Document:

Exhibit

Exhibit 10.14(c)

Performance Share Award No. ___
ATLANTIC CAPITAL BANCSHARES, INC.
2015 STOCK INCENTIVE PLAN
(As Amended and Restated Effective May 18, 2017)
Performance Share Award Agreement
(Employees)
	
		
	Name of Participant:
	                                                                  

	Grant Date:
	                                                                  

	Threshold Number of Shares Subject to Award:
	As set forth on Schedule A

	Target Number Subject to Award:
	As set forth on Schedule A

	Maximum Number of Shares Subject to Award:
	As set forth on Schedule A

	Performance Metrics:
	As set forth on Schedule A

	Performance Period:
	As set forth on Schedule A

THIS AGREEMENT (together with Schedules A and B attached hereto, this “Agreement”) is made effective as of the ____ day of ___________, _____ (the “Grant Date”) between Atlantic Capital Bancshares, Inc., a Georgia corporation (the “Company”), and ___________________________, an Employee of the Company or an Affiliate (the “Participant”). 
R E C I T A L S:
In furtherance of (i) the purposes of the Atlantic Capital Bancshares, Inc. 2015 Stock Incentive Plan, as amended and restated effective May 18, 2017 and as it may be further amended and/or restated (the “Plan”), and (ii) the Atlantic Capital Bancshares, Inc. Executive Officer Long-Term Incentive Plan, as amended and restated effective April 19, 2018, and as it may be further amended and/or restated (the “LTIP”), and in consideration of the services of the Participant and such other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Participant hereby agree as follows:
1.Incorporation of Plan and LTIP.  The rights and duties of the Company and the Participant under this Agreement shall in all respects be subject to and governed by the provisions of the Plan and the LTIP, copies of which are delivered herewith or have been previously provided to the Participant and the terms of which are incorporated herein by reference.  In the event of any conflict between the provisions in this Agreement and those of the Plan or the LTIP, the provisions of the Plan or the LTIP, as the case shall be, shall govern, unless the Administrator determines otherwise.  In addition, in the event of any conflict between the provisions in the Plan and the LTIP, the provisions of the Plan shall govern, unless the Administrator determines otherwise.  Unless otherwise defined herein, capitalized terms in this Agreement shall have the same definitions as set forth in the Plan.

PSA Agreement (Employees – without Employment Agreement) (Rev. October 2018) 

2.    Grant of Performance Share Award.  Subject to the terms of this Agreement, the Plan and the LTIP, the Company hereby grants the Participant a Performance Share Award (the “Award”) for up to the maximum number of shares of Common Stock (the “Shares”) as is set forth above and in Schedule A.  The Award represents a Bonus opportunity granted under the LTIP and shall be payable, if and to the extent earned, solely in shares issued under the Plan (or a successor plan).  The Participant expressly acknowledges that the terms of Schedules A and B shall be incorporated herein by reference and shall constitute part of this Agreement. 
3.    No Rights as a Shareholder.  The Participant shall not be deemed to be the holder of any of the Shares subject to the Award and shall not have any rights of a shareholder unless and until (and then only to the extent that) the Award has vested and certificates for such Shares have been issued and delivered to him or her (or, in the case of uncertificated shares, other written evidence of ownership in accordance with Applicable Law shall have been provided); provided, however, that if any cash or non-cash dividends are declared and paid by the Company with respect to any Shares subject to the Award (to the extent that the Award is not then vested), the Participant shall have dividend equivalent rights with respect to such Shares, but such dividend equivalent rights shall be subject to the same vesting schedule, forfeiture terms and other restrictions as are applicable to the underlying Shares.  
4.    Earning of Award.  
(a)    Subject to the terms of the Plan and this Agreement, including but not limited to Section 5 and Section 13 herein, the Award shall be deemed earned, and the Shares subject to the Award shall be distributable as provided in Section 6 herein, upon such date or dates, and subject to such conditions, as are described in this Agreement, including but not limited to Schedule A.  To be entitled to distribution of Shares or other payment hereunder (if any) upon vesting and earning of the Award, the Participant must be employed by the Company on the last day of the Performance Period.  The Participant expressly acknowledges that the Award shall be deemed earned only upon such terms and conditions as are provided in this Agreement (including but not limited to Schedule A) and otherwise in accordance with the terms of the Plan.  
(b)    The Administrator has sole authority to determine whether and to what degree the Award has vested and been earned and is payable and to interpret the terms and conditions of this Agreement and the Plan.
5.    Effect of Termination of Employment or Service.  
(a)    Except as otherwise provided in this Section 5 or in Section 13 herein, if the employment or service of the Participant is terminated for any reason (whether by the Company or the Participant and whether voluntary or involuntary or with or without Cause) (such date of termination of employment or service being referred to as the “Termination Date”) and all or any part of the Award has not been earned pursuant to the terms of the Plan and this Agreement, then the Award, to the extent not earned as of the Participant’s Termination Date, shall be forfeited immediately upon such termination, and the Participant shall have no further rights with respect to the Award or the Shares underlying that portion of the Award that has not yet been earned.  The Participant expressly acknowledges and agrees that the termination of his or her employment or 

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service shall (except as may otherwise be provided in this Agreement or in the Plan) result in forfeiture of the Award and the Shares to the extent that the Award has not been earned as of his or her Termination Date.
(b)    Notwithstanding the provisions of Section 5(a), and subject to the terms of Section 3(c) of the Plan, in the event of the Participant’s termination due to (i) death; (ii) Disability; (iii) Retirement; or (iv) Good Reason (as defined in the Participant’s employment agreement, or if there is no employment agreement defining Good Reason, as defined in Section 5(c) of this Agreement), a pro-rata portion of the Award shall be eligible to be earned based on attainment of the Performance Metrics for the Performance Period as specified in this Agreement, including Schedule A.  The pro-rata portion that may be earned and vested shall be determined by multiplying the total number of Shares earned under Schedule A by a fraction, the numerator of which is the number of calendar days the Participant was employed during the Performance Period, and the denominator of which is the number of calendar days in the Performance Period; any such shares so earned shall be payable as provided in Section 6 herein.  
(c)    For purposes of this Section 5, “Good Reason” shall occur if during the Participant’s employment, the Participant’s employment is materially and adversely altered by the Company, without the Participant’s consent, by:
(i)    a material reduction in the Participant’s base salary;
(ii)    the assignment to the Participant of duties or responsibilities materially inconsistent with, or a material diminution in, the Participant’s position, authority, duties or responsibilities; or
(iii)    the relocation of the Participant’s principal place of employment by more than 30 miles from the location at which the Participant is stationed.
An event or condition that would otherwise constitute “Good Reason” shall constitute Good Reason only if the Company fails to rescind or cure such event or condition within 30 days after receipt from the Participant of written notice of the event which constitutes Good Reason, and Good Reason shall cease to exist for any event or condition described herein on the 60th day following the later of the occurrence or the Participant’s knowledge thereof, unless the Participant has given the Company written notice thereof prior to such date.
(d)    In the event that the Participant’s employment or service is terminated due to Cause, the Award shall immediately be forfeited and the Participant shall have no right to any Shares or other benefits related to the Award.
(e)    The Administrator shall have the sole discretion to determine the basis for the Participant’s termination of employment or service, including whether such termination is due to Disability, Retirement, Good Reason or Cause.  
6.    Settlement of Award.  The Administrator shall have discretion to determine the extent, if any, to which the Award has been earned.  The Award, if earned in accordance with the 

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terms of this Agreement, shall be payable in whole shares of Common Stock.  The total number of Shares that may be acquired upon earning of the Award (or portion thereof) shall be rounded down to the nearest whole share.  A certificate or certificates for the Shares subject to the Award or portion thereof shall be issued in the name of the Participant or his or her beneficiary (or, in the case of uncertificated shares, other written evidence of ownership in accordance with Applicable Law shall be provided) within 70 days following the date the Award or portion thereof has been earned in accordance with the terms of this Agreement; provided that the following shall apply: (i) in the event the Award is earned following completion of the Performance Period as described in Section 4 and Schedule A, herein, the Shares shall be distributable no later than 70 days following the completion of the Performance Period; (ii) in the event the Award is earned pursuant to Section 5(b) herein, the Shares shall be distributable no later than 70 days following the completion of the Performance Period; and (iii) in the event that the Award is earned pursuant to Section 13 herein, the Shares shall be distributable no later than 70 days following the occurrence of the Change of Control (as defined for these purposes under Code Section 409A) in the case of payment pursuant to Section 13(a)(i) or Section 13(a)(ii) (if the payment event is a Change in Control) or within 70 days of the Participant’s Termination Date if the payment event pursuant to Section 13(a)(ii) is the Participant’s termination of employment or service.  If the 70-day period described herein begins in one calendar year and ends in another, the Participant (or his beneficiary) shall not have the right to designate the calendar year of the distribution (except as otherwise provided below with respect to a delay in distribution if the Participant is a “specified employee”).  Notwithstanding the foregoing, if the Participant is or may be a “specified employee” (as defined under Code Section 409A), and the distribution is considered deferred compensation under Code Section 409A, then such distribution if made due to separation from service shall be subject to delay as provided in Section 21 of the Plan (or any successor provision thereto).  
7.    No Right of Continued Employment or Service; Forfeiture of Award; No Right to Future Awards.  Neither the Plan, this Agreement, the grant of the Award nor any other action related to the Plan shall confer upon the Participant any right to continue in the employ or service of the Company or an Affiliate or to interfere in any way with the right of the Company or an Affiliate to terminate the Participant’s employment or service at any time.  Except as otherwise provided in the Plan or this Agreement or as may be determined by the Administrator, all rights of the Participant with respect to the unvested and unearned portion of the Award shall terminate upon termination of the Participant’s employment or service with the Company or an Affiliate.  The Participant acknowledges and agrees that the Company has no obligation to advise the Participant of the expiration of the Award.  The grant of the Award does not create any obligation to grant further awards.
8.    Nontransferability of Award and Shares.  The Award shall not be transferable (including by sale, assignment, pledge or hypothecation) other than transfers by will or the laws of intestate succession, and the Participant or other recipient of the Award shall not sell, transfer, assign, pledge or otherwise encumber the Shares subject to the Award until the Performance Period has expired and all conditions to earning and vesting in the Award have been met.  The designation of a beneficiary in accordance with the Plan does not constitute a transfer.

