Document:

ex10-2.htm

Exhibit 10.2

 

THE TRANSFER OF THIS NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION HEREOF IS SUBJECT TO RESTRICTIONS CONTAINED HEREIN. THIS NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION HEREOF HAS BEEN ISSUED IN RELIANCE UPON THE REPRESENTATION OF LENDER THAT IT HAS BEEN ACQUIRED FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TOWARDS THE RESALE OR OTHER DISTRIBUTION THEREOF. THIS NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL SATISFACTORY TO BORROWER THAT SUCH REGISTRATION IS NOT REQUIRED.

 

 

CONVERTIBLE PROMISSORY NOTE 

 

	
$5,000,000.00    
	
 Date of Issuance: March 6, 2017

	
 
	
 Rancho Cordova, California

 

1.        Principal and Interest. For value received, Cesca Therapeutics Inc., a Delaware corporation (the “Borrower”), hereby promises to pay to the order of Boyalife Investment Fund II, Inc., an Illinois corporation, together with its successors and assigns (the “Lender”), the principal sum of $5,000,000.00, or such lesser amount as may be outstanding from time to time. This Note is being issued pursuant to that certain Credit Agreement, dated March 6, 2017, by and between Borrower and Lender (the “Credit Agreement”) and is subject to the terms and conditions of the Credit Agreement. Capitalized terms used but not defined herein shall have the meanings ascribed thereto in the Credit Agreement. 

 

2.        Interest. This Note shall bear simple interest (calculated on the basis of a 360-day year for the actual number of days elapsed) at the annual rate of twenty-two percent (22.0%) of the principal amount of this Note outstanding from time to time, and if such rate is determined to be usurious, then the rate shall be reduced to the highest legally permissible rate. Notwithstanding the foregoing, interest shall not accrue or be payable on any portion of the principal amount of this Note that constitutes Knobbe Principal (as that term is defined in the Credit Agreement). Accrued and unpaid interest shall become due and payable annually on December 31st of each year.

 

3.        Maturity. Subject to the conversion provisions set forth in Section 4 hereof, the outstanding principal together with any accrued but unpaid interest under this Note shall be due and payable March 6, 2022 (the “Maturity Date”). Notwithstanding the foregoing, the entire unpaid principal sum of this Note, together with accrued and unpaid interest thereon, shall become immediately due and payable upon written demand by Lender upon an Event of Default and so long as such Event of Default is continuing.

 

 

 

 

  

4.        Optional Conversion at Maturity. In the event that this Note is not paid in full on or before the Maturity Date, then at any time after the Maturity Date, the outstanding principal amount of this Note together with all accrued but unpaid interest thereon may be converted, in part or in whole, at the option of Lender, into shares of Borrower’s common stock, par value $0.001 per share (the “Common Stock”) as provided below. A conversion of any portion of this Note into shares of Common Stock shall be effected at a conversion price equal to ninety percent (90%) of the Current Market Price as of the date of such conversion (the “Conversion Price”). As used herein, the term “Current Market Price” means, generally, (y) the average VWAP for the 10 consecutive trading days ending on the Maturity Date, or (z) if the Common Stock is not listed or quoted on the NASDAQ Capital Market or another securities exchange or market, the fair value as reasonably determined by the Board of Directors of Borrower. As used herein, the term “VWAP” means, for any trading day, the volume weighted average trading price of the Common Stock for such trading day on the NASDAQ Capital Market (or if the Common Stock is no longer traded on the NASDAQ Capital Market, on such other exchange as the Common Stock are then traded). To effect a conversion under this Section 4, Lender shall provide written notice of such conversion to Borrower, along with such other documents required under Section 5 hereof, at least three Business Days prior to the date of conversion, and the written notice shall state the date on which the conversion will occur. Notwithstanding the foregoing, the total number of shares of Common Stock issued or issuable upon conversion of this Note shall not exceed an amount in excess of 19.99% of Borrower’s outstanding common stock as of the date of the issuance of this Note, unless and until Borrower obtains the approval of its stockholders as required by the applicable Marketplace Rules of NASDAQ. 

