Document:

Form of Restricted Stock Agreement (for equity component of management fee)

 Exhibit 10.1.3 
  
 RESTRICTED STOCK AWARD AGREEMENT 
  
 THIS RESTRICTED STOCK AWARD AGREEMENT (this “Agreement”) is made as of
             (the “Award Date”), by and between Luminent Mortgage Capital, Inc., a Maryland corporation (the “Company”), and Seneca Capital Management, LLC, a
California limited liability company (the “Manager”). 
  
 THE PARTIES ENTER THIS AGREEMENT on the basis of the following facts, understandings and intentions: 
  
 A. The Company and the Manager entered into that certain Management Agreement dated as of June 11, 2003 (the “Management Agreement”),
whereby the Manager was retained by the Company to manage the day-to-day operations of the Company. 
  
 B. Pursuant to the terms of the Management Agreement, the Manager has earned Incentive Management Compensation (as defined in the Management
Agreement), a portion of which (the “Stock Obligation”) is payable in common stock, par value $0.001 per share, of the Company (“Common Stock”). 
  
 C. The Company desires to grant to the Manager, effective as of the Award Date set forth above, certain shares of
Common Stock upon the terms and conditions set forth herein. 
  
 NOW THEREFORE, in consideration of the premises and the mutual covenants of the parties hereto, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby
agree as follows: 
  
 1. Grant. Subject to the terms of
this Agreement and in satisfaction of the Stock Obligation, the Company hereby grants to the Manager an aggregate of              restricted shares of Common Stock (the
“Restricted Shares”). 
  
 2. Vesting. Subject to
Section 7 below, the Restricted Shares shall vest, and the restrictions imposed on the Restricted Shares hereunder (other than those restrictions set forth in Sections 5(b) and 5(d) below or otherwise required in order to comply with applicable
securities and other laws) shall lapse, with respect to one third (1/3) of the total number of Restricted Shares on each of             ,
             and             . 
  
 3. No Right to Continued Service. Except as otherwise provided in Section 7 below, the vesting schedule in Section 2
requires continued service of the Manager pursuant to the Management Agreement (including any extension of the term thereof), or a similar successor agreement pursuant to which the Manager continues to manage the day-to-day operations of the
Company, through each applicable vesting date as a condition to the vesting of the applicable installment of the Restricted Shares and the rights and benefits of the Manager under this 
  

 1 

 Agreement. The Manager’s services to the Company for only a portion of a vesting period, even if a substantial
portion, will not entitle the Manager to any proportionate vesting or avoid or mitigate a termination of rights and benefits upon or following a termination of services as provided in Section 7 below. 
  
 Nothing contained in this Agreement constitutes a commitment by the Company
or any of its subsidiaries or other affiliates to continue to retain the Manager, affects the Manager’s status as a consultant at will who is subject to termination without cause, confers upon the Manager any right to remain retained by or in
service to the Company or any of its subsidiaries or other affiliates, interferes in any way with the right of the Company or any of its subsidiaries or other affiliates at any time to terminate such retention or service, or affects the right of the
Company or any of its subsidiaries or other affiliates to increase or decrease the Manager’s other compensation or benefits in accordance with the terms of the other agreements among the parties. Nothing in this paragraph, however, is intended
to adversely affect any independent right of the Manager under any contract (including, without limitation, the Management Agreement) other than this Agreement. 
  

4. Dividend and Voting Rights. After the Award Date, the Manager shall be entitled to cash dividend and voting rights with respect to the
Restricted Shares even though such shares are not vested pursuant to Section 2, provided that to the extent any such Restricted Shares are forfeited to the Company pursuant to Section 7 below or the terms of the Management Agreement, such rights
shall terminate immediately with respect to the Restricted Shares that are so forfeited. 
  
 5. Restrictions on Transfer. 
  
 (a) Restrictions Prior to Vesting. Prior to the time that the Restricted Shares have become vested pursuant to Sections 2 or 7, neither the Restricted Shares, nor any interest therein, amount payable in respect thereof (other than
cash dividends), nor Restricted Property (as defined in Section 8) with respect thereto may be sold, assigned, transferred, pledged or otherwise disposed of, alienated or encumbered, either voluntarily or involuntarily, except that the Manager shall
have the right to transfer any or all of the Restricted Shares to officers, directors and employees of and consultants to the Manager, provided that in connection with such transfer the transferee shall execute an agreement substantially similar to
this Agreement and agree to be bound by the terms and conditions thereof, except that the vesting schedule shall commence on the Award Date of this Agreement and shall not be restarted when transferred. Any such transferee’s rights with respect
to any Restricted Shares so transferred shall be no greater than the rights of the Manager with respect to such shares (had they not been transferred) and, without limiting the generality of the foregoing, any Restricted Shares so transferred shall
be subject to forfeiture if the Manager no longer manages the day-to-day operations of the Company or a Subsidiary as provided in Section 7. 
  
 (b) Restrictions After Vesting. Upon and after the time that a Restricted Share has become vested pursuant to Sections 2 or 7, the Restricted Share
shall not continue to be subject to the restrictions set forth in Section 5(a), but such share (and any related Restricted Property) shall continue to be subject to the other limitations and restrictions set forth or referred to, as the case may be,
in this Agreement (including, without limitation, in Section 5(d) below). 
  

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 Without in any way limiting the provisions set forth above, neither the Restricted Shares, nor any interest therein,
amount payable in respect thereof (other than cash dividends), nor Restricted Property shall be disposed of, in whole or in part, except in compliance with all applicable federal and state securities laws and unless and until: 
  

	 	(1)	 	there is then in effect a registration statement under the Securities Act of 1933, as amended (the “Securities Act”), covering such proposed disposition and such
disposition is made in accordance with such registration statement; or 

  

	 	(2)	 	such disposition is made in accordance with Rule 144 under the Securities Act; or 

  

	 	(3)	 	the Company is notified of the proposed disposition and is furnished with a statement of the circumstances surrounding the proposed disposition, and, if requested by the Company, is
furnished with an opinion of counsel acceptable to the Company’s counsel, that such disposition will not require registration under the Securities Act and will be in compliance with all applicable state securities laws.

  
 (c) Other Transfers Void. Any sale or
transfer, or purported sale or transfer, of any Restricted Shares acquired pursuant to this Agreement or any interest therein, amount payable in respect thereof (other than cash dividends) or Restricted Property with respect thereto, other than to
the Company shall be null and void unless the terms, conditions and provisions of this Agreement are strictly observed and followed. Furthermore, the proposed transferee in any otherwise permitted transfer of any such property or interest shall, as
a condition precedent to any such transfer, agree in writing with the Company to be bound by the restrictions on such shares set forth in this Agreement (including, without limitation, the provisions of Section 5(d) below), which shall continue in
effect with respect to the shares. 
  
 (d) Charter
Documents. The Charter and Bylaws of the Company, as either of them may be amended from time to time, may provide for additional restrictions and limitations with respect to the Common Stock (including additional restrictions and limitations on
the transfer of shares). To the extent that these restrictions and limitations are more restrictive than those set forth in this Agreement, such restrictions and limitations shall apply to the Restricted Shares (both before and after such Restricted
Shares shall have become vested pursuant to Section 2). Such restrictions and limitations are not, however, in lieu of, nor shall they in any way reduce or minimize, any limitation or restriction on the Restricted Shares imposed under this
Agreement. 
  