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9.    Superseding Agreement; Binding Effect.  This Agreement supersedes any statements, representations or agreements of the Company with respect to the grant of the Award, and the Participant hereby waives any rights or claims related to any such statements, representations or agreements.  This Agreement does not supersede or amend any existing confidentiality agreement, non-competition agreement, non-solicitation agreement, employment agreement, consulting agreement or any other similar agreement between the Participant and the Company, including but not limited to any restrictive covenants contained in such agreements, which shall remain in full force and effect and enforceable in accordance with their terms.  This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective executors, administrators, next-of-kin, successors and assigns.
10.    Representations and Warranties of Participant.  The Participant represents and warrants to the Company that:
(a)    Agrees to Terms of the Plan and Agreement.  The Participant has received a copy of the Plan and the LTIP, has read and understands the terms of the Plan, the LTIP and this Agreement and agrees to be bound by their terms and conditions.
(b)    Tax Consequences.  The Participant acknowledges that he or she is solely responsible and liable for the satisfaction of all taxes and penalties that may arise in connection with the Award (including but not limited to any taxes arising under Code Section 409A), and the Company shall not have any obligation to indemnify or otherwise hold the Participant harmless from any or all such taxes.  The Participant further acknowledges that the Company has made no warranties or representations to the Participant with respect to the tax consequences (including but not limited to income tax consequences) related to the transactions contemplated by this Agreement, and the Participant is in no manner relying on the Company or its representatives for an assessment of such tax consequences.  The Participant acknowledges that there may be adverse tax consequences upon acquisition or disposition of the Shares subject to the Award and that the Participant should consult a tax advisor prior to such acquisition or disposition.  The Participant acknowledges that he or she has been advised that he or she should consult with his or her own attorney, accountant and/or tax advisor regarding the decision to enter into this Agreement and the consequences thereof.  The Participant also acknowledges that the Company has no responsibility to take or refrain from taking any actions in order to achieve a certain tax result for the Participant.
11.    Restrictions on Award and Shares.
(a)    Other Agreements.  As a condition to the issuance and delivery of the Shares subject to the Award, or the grant of any benefit pursuant to the terms of the Plan, the Company may require the Participant or other person to become a party to this Agreement, any shareholders’ agreement, other agreement(s) restricting the transfer, purchase or repurchase of shares of Common Stock of the Company, voting agreement and/or employment agreements, consulting agreements, non-competition agreements, confidentiality agreements, non-solicitation agreements or other agreements imposing such restrictions as may be required by the Company.  In addition, without in any way limiting the effect of the foregoing, the Participant or other holder of the Shares shall be permitted to transfer such Shares only if such transfer is in accordance with the terms of the Plan, this Agreement, any shareholders’ agreement and any other applicable agreements.  The acquisition 

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of the Shares by the Participant or any other holder of the Shares shall be subject to, and conditioned upon, the agreement of the Participant or other holder of such Shares to the restrictions described in the Plan, this Agreement, any shareholders’ agreement and any other applicable agreements.
(b)    Compliance with Applicable Law.  The Company may impose such restrictions on the Award, the Shares and any other benefits underlying the Award as it may deem advisable, including without limitation restrictions under the federal securities laws, the requirements of any stock exchange or similar organization and any blue sky, state or foreign securities laws or other laws applicable to such securities.  Notwithstanding any other provision of the Plan or this Agreement to the contrary, the Company shall not be obligated to issue, deliver or transfer shares of Common Stock, make any other distribution of benefits or take any other action, unless such delivery, distribution or action is in compliance with Applicable Law (including but not limited to the requirements of the Securities Act).  The Company is under no obligation to register the Shares with the Securities and Exchange Commission or to effect compliance with the exemption, registration, qualification or listing requirements of any state securities laws, stock exchange or similar organization, and the Company shall have no liability for any inability or failure to do so.  The Company may cause a restrictive legend or legends to be placed on any certificate for Shares issued pursuant to the Award in such form as may be prescribed from time to time by Applicable Law or as may be advised by legal counsel.  
12.    Certain Changes in Status.  The Participant acknowledges that the Administrator has the sole discretion to determine (taking into account any Code Section 409A considerations), at any time, the effect, if any, on the Award (including but not limited to modifying the vesting and/or earning of the Award) of any changes in the Participant’s status (other than termination) as an Employee, including but not limited to a change from full-time to part-time, or vice versa, or other similar changes in the nature or scope of the Participant’s employment or service. 
13.    Effect of Change of Control.
(a)    Subject to the terms of the Plan (and unless otherwise required pursuant to Code Section 409A), the following provisions shall apply in the event of a Change of Control:  
(i)    To the extent that the successor or surviving company in the Change of Control event does not assume or substitute the Award (or in which the Company is the ultimate parent corporation and does not continue the Award) on substantially similar terms or with substantially equivalent economic benefits (as determined by the Administrator) as the Award outstanding immediately prior to the Change of Control event, the Award shall be deemed to be vested, earned and payable at target (as determined by the Administrator).  
(ii)    Further, in the event that the Award is substituted, assumed or continued as provided in Section 13(a) herein, the Award shall nonetheless be deemed to be vested, earned and payable at target (as determined by the Administrator), if the employment or service of the Participant is terminated within six months before (in which case vesting shall not occur until the effective date of the Change of Control) or one year (or such other period after a Change of Control as may be stated in a Participant’s employment, change of control, consulting or other similar agreement, if applicable) after the effective date of a 

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Change of Control if such termination of employment or service (i) is by the Company not for Cause or (ii) is by the Participant for Good Reason. For clarification, for the purposes of this Section 13, the “Company” shall include any successor to the Company.   
(iii)    Notwithstanding any other provision of the Plan to the contrary, in the event that the Participant has entered into an employment agreement as of the Effective Date of the Plan or is a participant in the Company’s Change in Control Plan or similar arrangement, the Participant shall be entitled to the greater of the benefits provided upon a change of control of the Company under the Plan or the respective employment agreement, Change in Control Plan or other arrangement, and such agreement, Change in Control Plan or other arrangement shall not be construed to reduce in any way the benefits otherwise provided to the Participant upon a Change of Control as defined in the Plan.
(b)    For the purposes herein, except as may be otherwise required, if at all, under Code Section 409A, a “Change of Control” shall be deemed to have occurred on the earliest of the following dates: 
(i)    The date any entity or person shall have become the beneficial owner of, or shall have obtained voting control over, more than fifty percent (50%) of the total voting power of the Company’s then outstanding voting stock;
(ii)    The date of the consummation of (A) a merger, consolidation or reorganization of the Company (or similar transaction involving the Company), in which the holders of the Common Stock immediately prior to the transaction have voting control over less than fifty-one percent (51%) of the voting securities of the surviving corporation immediately after such transaction, or (B) the sale or disposition of all or substantially all the assets of the Company; or
(iii)    The date there shall have been a change in a majority of the Board of Directors of the Company within a 12-month period unless the nomination for election by the Company’s shareholders of each new Director was approved by the vote of two-thirds of the members of the Board (or a committee of the Board, if nominations are approved by a Board committee rather than the Board) then still in office who were in office at the beginning of the 12-month period.
(For the purposes herein, the term “person” shall mean any individual, corporation, partnership, group, association or other person, as such term is defined in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, other than the Company, a Subsidiary of the Company or any employee benefit plan(s) sponsored or maintained by the Company or any Subsidiary thereof, and the term “beneficial owner” shall have the meaning given the term in Rule 13d-3 under the Exchange Act.)  
For the purposes of clarity, (i) a transaction shall not constitute a Change of Control if its principal purpose is to change the state of the Company’s incorporation, create a holding company that would be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction or is another 

