Document:

ex10-34.htm

Exhibit 10.34

 

FORM OF
BRYN MAWR BANK CORPORATION 

RESTRICTED STOCK UNIT AGREEMENT FOR NON-EMPLOYEE DIRECTORS

(SERVICE/PERFORMANCE-BASED)

SUBJECT TO THE AMENDED AND RESTATED 2010 LONG TERM INCENTIVE PLAN 

 

 

Grantee:               

 

Date of Grant:     [_____]

 

Total Number of RSUs:     [_____] 

 

Number of time-based RSUs:     [______] (“Time-Based RSUs”)

 

Target number of performance-based RSUs:      [______] (“Performance-Based RSUs”)

 

Service Period:     [_____] to [_____] (“Service Period”)

 

Vesting Dates for Time-Based RSU’s: [_____], [_____] and [_____]

 

 

	
Performance Goal:
	
Certain conditions and goals as determined according to Exhibit A hereto

 

 

RESTRICTED STOCK UNIT AGREEMENT (“Agreement”), dated as of the Date of Grant set forth above by and between BRYN MAWR BANK CORPORATION (the “Corporation”) and the Grantee named above (the “Grantee”). 

 

1.             The Plan. This Agreement is subject to the terms and conditions of the Amended and Restated Bryn Mawr Bank Corporation 2010 Long Term Incentive Plan (the “Plan”) as approved by the Board of Directors of the Corporation on February 27, 2015 and by the Corporation’s shareholders on April 30, 2015. Except as otherwise specified herein, all capitalized terms used in this Agreement shall have the meanings given to them in the Plan. 

 

2.             Grant of Restricted Stock Units. 

 

a.     Subject to the terms and conditions of the Plan and this Agreement, and the Grantee’s acceptance of same by execution of this Agreement, the Corporation’s Compensation Committee (“Compensation Committee”) hereby grants to the Grantee the number of Restricted Stock Units set forth under “Total Number of RSUs” above (the “RSUs”). 

 

b.     Upon vesting of the RSUs and satisfaction of all of the other terms and conditions in this Agreement, the Corporation will issue stock representing the shares underlying the vested RSUs (regardless of whether such RSUs are Time-Based RSUs or Performance-Based RSUs) as soon as practicable following the Time Vesting Date (as defined in subsection 3(a) below), in the case of the vested Time-Based RSUs, and the Performance Vesting Date (as defined in subsection 3(b) below)), in the case of the Performance-Based RSUs.

 

3.             Terms and Conditions. The Grant is subject to the following terms and conditions:

 

a.     Time-Based Requirements. The Time-Based RSUs will vest in three installments at the Time Vesting Dates (as defined below), provided that Grantee provides continuous service as a director of the Corporation through the applicable Time Vesting Date (as defined below), as follows: (a) [______] of the Time-Based RSUs will vest at [_____], (b) [______] of the Time-Based RSUs will vest at [_____], and (c) with respect to [______] of the Time-Based RSUs will vest at [_____] (each of the dates set forth in clauses (a), (b) and (c) is, as to the corresponding portion of the Time-Based RSUs, a “Time Vesting Date”). 

 

 

 

 

 

b.     Performance Goals. The Performance-Based RSUs are subject to the performance goals set forth in Exhibit A (the “Performance Goals”) and shall vest, in whole or in part, upon the Performance Vesting Date only if the Performance Goals are achieved and the Grantee has provided continuous service as a director of the Corporation through the end of the Service Period, or as otherwise provided herein. The Compensation Committee shall determine within 75 days after the last day of the Service Period whether the Performance Goals have been achieved, in whole or in part, in accordance with Exhibit A attached hereto. The value of any fractional shares will be paid to the Grantee through a separate disbursement. No vesting of Performance-Based RSUs shall be deemed to have occurred unless and until the Compensation Committee certifies in writing as to the portion of Performance Goals that have been achieved. The date on which the Compensation Committee certifies as to the achievement of the Performance Goals and the vesting of the Performance-Based RSUs is referred to in this Agreement as the “Performance Vesting Date”. 