 6. Delivery of Shares. 
  
 (a) Certificates to be Held by the Manager; Legends. Upon delivery to
the Manager of a certificate or certificates, as the case may be, representing the Restricted Shares, such certificate(s) shall be held by the Manager or its designee until the shares represented thereby vest pursuant to Sections 2 or 7 or are
forfeited pursuant to Section 7. Such certificate(s) shall initially bear the following legends: 
  

 3 

 (1) Vesting Legend. 
  
 “BY ITS ACQUISITION HEREOF, THE HOLDER AGREES TO BE BOUND BY THE PROVISIONS OF THE RESTRICTED STOCK AWARD AGREEMENT
DATED AS OF JANUARY             , 2004 (THE “AGREEMENT”), BY AND BETWEEN THE CORPORATION AND THE HOLDER. THE AGREEMENT CONTAINS SUBSTANTIAL RESTRICTIONS ON TRANSFER,
INCLUDING RESTRICTIONS ON SALE, ASSIGNMENT, PLEDGE, TRANSFER OR OTHER DISPOSITION.” 
  
 (2) Securities Act Legend. 
  
 “THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE OFFERED OR
SOLD EXCEPT (A) TO THE CORPORATION OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, OR (C) IN A TRANSACTION EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
(AND BASED ON AN OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION AND THE INITIAL PURCHASER).” 
  
 (3) Other Legends. Any legends provided for by the Company’s Charter as well as any other legends that may be required and/or
deemed appropriate under applicable laws by the Company. 
  
 (b)
Delivery of Certificates Upon Vesting. Upon the request of the Manager and the return of the original certificate(s), and after the vesting of any Restricted Shares pursuant to Section 2, the Company shall deliver to the Manager a certificate
evidencing the number of such vested Restricted Shares without the legend described in Section 6(a)(1) in exchange for the certificate(s) evidencing at least an equal number of shares bearing that legend. The shares so delivered by the Company shall
no longer be restricted pursuant to Section 5(a) but shall continue to be subject to the restrictions referred to in Sections 5(b) and 5(d) and shall continue to be legended as set forth in Sections 6(a)(2) and 6(a)(3) for so long as the Company
deems necessary. If, in such circumstances, the Manager shall return to the Company a certificate or certificates evidencing a greater number of shares than have vested, then the Company shall deliver to the Manager an additional certificate
evidencing such excess number of shares and bearing all of the legends described in Section 6(a). As a further condition to the Company’s obligation to deliver any share certificate(s), the Manager shall deliver to the Company any
representations or other documents or assurances as the Company may deem necessary or reasonably desirable to ensure compliance with all applicable legal and regulatory requirements. 
  
 (c) Stock Power; Power of Attorney. Concurrent with the execution and delivery of this Agreement, the Manager shall
deliver to the Company an executed stock power in the form attached hereto as Exhibit A, in blank, with respect to the Restricted Shares and any related Restricted Property. The Manager, by acceptance of the Restricted Shares, shall be deemed
to appoint, and does so appoint by execution of this Agreement, the Company and each of its authorized representatives as the Manager’s attorneys-in-fact to effect any transfer of unvested, forfeited shares and any related Restricted Property
to the Company as may be required or 
  

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 permitted pursuant to this Agreement and to execute such documents as the Company or such representatives deem necessary
or advisable in connection with any such transfer. 
  
 7.
Forfeiture and Acceleration of Unvested Shares. 
  
 (a)
Termination of Service. Except as expressly provided in Section 7(c) below, the Restricted Shares shall be forfeited to the Company to the extent such shares have not become vested pursuant to Sections 2 or 7 prior to the later of (1)
the expiration or termination of the Management Agreement (after giving effect to any extension of the term thereof), or (2) if the Management Agreement expires or terminates but the Manager continues to manage the day-to-day operations of the
Company or a Subsidiary pursuant to a similar successor agreement, the termination of the Manager’s management of the day-to-day operations of the Company pursuant to or following the expiration of any such successor agreement. For this
purpose, the term “Subsidiary” means a corporation or other entity the majority of the voting stock or voting interests of which are beneficially owned, directly or indirectly, by the Company. If the Manager is retained by a Subsidiary and
that entity ceases to be a Subsidiary, such event shall be deemed to be a termination of service of the Manager for purposes of this Agreement, unless the Manager otherwise continues to be retained by or continues to provide service to the Company
or another Subsidiary following such event. 
  
 (b) Return of
Shares. Upon the occurrence of any forfeiture of the Restricted Shares pursuant to Section 7(a), such unvested, forfeited shares and related Restricted Property shall, without payment of any consideration by the Company for such transfer, be
automatically transferred to the Company, without any other action by the Manager or any permitted transferee of the Manager. The Company may exercise its powers under Section 6 hereof and take any other action necessary or advisable to evidence
such transfer. The Manager or any permitted transferee of the Manager, or any such person’s beneficiary or personal representative, as the case may be, shall deliver any additional documents of transfer that the Company may request to confirm
the transfer of such unvested, forfeited shares and related Restricted Property to the Company. 
  
 (c) Automatic Acceleration of Vesting. If the Management Agreement is terminated by the Company for any reason other than cause (as defined in the
Management Agreement) (including, without limitation, a Change of Control (as defined in the Management Agreement)), then the portion of the Restricted Shares that is outstanding and otherwise unvested immediately prior to the time of such
termination of service shall thereupon automatically become fully vested. Furthermore, if the Management Agreement expires or terminates but the Manager continues to manage the day-to-day operations of the Company or a Subsidiary pursuant to a
similar successor agreement, and if the Manager’s services to the Company pursuant to such successor agreement are terminated by the Company for any reason other than cause, then the portion of the Restricted Shares that is outstanding and
otherwise unvested immediately prior to the time of such termination of service shall thereupon automatically become fully vested. For purposes of the immediately preceding sentence, “cause” means, unless otherwise defined in the
applicable successor management agreement, a reasonable good faith determination by the Board based on findings of fact which are disclosed to the Manager that the Manager was grossly negligent, acted with reckless disregard or engaged in willful
misconduct or active fraud while discharging its material duties to the Company. 
  

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 8. Adjustments Upon Specified Events. Upon the occurrence of a stock split, reverse stock split,
stock dividend or any other change in capitalization, reorganization, merger or similar event affecting the Common Stock, the restrictions and limitations applicable to the Restricted Shares under this Agreement will continue in effect with respect
to any consideration or other securities (the “Restricted Property” and, for the purposes of this Agreement, “Restricted Shares” shall include “Restricted Property,” unless the context otherwise requires) received in
respect of such Restricted Shares. Such Restricted Property shall vest at such times and in such proportion as the Restricted Shares to which the Restricted Property is attributable vest, or would have vested pursuant to the terms hereof if such
Restricted Shares had remained outstanding. To the extent that the Restricted Property includes any cash (other than cash dividends provided for in Section 4 hereof) that is retained by the Company prior to the vesting of the related Restricted
Shares, such cash shall be invested, pursuant to policies established by the Company, in interest bearing, FDIC-insured (subject to applicable insurance limits) deposits of a depository institution selected by the Company until the vesting or
forfeiture thereof, the earnings on which shall be added to and become a part of the Restricted Property. 
  