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transaction of other similar effect; and (ii) in no event shall a firm commitment underwritten public offering of the Common Stock pursuant to an effective registration statement under the Securities Act constitute a Change of Control.
Notwithstanding the preceding provisions of Section 13(b), in the event that the Award is deemed to be deferred compensation subject to (and not exempt from) the provisions of Code Section 409A, then distributions related to the Award to be made upon a Change of Control may be permitted, in the Administrator's discretion, upon the occurrence of one or more of the following events (as they are defined and interpreted under Code Section 409A):  (A) a change in the ownership of the Company; (B) a change in effective control of the Company; or (C) a change in the ownership of a substantial portion of the assets of the Company.
14.    Governing Law.  Except as otherwise provided in the Plan or herein, this Agreement shall be construed and enforced according to the laws of the State of Georgia, without regard to the conflict of laws provisions of any state, and in accordance with applicable federal laws of the United States.  The Company and the Participant agree that any dispute arising from this Agreement shall be resolved only in a state or federal court sitting in Fulton County, Georgia, which shall have exclusive jurisdiction over any such dispute.  The Company and the Participant consent to the personal jurisdiction and waive any objection to jurisdiction or venue in any such court.
15.    Amendment and Termination; Waiver.  Subject to the terms of the Plan, this Agreement may be amended, altered, suspended and/or terminated at any time, prospectively or retroactively, by the Administrator; provided, however, that any such amendment, alteration, suspension or termination of the Award shall not, without the written consent of the Participant, materially adversely affect the rights of the Participant with respect to the Award.  Notwithstanding the foregoing, the Administrator shall have unilateral authority to amend the Plan and this Agreement (without Participant consent) to the extent necessary to comply with Applicable Law or changes to Applicable Law (including but in no way limited to Code Section 409A and federal securities laws).  The Administrator also shall have unilateral authority to make adjustments to the terms and conditions of the Award in recognition of unusual or nonrecurring events affecting the Company or any Affiliate, or the financial statements of the Company or any Affiliate, or of changes in Applicable Law, or accounting principles, if the Administrator determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan or necessary or appropriate to comply with applicable accounting principles or Applicable Law.  The waiver by the Company of a breach of any provision of this Agreement by the Participant shall not operate or be construed as a waiver of any subsequent breach by the Participant.
16.    Withholding.  The Participant acknowledges that the Company shall require the Participant or other person to pay to the Company in cash the amount of any tax or other amount required by any governmental authority to be withheld and paid over by the Company to such authority for the account of the Participant, and the Participant agrees, as a condition to the grant of the Award and delivery of the Shares or any other benefit, to satisfy such obligations.  Notwithstanding the foregoing, the Administrator may in its discretion establish procedures to permit 

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the Participant to satisfy such obligation in whole or in part, and any local, state, federal, foreign or other income tax obligations relating to the Award, by electing (the “election”) to deliver to the Company shares of Common Stock held by the Participant (which are fully vested and not subject to any pledge or other security interest) and/or have the Company withhold shares of Common Stock from the Shares to which the Participant is otherwise entitled. The number of shares to be withheld shall have a Fair Market Value as of the date that the amount of tax to be withheld is determined as nearly equal as possible to, but not exceeding (unless otherwise permitted by the Administrator in a manner in accordance with Applicable Law and applicable accounting principles), the amount of such obligations being satisfied. Each election must be made in writing to the Administrator in accordance with election procedures established by the Administrator.  
17.    Administration.  The authority to construe and interpret this Agreement and the Plan, and to administer all aspects of the Plan, shall be vested in the Administrator, and the Administrator shall have all powers with respect to this Agreement as are provided in the Plan.  Any interpretation of this Agreement by the Administrator and any decision made by it with respect to this Agreement shall be final and binding.
18.    Notices.  Except as may be otherwise provided by the Plan or determined by the Administrator, any written notices provided for in this Agreement or the Plan shall be in writing and shall be deemed sufficiently given if either hand delivered or if sent by fax or overnight courier, or by postage paid first class mail.  Notices sent by mail shall be deemed received three business days after mailed but in no event later than the date of actual receipt.  Notices shall be directed, if to the Participant, at the Participant’s address indicated in the Company’s records, or if to the Company, at the Company’s principal office.   
19.    Severability.  If any provision of this Agreement shall be held illegal or invalid for any reason, such illegality or invalidity shall not affect the remaining parts of this Agreement, and this Agreement shall be construed and enforced as if the illegal or invalid provision had not been included.  To the extent any provision of this Agreement or a Prohibited Activity (as defined herein) is deemed to be unenforceable as written but could be made enforceable by way of modification or reformation, then it is the intent of the parties that such provision be modified or reformed to make it enforceable to the fullest extent permitted by law.
20.    Right of Offset.  Notwithstanding any other provision of the Plan or this Agreement, the Company may at any time (subject to any Code Section 409A considerations) reduce the amount of any payment or other benefit otherwise payable to or on behalf of the Participant by the amount of any obligation of the Participant to or on behalf of the Company or an Affiliate that is or becomes due and payable, and, by entering into this Agreement, the Participant shall be deemed to have consented to such reduction. 
21.    Forfeiture of Award.
(a)    Notwithstanding any other provision of this Agreement, if, at any time during the employment or service of the Participant or during the 12-month period following termination of employment or service (regardless of whether such termination was by the Company or the Participant, and whether voluntary or involuntary or with or without Cause or Good Reason), the 

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Participant engages in a Prohibited Activity (as defined herein), then the Award shall immediately be terminated (to the extent not otherwise already terminated) and all of Participant’s rights under this Agreement shall be forfeited in their entirety.  
(b)    For the purposes herein, a “Prohibited Activity” shall have the meaning set forth on Schedule B attached hereto.
(c)    The Participant acknowledges that compliance with the provisions of this Section 21 is a condition precedent to the Participant’s rights under this Agreement.  The Participant further acknowledges and agrees that, by entering into this Agreement, the Participant agrees to be bound by the covenants contained in Schedule B for the durations and pursuant to the terms set forth therein regardless of whether the Participant’s rights under this Agreement have been forfeited because of a violation of the covenants or otherwise.
(d)    Notwithstanding the provisions of Section 21(a) herein, the waiver by the Company in any one or more instances of any rights afforded to the Company pursuant to the terms of Section 21(a) herein shall not be deemed to constitute a further or continuing waiver of any rights the Company may have pursuant to the terms of this Agreement or the Plan (including but not limited to the rights afforded the Company in Section 20 herein).
22.    Compliance with Recoupment, Ownership and Other Policies or Agreements.  As a condition to receiving this Award, the Participant agrees that he or she shall abide by all provisions of any equity retention policy, stock ownership guidelines, compensation recovery policy and/or other policies adopted by the Company, each as in effect from time to time and to the extent applicable to the Participant.  In addition, the Participant shall be subject to such compensation recovery, recoupment, forfeiture or other similar provisions as may apply to him or her under Applicable Law.
23.    Counterparts; Further Instruments. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.  The parties hereto agree to execute such further instruments and to take such further action as may be reasonably necessary to carry out the purposes and intent of this Agreement.
[Signature Page Follows]

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IN WITNESS WHEREOF, this Agreement has been executed in behalf of the Company and by the Participant effective as of the day and year first above written.

	
		
	ATLANTIC CAPITAL BANCSHARES, INC.
By:                                                       
Printed Name:                                      
Title:                                                     
Attest:
                                                               
Secretary
[Corporate Seal]
	PARTICIPANT 
By:                                                            
Printed Name:                                           

PSA Agreement (Employees – without Employment Agreement) (Rev. October 2018) 

ATLANTIC CAPITAL BANCSHARES, INC.
2015 STOCK INCENTIVE PLAN
(As Amended and Restated Effective May 18, 2017)
Performance Share Award Agreement 
(Employees)
SCHEDULE A
	
		
	Performance Period:
	 

	Grant Date:
	 

	Performance Metrics:
	 

	Target Number of Shares Subject to Award:
	                                                                  

	Threshold Number of Shares Subject to Award:
	                                                                  

	Maximum Number of Shares Subject to Award:
	                                                                  

1.    Earning of Award:  
(a)    General.  The Award is granted to the Participant on the Grant Date set forth above and represents a right to receive some or all of the Shares (as defined in the Agreement) underlying the Award subject to satisfaction of the Performance Metric(s) (as defined below) as described herein.  The Participant may earn from _____% to _____% of the target number of Shares subject to the Award, depending upon performance.  The Performance Metric(s) are weighted __________.  The Award may be earned, if at all, based on attainment of performance goals specified below for _____ performance metrics (each, a “Performance Metric” and collectively, the “Performance Metrics”): __________.  The Award shall not be deemed earned, and none of the Shares attributable to a Performance Metric shall be issued, unless the particular Performance Metric is attained at a minimum of the threshold level for such Performance Metric.  If performance falls below the threshold level with regard to a Performance Metric, then no Shares shall be distributed with respect to that Performance Metric.  The extent to which the Performance Metric(s) are met, and the number of Shares distributable, if any, shall be calculated with respect to each Performance Metric pursuant to the terms and conditions described in Section 2 below.  All determinations made with respect to the Performance Metric(s) and the earning of the Award shall be made by the Administrator in its sole discretion, and the applicable Performance Metric(s) shall not be deemed achieved and the Award shall not be deemed earned unless and to the extent that the Administrator determines that the Award has been earned.  
(b)    Administrator Discretion.  Notwithstanding any other terms of the Agreement, including this Schedule A, (i) the Administrator has sole discretion to reduce or eliminate that portion of the Award that shall be deemed earned and related Shares issuable, notwithstanding the attainment of threshold, target or maximum performance levels for [the / either or both / any or all] Performance Metric(s), if the Administrator determines that __________, and (ii) the actual number of Shares earned may be reduced by the 

PSA Agreement (Employees – without Employment Agreement) (Rev. October 2018)

Administrator in its sole and absolute discretion based on such factors as the Administrator determines to be appropriate and advisable (however, it is the intention of the Administrator that it shall exercise such negative discretion only in extreme and unusual circumstances).
2.    Calculation of Earning of Award.
	