 

c.     No Rights as a Shareholder. Grantee will have no rights or privileges of a shareholder (including but not limited to, no right to vote the shares) with respect to shares underlying RSUs until such RSUs have vested and such shares have been issued. 

 

d.     Dividend-Equivalents. At the time of issuance of shares underlying vested RSUs pursuant to subsection 2(b) above, the Corporation shall also pay to Grantee an amount equal to the aggregate amount of all dividends declared and paid by the Corporation based on dividend record dates falling between the Date of Grant and the date of issuance in accordance with the number of shares issued. The computation set forth in this subparagraph is separate and distinct from the calculations and concepts set forth on Exhibit “A” hereto and the calculations and concepts set forth on Exhibit “A” hereto have no applicability to the calculation of the amount of dividends to be paid by the Corporation pursuant to this subparagraph. 

 

e.     Holding Period. All vested RSUs will be subject to a holding period (“Holding Period”) until the earliest of:

 

	 	
i.
	
The two-year anniversary of such Time Vesting Date or Performance Vesting Date, as applicable;

 

	 	
ii.
	
The date of the Grantee’s death or Disability (as defined in section 5 below); or

 

	 	
iii.
	
The date of consummation of a Change in Control (as defined in section 7 below).

 

For purposes of clarification, once shares underlying vested RSUs have been issued and until the expiration of the applicable Holding Period, Grantee shall have all of the rights and privileges of a shareholder with respect to such shares other than the right to sell, transfer, gift, or otherwise divest himself or herself of such shares. Notwithstanding anything herein to the contrary, the Corporation may lift the Holding Period with respect to any shares underlying vested RSUs where the sale of such shares is necessary to satisfy the payment of statutory federal, state and local withholding taxes including, without limitation, social security and medicare taxes. 

 

4.             Forfeiture.

 

a.     Forfeiture. All Time-Based RSUs that have not vested at the applicable Time Vesting Date in accordance with subsection 3(a), and all Performance-Based RSUs that have not vested at the Performance Vesting Date in accordance with subsection 3(b) and Exhibit A attached hereto, shall be forfeited in their entirety. 

 

 

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b.     Forfeiture of Unvested RSUs and Payment to the Corporation for Issued Shares Resulting from Vested RSUs If Grantee Engages in Certain Activities. The provisions of this subsection 4(b) will apply to all RSUs granted to Grantee under the Plan and to any shares issued to the Grantee upon vesting of RSUs. If, at any time during the Service Period, or for a period of two (2) years after termination of Grantee’s service as a director of the Corporation for any reason, Grantee engages in any activity inimical, contrary or harmful to the interests of the Corporation including, but not limited to (A) conduct related to Grantee’s service for which either criminal or civil penalties against Grantee may be brought, (B) violation of the Corporation’s or the Bank’s policies including, without limitation, the Insider Trading Policy, Code of Business Conduct and Ethics, Code of Personal Conduct, Employee Handbook, or otherwise, (C) soliciting of any customer of the Corporation or any of its direct or indirect subsidiaries (collectively, the “Company Group”) for business which would result in such customer terminating their relationship with the Company Group; soliciting or inducing any individual who is an employee or director of the Company Group to leave the Company Group or otherwise terminate their relationship with the Company Group, (D) disclosing or using any confidential information or material concerning the Company Group, (E) breach of any agreement between the Grantee and the Company Group, or (F) participating in a hostile takeover attempt, then (x) all RSUs that have not vested effective as of the date on which Grantee engages in such activity, unless forfeited sooner by operation of another term or condition of this Agreement or the Plan, shall be forfeited in their entirety, and (y) for any shares underlying vested RSUs which have been issued to Grantee, the Grantee shall pay to the Corporation the market value of the shares on the date of issuance or the date Grantee engages in such activity, whichever is greater. The term “confidential information” as used in this Agreement includes, but is not limited to, records, documents, programs, technical data, information technology, policies, files, lists, client non-public personal information, pricing, costs, strategies, market data, statistics, business partners, customers, customer requirements, prospective customer contacts, knowledge of the Company Group’s clients, methods of operation, processes, trade secrets, methods of determination of prices, fees, financial condition, profits, sales, net income, indebtedness, potential mergers or acquisitions, or the sale of Company Group assets or subsidiaries, commercial contracts and relationships, employees, litigation (whether actual or threatened), information acquired in connection with the Grantee’s role as a director to the Company, whether through board meetings, deliberations or discussions among directors, Company Group employees or agents, or relating to board dynamics generally, including, without limitation, proprietary or confidential information of any third party who may disclose such information to the Company Group or the Grantee in the course of Company Group business, and any other information relating to the Company Group that has not been made available to the general public, as the same may exist from time to time. 