 9. Notices. Any notice to be given under the terms of this Agreement shall be in writing and addressed to the Company at its principal office to
the attention of the Chief Financial Officer, and to the Manager at the address of its principal office to the attention of the Chief Financial Officer. Any notice shall be delivered in person or shall be enclosed in a properly sealed envelope,
addressed as aforesaid, registered or certified, and deposited (postage and registry or certification fee prepaid) in a post office or branch post office regularly maintained by the United States Government. Any such notice shall be given only when
received, but if the Manager is no longer being retained by or rendering services to the Company, shall be deemed to have been duly given three (3) business days after the date mailed in accordance with the foregoing provisions of this Section 9.

  
 10. Entire Agreement. This Agreement (including the
exhibit hereto) constitutes the entire and final agreement and supersedes all prior understandings, negotiations and agreements, written or oral, of the parties hereto with respect to the subject matter hereof. This Agreement is intended by the
parties as a complete and exclusive statement of the terms of their agreement with respect to the subject matter hereof. Any representation, promise or agreement with respect to the subject matter hereof not specifically included in this Agreement
shall not be binding upon or enforceable against either party. This is a fully integrated agreement. 
  
 The Charter and Bylaws of the Company, as well as the Management Agreement, respectively, are outside of the scope of the preceding paragraph. 

 
 This Agreement may be amended; provided, however, that any such amendment
must be in writing and signed by the Company and the Manager. The Company may, however, unilaterally waive any provision hereof in writing to the extent such waiver does not materially and adversely affect the Manager’s rights with respect to
the Restricted Shares, provided that no such waiver shall operate or be construed to be a subsequent waiver of the same provision or a waiver of any other provision hereof. No waiver by the Company shall be binding unless in writing and signed by
the Company. The Charter and Bylaws of the Company may be amended from time to time in accordance with their respective terms. 
  

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 11. Effect of this Agreement. This Agreement shall be assumed by, be binding upon and inure to the
benefit of any successor or successors to the Company. The term “Company” for purposes of this Agreement includes any such successor(s). 
  
 12. Governing Law; Arbitration; Severability; Miscellaneous. 
  
 (a) California Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the
State of California without regard to conflict of law principles thereunder. 
  
 (b) Construction. The terms of the purchase of the Restricted Shares have resulted from the negotiations of the parties. Each party has cooperated in the drafting and preparation of this Agreement. Hence, in
any construction of this Agreement, the same shall not be construed against either party on the basis that the party was the drafter. The language of all parts of this Agreement shall in all cases be construed as a whole, according to its fair
meaning, and not strictly for or against either of the parties. 
  
 (c) Limited Rights. The Manager shall have no rights as a stockholder of the Company with respect to the Restricted Shares until a certificate (or certificates) representing the Restricted Shares shall have been registered and issued
in the name of the Manager. The Manager’s rights with respect to the Restricted Shares after the date of such issuance are subject to the terms and conditions set forth herein. 
  
 (d) Severability. If a court of competent jurisdiction determines that any portion of this Agreement is in violation
of any statute or public policy, then only the portions of this Agreement which violate such statute or public policy shall be stricken, and all portions of this Agreement which do not violate any statute or public policy shall continue in full
force and effect. Furthermore, it is the parties’ intent that any court order striking any portion of this Agreement should modify the stricken terms as narrowly as possible to give as much effect as possible to the intentions of the parties
hereunder. 
  
 (e) Counterparts. This Agreement may be
executed simultaneously in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. Photographic copies of such signed counterparts may be used in lieu of the
originals for any purpose. 
  
 (f) Section Headings. The
section headings of this Agreement are for convenience of reference only and shall not be deemed to alter or affect any provision hereof. 
  
 (g) Further Assurances. Each of the parties hereto shall use its reasonable and diligent best efforts to proceed promptly with the transactions
contemplated herein, to fulfill the conditions precedent for such party’s benefit or to cause the same to be fulfilled and to execute such further documents and other papers and perform such further acts as may be reasonably required or
desirable to carry out the provisions hereof and the transactions contemplated herein. 
  
 (h) Legal Counsel. The Company and the Manager recognize that this is a legally binding contract and acknowledge and agree that they have had the opportunity to consult with legal counsel of their choice.

  

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 13. Securities Law Representations. The Manager acknowledges that the Restricted Shares are not
being registered under the Securities Act, based, in part, in reliance upon an exemption from registration under the Securities Act and an exemption from qualification under applicable state securities laws, as each may be amended from time to time.
The Manager, by executing this Agreement, hereby makes the following representations to the Company and acknowledges that the Company’s reliance on federal and state securities law exemptions from registration and qualification is predicated,
in substantial part, upon the accuracy of these representations: 
  

	 	·	 	Accredited Investor. The Manager is an “accredited investor” as defined in Rule 501 of the Securities Act. 

  

	 	·	 	No Intent to Sell. The Manager is acquiring the Restricted Shares solely for the Manager’s own account, for investment purposes only, and not with a view to or an intent
to sell, or to offer for resale in connection with any unregistered distribution, all or any portion of the shares within the meaning of the Securities Act or other applicable state securities laws. 

  

	 	·	 	Information, No Reliance on Company. The Manager has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the
Restricted Shares and the restrictions imposed on the Restricted Shares. The Manager has been furnished with, and/or has access to, such information as he or she considers necessary or appropriate for deciding whether to acquire the Restricted
Shares. However, in evaluating the merits and risks of an investment in the Restricted Shares, the Manager has and will rely upon the advice of its own legal counsel, tax advisors, and/or investment advisors and is not relying on any representations
made by the Company or any of its agents other than those expressly set forth in this Agreement. 

  

	 	·	 	Risk of Loss. The Manager is aware that the Restricted Shares may be of no practical value and that any investment in common shares of a closely held corporation such as the
Company is non-marketable, non-transferable and could require capital to be invested for an indefinite period of time, possibly without return, and at substantial risk of loss. 

  

	 	·	 	Restrictions on Shares. The Manager understands that the Restricted Shares will be characterized as “restricted securities” under the federal securities laws, and
that, under such laws and applicable regulations, such securities may be resold without registration under the Securities Act only in certain limited circumstances, including in accordance with the conditions of Rule 144 promulgated under the
Securities Act, as presently in effect. The Manager acknowledges receiving a copy of Rule 144 promulgated under the Securities Act, as presently in effect, and represents that he is familiar with such rule, and understands the resale limitations
imposed thereby and by the Securities Act and the applicable state securities law. 

  

	 	·	 	Additional Restrictions. The Manager has read and understands the restrictions and limitations set forth in this Agreement which will be imposed on the Restricted

  

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 Shares (including those restrictions and limitations which will continue after the shares have vested),
including, but not limited to, the provisions of Sections 5(a) and 5(d) of this Agreement. The Manager acknowledges having received and reviewed copies of the Charter and Bylaws of the Company and a copy of the Management Agreement. 
  

	 	·	 	No Company Representations. At no time was an oral representation made to the Manager relating to the Restricted Shares or the purchase of the Restricted Shares and the
Manager was not presented with or solicited by any promotional meeting or material relating to the Restricted Shares or the purchase of the Restricted Shares. 