 

5.        Mechanics of Conversion. As soon as practicable after conversion of this Note pursuant to Section 4 hereof, Lender agrees to surrender this Note for conversion at the principal office of Borrower and agrees to execute all appropriate documentation necessary to effect such conversion. As soon as practicable thereafter, Borrower, at its expense, will cause to be issued in the name of and delivered to Lender, a certificate or certificates for the number of shares of Common Stock to which Lender shall be entitled on such conversion (bearing such legends as may be required by applicable state and federal securities laws in the opinion of legal counsel for Borrower). Such conversion shall be deemed to have been made immediately prior to the close of business on the applicable conversion date set forth in Section 4 above, regardless of whether the Note has been surrendered on such date, provided that Borrower shall not be required to issue a certificate for shares to Lender prior to the surrender of this Note. No fractional shares will be issued on conversion of this Note; in lieu of any fractional share to which Lender would otherwise be entitled, Borrower shall pay to Lender the amount of the outstanding principal balance and/or accrued interest due that is not so converted, such payment to be in cash or by check. Lender understands that Lender shall not have any of the rights of a stockholder with respect to the shares of Common Stock issuable upon conversion of any principal or accrued interest of this Note, until such principal or accrued interest is converted into capital stock of Borrower as provided herein.

 

 

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6.        Payment. All payments hereunder shall be made in lawful money of the United States of America directly to Lender at the address of Lender set forth in the Credit Agreement, or at such other place or to such account as Lender from time to time shall designate in a written notice to Borrower. Borrower may prepay the outstanding amount hereof in whole or in part at any time, without penalty. All payments made under this Note shall be applied first to accrued but unpaid interest, then to payment of any outstanding Knobbe Principal, and finally to payment of the remaining outstanding principal due hereunder. Whenever any payment hereunder shall be stated to be due, or any other date specified hereunder would otherwise occur, on a day other than a Business Day then, except as otherwise provided herein, such payment shall be made, and such payment date or other date shall occur, on the next succeeding Business Day.

 

7.        Miscellaneous.

 

(a)     Assignment. Lender may assign any of its rights, duties, or obligations under this Note upon written notice to Borrower, subject to the limitations set forth in Section 6.3 of the Credit Agreement. Borrower may not, without the prior written consent of Lender, assign any rights, duties, or obligations under this Note; provided, however, Borrower may assign any rights, duties, or obligations under this Note without obtaining prior written consent in connection with a Change in Control (as defined below). The rights and obligations of Borrower and the holder of this Note shall be binding upon and benefit the permitted successors, assigns, heirs, administrators and transferees of the parties. For the purpose of this Section 7(a), a “Change in Control” shall mean the acquisition of Borrower by another entity by means of any transaction or series of related transactions to which Borrower is party (including, without limitation, any stock acquisition, reorganization, merger or consolidation but excluding a consolidation with a wholly-owned subsidiary of Borrower, a merger effected exclusively to change the domicile of Borrower) other than a transaction or series of transactions in which the holders of the voting securities of Borrower outstanding immediately prior to such transaction continue to retain (either by such voting securities remaining outstanding or by such voting securities being converted into voting securities of the surviving entity), as a result of shares in Borrower held by such holders prior to such transaction, at least fifty percent (50%) of the total voting power represented by the voting securities of Borrower or such surviving entity outstanding immediately after such transaction or series of transactions. 

 

(b)     Amendment. Any provision of this Note may be amended, waived or modified only upon the written consent of Borrower and Lender.

 

(c)     Waivers. Except as otherwise set forth in this Note, Borrower, for itself and its legal representatives, successors and assigns, expressly waives presentment, protest, demand, notice of dishonor, notice of nonpayment, notice of maturity, notice of protest, presentment for the purpose of accelerating maturity, and diligence in collection.

 

(d)     Cumulative Rights. No delay on the part of Lender in the exercise of any power or right under this Note shall operate as a waiver thereof, nor shall a single or partial exercise of any other power or right. Enforcement by Lender of any right or remedy for the payment hereof shall not constitute any election by Lender of remedies so as to preclude the exercise of any other remedy available to Lender.