					
	 
	 
	Number of Shares Earned at

	Measure
	% Weighting of Performance Metric
	Threshold (_____% of target)
	Target 
(_____% of target)
	Maximum 
(_____% of target)

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

To the extent the actual level of attainment of each Performance Metric is at a point between the threshold performance level and the target performance level or between the target performance level and the maximum performance level, the number of Shares which the Participant may earn shall be determined based on linear interpolation.

Performance Metric:
Threshold:     _____%
Target:        _____%
Maximum:    _____%
If, for the Performance Period, the Company achieves the threshold performance level set forth above, the Participant shall be entitled to __________ of the target number of the Shares.
If, for the Performance Period, the Company achieves the target performance level set forth above, the Participant shall be entitled to __________ of the target number the Shares.
If, for the Performance Period, the Company achieves the maximum performance level set forth above, the Participant shall be entitled to __________ of the target number of the Shares.
Performance Metric:
Threshold:     
Target:        
Maximum:    
If, for the Performance Period, the Company achieves the threshold performance level set forth above, the Participant shall be entitled to __________ of the target number of the Shares.
If, for the Performance Period, the Company achieves the target performance level set forth above, the Participant shall be entitled to __________ of the target number of the Shares.
If, for the Performance Period, the Company achieves the maximum performance level set forth above, the Participant shall be entitled to __________ of the target number of the Shares.

PSA Agreement (Employees – without Employment Agreement) (Rev. October 2018)

3.    Certain Definitions.  In addition to other terms defined herein, the following definitions shall apply:

ATLANTIC CAPITAL BANCSHARES, INC.
2015 STOCK INCENTIVE PLAN
(As Amended and Restated Effective May 18, 2017)
Performance Share Award Agreement 
(Employees)
SCHEDULE B
“Prohibited Activity”
A “Prohibited Activity” shall be any violation of any one or more than one of the protective covenants set forth hereafter:
1.Confidential Information and Trade Secrets. During the Participant’s employment, the parties acknowledge that the Company and/or Atlantic Capital Bank, N.A. (collectively, the “Employers”) shall disclose, or have already disclosed, to the Participant for use in the Participant’s employment, and the Participant shall be provided access to and otherwise shall make use of, acquire, create, or add to certain valuable, unique, proprietary, and secret information of the Employers (whether tangible or intangible and whether or not electronically kept or stored), including financial statements, drawings, designs, manuals, business plans, processes, procedures, formulas, inventions, pricing policies, customer and prospect lists and contacts, contracts, sources and identity of vendors and contractors, financial information of customers of the Employers, and other proprietary documents, materials, or information indigenous to the Employers, relating to their businesses and activities, or the manner in which the Employers do business, which is valuable to the Employers in conducting their business because the information is kept confidential and is not generally known to the Employers’ competitors or to the general public (“Confidential Information”).  Confidential Information does not include information generally known or easily obtained from public sources or public records, unless the Participant causes the Confidential Information to become generally known or easily obtained from public sources or public records.

a.    To the extent that the Confidential Information rises to the level of a trade secret under Applicable Law, then the Participant shall, during the Participant’s employment and for so long as the Confidential Information remains a trade secret under Applicable Law (or for the maximum period of time otherwise allowed by Applicable Law) (i) protect and maintain the confidentiality of such trade secrets and (ii) refrain from disclosing, copying, or using any such trade secrets, without the Employers’ prior written consent, except as necessary in the Participant’s performance of the Participant’s duties while employed with the Employers.

b.    To the extent that the Confidential Information defined above does not rise to the level of a trade secret under Applicable Law, the Participant shall, during the Participant’s employment and for so long as such information remains confidential following any voluntary or involuntary termination of employment (whether by the Employers or Participant), (i) protect and maintain the confidentiality of the Confidential Information and (ii) refrain from disclosing, copying, or using any Confidential Information without the Employers’ prior written consent, except as necessary in the Participant’s performance of the Participant’s duties while employed with the Employers.

2.Return of Property of the Employers. Upon any voluntary or involuntary termination of the Participant’s employment (or at any time upon request of the Employers), the Participant agrees to immediately return to the Employers all property of the Employers (including, without limitation, all documents, electronic files, records, computer disks or other tangible or intangible things that may or may not relate to or otherwise comprise Confidential Information or trade secrets, as defined by Applicable Law) that the Participant created, used, possessed or maintained while working for the Employers from whatever source and whenever created, including all reproductions or excerpts thereof. This provision does not apply to purely personal documents of the Participant, but it does apply to business calendars, customer lists, contact information, computer programs, disks and their contents and like information that may contain some personal matters of the Participant.  The Participant acknowledges that title to all such property is vested in the Employers.

3.Non-Diversion of Business Opportunity. During the Participant’s employment with the Employers and consistent with the Participant’s duties and fiduciary obligations to the Employers, the Participant shall (a) disclose to the Employers any business opportunity that comes to the Participant’s attention during the Participant’s employment with the Employers and that relates to the business of the Employers or otherwise arises as a result of the Participant’s employment with the Employers and (b) not take advantage of or otherwise divert any such opportunity for the Participant’s own benefit or that of any other person or entity without prior written consent of the Employers.

4.Non-Solicitation of Customers. During the Participant’s employment and for a period of twelve (12) months following any employment termination, the Participant agrees not to, directly or indirectly, contact, solicit, divert, appropriate, or call upon, with the intent of doing business with, the customers or clients of the Employers with whom the Participant has had material contact (as such term is defined by Georgia’s Restrictive Covenants Act) during the last year of the Participant’s employment with the Employers, including prospects of the Employers with whom the Participant had such contact during said last year of the Participant’s employment, if the purpose of such activity is either (a) to solicit such customers or clients or prospective customers or clients for a Competitive Business as herein defined (including, without limitation, any Competitive Business started by the Participant) or (b) to otherwise encourage any such customer or client to discontinue, reduce, or adversely alter the amount of its business with the Employers.  The Participant acknowledges that, due to the Participant’s relationship with the Employers, the Participant shall develop, or has developed, special contacts and relationships with the Employers’ clients and prospects, and that it would be unfair and harmful to the Employers if the Participant took advantage of these relationships.

5.Competitive Business.  A “Competitive Business”, as defined in this Agreement, is an enterprise that is in the business of offering banking products and/or services, which services and/or products are similar or substantially identical to those offered by the Employers during the Participant’s employment with the Employers.

6.Non-Piracy of Employees. During the Participant’s employment and for a period of twelve (12) months following any termination, the Participant covenants and agrees that the Participant shall not, within the Territory, directly or indirectly: (a) solicit, recruit, or hire (or attempt to solicit, recruit, or hire) or otherwise assist anyone in soliciting, recruiting, or hiring, any employee or independent contractor (which shall not include non-exclusive outside vendors) of the Employers who performed work for the Employers within the last six (6) months of the Participant’s employment with the Employers or who was otherwise engaged or employed with the Employers at the time of said termination of employment of the Participant or (b) otherwise encourage, solicit, or support any such employees or independent contractors to leave their employment or engagement with the Employers, in either case until such employee or contractor has been terminated or separated from the Employers for at least twelve (12) months.  The “Territory” shall be defined as (i) the following counties in the State of Georgia: Barrow; Bartow; Butts; Carroll; Cherokee; Clayton; Cobb; Coweta; Dawson; DeKalb; Douglas; Fayette; Forsyth; Fulton; Gwinnett; Haralson; Heard; Henry; Jasper; Lamar; Meriwether; Newton; Paulding; Pickens; Pike; Rockdale; Spalding; and Walton, as well as (ii) the area within the city limits of Chattanooga, Tennessee, Knoxville, Tennessee and Charlotte, North Carolina as well as (iii) each county within which Chattanooga, Tennessee, Knoxville, Tennessee and Charlotte, North Carolina are located, as well as (iv) the counties (including those in adjacent states, if any) that are immediately contiguous to the counties referenced in subpart (iii), as well as (v) any counties of any state in which the Employers, at the time of termination of the Participant’s employment, are operating or providing services, or in which the Employers have plans to solicit or engage in business, which plans are known to the Participant during the term of the Participant’s employment; provided, however, that the Territory described herein is a good faith estimate of the geographic area that is now applicable or that may be applicable at the termination of the Participant’s employment as the areas in which the Employers do or shall do business during the term of the Participant’s employment, and the Employers and the Participant agree that this non-compete covenant shall ultimately be construed to cover only so much of such estimate as relates to the geographic areas in which the Employers do business within the two-year period preceding termination of the Participant’s employment. 