  

	 	·	 	Share Certificate Legend. The Manager represents that the Manager understands and acknowledges that any certificate evidencing the Restricted Shares (or evidencing any other
securities issued with respect thereto pursuant to any stock split, stock dividend, merger or other form of reorganization or recapitalization) when issued shall bear, in addition to any other legends which may be required by applicable state
securities laws, the legends set forth or referred to, as the case may be, in Section 6(a) above. 

  

	 	·	 	Tax Matters. The Manager has obtained and is relying upon the advice of its own tax advisors with respect to the tax consequences of the Manager’s acquisition of the
Restricted Shares (including, without limitation, whether an election (a “Section 83(b) Election”) under Section 83(b) of the Internal Revenue Code of 1986, as amended, may be made in connection with such acquisition, and the advisability
of and procedures for making a Section 83(b) Election in the particular circumstances), as well as with respect to the tax consequences of any vesting, forfeiture and/or future sale or other transfer of the Restricted Shares. The Manager is not
relying on any representations made by the Company or any of its agents with respect to such matters. The Manager acknowledges that, should the Manager be permitted and decide to make a Section 83(b) Election with respect to the acquisition of the
Restricted Shares, the Manager must take affirmative steps to make such election within thirty days of the date of transfer of the Restricted Shares to the Manager. 

  
 [The remainder of this page has intentionally been left blank.] 
  
  

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 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Effective Date.

  
 “COMPANY” 
  
 LUMINENT MORTGAGE CAPITAL, 
 INC., a Maryland corporation 
  
  
  
 By:
                                        
                                        
                
  
 Its:
                                        
                                        
                 
  
  
  
  
 “MANAGER” 
  
 SENECA CAPITAL MANAGEMENT, 
 LLC, a Delaware limited liability company 
  
  
  
 By:
                                        
                                        
                
  
 Its:
                                        
                                        
               
  
  

 S-1 

 EXHIBIT A 
  
 Stock Power 
  
 FOR VALUE RECEIVED and pursuant to that certain Restricted Stock Award Agreement dated as of
            , by and between Luminent Mortgage Capital, Inc., a Maryland corporation (the “Company”), and Seneca Capital Management, LLC, a Delaware limited liability
company (the “Manager”), the Manager hereby sells, assigns and transfers to the Company an aggregate              shares of common stock of the Company, standing in the
Manager’s name on the books of the Company and represented by stock certificate number(s)
                                        
         to which this instrument is attached, and hereby irrevocably constitutes and appoints
                                        
         as its attorney in fact and agent to transfer such shares on the books of the Company, with full power of substitution in the premises. 
  
 Dated              
  
                                       
                                        
                          
 Signature 
  
                                       
                                        
                          
 Print Name 
  
 (Instruction: Please do
not fill in any blanks other than the signature line. The purpose of the assignment is to enable the Company to exercise its rights to reacquire the shares in the circumstances provided for in the Restricted Stock Award Agreement without requiring
additional signatures on the part of the Individual.) 
  

 1Form of Warrent to Purchase

 Exhibit 4.4 
  

NEITHER THESE SECURITIES NOR THE SECURITIES FOR WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE STATE SECURITIES OR BLUE SKY LAWS.

  
 CURON MEDICAL, INC. 
  
 WARRANT 
  

			
		
	 Warrant No. 2004W[]
	 	Dated: February 6, 2004

  
 Curon Medical, Inc. a
Delaware corporation (the “Company”), hereby certifies that, for value received, [Name of Holder] or its registered assigns (the “Holder”), is entitled to purchase from the Company up to a total of
[            ]1 shares of common stock, $0.001 par value
per share (the “Common Stock”), of the Company (each such share, a “Warrant Share” and all such shares, the “Warrant Shares”) at an exercise price equal to $4.71 per share (as adjusted from time to
time as provided in Section 9, the “Exercise Price”), at any time and from time to time from and after the date hereof and through and including the date that is five years from the date of issuance hereof (the
“Expiration Date”), and subject to the following terms and conditions. This Warrant (this “Warrant”) is one of a series of similar warrants issued pursuant to that certain Securities Purchase Agreement, dated as of
the date hereof, by and among the Company and the Purchasers identified therein (the “Purchase Agreement”). All such warrants are referred to herein, collectively, as the “Warrants.” 
  
 1. Definitions. In addition to the terms defined elsewhere in this
Warrant, capitalized terms that are not otherwise defined herein have the meanings given to such terms in the Purchase Agreement. 
  
 2. Registration of Warrant. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the
“Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any
distribution to the Holder, and for all other purposes, absent actual notice to the contrary. 
  

	1	22.5% warrant coverage 

  

 3. Registration of Transfers. The Company shall register the transfer of any portion of this
Warrant in the Warrant Register, upon surrender of this Warrant, with the Form of Assignment attached hereto duly completed and signed, to the Transfer Agent or to the Company at its address specified herein. Upon any such registration or transfer,
a new warrant to purchase Common Stock, in substantially the form of this Warrant (any such new warrant, a “New Warrant”), evidencing the portion of this Warrant so transferred shall be issued to the transferee and a New Warrant
evidencing the remaining portion of this Warrant not so transferred, if any, shall be issued to the transferring Holder. The acceptance of the New Warrant by the transferee thereof shall be deemed the acceptance by such transferee of all of the
rights and obligations of a holder of a Warrant. 
  
 4.
Exercise and Duration of Warrants. 
  
 (a)
This Warrant shall be exercisable by the registered Holder at any time and from time to time on or after August 6, 2004 (the “Effective Date”) to and including the Expiration Date. At 6:30 P.M., New York City time on the Expiration
Date, the portion of this Warrant not exercised prior thereto shall be and become void and of no value; provided that, if the average of the Closing Prices for the five Trading Days immediately prior to (but not including) the Expiration Date
exceeds the Exercise Price on the Expiration Date, then this Warrant shall be deemed to have been exercised in full (to the extent not previously exercised) on a “cashless exercise” basis at 6:30 P.M. New York City time on the Expiration
Date if a “cashless exercise” may occur at such time pursuant to Section 10 below. Notwithstanding anything to the contrary herein, the Expiration Date shall be extended for each day that the Registration Statement is not effective during
the period from the Effective Date through and including February 6, 2008. 
  
 (b) A Holder may exercise this Warrant by delivering to the Company (i) an exercise notice, in the form attached hereto (the “Exercise Notice”), appropriately completed and duly signed, and (ii)
payment of the Exercise Price for the number of Warrant Shares as to which this Warrant is being exercised (which may take the form of a “cashless exercise” if so indicated in the Exercise Notice and if a cashless exercise may occur at
such time pursuant to Section 10 below), and the date such items are delivered to the Company (as determined in accordance with the notice provisions hereof) is an “Exercise Date.” The Holder shall not be required to deliver the
original Warrant in order to effect an exercise hereunder. Execution and delivery of the Exercise Notice shall have the same effect as cancellation of the original Warrant and issuance of a New Warrant evidencing the right to purchase the remaining
number of Warrant Shares. 
  