 

c.     Right of Setoff. By accepting this Agreement, Grantee consents to the deduction, to the extent permitted by law, from any amounts that the Company Group owes Grantee from time to time and the amounts Grantee owes the Corporation under subsection 4(b) above. Whether or not the Corporation elects to make any setoff in whole or in part, if the Corporation does not recover by means of setoff the full amount Grantee owes it, calculated as set forth above, Grantee agrees to immediately pay the unpaid balance to the Corporation. 

 

d.     Compensation Committee Discretion. Grantee may be released from Grantee’s obligations under subsections 4(b) and 4(c) only if the Compensation Committee, or its duly appointed agent, determines in its sole discretion that such action is in the best interest of the Corporation. 

 

5.             Death, Disability or Retirement. In the event the Grantee shall cease to be a director of the Corporation prior to the expiration of the Service Period by reason of: (a) Retirement; (b) a transfer of the Grantee in a spinoff; (c) death; or (d) total and permanent disability as determined by the Compensation Committee (“Disability”), then the vesting requirements on a fraction of Grantee’s RSUs will be deemed to have been fulfilled. With respect to the Time-Based RSUs, the vested portion shall be calculated as follows: the number of Time-Based RSUs granted multiplied by a fraction, the numerator of which is the number of full calendar months that elapsed in the Service Period prior to the death, Disability, Retirement or transfer in a spinoff of the Grantee and the denominator of which is the total number of full calendar months in the Service Period. With respect to the Performance-Based RSUs, the vested portion shall be calculated as follows: the number of Performance-Based RSUs that would have vested in accordance with Section 3(b) had Grantee remained a director through the Service Period, multiplied by a fraction, the numerator of which is the number of full calendar months that elapsed in the Service Period prior to the death, Disability, Retirement or transfer in a spinoff of the Grantee and the denominator of which is the total number of full calendar months in the Service Period. Shares underlying all Time-Based RSUs that vest in accordance with the terms of this Section 5 shall be issued as soon as practicable following such vesting and Performance-Based RSUs that vest in accordance with the terms of this Section 5 shall be issued as soon as practicable following the Performance Vesting Date. Any remaining RSUs which have not vested as provided in this section 5 shall be forfeited. 

 

6.             Termination. If the Grantee ceases to be a director of the Corporation prior to the expiration of the Service Period for any reason other than as described in section 5 above, any RSUs that have not yet vested at the date of termination shall automatically be forfeited.

 

7.             Change in Control. In the event of a Change in Control, Grantee’s outstanding RSUs will be deemed to have vested and any shares underlying such RSUs not previously issued shall be issued within ten days after the Change in Control. For purposes of clarification, in such a situation, all Time-Based RSUs will vest, and Performance-Based RSUs will vest at the target levels as described in Exhibit A hereto. A “Change in Control” shall be deemed to have taken place if (i) any Person (as defined below) other than an entity in the Company Group or an employee benefit plan of the Company Group (or any Person organized, appointed or established by the Company Group for or pursuant to the terms of any such employee benefit plan), together with all affiliates and associates of such Person, becomes the beneficial owner in the aggregate of 25% or more of the common stock of the Corporation then outstanding, or (ii) during any twenty-four month period, individuals who at the beginning of such period constituted the Board of Directors of the Corporation or The Bryn Mawr Trust Company (the “Bank”) cease, for any reason, to constitute a majority thereof, unless the election, or the nomination for election by the Corporation or the Bank’s shareholders, as the case may be, of each director who was not a director at the beginning of such period was approved by a vote of at least two-thirds of the directors in office at the time of such election or nomination, who were directors at the beginning of such period.