7.Protected Rights. Notwithstanding anything in this Agreement to the contrary, (a) nothing in this Agreement or other agreement prohibits the Participant from reporting possible violations of law or regulation to any governmental agency or entity, including but not limited to the Department of Justice, the Securities and Exchange Commission, the Congress and any agency Inspector General (the “Government Agencies”), or communicating with Government Agencies or otherwise participating in any investigation or proceedings that may be conducted by Government Agencies, including providing documents or other information; (b) the Participant does not need the prior authorization of the Employers to take any action described in (a), and the Participant is not required to notify the Employers that he or she has taken any action described in (a); and (c) this Agreement does not limit the Participant’s right to receive an award for providing information relating to a possible securities law violation to the Securities and Exchange Commission.  Further, notwithstanding the foregoing, the Participant shall not be held criminally or civilly liable under any federal, state or local trade secret law for the disclosure of a trade secret that (x) is made (A) in confidence to a federal, state or local official, either directly or indirectly, or to an attorney; and (B) solely for the purpose of reporting or investigating a suspected violation or law; or (y) is made in a compliant or other document filed in a lawsuit or other proceeding, if such filing is made under seal.  Additionally, an individual suing an employer for retaliation based on the reporting of a suspected violation of law may disclose a trade secret to his or her attorney and use the trade secret information in the court proceeding, so long as any document containing the trade secret is filed under seal and the individual does not disclose the trade secret except pursuant to court order. The rights described in this Section 7 are referred to in this Agreement as the “Protected Rights.”

8.Acknowledgment. 

a.    It is understood and agreed by the Participant that the parties have attempted to limit his or her right to post-termination activities only to the extent necessary to protect the Employers from unfair competition and that the terms and provisions of Schedule B of this Agreement are not intended to restrict the Participant in the exercise of his or her skills or the use of knowledge or information that does not rise to the level of a trade secret under Applicable Law or Confidential Information of the Employers (to which trade secrets and Confidential Information the Participant has had and/or shall have access and has made and/or shall make use of during employment with the Employers). 

b.    It is further acknowledged that the purpose of these covenants and promises is (and that they are necessary) to protect the Employers’ legitimate business interests, to protect the Employers’ investment in the overall development of its business and the good will of its customers, and to protect and retain (and to prevent the Participant from unfairly and to the detriment of the Employers utilizing or taking advantage of) such business trade secrets and Confidential Information of the Employers and those substantial contacts and relationships (including those with customers and employees of the Employers) which the Participant established due to his or her employment with the Employers.

c.    This Agreement is not intended to preclude the Participant’s opportunity to engage in or otherwise pursue occupations in any unrelated or non-competitive field of endeavor, or to engage in or otherwise pursue directly competitive endeavors so long as they meet the requirements of this Agreement.  

d.    The Participant acknowledges that these covenants and promises (and their respective time, geographic, and/or activity limitations) are reasonable and that said limitations are no greater than necessary to protect said legitimate business interests in light of the Participant’s position with the Employers and the Employers’ business, and the Participant agrees to strictly abide by the terms hereof.  If any provision of this Agreement is ruled invalid or unenforceable by a court of competent jurisdiction because of a conflict between the provision and any Applicable Law or public policy, the provision shall be redrawn to make the provision consistent with, and valid and enforceable under, the law or public policy.

PSA Agreement (Employees – without Employment Agreement) (Rev. October 2018)ex_137686.htm

Exhibit 4.1

 

 

THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT OR SUCH SHARES, AS THE CASE MAY BE, UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

 

CATASYS, INC. 

 

WARRANT TO PURCHASE SHARES

OF STOCK

 

(Revolving Loan)

 

THIS CERTIFIES THAT, for value received, HORIZON TECHNOLOGY FINANCE CORPORATION and its assignees are entitled to subscribe for and purchase that number of the fully paid and nonassessable shares of stock (as adjusted pursuant to Section 4 hereof, the “Shares”) of CATASYS, INC., a Delaware corporation (the “Company”), as is determined pursuant to the next paragraph hereof at the price per share as is determined pursuant to the next paragraph hereof (such price and such other price as shall result, from time to time, from the adjustments specified in Section 4 hereof is herein referred to as the “Warrant Price”), subject to the provisions and upon the terms and conditions hereinafter set forth. As used herein, (a) the term “Shares” shall mean, at the holder’s election, either (i) Company’s current, publicly traded common stock (the “Common Stock”), and any stock into or for which such Common Stock may hereafter be converted or exchanged, or (ii) Next Round Stock (as defined below), and any stock into or for which all then outstanding shares of such Next Round Stock may hereafter be converted or exchanged, and after the conversion of all then-outstanding shares of the Next Round Stock to shares of Common Stock, shall mean the Common Stock; (b) the term “Date of Grant” shall mean March __, 2019 (except as otherwise provided herein), and (c) the term “Other Warrants” shall mean any other warrants issued by the Company in connection with the transaction with respect to which this Warrant was issued, and any warrant issued upon transfer or partial exercise of or in lieu of this Warrant. The term “Warrant” as used herein shall be deemed to include Other Warrants unless the context clearly requires otherwise.

 

 

 

 

The Warrant Price shall be (i) if this Warrant is exercised for Common Stock, the dollar volume-weighted average price for such security on the Principal Market (or, if the Principal Market is not the principal trading market for such security, then on the principal securities exchange or securities market on which such security is then traded) during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time, as reported by Bloomberg through its “HP” function (set to weighted average) or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board for such security during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time, as reported by Bloomberg (such volume-weighted average price, the “VWAP”) over the five (5) trading days immediately preceding the Date of Grant, provided, however, that the Warrant Price for any Shares earned by the holder hereof pursuant to clause (A) or (B) of the immediately succeeding sentence shall be determined by the VWAP over the five (5) trading days immediately preceding the date on which this Warrant can be exercisable for such Shares and (ii) if this Warrant is exercised for Next Round Stock, the lowest price per share at which shares of the Company’s equity securities are sold in any offering (other than an Excluded Issuance) occurring during the period commencing as of the Date of Grant and continuing through the date that is eighteen (18) months after the Date of Grant (such stock, the “Next Round Stock”). The number of shares for which this Warrant is exercisable shall be the nearest whole number determined by dividing $400,000 by the Warrant Price determined pursuant to this paragraph, provided, however, that (A) commencing on the first date upon which the actual outstanding principal balance of the Revolving Loan (as defined in that certain Amended and Restated Venture Loan and Security Agreement dated on or about the Date of Grant, by and among the Company, Anxiolitix, Inc., Catasys Health, Inc., HRZN, Horizon Credit II LLC and HRZN as Collateral Agent (the “Loan Agreement”)), exceeds Two Million Five Hundred Thousand Dollars ($2,500,000) for the first time without giving effect to any deemed amounts of principal balance arising thereunder and continuing thereafter until the exercise or termination of this Warrant, the number of Shares for which this Warrant is exercisable shall be determined by dividing $500,000 by the Warrant Price determined pursuant to this paragraph, and (B) commencing on the first date upon which the outstanding principal balance of the Revolving Loan exceeds Five Million Dollars ($5,000,000) for the first time and continuing thereafter until the exercise or termination of this Warrant, the number of Shares for which this Warrant is exercisable shall be determined by dividing $600,000 by the Warrant Price determined pursuant to this paragraph. For the avoidance of doubt, the “Date of Grant” with respect to the additional Shares for which this Warrant can be exercised in connection with the increases provided in the foregoing clauses (A) and (B) shall be the actual first date on which this Warrant can be exercised for such additional Shares, as set forth in each such clause, as applicable. As used herein the term “Excluded Issuance” shall mean the issuance of (i) shares of stock or standard options to purchase stock to directors, officers or employees of the Company in their capacity as such pursuant to a customary equity incentive plan; (ii) shares of stock issued upon the conversion or exercise of convertible securities (other than securities that are covered by clause (i) above) issued prior to the date hereof; (iii) the Shares, and (iv) shares issued in connection with strategic alliances, strategic mergers and acquisitions and strategic partnerships, provided that (A) the primary purpose of such issuance is not to raise capital as determined in good faith by the Board of Directors of the Company, (B) the purchaser or acquirer of such shares in such issuance solely consists of either (1) the actual participants in such strategic alliance or strategic partnership, (2) the actual owners of such assets or securities acquired in such merger or acquisition or (3) the shareholders, partners or members of the foregoing persons, and (C) the number or amount (as the case may be) of such shares of Common Stock issued to such Person by the Company shall not be disproportionate to such Person’s actual participation in such strategic alliance or strategic partnership or ownership of such assets or securities to be acquired by the Company (as applicable).

 

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The Company shall not issue any shares of Common Stock upon the exercise of this Warrant if the issuance of such shares of Common Stock would exceed the aggregate number of shares of Common Stock which the Company may issue upon exercise without breaching the Company’s obligations under the rules or regulations of the Principal Market, except that such limitation shall not apply in the event that the Company (A) obtains the approval of its stockholders as required by the applicable rules of the Principal Market for issuances of shares of Common Stock in excess of such amount or (B) obtains a written opinion from outside counsel to the Company that such approval is not required, which opinion shall be reasonably satisfactory to the Holder.