 (c) On or after
August 6, 2007 (the “Company Exercise Triggering Date”) the Company shall have the right, on one occasion in its sole discretion and subject to provisions hereof, to require that the outstanding Warrants be exercised, (the
“Company’s Exercise Election”), at the applicable Exercise Price; provided that the Conditions to Exercise at the Company’s Election (as set forth below) are satisfied as of the Company’s Election Exercise Date (as
defined below) or waived by the holder. The Company shall exercise its right to Company’s Exercise Election by providing the holder and each other each holder of Warrants written notice (“Company’s Exercise Election
Notice”) by facsimile and overnight courier; provided, however, that the Company may not deliver more than one Company’s Exercise Election Notice hereunder. The date on which the holder actually receives the
Company’s Exercise Election 

  

 2 

 
Notice is referred to herein as the “Company’s Exercise Election Notice Date.” The Company’s Exercise Election Notice shall
indicate the date selected by the Company for exercise (the “Company’s Election Exercise Date”), which date shall be not less than 10 Trading Days or more than 60 Trading Days after the Company’s Exercise Election Notice
Date, and the number of outstanding Warrants the Company is electing to be subject to the Company’s Exercise Election (the “Company Exercise Number”). Subject to the satisfaction of all the conditions of this Section, on the
Company’s Election Exercise Date the Holder will be deemed to have submitted an Exercise Notice in accordance with this Warrant for all of the Company Exercise Number. “Conditions to Exercise At The Company’s Election”
means the following conditions: (i) on each day during the period beginning on the date which is 30 days prior to the date of the Company’s Exercise Election Notice Date and ending on and including the Company’s Election Exercise Date (the
“Measuring Period”), the Registration Statement shall be effective and available for the sale of all of the Registrable Securities required to be included in such Registration Statement and there shall not have been any Events (as
defined in the Purchase Agreement); (ii) on each day during the Measuring Period, the Common Stock is designated for quotation on the Trading Market and shall not have been suspended from trading on such market or exchange (other than suspensions of
not more than one day and occurring prior to the Company’s Exercise Election Notice Date due to business announcements by the Company) nor shall delisting or suspension by such exchange or market been threatened or pending either (A) in writing
by such exchange or market or (B) by falling below the minimum listing maintenance requirements of such exchange or market; (iii) during the Measuring Period there shall not have occurred the public announcement of a pending, proposed or intended
Fundamental Transaction, unless such pending, proposed or intended Fundamental Transaction has been terminated, abandoned or consummated and the Company has publicly announced such termination, abandonment or consummation of such Fundamental
Transaction; (iv) during the Measuring Period, the Company shall have delivered Warrant Shares upon exercise of the Warrants to the holders on a timely basis as set forth herein,; and (v) the Closing Price of the Common Stock for any fifteen (15)
Trading Days out of any thirty (30) consecutive Trading Days occurring after the Company Exercise Triggering Date and immediately prior to the date of the Company’s Exercise Election Notice is at or above 175% of the Exercise Price on the date
of initial issuance of this Warrant (subject to adjustment for stock splits, stock dividends, recapitalizations, combinations, reverse stock splits or other similar events). Notwithstanding the above, any holder of Warrants may exercise such
Warrants into Common Stock pursuant hereto on or prior to the date immediately preceding the Company’s Election Exercise Date. In the event the Holder delivers any Exercise Notice(s) to the Company prior to the Company’s Election Exercise
Date, then the aggregate number of Warrant Shares issued or issuable pursuant to such Exercise Notice(s) shall be deducted from the Company Exercise Number. 
  
 5. Delivery of Warrant Shares. 
  
 (a) Upon exercise of this Warrant, the Company shall promptly (but in no event later than three Trading Days
after the Exercise Date) issue or cause to be issued and cause to be delivered to or upon the written order of the Holder and in such name or names as the Holder may designate, a certificate for the Warrant Shares issuable upon such exercise, with
or without legends in accordance with Section 4.1 of the Purchase Agreement. The Holder, or any Person so designated by the Holder to receive Warrant Shares, shall be deemed to have become holder of record of such Warrant Shares as of the Exercise
Date. The Company shall, upon 

  

 3 

 
request of the Holder, use its reasonable efforts to deliver Warrant Shares, to the extent such warrant shares are not “restricted securities”
within the meaning of Rule 144 of the Securities Act, hereunder electronically through the Depository Trust Corporation or another established clearing corporation performing similar functions. 
  
 (b) This Warrant is exercisable, either in its entirety or,
from time to time, for a portion of the number of Warrant Shares. Upon surrender of this Warrant following one or more partial exercises, the Company shall issue or cause to be issued, at its expense, a New Warrant evidencing the right to purchase
the remaining number of Warrant Shares. 
  
 (c)
In addition to any other rights available to a Holder, if the Company fails to deliver or cause to be delivered to the Holder a certificate representing Warrant Shares by the third Trading Day after the date on which delivery of such certificate is
required by this Warrant, and if after such third Trading Day the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares that the Holder
anticipated receiving from the Company (a “Buy-In”), then the Company shall, within three Trading Days after the Holder’s request and in the Holder’s discretion, either (i) pay cash to the Holder in an amount equal to the
Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased (the “Buy-In Price”), at which point the Company’s obligation to deliver such certificate (and to issue
such Common Stock) shall terminate, or (ii) promptly honor its obligation to deliver to the Holder a certificate or certificates representing such Common Stock and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price
over the product of (A) such number of shares of Common Stock, times (B) the Closing Price on the date of the event giving rise to the Company’s obligation to deliver such certificate. 
  
 (d) The Company’s obligations to issue and deliver
Warrant Shares in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment
against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other Person of any obligation to the Company or any violation or alleged
violation of law by the Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such obligation of the Company to the Holder in connection with the issuance of Warrant Shares. Nothing herein shall limit a
Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver
certificates representing shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof. 
  
 6. Charges, Taxes and Expenses. Issuance and delivery of certificates for shares of Common Stock upon exercise of this Warrant shall be made
without charge to the Holder for any issue or transfer tax, withholding tax, transfer agent fee or other incidental tax or expense in respect of the issuance of such certificates, all of which taxes and expenses shall be paid by the Company;
provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the registration of any certificates for Warrant Shares or Warrants in a name other than that of the Holder or an
Affiliate thereof. The Holder 

  

 4 

 
shall be responsible for all other tax liability that may arise as a result of holding or transferring this Warrant or receiving Warrant Shares upon exercise
hereof. 
  
 7. Replacement of Warrant. If this Warrant is
mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation hereof, or in lieu of and substitution for this Warrant, a New Warrant, but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft or destruction and customary and reasonable indemnity, if requested. Applicants for a New Warrant under such circumstances shall also comply with such other reasonable regulations and
procedures and pay such other reasonable third-party costs as the Company may prescribe. 
  
 8. Reservation of Warrant Shares. The Company covenants that it will at all times reserve and keep available out of the aggregate of its authorized but unissued and otherwise unreserved Common Stock, solely for
the purpose of enabling it to issue Warrant Shares upon exercise of this Warrant as herein provided, the number of Warrant Shares which are then issuable and deliverable upon the exercise of this entire Warrant, free from preemptive rights or any
other contingent purchase rights of persons other than the Holder (taking into account the adjustments and restrictions of Section 9). The Company covenants that all Warrant Shares so issuable and deliverable shall, upon issuance and the
payment of the applicable Exercise Price in accordance with the terms hereof, be duly and validly authorized, issued and fully paid and nonassessable. The Company will take all such action as may be necessary to assure that such shares of Common
Stock may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of any securities exchange or automated quotation system upon which the Common Stock may be listed. 
  
 9. Certain Adjustments. The Exercise Price and number of Warrant
Shares issuable upon exercise of this Warrant are subject to adjustment from time to time as set forth in this Section 9. 
  