 

 

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(c)     Interpretation. Whenever possible, each provision of this Note shall be interpreted in such manner as to be effective and valid under all applicable laws and regulations. If, however, any provision of this Note shall be prohibited by or invalid under any such law or regulation in any jurisdiction, it shall, as to such jurisdiction, be deemed modified to conform to the minimum requirements of such law or regulation, or, if for any reason it is not deemed so modified, it shall be ineffective and invalid only to the extent of such prohibition or invalidity without affecting the remaining provision of this Note, or the validity or effectiveness of such provision in any other jurisdiction.

 

(d)     Jurisdiction. Borrower and each Lender hereby (i) submit to the exclusive jurisdiction of the courts of the State of California and the United States Federal courts of the United States sitting in the Northern District of California for the purpose of any action or proceeding arising out of or relating to this Note and any other documents and instruments relating hereto, (ii) agree that all claims in respect of any such action or proceeding may be heard and determined in such courts, (iii) irrevocable waive (to the extent permitted by applicable law) any objection which it now or hereafter may have to the laying of venue of any such action or proceeding brought in any of the foregoing courts, and any objection on the ground that any such action or proceeding in any such court has been brought in an inconvenient forum and (iv) agree that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner permitted by law. This Note shall be governed by the law of the State of California, without regard to choice of law principals.

 

(e)     Notices. Any notices or other communications hereunder shall be delivered pursuant to Section 9.3 of the Credit Agreement. 

 

(f)     Integration. This Note and the other Loan Documents constitute the sole agreement of the parties with respect to the subject matter hereof and thereof and supersede all oral negotiations and prior writings with respect to the subject matter hereof and thereof.

 

 

[Signature Page Follows]

 

 

 

 

 

IN WITNESS WHEREOF, Borrower has caused this Note to be issued as of the Date of Issuance set forth above.

 

 

	
 
	
CESCA THERAPEUTICS INC.
	
 

	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 

	
 
	
By: /s/ Vivian Liu                                            
	
 

	
 
	
Name: Vivian Liu
	
 

	
 
	
Title: Chief Operating Officer
	
 

 

 

Accepted and Agreed by Lender:

 

BOYALIFE INVESTMENT FUND II, INC.

 

 

By:      /s/ James Xu               

Name: James Xu

Title:

 

 

[Signature Page to Convertible Promissory Note]Exhibit

        

PERFORMANCE SHARE AGREEMENT
UNDER THE THIRD AMENDED AND RESTATED
WESTWOOD HOLDINGS GROUP, INC. STOCK INCENTIVE PLAN

WHEREAS, WESTWOOD HOLDINGS GROUP, INC., a Delaware corporation (the “Company”), previously established the Third Amended and Restated Westwood Holdings Group, Inc. Stock Incentive Plan, as amended from time to time (the “Plan”); and
WHEREAS, this PERFORMANCE SHARE AGREEMENT (the “Agreement”), is made as of the [•] day of [•], 20__ (the “Date of Grant”), (the “Date of Grant”), between the Company and [•] (the “Employee”), and sets forth the terms of the award of Performance Shares (as defined below) granted to Employee, which such award is intended to constitute a Performance-Based Award under the Plan; and
WHEREAS, the Compensation Committee of the Board of Directors (the “Committee”) has determined that it is in the best interests of the Company to establish a qualifying performance-based vesting formula for the Performance Shares to qualify for an exemption from the limits on deductibility of executive compensation under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”); and
WHEREAS, [by resolution/unanimous written consent] on [•], the Committee approved the material terms of the performance-based vesting for the Performance Shares; and
WHEREAS, all of the terms and provisions of the Plan are incorporated herein by reference and made a part hereof, and all capitalized terms used but not defined in this Agreement have the meanings set forth in the Plan.
NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth, the parties hereto agree as follows:
 

        

	
		