 

 

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8.             Non-Interference and Non-Solicitation. 

 

a.     For a period of twelve (12) months following the date Grantee ceases to be a director of the Corporation for any reason, whether voluntarily or involuntarily (the “Separation Date”), Grantee agrees not to disrupt, damage, impair or interfere with the business of the Company Group in any manner, including without limitation, by: (a) employing, engaging or soliciting any employee of the Company Group; (b) inducing or attempting to influence an employee to leave the employ of the Company Group; (c) adversely influencing or altering the relationship of any person, firm, corporation, partnership, association or other entity (“Person”) with the Company Group, whether such Person is an employee, customer, client or otherwise; or (d) directly or indirectly, individually or for any other, calling on, engaging in business with, soliciting, inducing, or attempting to solicit or induce, any Person who has been a customer, client or business referral source of the Company Group, or who has been solicited as a potential customer, client or business referral source of the Company Group, during the two (2) year period preceding the Separation Date to (x) cease doing business in whole or in part with or through the Company Group or (y) do business with any other Person which performs services or offers products materially similar to or competitive with those provided by the Company Group. 

 

b.     Grantee shall maintain confidential information (as defined in Section 4(b)) in the strictest of confidence, shall not disclose confidential information to any person outside of the Company Group, and shall not use, reproduce, disseminate, or take any other action with respect to confidential information other than in connection with Grantee’s provision of services as a director of the Corporation and for the benefit of the Company Group. Grantee shall not remove confidential information from Company Group premises unless necessary in connection with the performance of Grantee’s service, and in such event, such confidential information shall be returned or destroyed immediately upon cessation of Grantee’s service with the Company Group. The obligations of Grantee under this Section 8(b) shall apply during Grantee’s provision of services and following termination of Grantee’s provision of services, and shall survive in perpetuity.

 

c.     Grantee acknowledges and agrees that the restrictions contained in this section 8 are reasonable and necessary in order to protect the legitimate interests of the Company Group and that any violation thereof would result in irreparable injury to the Company Group. Consequently, Grantee acknowledges and agrees that, in the event of any violation thereof, the Company Group shall be authorized and entitled, without the necessity of posting a bond or other form of security, to obtain from any court of competent jurisdiction injunctive and equitable relief, as well as an equitable accounting of all profits and benefits arising out of such violation, which rights and remedies shall be cumulative and in addition to any other rights or remedies to which the Company Group may be entitled at law or in equity (including the rights of forfeiture set forth in section 4 hereof) and, in the event the Company Group is required to enforce the terms of this Agreement through court proceedings, the Company Group shall be entitled to reimbursement of all legal fees, costs and expenses incident to enforcement of any such term, in whole or in part and/or such term as may be modified by a court of competent jurisdiction. 

 

d.     If any court of competent jurisdiction construes any of the restrictive covenants set forth in this section 8, or any part thereof, to be unenforceable because of the duration, scope or geographic area covered thereby, such court shall have the power to reduce the duration, scope or geographic area of such provision and, in its reduced form, such provision shall then be enforceable and shall be enforced. 

 

9.             Change Adjustments. The Compensation Committee shall make appropriate adjustments to give effect to adjustments made in the number of shares of the Corporation’s common stock through a merger, consolidation, recapitalization, reclassification, combination, spinoff, common stock dividend, stock split or other relevant change as the Compensation Committee deems appropriate to prevent dilution or enlargement of the rights of the Grantee. Any adjustments or substitutions pursuant to this section shall meet the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and shall be final and binding upon the Grantee. 

 

10.           Compliance with Law and Regulations. The grant of RSUs and the issuance of shares underlying vested RSUs shall be subject to all applicable federal and state laws, the rules and regulations and to such approvals by any government or regulatory agency as may be required. The Corporation shall not be required to register any securities pursuant to the Securities Act of 1933, as amended, or to list such shares under the stock market or exchange on which the common stock of the Corporation may then be listed, or to take any other affirmative action in order to cause the issuance or delivery of shares underlying vested RSUs to comply with any law or regulation of any governmental authority.