 (a) Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding, (i) pays a stock dividend on its
Common Stock or otherwise makes a distribution on any class of capital stock that is payable in shares of Common Stock, (ii) subdivides outstanding shares of Common Stock into a larger number of shares, or (iii) combines outstanding shares of Common
Stock into a smaller number of shares, then in each such case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock outstanding immediately before such event and of which the
denominator shall be the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to clause (i) of this paragraph shall become effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution, and any adjustment pursuant to clause (ii) or (iii) of this paragraph shall become effective immediately after the effective date of such subdivision or combination. 
  
 (b) Pro Rata Distributions. If the Company, at any
time while this Warrant is outstanding, distributes to holders of Common Stock (i) evidences of its indebtedness, (ii) any security (other than a distribution of Common Stock covered by the preceding paragraph), (iii) rights or warrants to subscribe
for or purchase any security, or (iv) any other asset (in each case, “Distributed Property”), then in each such case the Exercise Price in effect immediately 

  

 5 

 
prior to the record date fixed for determination of stockholders entitled to receive such distribution shall be adjusted (effective on such record date) to
equal the product of such Exercise Price times a fraction of which the denominator shall be the average of the Closing Prices for the five Trading Days immediately prior to (but not including) such record date for a share of common stock (the
“Average Closing Price”) and of which the numerator shall be such Average Closing Price less the then fair market value of the Distributed Property distributed in respect of one outstanding share of Common Stock, as determined by the
Company’s independent certified public accountants that regularly examine the financial statements of the Company (an “Appraiser”). In such event, the Holder, after receipt of the determination by the Appraiser, shall have the
right to select an additional appraiser (which shall be a nationally recognized accounting firm), in which case such fair market value shall be deemed to equal the average of the values determined by each of the Appraiser and such appraiser. As an
alternative to the foregoing adjustment to the Exercise Price, at the request of the Holder delivered before the 90th day after such record date, the Company will deliver to the Holder, within five Trading Days after such request (or, if later, on
the effective date of such distribution), the Distributed Property that the Holder would have been entitled to receive in respect of the Warrant Shares for which this Warrant could have been exercised immediately prior to such record date. If such
Distributed Property is not delivered to the Holder pursuant to the preceding sentence, then upon expiration of or any exercise of the Warrant that occurs after such record date, the Holder shall remain entitled to receive, in addition to the
Warrant Shares otherwise issuable upon such exercise (if applicable), such Distributed Property. 
  
 (c) Fundamental Transactions. If, at any time while this Warrant is outstanding, (i) the Company effects any merger or
consolidation of the Company with or into another Person, (ii) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions, (iii) any tender offer or exchange offer (whether by the Company or
another Person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, or (iv) the Company effects any reclassification of the Common Stock or any compulsory
share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (other than as a result of a subdivision or combination of shares of Common Stock covered by Section 9(a) above) (in
any such case, a “Fundamental Transaction”), then the Holder shall have the right thereafter to receive, upon exercise of this Warrant, the same amount and kind of securities, cash or property as it would have been entitled to
receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of the number of Warrant Shares then issuable upon exercise in full of this Warrant (the “Alternate
Consideration”). The aggregate Exercise Price for this Warrant will not be affected by any such Fundamental Transaction, but the Company shall apportion such aggregate Exercise Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be
given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. At the Holder’s request, any successor to the Company or surviving entity in such Fundamental
Transaction shall issue to the Holder a new warrant consistent with the foregoing provisions and evidencing the Holder’s right to purchase the Alternate Consideration for the aggregate Exercise Price upon exercise thereof. The terms of any

  

 6 

 
agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring any such successor or surviving entity to comply with the
provisions of this paragraph (c) and insuring that the Warrant (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction. If any Fundamental Transaction that is consummated
after the second anniversary of the date hereof constitutes or results in a Change of Control, and the cash consideration to be received by the Holder from the Fundamental Transaction (if the Holder had exercised the Warrant in accordance with the
terms hereof) is not greater than or equal to 30% over the Exercise Price, then at the request of the Holder delivered before the 30th day after such Fundamental Transaction, the Company (or any such successor or surviving entity) will purchase the
Warrant from the Holder for a purchase price, payable in cash within five Trading Days after such request (or, if later, on the effective date of the Fundamental Transaction), equal to the Black-Scholes value (assuming 55% volatility for the purpose
of such calculation) of the remaining unexercised portion of this Warrant on the date of such request. 
  
 (d) Subsequent Equity Sales. 
  
 (i) If, at any time prior to the second year anniversary of the date hereof, and while this Warrant is outstanding, the Company issues
additional shares, other than Excluded Stock (as defined in the Purchase Agreement) of Common Stock or rights, warrants, options or other securities or debt convertible, exercisable or exchangeable for shares of Common Stock or otherwise entitling
any Person to acquire shares of Common Stock (collectively, “Common Stock Equivalents”) at an effective net price to the Company per share of Common Stock (the “Effective Price”) less than the Exercise Price (as
adjusted hereunder to such date) (a “Dilutive Issuance”), then concurrent with such Dilutive Issuance the Exercise Price shall be reduced to equal the greater of (A) the Effective Price or (B) the Closing Price of the Company’s
Common Stock on the date of issuance hereof. If at any time on or after the second year anniversary of the date hereof and while this Warrant is outstanding, the Company issues Common Stock or Common Stock Equivalents (other than Excluded Stock) in
a Dilutive Issuance, then concurrent with such Dilutive Issuance, the Exercise Price shall be reduced to a price equal to the greater of (a) the Closing Price of the Company’s Common Stock on the date of issuance hereof or (b) the product of
(A) the Exercise Price prior to such Dilutive Issuance and (B) the quotient determined by dividing (1) the sum of (I) the product derived by multiplying the Exercise Price immediately prior to such Dilutive Issuance and the number of shares of
Common Stock outstanding immediately prior to such Dilutive Issuance plus (II) the consideration, if any, received by the Company upon such Dilutive Issuance, by (2) the product derived by multiplying (I) the Exercise Price prior to such Dilutive
Issuance by (II) the Deemed Number immediately after such Dilutive Issuance. For purposes of this paragraph, and calculating the adjustment for any Dilutive Issuance hereunder, the “Deemed Number” shall equal the number of shares of Common
Stock outstanding immediately after such Dilutive Issuance plus the maximum number of shares of Common Stock potentially issuable upon the conversion, exercise or exchange of any Common Stock Equivalents issued in such Dilutive Issuance. For
purposes of this paragraph, in connection with any issuance of any Common Stock Equivalents, (X) the Effective Price applicable to such Common Stock shall equal the minimum dollar value of consideration payable to the Company to purchase such Common
Stock Equivalents and to convert, exercise or exchange them into Common Stock (net of any discounts, fees, commissions and other expenses), divided by the Deemed Number, and (Y) no further adjustment shall be made to the 

  

 7 

 
Exercise Price upon the actual issuance of Common Stock upon conversion, exercise or exchange of such Common Stock Equivalents. 
  