	1.
	Grant of Performance Shares. 

A.  The Company hereby grants to Employee, on the terms and conditions hereinafter set forth, [•] performance shares (the “Performance Shares”), with (i) [•] Performance Shares (the “Category 1 Shares”) subject to the vesting provisions and other terms set forth in Section 2.A. below and (ii) [•] Performance Shares (the “Category 2 Shares”) subject to the vesting provisions and other terms set forth in Section 2.B. below. Depending on the level of performance determined to be attained with respect to the applicable Performance Goal as described in Section 2.B. below, the number of Category 2 Shares that may be earned by the Employee hereunder may range from 0% to [•]% of the Category 2 Shares (the “Earned Category 2 Shares”). Each Performance Share represents the right to receive one share of Stock. The Performance Shares are described in the Plan as a Performance-Based Award subject to restrictions that lapse based on the achievement of Performance Goals during specified Performance Cycles and time-based vesting requirements.  

B.  The Employee shall have the right to receive an amount (a “Dividend Equivalent”) equal to dividends paid with respect to a number of shares of Stock equal to the number of Performance Shares granted hereunder; provided, however, that any such Dividend Equivalents shall be subject to the same conditions and restrictions (including vesting) applicable to the Performance Shares as set forth in the Agreement and the Dividend Equivalents shall be accrued (without interest) and paid to the Employee, in the same form as the associated dividend was paid to stockholders generally, as soon as practicable following the applicable vesting date under Section 2 below.   

 
	
		
	2.
	Vesting Terms.

 
	
			
	 
	A.
	Vesting of Category 1 Shares. The Category 1 Shares, subject to the other terms and conditions set forth herein, shall vest subject to the satisfaction of a time-based vesting schedule and a performance-based vesting schedule. The Performance Cycle for the Category 1 Shares begins on January 1, 20__ and ends on December 31, 20__. Subject to the attainment of the Performance Goal set forth on Exhibit A hereto with respect to the Performance Cycle, the Category 1 Shares shall become earned (the “Earned Category 1 Shares”). The Earned Category 1 Shares (if any) shall vest in accordance with the following vesting schedule, provided that the Employee remains continuously employed by the Company or any of its affiliates from the Date of Grant through each vesting date:

In addition, the vesting of the Earned Category 1 Shares shall only occur following certification by the Committee of the achievement of the Performance Goal set forth on Exhibit A hereto with respect to the Performance Cycle as soon as practicable following December 31, 20__. For the avoidance of doubt, if the Committee certifies that the Performance Goal set forth on Exhibit A hereto with respect to the Performance Cycle has not been attained, no Category 1 Shares shall become Earned Category 1 Shares and all Category 1 Shares shall be forfeited to the Company without consideration. If the vesting of any Earned Category 1 Shares would yield a fractional share, such fractional share shall be rounded up to the nearest whole share.    

        

	
			
	 
	B.
	Vesting of Category 2 Shares. The Category 2 Shares, subject to the other terms and conditions set forth herein, shall vest subject to the satisfaction of a time-based vesting schedule and a performance-based vesting schedule. The Performance Cycle for the Category 2 Shares begins on January 1, 20__ and ends on December 31, 20__. The number of Earned Category 2 Shares shall be determined according to the level of achievement with respect to the Performance Goal set forth on Exhibit A hereto for the Performance Cycle. The Earned Category 2 Shares (if any) shall vest in accordance with the following vesting schedule, provided that the Employee remains continuously employed by the Company or any of its affiliates from the Date of Grant through each vesting date:

In addition, vesting of the Earned Category 2 Shares shall only occur following certification by the Committee of the achievement of the Performance Goal set forth on Exhibit A hereto with respect to the Performance Cycle as soon as practicable following December 31, 20__. For the avoidance of doubt, if the Committee certifies that the level of achievement with respect to the Performance Goal set forth on Exhibit A hereto for the Performance Cycle is “Below Threshold,” no Category 2 Shares shall become Earned Category 2 Shares and all Category 2 Shares shall be forfeited to the Company without consideration. If the vesting of any Earned Category 2 Shares would yield a fractional share, such fractional share shall be rounded up to the nearest whole share. 

