove) and that is or are registered in such name or names requested by the   Noteholder. Any Subordinated Note presented or surrendered for registration of transfer or for   exchange shall be duly endorsed and accompanied by a written instrument of transfer in such   form as is attached hereto and incorporated herein, duly executed by the holder of this   Subordinated Note or his attorney duly authorized in writing, with such tax identification number   or other information for each person in whose name a Subordinated Note is to be issued, and   accompanied by evidence of compliance with any restrictive legend(s) appearing on such   Subordinated Note or Subordinated Notes as Company may reasonably request to comply with   applicable law. No exchange or registration of transfer of this Subordinated Note shall be made   on or after the fifteenth day immediately preceding the Maturity Date. This Subordinated Note is   subject to the restrictions on transfer of the Purchase Agreement between Company and the   Purchasers identified therein, who were the original holders of the Subordinated Notes, a copy of   which is on file with Company.   14. Priority. The Subordinated Notes rank pari passu among themselves and pari   passu, in the event of any insolvency proceeding, dissolution, assignment for the benefit of   creditors, reorganization, restructuring of debt, marshaling of assets and liabilities or similar   proceeding or any liquidation or winding up of Company, with all other present or future   unsecured subordinated debt obligations of Company, except any unsecured subordinated debt   that, pursuant to its express terms, is senior or subordinate in right of payment to the   Subordinated Notes.   15. Ownership. Prior to due presentment of this Subordinated Note for registration of   transfer, Company may treat the holder in whose name this Subordinated Note is registered in   the Security Register as the absolute owner of this Subordinated Note for receiving payments of   principal and interest on this Subordinated Note and for all other purposes whatsoever, whether   or not this Subordinated Note be overdue, and Company shall not be affected by any notice to   the contrary.     

 

   A-1-12   16. Waiver and Consent. Any consent or waiver given by the holder of this   Subordinated Note shall be conclusive and binding upon such holder and upon all future holders   of this Subordinated Note and of any Subordinated Note issued upon the registration of transfer   hereof or in exchange therefor or in lieu hereof, whether or not notation of such consent or   waiver is made upon this Subordinated Note. This Subordinated Note may be also amended or   waived pursuant to, and in accordance with, the provisions of Section VIII.C of the Purchase   Agreement. No delay or omission of the holder of this Subordinated Note to exercise any right or   remedy accruing upon any Event of Default shall impair such right or remedy or constitute a   waiver of any such Event of Default or an acquiescence therein. Any insured depository   institution which shall be a holder of this Subordinated Note or which otherwise shall have any   beneficial ownership interest in this Subordinated Note shall, by its acceptance of such   Subordinated Note (or beneficial interest therein), be deemed to have waived any right of offset   with respect to the indebtedness evidenced thereby.   17. Absolute and Unconditional Obligation of Company. No provisions of this   Subordinated Note shall alter or impair the obligation of Company, which is absolute and   unconditional, to pay the principal and interest on this Subordinated Note at the times, places and   rate, and in the coin or currency, herein prescribed.   (a) No delay or omission of the holder of this Subordinated Note to exercise any right   or remedy accruing upon any Event of Default shall impair such right or remedy or constitute a   waiver of any such Event of Default or an acquiescence therein.   (b) Any insured depository institution which shall be a holder of this Subordinated   Note or which otherwise shall have any beneficial ownership interest in this Subordinated Note   shall, by its acceptance of such Note (or beneficial interest therein), be deemed to have waived   any right of offset with respect to the indebtedness evidenced thereby.   18. No Sinking Fund; Convertibility. This Subordinated Note is not entitled to the   benefit of any sinking fund. This Subordinated Note is not convertible into or exchangeable for   any of the equity securities, other securities or assets of Company or any subsidiary.   19. Successors and Assigns. This Note shall be binding upon Company and inure to   the benefit of the Noteholder and its respective successors and permitted assigns. The Noteholder   may assign all, or any part of, or any interest in, the Noteholder’s rights and benefits hereunder   only to the extent and in the manner permitted in the Purchase Agreement. To the extent of any   such assignment, such assignee shall have the same rights and benefits against Company and   shall agree to be bound by and to comply with the terms and conditions of the Purchase   Agreement as it would have had if it were the Noteholder hereunder.   20. No Recourse Against Others. No recourse under or upon any obligation, covenant   or agreement contained in this Subordinated Note, or for any claim based thereon or otherwise in   respect thereof, will be had against any past, present or future shareholder, employee, officer, or   director, as such, of Company or of any predecessor or successor, either directly or through   Company or any predecessor or successor, under any rate of law, statute or constitutional   provision or by the enforcement of any assessment or by any legal or equitable proceeding or   otherwise, all such liability being expressly waived and released by the acceptance of this     

 