 (ii) If, at any time while this Warrant is outstanding, the
Company issues Common Stock Equivalents with an Effective Price or a number of underlying shares that floats or resets or otherwise varies or is subject to adjustment based (directly or indirectly) on market prices of the Common Stock (a
“Floating Price Security”), then for purposes of applying the preceding paragraph in connection with any subsequent exercise, the Effective Price will be determined separately on each Exercise Date and will be deemed to equal the
lowest Effective Price at which any holder of such Floating Price Security is entitled to acquire Common Stock on such Exercise Date (regardless of whether any such holder actually acquires any shares on such date). 
  
 (e) Number of Warrant Shares. Simultaneously with any
adjustment to the Exercise Price pursuant to paragraphs (a), (b) or (d) of this Section, the number of Warrant Shares that may be purchased upon exercise of this Warrant shall be increased or decreased proportionately, so that after such adjustment
the aggregate Exercise Price payable hereunder for the increased or decreased number of Warrant Shares shall be the same as the aggregate Exercise Price in effect immediately prior to such adjustment. 
  
 (f) Calculations. All calculations under this
Section 9 shall be made to the nearest cent or the nearest 1/100th of a share, as applicable. The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the Company, and
the disposition of any such shares shall be considered an issue or sale of Common Stock. 
  
 (g) Notice of Adjustments. Upon the occurrence of each adjustment pursuant to this Section 9, the Company at its expense
will promptly compute such adjustment in accordance with the terms of this Warrant and prepare a certificate setting forth such adjustment, including a statement of the adjusted Exercise Price and adjusted number or type of Warrant Shares or other
securities issuable upon exercise of this Warrant (as applicable), describing the transactions giving rise to such adjustments and showing in detail the facts upon which such adjustment is based. Upon written request, the Company will promptly
deliver a copy of each such certificate to the Holder and to the Company’s Transfer Agent. 
  
 (h) Notice of Corporate Events. If the Company (i) declares a dividend or any other distribution of cash, securities or other
property in respect of its Common Stock, including without limitation any granting of rights or warrants to subscribe for or purchase any capital stock of the Company or any Subsidiary, (ii) authorizes or approves, enters into any agreement
contemplating or solicits stockholder approval for any Fundamental Transaction or (iii) authorizes the voluntary dissolution, liquidation or winding up of the affairs of the Company, then the Company shall deliver to the Holder a notice describing
the material terms and conditions of such transaction, at least 20 calendar days prior to the applicable record or effective date on which a Person would need to hold Common Stock in order to participate in or vote with respect to such transaction,
and the Company will take all steps reasonably necessary in order to insure that the Holder is given the practical opportunity to exercise this Warrant prior to such time so as to participate in or vote with respect to such transaction; provided,
however, that the 

  

 8 

 
failure to deliver such notice or any defect therein shall not affect the validity of the corporate action required to be described in such notice.

  
 10. Payment of Exercise Price. The Holder shall pay the
Exercise Price in immediately available funds; provided, however, if the Registration Statement did not become effective on or before the Effective Date and is not continuously effective through the Expiration Date, the Holder may satisfy its
obligation to pay the Exercise Price through a “cashless exercise,” in which event the Company shall issue to the Holder the number of Warrant Shares determined as follows: 
  

			
	 	  	X = Y [(A-B)/A]
		
	 where:
	  	 
		
	 	  	X = the number of Warrant Shares to be issued to the Holder.
		
	 	  	Y = the number of Warrant Shares with respect to which this Warrant is being exercised.
		
	 	  	A = the average of the Closing Prices for the five Trading Days immediately prior to (but not including) the Exercise Date.
		
	 	  	B = the Exercise Price.

  
 For
purposes of Rule 144 promulgated under the Securities Act, it is intended, understood and acknowledged that the Warrant Shares issued in a cashless exercise transaction shall be deemed to have been acquired by the Holder, and the holding period for
the Warrant Shares shall be deemed to have commenced, on the date this Warrant was originally issued pursuant to the Purchase Agreement. 
  
 11. Limitation on Exercise. (a) Notwithstanding anything to the contrary contained herein, the number of shares of Common Stock that may be
acquired by the Holder upon any exercise of this Warrant (or otherwise in respect hereof) shall be limited to the extent necessary to insure that, following such exercise (or other issuance), the total number of shares of Common Stock then
beneficially owned by such Holder and its Affiliates and any other Persons whose beneficial ownership of Common Stock would be aggregated with the Holder’s for purposes of Section 13(d) of the Exchange Act, does not exceed 4.999% (the
“Maximum Percentage”) of the total number of issued and outstanding shares of Common Stock (including for such purpose the shares of Common Stock issuable upon such exercise). For such purposes, beneficial ownership shall be
determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. Each delivery of an Exercise Notice hereunder will constitute a representation by the Holder that it has evaluated the limitation
set forth in this paragraph and determined that issuance of the full number of Warrant Shares requested in such Exercise Notice is permitted under this paragraph. The Company’s obligation to issue shares of Common Stock in excess of the
limitation referred to in this Section shall be suspended (and shall not terminate or expire notwithstanding any contrary provisions hereof) until such time, if any, as such shares of Common Stock may be issued in compliance with such limitation. By
written notice to the Company, the Holder may waive the provisions of this Section or increase 

  

 9 

 
or decrease the Maximum Percentage to any other percentage specified in such notice, but (i) any such waiver or increase will not be effective until the 61st
day after such notice is delivered to the Company, and (ii) any such waiver or increase or decrease will apply only to the Holder and not to any other holder of Warrants. 
  
 (b) The Company shall not be obligated to issue any shares of Common Stock upon exercise of this Warrant if
the issuance of such shares of Common Stock (individually or together with all other shares of Common Stock issued or issuable now or in the future pursuant to any other securities and including the Common Stock issued pursuant to the Purchase
Agreement) would exceed that number of shares of Common Stock which the Company may issue without triggering the stockholder approval requirements of the Trading Market (the “Issuable Maximum”), 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 Trading Market and in accordance with applicable law for issuances of Common Stock in excess of the threshold amount in such
rule 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 holders of the Warrants representing at least a majority of the shares of Common
Stock underlying the Warrants then outstanding. If, at the time any Holder requests an exercise of any of the Warrants, the Actual Minimum (excluding any shares issued or issuable at an effective purchase price in excess of the Closing Price on the
Trading Day immediately preceding the Closing Date) exceeds the Issuable Maximum (and if the Company has not previously obtained the required stockholder approval), then the Company shall issue to the Holder requesting such exercise a number of
shares of Common Stock not exceeding such Holder’s pro-rata portion of the Issuable Maximum (based on such Holder’s share (vis-à-vis other Holders) of the aggregate purchase price paid under the Purchase Agreement and taking into
account any Warrant Shares previously issued to such Holder). For the purposes hereof, “Actual Minimum” shall mean, as of any date, the maximum aggregate number of shares of Common Stock then issued or potentially issuable in the
future pursuant to the Transaction Documents, including any Underlying Shares issuable upon exercise in full of all Warrants, ignoring any limits on the number of shares of Common Stock that may be owned by a Holder at any one time. 
  
 (c) In the event that any Holder’s receipt of shares of
Common Stock upon exercise of this Warrant is restricted based on the Issuable Maximum (the “Exercise Event”), the Company shall within five Trading Days after such Exercise Event, pay cash to such Holder, as liquidated damages and
not as a penalty, in an amount equal to the Black-Scholes value of the unexercisable portion of this Warrant assuming the limitations in Section 11(b) were not applicable. 
  