        

	
			
	 
	C.
	Termination of Employment.

(i). Death or Disability. Upon the Employee’s termination of employment due to death or Disability, either (a) during the applicable Performance Cycle, all of the Category 1 Shares and 100% of the Category 2 Shares (i.e., a number of Category 2 Shares equal to the “Target” level of achievement with respect to the applicable Performance Goal) shall become fully vested, in each case, effective upon the date of such termination and without regard to the level of achievement with respect to the applicable Performance Goal(s) or (b) following the last day of the applicable Performance Cycle, all of the unvested Earned Category 1 Shares and unvested Earned Category 2 Shares shall become fully vested. 

(ii). Without Cause; for Good Reason. Upon the Employee’s termination of employment by the Company without Cause or by the Employee for “Good Reason” (as defined below), either (a) during the applicable Performance Cycle, all Category 1 Shares and Category 2 Shares shall remain outstanding and eligible to vest following the date of termination as if the Employee’s employment had continued, contingent upon and subject to achievement of the applicable Performance Goal(s) as set forth in Section 2.A. or 2.B. above or (b) following the last day of the applicable Performance Cycle, all of the unvested Earned Category 1 Shares and unvested Earned Category 2 Shares shall become fully vested. For purposes of this Agreement, the term “Good Reason” shall have the meaning ascribed to such term in [the Plan/that certain Executive Employment Agreement dated as of [•], by and among the Company and the Employee, as amended from time to time (the “Employment Agreement”)].

(iii). Change in Control. Notwithstanding anything contained in this Agreement [or the Employment Agreement] to the contrary, upon the occurrence of a Change in Control either (a) during the applicable Performance Cycle, all of the Category 1 Shares and 100% of the Category 2 Shares (i.e., a number of Category 2 Shares equal to the “Target” level of achievement with respect to the applicable Performance Goal) shall become fully vested, in each case, effective upon the date of such Change in Control and without regard to the level of achievement with respect to the applicable Performance Goal(s) or (b) following the last day of the applicable Performance Cycle, all of the unvested Earned Category 1 Shares and unvested Earned Category 2 Shares shall become fully vested.

(iv). Other Terminations. Upon the Employee’s termination of employment for Cause by the Company or by the Employee without Good Reason at any time, any Performance Shares (including Earned Category 1 Shares and Earned Category 2 Shares as well as any accrued Dividend Equivalents) that have not vested prior to such date of termination shall be forfeited to the Company without consideration.

        

	
			
	 3.
	Settlement. Payment in respect of vested Performance Shares shall be made as soon as administratively practicable, but in no event later than the 25th business day, following the applicable vesting date pursuant to Section 2 above, upon which the Company shall issue and deliver to the Employee (A) the number of shares of Stock equal to the number of vested Earned Category 1 Shares or vested Earned Category 2 Shares, as applicable, and (B) cash, shares of Stock or other property (as applicable) equal to any Dividend Equivalents accrued with respect to such vested Earned Category 1 Shares or vested Earned Category 2 Shares. 

	 
	 

	4.
	Employment of Employee. As an inducement to the Company to issue the Performance Shares to Employee, and as a condition thereto, Employee acknowledges and agrees that, without limitation of his rights under any employment agreement with the Company, neither the issuance of the Performance Shares to Employee nor any provision contained herein shall entitle Employee to remain in the employment of the Company or its affiliates or affect the right of the Company to terminate Employee’s employment at any time.

 
	
		
	5.
	Restrictions on Transfer.

 
	
			
	 
	A.
	The Employee agrees that he shall not dispose of (meaning, without limitation, sell, transfer, pledge, exchange, hypothecate or otherwise dispose of) any Performance Shares or other rights hereby acquired prior to the date the Performance Shares are vested and settled. Any attempted disposition of the Performance Shares in violation of the preceding sentence shall be null and void and the Performance Shares that the Employee attempted to dispose of shall be forfeited.

 
	
			
	 
	B.
	The spouse of Employee shall execute a signature page to this Agreement as of the date hereof and agree to be bound in all respects by the terms hereof to the same extent as Employee. The spouse further agrees that should she predecease Employee or become divorced from Employee, any of the Performance Shares which such spouse may own or in which she may have an interest shall remain subject to this Agreement.