   A-1-13   Subordinated Note by the holder hereof and as part of the consideration for the issuance of this   Subordinated Note.   21. Notices. All notices to Company under this Subordinated Note shall be in writing   and addressed to Company at 2 Elm Street, Camden, Maine, Attn: Gregory A. Dufour, President   and Chief Executive Officer, or to such other address as Company may notify to the holder of   this Subordinated Note (the “Payment Office”). All notices to the Noteholders shall be in writing   and sent by first-class mail to each Noteholder at his or its address as set forth in the Security   Register.   22. Further Issues. Company may, without the consent of the holders of the   Subordinated Notes, create and issue additional notes having the same terms and conditions of   the Subordinated Notes (except for the Issue Date) so that such further notes shall be   consolidated and form a single series with the Subordinated Notes.    23. Governing Law. THIS SUBORDINATED NOTE WILL BE DEEMED TO BE A   CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK AND WILL BE   GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE   STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ITS LAWS OR PRINCIPLES OF   CONFLICT OF LAWS THAT WOULD RESULT IN THE APPLICATION OF THE LAWS   OF ANOTHER JURISDICTION. THIS SUBORDINATED NOTE IS INTENDED TO MEET   THE CRITERIA FOR QUALIFICATION OF THE OUTSTANDING PRINCIPAL AS TIER 2   CAPITAL UNDER THE REGULATORY GUIDELINES OF THE FEDERAL RESERVE,   AND THE TERMS HEREOF SHALL BE INTERPRETED IN A MANNER TO SATISFY   SUCH INTENT.   [Signature Page Follows]        

 

   A-1-14      IN WITNESS WHEREOF, the undersigned has caused this Subordinated Note to be   duly executed.   Dated: October 8, 2015    CAMDEN NATIONAL CORPORATION       By:     Name: Gregory A. Dufour     Title: President and Chief Executive   Officer        

 

         ASSIGNMENT FORM   To assign this Subordinated Note, fill in the form below: (I) or (we) assign and transfer this   Subordinated Note to:        (Print or type assignee’s name, address and zip code)           (Insert assignee’s social security or tax I.D. No.)      and irrevocably appoint _______________________ agent to transfer this Subordinated Note on   the books of Company. The agent may substitute another to act for him.      Date:  Your signature:    (Sign exactly as your name appears on the face of   this Subordinated Note)      Tax Identification No:       Signature Guarantee:    (Signatures must be guaranteed by an eligible guarantor institution (banks, stockbroker’s, savings   and loan associations and credit unions with membership in an approved signature guarantee   medallion program), pursuant to Exchange Act Rule 17Ad-15).      The undersigned certifies that it [is / is not] an Affiliate of Company and that, to its   knowledge, the proposed transferee [is / is not] an Affiliate of Company.   In connection with any transfer or exchange of this Subordinated Note occurring prior to the   date that is one year after the later of the date of original issuance of this Subordinated Note and   the last date, if any, on which this Subordinated Note was owned by Company or any Affiliate of   Company, the undersigned confirms that this Subordinated Note is being:   CHECK ONE BOX BELOW:    (1) acquired for the undersigned’s own account, without transfer;    (2) transferred to Company;    (3) transferred in accordance and in compliance with Rule 144A under the Securities   Act of 1933, as amended (the “Securities Act”);    (4) transferred under an effective registration statement under the Securities Act;    (5) transferred in accordance with and in compliance with Regulation S under the   Securities Act;     

 

    16       (6) transferred to an institutional “accredited investor” (as defined in Rule 501(a)(1),   (2), (3) or (7) under the Securities Act) or an “accredited investor” (as defined in   Rule 501(a)(4) under the Securities Act), that has furnished a signed letter   containing certain representation’s and agreements; or    (7) transferred in accordance with another available exemption from the registration   requirements of the Securities Act of 1933, as amended.   Unless one of the boxes is checked, Company will refuse to register this Subordinated Note in   the name of any person other than the registered holder thereof; provided, however, that if box (5),   (6) or (7) is checked, Company may require, prior to registering any such transfer of this   Subordinated Note, in its sole discretion, such legal opinions, certifications and other information   as Company may reasonably request to confirm that such transfer is being made pursuant to an   exemption from, or in a transaction not subject to, the registration requirements of the Securities   Act such as the exemption provided by Rule 144 under such Act.   Signature:       Signature Guarantee:    (Signatures must be guaranteed by an eligible guarantor institution (banks, stockbroker’s,   savings and loan associations and credit unions with membership in an approved signature   guarantee medallion program), pursuant to Exchange Act Rule 17Ad-l5).   TO BE COMPLETED BY PURCHASER IF BOX (1) OR (3) ABOVE IS CHECKED.   The undersigned represents and warrants that it is purchasing this Subordinated Note for its   own account or an account with respect to which it exercises sole investment discretion and that   it and any such account is a “qualified institutional buyer” within the meaning of Rule 144A   under the Securities Act of 1933, as amended, and is aware that the sale to it is being made in   reliance on Rule 144A and acknowledges that it has received such information regarding Company   as the undersigned has requested pursuant to Rule 144A or has determined not to request such   information and that it is aware that the transferor is relying upon the undersigned’s foregoing   representations in order to claim the exemption from registration provided by Rule 144A.   Date:  Signature:

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