 

1.      Term. The purchase right represented by this Warrant is exercisable, in whole or in part, at any time and from time to time from the Date of Grant through seven (7) years after the Date of Grant (the “Term”).

 

2.      Method of Exercise; Payment; Issuance of New Warrant. Subject to Section 1 hereof, the purchase right represented by this Warrant may be exercised by the holder hereof, in whole or in part and from time to time, at the election of the holder hereof, by (a) the surrender of this Warrant (with the notice of exercise substantially in the form attached hereto as Exhibit A-1 duly completed and executed) at the principal office of the Company and by the payment to the Company, by certified or bank check, or by wire transfer to an account designated by the Company (a “Wire Transfer”) of an amount equal to the then applicable Warrant Price multiplied by the number of Shares then being purchased; (b) if in connection with a registered public offering of the Company’s securities, the surrender of this Warrant (with the notice of exercise form attached hereto as Exhibit A-2 duly completed and executed) at the principal office of the Company together with notice of arrangements reasonably satisfactory to the Company for payment to the Company either by certified or bank check or by Wire Transfer from the proceeds of the sale of shares to be sold by the holder in such public offering of an amount equal to the then applicable Warrant Price per share multiplied by the number of Shares then being purchased; or (c) exercise of the “net issuance” right provided for in Section 10.2 hereof. The person or persons in whose name(s) any certificate(s) representing the Shares shall be issuable upon exercise of this Warrant shall be deemed to have become the holder(s) of record of, and shall be treated for all purposes as the record holder(s) of, the shares represented thereby (and such shares shall be deemed to have been issued) immediately prior to the close of business on the date or dates upon which this Warrant is exercised. In the event of any exercise of the rights represented by this Warrant, certificates for the shares of stock so purchased shall be delivered to the holder hereof as soon as possible and in any event within thirty (30) days after such exercise and, unless this Warrant has been fully exercised or expired, a new Warrant representing the portion of the Shares, if any, with respect to which this Warrant shall not then have been exercised shall also be issued to the holder hereof as soon as possible and in any event within such thirty-day period; provided, however, at such time as the Shares are in the opinion of counsel for the issuer eligible for transfer pursuant to Rule 144 under the Securities Act of 1933, as amended (the “Act”), if requested by the holder of this Warrant, the Company shall cause its transfer agent to deliver the certificate representing Shares issued upon exercise of this Warrant to a broker or other person (as directed by the holder exercising this Warrant) within the time period required to settle any trade made by the holder after exercise of this Warrant of which the issuer has received three trading days prior notice.

 

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3.     Stock Fully Paid; Reservation of Shares. All Shares that may be issued upon the exercise of the rights represented by this Warrant will, upon issuance pursuant to the terms and conditions herein, be fully paid and nonassessable, and free from all preemptive rights and taxes, liens and charges with respect to the issue thereof. During the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized, and reserved for the purpose of the issue upon exercise of the purchase rights evidenced by this Warrant, a sufficient number of shares of its Common Stock to provide for the exercise of the rights represented by this Warrant.

 

4.     Adjustment of Warrant Price and Number of Shares. The number and kind of securities purchasable upon the exercise of this Warrant and the Warrant Price shall be subject to adjustment from time to time upon the occurrence of certain events, as follows:

 

(a)      Reclassification or Merger. In case of any reclassification or change of securities of the class issuable upon exercise of this Warrant (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination), or in case of any merger of the Company with or into another corporation (other than a merger with another corporation in which the Company is the acquiring and the surviving corporation and which does not result in any reclassification or change of outstanding securities issuable upon exercise of this Warrant), or in case of any sale of all or substantially all of the assets of the Company, the Company, or such successor or purchasing corporation, as the case may be, shall duly execute and deliver to the holder of this Warrant a new Warrant (in form and substance satisfactory to the holder of this Warrant), so that the holder of this Warrant shall have the right to receive upon exercise of this Warrant, at a total purchase price not to exceed that payable upon the exercise of the unexercised portion of this Warrant, and in lieu of the shares of Common Stock theretofore issuable upon exercise of this Warrant, (i) the kind and amount of shares of stock, other securities, money and property receivable upon such reclassification, change, merger or sale by a holder of the number of shares of Common Stock then purchasable under this Warrant, or (ii) in the case of such a merger or sale in which the consideration paid consists all or in part of assets other than securities of the successor or purchasing corporation, at the option of the holder of this Warrant, the securities of the successor or purchasing corporation having a value at the time of the transaction equivalent to the value of the Common Stock purchasable upon exercise of this Warrant at the time of the transaction. Any new Warrant shall provide for adjustments that shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 4. The provisions of this Section 4(a) shall similarly apply to successive reclassifications, changes, mergers and sales.

 

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(b)     Subdivision or Combination of Shares. If the Company at any time while this Warrant remains outstanding and unexpired shall subdivide or combine its outstanding shares of Common Stock, the Warrant Price shall be proportionately decreased and the number of Shares issuable hereunder shall be proportionately increased in the case of a subdivision and the Warrant Price shall be proportionately increased and the number of Shares issuable hereunder shall be proportionately decreased in the case of a combination.

 

(c)      Stock Dividends and Other Distributions. If the Company at any time while this Warrant is outstanding and unexpired shall (i) pay a dividend with respect to its Common Stock payable in Common Stock, then the Warrant Price shall be adjusted, from and after the date of determination of shareholders entitled to receive such dividend or distribution, to that price determined by multiplying the Warrant Price in effect immediately prior to such date of determination by a fraction (A) the numerator of which shall be the total number of shares of Common Stock outstanding immediately prior to such dividend or distribution, and (B) the denominator of which shall be the total number of shares of Common Stock outstanding immediately after such dividend or distribution; or (ii) make any other distribution with respect to Common Stock (except any distribution specifically provided for in Sections 4(a) and 4(b)), then, in each such case, provision shall be made by the Company such that the holder of this Warrant shall receive upon exercise of this Warrant a proportionate share of any such dividend or distribution as though it were the holder of the Shares as of the record date fixed for the determination of the shareholders of the Company entitled to receive such dividend or distribution.

 

(d)     Adjustment of Number of Shares. Upon each adjustment in the Warrant Price, the number of Shares purchasable hereunder shall be adjusted, to the nearest whole share, to the product obtained by multiplying the number of Shares purchasable immediately prior to such adjustment in the Warrant Price by a fraction, the numerator of which shall be the Warrant Price immediately prior to such adjustment and the denominator of which shall be the Warrant Price immediately thereafter.

 

5.     Notice of Adjustments. Whenever the Warrant Price or the number of Shares purchasable hereunder shall be adjusted pursuant to Section 4 hereof, the Company shall make a certificate signed by its chief financial officer setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated, and the Warrant Price and the number of Shares purchasable hereunder after giving effect to such adjustment, and shall cause copies of such certificate to be mailed (without regard to Section 13 hereof, by first class mail, postage prepaid) to the holder of this Warrant.

 

6.     Fractional Shares. No fractional Shares will be issued in connection with any exercise hereunder, but in lieu of such fractional Shares the Company shall make a cash payment therefor based on the fair market value of the stock on the date of exercise as reasonably determined in good faith by the Company’s Board of Directors.

 

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7.     Compliance with Securities Act; Disposition of Warrant or Shares of Common Stock.

 

(a)     Compliance with Securities Act. The holder of this Warrant, by acceptance hereof, agrees that this Warrant, and the Shares to be issued upon exercise hereof are being acquired for investment and that such holder will not offer, sell or otherwise dispose of this Warrant, or any Shares except under circumstances which will not result in a violation of the Act or any applicable state securities laws. Upon exercise of this Warrant, the holder hereof shall confirm in writing that the Shares so purchased are being acquired for investment and not with a view toward distribution or resale in violation of the Act and shall confirm such other matters related thereto as may be reasonably requested by the Company. This Warrant and all Shares issued upon exercise of this Warrant shall be stamped or imprinted with a legend in substantially the following form:

 

“THE SECURITIES EVIDENCED HEREBY 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, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.”

 

Said legend shall be removed by the Company, upon the request of a holder, at such time as the restrictions on the transfer of the applicable security shall have terminated in the opinion of counsel to the Company. In addition, in connection with the issuance and any subsequent exercise of this Warrant, the holder specifically represents to the Company by acceptance or such exercise of this Warrant as follows:

 

(1)     The holder is aware of the Company’s business affairs and financial condition, and has acquired information about the Company sufficient to reach an informed and knowledgeable decision to acquire or exercise this Warrant. The holder is acquiring this Warrant for its own account for investment purposes only and not with a view to, or for the resale in connection with, any “distribution” thereof in violation of the Act.

 

(2)     The holder understands that neither this Warrant nor any Shares has been registered under the Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of the holder’s investment intent as expressed herein.

 

(3)     The holder further understands that this Warrant must be held indefinitely unless subsequently registered under the Act and qualified under any applicable state securities laws, or unless exemptions from registration and qualification are otherwise available. The holder is aware of the provisions of Rule 144, promulgated under the Act.

 

(4)     The holder is an “accredited investor” as such term is defined in Rule 501 of Regulation D promulgated under the Act.