 
	
		
	6.
	Notices; Deliveries. Any notice or delivery required to be given under the terms of this Agreement shall be addressed to the Company at its principal office, and any notice or delivery to be given to Employee shall be addressed to him at the address given by him and appearing in the Company’s records or such other address as either party hereto may hereafter designate in writing to the other. Any such notice or delivery shall be deemed to have been duly given when addressed as aforesaid, registered or certified mail, and deposited (postage or registration or certification fee prepaid) in a post office or branch post office regularly maintained by the United States.

 

        

	
		
	7.
	Disputes. As a condition of the granting of the Performance Shares hereby, Employee and his heirs and successors agree that any dispute or disagreement which may arise hereunder shall be determined by the Company’s Board of Directors in its sole discretion and judgment, and that any such determination and any interpretation by the Board of Directors of the terms of this grant of Performance Shares shall be final and shall be binding and conclusive, for all purposes, upon the Company, Employee, his heirs and personal representatives.

 
	
		
	8.
	Interpretation. The Performance Shares granted hereby are subject to the Plan. If a conflict exists between any term or provision contained herein and a term or provision of the Plan, the applicable terms and provisions of the Plan will govern and prevail. Notwithstanding the preceding sentence, in the event of any direct conflict between Section 2.C.(iii). of this Agreement and either the Plan or the Employment Agreement, the terms of this Agreement shall govern and prevail. 

	
		
	9.
	Miscellaneous.

 
	
			
	 
	A.
	Employee hereby agrees that the Company may withhold from any amount payable to the Employee an amount sufficient to cover any federal, state or local withholding taxes which may become required with respect to the vesting or settlement of the Performance Shares or take any other action it deems necessary to satisfy any income or other tax withholding requirements as a result of the vesting or settlement of the Performance Shares. The Committee, in its discretion (which such discretion, if the Employee is a “statutory insider” within the meaning of Section 16(a) of the Exchange Act, may not be delegated to management), may allow the Employee to pay his withholding tax obligation in connection with the vesting or settlement of the Performance Shares by (i) making a cash payment to the Company, (ii) having withheld a portion of the shares of Stock that would otherwise be delivered to the Employee in connection with the vesting of Performance Shares or (iii) surrendering shares of Stock owned by the Employee prior to the vesting of the Performance Shares, in each case, having an aggregate Fair Market Value equal to the amount of such withholding taxes.

 
	
			
	 
	B.
	If any party to this Agreement so required under this Agreement fails or refuses to comply with the provisions of this Agreement, then in addition to any other remedies provided by law or this Agreement, the party affected thereby may institute and maintain a proceeding to compel the specific performance of this Agreement by the party so defaulting.

 
	
			
	 
	C.
	This Agreement shall be binding upon and inure to the benefit of any successor or successors of the Company.

	
			
	 
	D.
	The interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of Texas.

 

        

	
			
	 
	E.
	This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which collectively shall constitute a single instrument.

 
	
			
	 
	F.
	If any one or more of the provisions or parts of a provision contained in this Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or part of a provision of this Agreement or any other jurisdiction, but this Agreement shall be reformed and construed in any such jurisdiction as if such invalid or illegal or unenforceable provision or part of a provision had never been contained herein and such provision or part shall be reformed so that it would be valid, legal and enforceable to the maximum extent permitted in such jurisdiction.

	 
	 
	 