 12. Fractional Shares. The Company shall not be required to issue or cause to be issued fractional Warrant Shares on
the exercise of this Warrant. If any fraction of a Warrant Share would, except for the provisions of this Section, be issuable upon exercise of this Warrant, the number of Warrant Shares to be issued will be rounded down to the nearest whole share
and the remaining fractional amount shall be paid in cash. 
  
 13.
Notices. Any and all notices or other communications or deliveries hereunder (including without limitation any Exercise Notice) shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if
such notice or communication is 

  

 10 

 
delivered via facsimile at the facsimile number specified in this Section prior to 6:30 p.m. (New York City time) on a Trading Day, (ii) the next Trading Day
after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section on a day that is not a Trading Day or later than 6:30 p.m. (New York City time) on any Trading Day, (iii)
the Trading Day following the date of mailing, if sent by nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. The address for such notices or communications shall be
as set forth in the Purchase Agreement. 
  
 14. Warrant
Agent. The Company shall serve as warrant agent under this Warrant. Upon 30 days’ notice to the Holder, the Company may appoint a new warrant agent. Any corporation into which the Company or any new warrant agent may be merged or any
corporation resulting from any consolidation to which the Company or any new warrant agent shall be a party or any corporation to which the Company or any new warrant agent transfers substantially all of its corporate trust or stockholders services
business shall be a successor warrant agent under this Warrant without any further act. Any such successor warrant agent shall promptly cause notice of its succession as warrant agent to be mailed (by first class mail, postage prepaid) to the Holder
at the Holder’s last address as shown on the Warrant Register. 
  
 15. Miscellaneous. 
  
 (a)
Subject to the restrictions on transfer set forth on the first page hereof, this Warrant may be assigned by the Holder. This Warrant may not be assigned by the Company except to a successor in the event of a Fundamental Transaction. This Warrant
shall be binding on and inure to the benefit of the parties hereto and their respective successors and assigns. Subject to the preceding sentence, nothing in this Warrant shall be construed to give to any Person other than the Company and the Holder
any legal or equitable right, remedy or cause of action under this Warrant. This Warrant may be amended only in writing signed by the Company and the Holder and their successors and assigns; provided, however, that any amendments, modifications or
supplements to Sections 9(d) and 11(c) require the written consent of a majority of all of the holders of the warrants issued pursuant to the Purchase Agreement, including the consent of any holder holding 25% of the warrants issued pursuant to the
Purchase Agreement. 
  
 (b) The Company will not,
by amendment of its governing documents or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, 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 against impairment.
Without limiting the generality of the foregoing, the Company (i) will not increase the par value of any Warrant Shares above the amount payable therefor on such exercise, (ii) will take all such action as may be reasonably necessary or appropriate
in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares on the exercise of this Warrant, and (iii) will not close its stockholder books or records in any manner which interferes with the timely exercise of
this Warrant. 
  

 11 

 (c) GOVERNING LAW; VENUE;
WAIVER OF JURY TRIAL. ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY,
ENFORCEMENT AND INTERPRETATION OF THIS WARRANT SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK. EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION
OF THE STATE AND FEDERAL COURTS SITTING IN THE CITY OF NEW
YORK, BOROUGH OF MANHATTAN, FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER
OR IN CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR
DISCUSSED HEREIN (INCLUDING WITH RESPECT TO THE ENFORCEMENT OF ANY OF
THE TRANSACTION DOCUMENTS), AND HEREBY IRREVOCABLY WAIVES, AND AGREES NOT TO
ASSERT IN ANY SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS
NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, THAT
SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER. EACH PARTY HEREBY IRREVOCABLY
WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED
IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF
VIA REGISTERED OR CERTIFIED MAIL OR OVERNIGHT DELIVERY (WITH EVIDENCE OF
DELIVERY) TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES TO
IT UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE
GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED
HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO
SERVE PROCESS IN ANY MANNER PERMITTED BY LAW. THE COMPANY HEREBY
WAIVES ALL RIGHTS TO A TRIAL BY JURY. 
  

(d) The headings herein are for convenience only, do not constitute a part of this Warrant and shall not be deemed to limit or affect
any of the provisions hereof. 
  
 (e) In case any
one or more of the provisions of this Warrant shall be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Warrant shall not in any way be affected or impaired thereby and the
parties will attempt in good faith to agree upon a valid and enforceable provision which shall be a commercially reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Warrant. 
  
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 SIGNATURE PAGE FOLLOWS] 
  

 12 

 IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its authorized officer as
of the date first indicated above. 
  

			
	CURON MEDICAL, INC.
		
	By:	 	 
	 	 	

	 Name:
	 	Larry C. Heaton, II
	 Title:
	 	President and Chief Executive Officer

  

 13 

 FORM OF EXERCISE NOTICE 
  
 (To be executed by the Holder to exercise the right to purchase shares of Common Stock under the foregoing Warrant) 
  
 To: CURON MEDICAL, INC. 
  
 The undersigned is the Holder of Warrant No.
                     (the “Warrant”) issued by Curon Medical, Inc., a Delaware corporation (the “Company”).
Capitalized terms used herein and not otherwise defined have the respective meanings set forth in the Warrant. 
  

	1.	The Holder is an “accredited investor” as defined in Regulation D under the Securities Act. 

  

	2.	The Warrant is currently exercisable to purchase a total of
                     Warrant Shares. 

  

	3.	The undersigned Holder hereby exercises its right to purchase
                     Warrant Shares pursuant to the Warrant. 

  

	4.	The Holder intends that payment of the Exercise Price shall be made as (check one): 

  
          “Cash Exercise” under Section 10 
  
          “Cashless
Exercise” under Section 10 (if permitted) 
  

	5.	If the holder has elected a Cash Exercise, the holder shall pay the sum of
$                     to the Company in accordance with the terms of the Warrant. 

  

	6.	Pursuant to this exercise, the Company shall deliver to the holder
                     Warrant Shares in accordance with the terms of the Warrant. 

  

	7.	Following this exercise, the Warrant shall be exercisable to purchase a total of
                     Warrant Shares. 

  

					
	 Dated:                     ,
        
	 	 Name of Holder:

			
	  	 	 (Print)
	 	  
	 	 	 	 	

			
	  	 	 By:
	 	  
	 	 	 	 	

	  	 	 Name:
	 	  
	 	 	 	 	

	  	 	 Title:
	 	  
	 	 	 	 	

	  	 	 	 	(Signature must conform in all respects to name of holder as specified on the face of the Warrant)

  

 FORM OF ASSIGNMENT 
  
 [To be completed and signed only upon transfer of Warrant] 
  
 FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
                     the right represented by the within Warrant to purchase
                     shares of Common Stock of Curon Medical, Inc. to which the within Warrant relates and appoints
                     attorney to transfer said right on the books of Curon Medical, Inc. with full power of substitution in the premises.

  

					
	 Dated:                     ,
        
	 	 	 	 
			
	  	 	 	 	  
	 	 	 	 	

	 	 	 	 	(Signature must conform in all respects to name of holder as specified on the face of the Warrant)
			
	 	 	 	 	 
	 	 	 	 	

	 	 	 	 	 Address of Transferee

			
	 	 	 	 	 
	 	 	 	 	

			
	 	 	 	 	 
	 	 	 	 	

	 In the presence of:

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