 

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(b)      Disposition of Warrant or Shares. With respect to any offer, sale or other disposition of this Warrant or any Shares, the holder hereof agrees to give written notice to the Company prior thereto, describing briefly the manner thereof, together with a written opinion of such holder’s counsel reasonably satisfactory to the Company, to the effect that such offer, sale or other disposition may be effected without registration or qualification (under the Act as then in effect or any federal or state securities law then in effect) of this Warrant or the Shares and indicating whether or not under the Act certificates for this Warrant or the Shares to be sold or otherwise disposed of require any restrictive legend as to applicable restrictions on transferability in order to ensure compliance with such law. Upon receiving such written notice and reasonably satisfactory opinion, the Company, as promptly as practicable but no later than fifteen (15) days after receipt of the written notice, shall notify such holder that such holder may sell or otherwise dispose of this Warrant or such Shares, all in accordance with the terms of the notice delivered to the Company. If a determination has been made pursuant to this Section 7(b) that the opinion of counsel for the holder or other evidence is not reasonably satisfactory to the Company, the Company shall so notify the holder promptly with details thereof after such determination has been made. Each certificate representing this Warrant or the Shares thus transferred (except a transfer pursuant to Rule 144) shall bear a legend as to the applicable restrictions on transferability in order to ensure compliance with such laws, unless in the aforesaid opinion of counsel for the holder, such legend is not required in order to ensure compliance with such laws. The Company may issue stop transfer instructions to its transfer agent in connection with such restrictions.

 

(c)      Applicability of Restrictions. Neither any restrictions of any legend described in this Warrant nor the requirements of Section 7(b) above shall apply to any transfer of, or grant of a security interest in, this Warrant (or the Common Stock obtainable upon exercise thereof) or any part hereof (i) to a partner of the holder if the holder is a partnership or to a member of the holder if the holder is a limited liability company, (ii) to a partnership of which the holder is a partner or to a limited liability company of which the holder is a member, (iii) to any affiliate of the holder if the holder is a corporation, (iv) notwithstanding the foregoing, to any corporation, company, limited liability company, limited partnership, partnership, or other person managed or sponsored by Horizon Technology Finance Corporation ("HRZN"), (v) or to a lender to the holder or any of the foregoing; provided, however, in any such transfer, if applicable, the transferee shall on the Company’s request agree in writing to be bound by the terms of this Warrant as if an original holder hereof.

 

8.     Rights as Shareholders; Information. No holder of this Warrant, as such, shall be entitled to vote or receive dividends or be deemed the holder of Shares or any other securities of the Company which may at any time be issuable upon the exercise hereof for any purpose, nor shall anything contained herein be construed to confer upon the holder of this Warrant, as such, any of the rights of a shareholder of the Company or any right to vote for the election of directors or upon any matter submitted to shareholders at any meeting thereof, or to receive notice of meetings, or to receive dividends or subscription rights or otherwise until this Warrant shall have been exercised and the Shares purchasable upon the exercise hereof shall have become deliverable, as provided herein.

 

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9.      Registration Rights. The Shares issuable hereunder initially shall be exempt from registration under the Securities Act. Following the Date of Grant, if the Company shall determine to prepare and file with the Securities and Exchange Commission a registration statement (together with any amendments or supplements thereto, whether prior to or after the effective date thereof, the “Registration Statement”) relating to an offering for its own account or the account of others under the Act of any of its equity securities (other than on Form S-4 or Form S-8 (each as promulgated under the Act) or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with the Company’s stock option or other employee benefit plans or a “universal shelf” registration statement providing only for issuances by the Company), then the Company shall deliver to holder a written notice of such determination and, if within fifteen (15) days after the date of the delivery of such notice, holder shall so request in writing, the Company shall include in such Registration Statement all or any part of such Shares such holder requests to be registered; provided, however, the Company shall not be required to register any Shares that are eligible for resale pursuant to Rule 144 without restriction (including, without limitation, volume restrictions) and without the need for current public information required by Rule 144(c)(1) (or Rule 144(i)(2), if applicable) or that are the subject of a then-effective registration statement. Company’s obligations under this Section are contingent upon Holder providing promptly all information concerning such Holder and its proposed plan of distribution as Company may reasonably request in connection with any of the foregoing. Company may by written notice to the Holder immediately suspend the use of any resale prospectus for a period not to exceed sixty consecutive days in any one instance and for a period not to exceed one hundred twenty calendar days in any twelve-month period (each, a “Suspension Period”) at any time that (i) Company becomes engaged in a business activity or negotiation or any other event has occurred or is anticipated which is not disclosed in that prospectus which Company reasonably believes should be disclosed therein under applicable law and which Company desires to keep confidential for business purposes or (ii) Company determines that a particular disclosure so determined to be required to be disclosed therein be premature or would adversely affect Company or its business or prospects. Company will use its commercially reasonable efforts to ensure that the use of the Registration Statement may be resumed as soon as practicable. Company shall bear all costs and expenses associated with the registration of the Shares as specified in this Section and the preparation and filing of the Registration Statement, including, without limitation, all printing expenses, legal fees and disbursement of Company’s outside counsel, commissions, NASDAQ and blue sky registration filing fees and transfer agents’ and registrars’ fees, but not including underwriting commissions or similar charges and legal fees and disbursements of counsel to Holder.

 

10.      Additional Rights.

 

10.1   Acquisition Transactions. The Company shall provide the holder of this Warrant with at least twenty (20) days’ written notice prior to closing thereof of the terms and conditions of any of the following transactions (to the extent the Company has notice thereof): (i) the sale, lease, exchange, conveyance or other disposition of all or substantially all of the Company’s property or business, or (ii) its merger into or consolidation with any other corporation (other than a wholly-owned subsidiary of the Company), or any transaction (including a merger or other reorganization) or series of related transactions, in which more than 50% of the voting power of the Company is disposed of.

 

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10.2    Right to Convert Warrant into Stock: Net Issuance.

 

(a)     Right to Convert. In addition to and without limiting the rights of the holder under the terms of this Warrant, the holder shall have the right to convert this Warrant or any portion thereof (the “Conversion Right”) into shares of Common Stock as provided in this Section 10.2 at any time or from time to time during the term of this Warrant. Upon exercise of the Conversion Right with respect to a particular number of shares subject to this Warrant (the “Converted Warrant Shares”), the Company shall deliver to the holder (without payment by the holder of any exercise price or any cash or other consideration) that number of shares of fully paid and nonassessable Common Stock as is determined according to the following formula:

 

X =  B - A 

          Y

 

	Where:	X =	the number of Shares that shall be issued to holder
	 	 	 
	 	Y =	the fair market value of one Share
	 	 	 
	 	A =	the aggregate Warrant Price of the Converted Warrant Shares immediately prior to the exercise of the Conversion Right (i.e., the number of Converted Warrant Shares multiplied by the Warrant Price)
	 	 	 
	 	B =	the aggregate fair market value of the Converted Warrant Shares (i.e., the number of Converted Warrant Shares multiplied by the fair market value of one Share)

 

No fractional shares shall be issuable upon exercise of the Conversion Right, and, if the number of shares to be issued determined in accordance with the foregoing formula is other than a whole number, the Company shall pay to the holder an amount in cash equal to the fair market value of the resulting fractional share on the Conversion Date (as hereinafter defined). For purposes of Section 10 of this Warrant, shares issued pursuant to the Conversion Right shall be treated as if they were issued upon the exercise of this Warrant.

 

(b)     Method of Exercise. The Conversion Right may be exercised by the holder by the surrender of this Warrant at the principal office of the Company together with a written statement (which may be in the form of Exhibit A-1 or Exhibit A-2 hereto) specifying that the holder thereby intends to exercise the Conversion Right and indicating the number of shares subject to this Warrant which are being surrendered (referred to in Section 10.2(a) hereof as the Converted Warrant Shares) in exercise of the Conversion Right. Such conversion shall be effective upon receipt by the Company of this Warrant together with the aforesaid written statement, or on such later date as is specified therein (the “Conversion Date”), and, at the election of the holder hereof, may be made contingent upon the closing of the sale of the Company’s Common Stock to the public in a public offering pursuant to a Registration Statement under the Act (a “Public Offering”). Certificates for the shares issuable upon exercise of the Conversion Right and, if applicable, a new warrant evidencing the balance of the shares remaining subject to this Warrant, shall be issued as of the Conversion Date and shall be delivered to the holder within thirty (30) days following the Conversion Date.

 

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(c)      Determination of Fair Market Value. For purposes of this Section 10.2, “fair market value” of a share of Common Stock as of a particular date (the “Determination Date”) shall mean:

 

(i)     If the Conversion Right is exercised in connection with and contingent upon a Public Offering, and if the Company’s Registration Statement relating to such Public Offering (“Registration Statement”) has been declared effective by the Securities and Exchange Commission, then the initial “Price to Public” specified in the final prospectus with respect to such offering.