	 
	G.
	The Performance Shares and any other amounts paid or credited pursuant to this Agreement are intended to either comply with, or be exempt from, the requirements of Section 409A of the Code and the regulations issued thereunder (“Section 409A”), and shall be interpreted accordingly where applicable. To the extent that the Committee determines that any Performance Shares or other amounts are not exempt from Section 409A, the Committee may (but shall not be required to) amend this Agreement in a manner intended to comply with the requirements of Section 409A or an exemption therefrom (including amendments with retroactive effect). Notwithstanding anything in this Agreement to the contrary, to the extent that any payment or benefit hereunder constitutes non-exempt “nonqualified deferred compensation” for purposes of Section 409A, (A) if such payment or benefit would otherwise be payable or distributable hereunder by reason of the Employee’s termination of employment, then all references to the Employee’s termination of employment shall be construed to mean a “separation from service” within the meaning of Section 409A, and (B) if such payment or benefit would otherwise be payable or distributable hereunder upon a Change in Control, then no such payment or distribution shall be made unless such Change in Control also constitutes a “change in the ownership of a corporation,” a “change in the effective control of a corporation,” or a “change in the ownership of a substantial portion of a corporation’s assets,” in each case, within the meaning of Section 409A. Notwithstanding anything to the contrary in this Agreement, to the extent that the Employee is a “specified employee” within the meaning of Section 409A, no amount that may constitute a deferral of compensation that is not otherwise exempt from Section 409A and which is payable on account of the Employee’s termination of employment shall be paid to the Employee before the date (the “Delayed Payment Date”) which is first day of the seventh month after such termination of employment or, if earlier, the date of the Employee’s death following such date of termination.  All such amounts that would, but for this Section 9.G., become payable prior to the Delayed Payment Date will be accumulated and paid on the Delayed Payment Date.  No interest will be paid by the Company with respect to any such delayed payments. For purposes of Section 409A, each payment or amount due under this Agreement shall be considered a separate payment.

[Signature Page Follows]

        

IN WITNESS WHEREOF, the Company has, effective as of the date and place first above written, caused this Agreement to be executed on its behalf by its authorized officer and Employee has hereunto set his hand as of the [•] day of [•] 20__.
.
 

WESTWOOD HOLDINGS GROUP, INC.

By: ____________________________________
Name: [•]

        

EMPLOYEE SIGNATURE PAGE
TO PERFORMANCE SHARE AGREEMENT
 
	
					
	 
	 
	 
	 
	 

	

Employee Name:
	 
	[•]
	 
	 

	 
	 
	 

	Signature
	 
	 
	 
	 

I, the undersigned, being the spouse of the above-named Employee, hereby acknowledge that I have read and understand the foregoing Performance Share Agreement under the Third Amended and Restated Westwood Holdings Group, Inc. Stock Incentive Plan (as amended from time to time), and I agree to be bound by the terms thereof.
 
	
									
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	Spouse Name:
	 
	[•]
	 
	 

	 
	 
	 
	 
	 

	Signature
	 
	 
	 
	 

        

Exhibit A
Performance Goals
Category 1 Shares
The Category 1 Shares shall become Earned Category 1 Shares subject to the attainment of the Performance Goal set forth in the table below with respect to the Performance Cycle (which, for the avoidance of doubt, begins on January 1, 20__ and ends on December 31, 20__):
	
	
	Performance Goal

	$[•] of Earnings Before Taxes (“EBT”)*

 
* For purposes of the Agreement and this Exhibit A, “earnings before taxes” is determined based on the Company’s audited financial statements for the applicable Performance Cycle and equals the Company’s revenues minus expenses, excluding tax. In the sole discretion of the Committee, earnings before taxes may exclude start up, non-recurring, mergers and acquisitions, litigation or claim adjustments or settlements, lift outs and other similar expense items; provided, however, that any such exclusion shall comply with Treas. Reg. § 1.162-27(e)(2)(iii).
Category 2 Shares
The Category 2 Shares shall become Earned Category 2 Shares based on the level of achievement with respect to the Performance Goal set forth in the table below for the Performance Cycle (which, for the avoidance of doubt, begins on January 1, 20__ and ends on December 31, 20__):
	
				
	Level
	Performance Goal**

	Performance Achievement (expressed as a percentage of the Target Performance Goal)
	Number of Earned Category 2 Shares (expressed as a percentage of the number of Target Category 2 Shares granted)

	“Below Threshold”
	Less than $[•] of EBT
	<[•]%
	0%

	“Threshold”
	Equal to $[•] of EBT
	[•]%
	[•]%

	“Target”
	Equal to $[•] of EBT
	[•]%
	[•]%

	“Maximum”
	Equal to or more than $[•] of EBT
	[•]%
	[•]%

 
** If the Company’s EBT is either (i) between Threshold and Target or (ii) between Target and Maximum, the actual number of Earned Category 2 Shares shall be calculated using straight line interpolation between such levels.

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