 

(ii)    If the Conversion Right is not exercised in connection with and contingent upon a Public Offering, then as follows:

 

(A)     If traded on a securities exchange, the fair market value of the Common Stock shall be deemed to be the VWAP over the five trading days immediately prior to the Determination Date;

 

(B)     If traded on the NASDAQ Stock Market or other over-the-counter system, the fair market value of the Common Stock shall be deemed to be the VWAP over the five trading days immediately prior to the Determination Date; and

 

(C)     If there is no public market for the Common Stock, then fair market value shall be reasonably determined in good faith by the Company’s Board of Directors.

 

If closing prices or closing bid prices are no longer reported by a securities exchange or other trading system, the closing price or closing bid price shall be that which is reported by such securities exchange or other trading system at 4:00 p.m. New York City time on the applicable trading day.

 

10.3    Exercise Prior to Expiration.  To the extent this Warrant is not previously exercised as to all of the Shares subject hereto, and if the fair market value of one share of the Common Stock is greater than the Warrant Price then in effect, this Warrant shall be deemed automatically exercised pursuant to Section 10.2 above (even if not surrendered) immediately before its expiration. For purposes of such automatic exercise, the fair market value of one share of the Common Stock upon such expiration shall be determined pursuant to Section 10.2(c). To the extent this Warrant or any portion thereof is deemed automatically exercised pursuant to this Section 10.3, the Company agrees to promptly notify the holder hereof of the number of Shares, if any, the holder hereof is to receive by reason of such automatic exercise.

 

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11.      Representations and Warranties. The Company represents and warrants to the holder of this Warrant as follows:

 

(a)     This Warrant has been duly authorized and executed by the Company and is a valid and binding obligation of the Company enforceable in accordance with its terms, subject to laws of general application relating to bankruptcy, insolvency and the relief of debtors and the rules of law or principles at equity governing specific performance, injunctive relief and other equitable remedies.

 

(b)     To the extent the Shares consist of Common Stock, such Shares of Common Stock have been duly authorized and reserved for issuance by the Company and, when issued in accordance with the terms hereof, will be validly issued, fully paid and nonassessable and free from preemptive rights.

 

(c)     A true and correct copy of the Company’s Certificate of Incorporation, as amended through the Date of Grant has been provided to Holder (the “Charter”). The rights, preferences, privileges and restrictions granted to or imposed upon the classes and series of the Company’s capital stock and the holders thereof are as set forth in the Charter.

 

(d)     The execution and delivery of this Warrant are not, and the issuance of the Shares upon exercise of this Warrant in accordance with the terms hereof will not be, inconsistent with the Company’s Charter or by-laws, do not and will not contravene any law, governmental rule or regulation, judgment or order applicable to the Company, and do not and will not conflict with or contravene any provision of, or constitute a default under, any indenture, mortgage, contract or other instrument of which the Company is a party or by which it is bound or require the consent or approval of, the giving of notice to, the registration or filing with or the taking of any action in respect of or by, any Federal, state or local government authority or agency or other person, except for the filing of notices pursuant to federal and state securities laws, which filings will be effected by the time required thereby.

 

(e)     There are no actions, suits, audits, investigations or proceedings pending or, to the knowledge of the Company, threatened against the Company in any court or before any governmental commission, board or authority which, if adversely determined, could have a material adverse effect on the ability of the Company to perform its obligations under this Warrant.

 

(f)     The number of shares of Common Stock of the Company outstanding on the date hereof, on a fully diluted basis (assuming the conversion of all outstanding convertible securities and the exercise of all outstanding options and warrants), does not exceed 17,000,000 shares.

 

12.     Modification and Waiver. This Warrant and any provision hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of the same is sought.

 

13.      Notices. Any notice, request, communication or other document required or permitted to be given or delivered to the holder hereof or the Company shall be delivered, or shall be sent by certified or registered mail, postage prepaid, to each such holder at its address as shown on the books of the Company or to the Company at the address indicated therefor on the signature page of this Warrant.

 

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14.     Binding Effect on Successors. This Warrant shall be binding upon any corporation succeeding the Company by merger, consolidation or acquisition of all or substantially all of the Company’s assets, and all of the obligations of the Company relating to the Shares issuable upon the exercise or conversion of this Warrant shall survive the exercise, conversion and termination of this Warrant and all of the covenants and agreements of the Company shall inure to the benefit of the successors and assigns of the holder hereof.

 

15.     Lost Warrants or Stock Certificates. The Company covenants to the holder hereof that, upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant or any stock certificate and, in the case of any such loss, theft or destruction, upon receipt of an indemnity reasonably satisfactory to the Company, or in the case of any such mutilation upon surrender and cancellation of such Warrant or stock certificate, the Company will make and deliver a new Warrant or stock certificate, of like tenor, in lieu of the lost, stolen, destroyed or mutilated Warrant or stock certificate.

 

16.     Descriptive Headings. The descriptive headings of the various Sections of this Warrant are inserted for convenience only and do not constitute a part of this Warrant. The language in this Warrant shall be construed as to its fair meaning without regard to which party drafted this Warrant.

 

17.     Governing Law. This Warrant shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the laws of the State of Delaware.

 

18.     Survival of Representations, Warranties and Agreements. All representations and warranties of the Company and the holder hereof contained herein shall survive the Date of Grant, the exercise or conversion of this Warrant (or any part hereof) or the termination or expiration of rights hereunder. All agreements of the Company and the holder hereof contained herein shall survive indefinitely until, by their respective terms, they are no longer operative.

 

19.     Remedies. In case any one or more of the covenants and agreements contained in this Warrant shall have been breached, the holders hereof (in the case of a breach by the Company), or the Company (in the case of a breach by a holder), may proceed to protect and enforce their or its rights either by suit in equity and/or by action at law, including, but not limited to, an action for damages as a result of any such breach and/or an action for specific performance of any such covenant or agreement contained in this Warrant.

 

20.     No Impairment of Rights. The Company will not, by amendment of its Charter or through any other means, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the holder of this Warrant against impairment.

 

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21.     Severability. The invalidity or unenforceability of any provision of this Warrant in any jurisdiction shall not affect the validity or enforceability of such provision in any other jurisdiction, or affect any other provision of this Warrant, which shall remain in full force and effect.

 

22.     Recovery of Litigation Costs. If any legal action or other proceeding is brought for the enforcement of this Warrant, or because of an alleged dispute, breach, default, or misrepresentation in connection with any of the provisions of this Warrant, the successful or prevailing party or parties shall be entitled to recover reasonable attorneys’ fees and other costs incurred in that action or proceeding, in addition to any other relief to which it or they may be entitled.

 

23.     Entire Agreement; Modification. This Warrant constitutes the entire agreement between the parties pertaining to the subject matter contained in it and supersedes all prior and contemporaneous agreements, representations, and undertakings of the parties, whether oral or written, with respect to such subject matter.

 

[Remainder of page intentionally blank. Signature page follows.]

 

 

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The Company has caused this Warrant to be duly executed and delivered as of the Date of Grant specified above.

 

	 	
			CATASYS, INC.

			 

			 

			 

			By: ___/s/ Christopher Shirley_____________________

			Name: ___Christopher Shirley_____________________

			Title: ____CFO__________________________

			Address: 11601 Wilshire Blvd., Suite 1100

			               Los Angeles, CA 90025

			

 

 

[SIGNATURE PAGE TO COMMON STOCK WARRANT]

 

 

 

 

EXHIBIT A-1

 

 

NOTICE OF EXERCISE

 

To:      CATASYS, INC. (the “Company”)

 

1.       The undersigned hereby:

 

	 	
			☐

				
			elects to purchase________ shares of Common Stock of the Company pursuant to the terms of the attached Warrant, and tenders herewith payment of the purchase price of such shares in full, or

			

 

	 	
			☐

				
			elects to exercise its net issuance rights pursuant to Section 10.2 of the attached Warrant with respect to________shares of Common Stock.

			

 

2.       Please issue a certificate or certificates representing ________ shares in the name of the undersigned or in such other name or names as are specified below:

 

	 
	(Name)
	 
	 
	 
	 
	 
	(Address)

 

3.       The undersigned represents that the aforesaid shares are being acquired for the account of the undersigned for investment and not with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or reselling such shares, all except as in compliance with applicable securities laws.

 

 

 

	 	(Signature)

 

 

 

	(Date)

 

 

 

 

EXHIBIT A-2

 

NOTICE OF EXERCISE

 

To:      CATASYS, INC. (the “Company”)

 

1.      Contingent upon and effective immediately prior to the closing (the “Closing”) of the Company’s public offering contemplated by the Registration Statement on Form S___, filed________, 20__, the undersigned hereby:

 

☐      elects to purchase________shares of Common Stock of the Company (or such lesser number of shares as may be sold on behalf of the undersigned at the Closing) pursuant to the terms of the attached Warrant, or

 

☐      elects to exercise its net issuance rights pursuant to Section 10.2 of the attached Warrant with respect to________shares of Common Stock.

 

2.      Please deliver to the custodian for the selling shareholders a stock certificate representing such________shares.

 

3.      The undersigned has instructed the custodian for the selling shareholders to deliver to the Company $________or, if less, the net proceeds due the undersigned from the sale of shares in the aforesaid public offering. If such net proceeds are less than the purchase price for such shares, the undersigned agrees to deliver the difference to the Company prior to the Closing.

 

 

 

 

	 	(Signature)

 

 

 

 

	(Date)

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