 

 

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11.           Notice. Any notice which either party hereto may be required or permitted to give to the other shall be in writing, and may be delivered personally or by mail, postage prepaid, addressed as follows: to the Corporation, Attention: Corporate Secretary, at its office at 801 Lancaster Avenue, Bryn Mawr, PA 19010 or to the Grantee at her/his address on the records of the Corporation or at such other addresses as the Corporation, or Grantee, may designate in writing from time to time to the other party hereto. 

 

12.           Incorporation by Reference. This Restricted Stock Unit Award is granted pursuant and subject to the terms and conditions of the Plan, the provisions of which are incorporated herein by reference. If any provision of this Agreement conflicts with any provision of the Plan in effect on the Date of Grant, the terms of the Plan shall control. This Agreement shall not be modified after the Date of Grant except by written agreement between the Corporation and the Grantee; provided, however, that such modification shall (a) not be inconsistent with the Plan, and (b) be approved by the Committee. 

 

13.           Severability. Except as set forth in Section 8, if any one or more of the provisions contained in this Agreement are invalid, illegal or unenforceable, the other provisions of this Agreement will be construed and enforced as if the invalid, illegal or unenforceable provision had never been included. 

 

14.           Compliance with Internal Revenue Code Section 409A. It is the intention of the parties that the RSUs and the Agreement comply with the provisions of Section 409A of the Code to the extent, if any, that such provisions are applicable to the Agreement and the Agreement will be administered by the Compensation Committee in a manner consistent with this intent. If any payments or benefits may be subject to taxation under Section 409A of the Code, Grantee agrees that the Compensation Committee may, without the consent of Grantee, modify this Agreement to the extent and in the manner that the Compensation Committee deems necessary or advisable or take any other action or actions, including an amendment or action with retroactive effect that the Compensation Committee determines is necessary or appropriate to exempt any payments or benefits from the application of Section 409A or to provide such payments or benefits in the manner that complies with the provisions of Section 409A such that they will not be taxable thereunder. 

 

15.           Choice of Law. The provisions of this Agreement shall be construed in accordance with the laws of the Commonwealth of Pennsylvania, without regard to any conflict of law provision that would apply the law of another jurisdiction.

 

16.           Interpretation. The interpretation and construction or any terms or conditions of the Plan or this Agreement by the Compensation Committee shall be final and conclusive. 

 

 

IN WITNESS WHEREOF, the Corporation has caused this Agreement to be executed by a duly authorized officer, and the Grantee has hereunto set his/her hand and seal, effective as of the Date of Grant set forth above. 

 

	
 
	
BRYN MAWR BANK CORPORATION

	
 
	
 

	
 
	
 

	
 
	
 

	
 
	
By: 

	
 
	
Name: 

	
 
	
Title: 

	
 
	
 

	
 
	
 

	
 
	
(Signature of Grantee)

	
 
	
 

	
 
	
 

	
 
	
(Print Name of Grantee)

	
 
	
 

	
 
	
 

	
 
	
(Address of Grantee)

 

 

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EXHIBIT A

 

TO RESTRICTED STOCK UNIT AGREEMENT DATED AS OF [_____]

 

All of the terms and conditions of the Restricted Stock Unit Agreement dated as of [_____], (“Agreement”), to which this Exhibit is attached are incorporated herein by reference. Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Agreement.

 

Name of Grantee:____________________

 

1. Target Number of Performance-Vested Restricted Stock Units subject to vesting based on Total Shareholder Return (“TSR”): _________________

 

2. Target Number of Performance-Vested Restricted Stock Units subject to vesting based on Return on Average Equity (“ROAE”): _________________ 

 

3. Performance Goals: Except as otherwise set forth in the Award Agreement, the number of RSUs (rounded down to the nearest whole number of RSUs) that become nonforfeitable with respect to the Performance Period in accordance with the terms of the Award Agreement will be based on the Company’s relative TSR and ROAE Percentile Rank (as defined below) compared to the Peer Group (as defined below) in respect of the relevant Performance Period, as set forth in the chart below. Notwithstanding anything herein to the contrary, in the event of a Change in Control, the number of RSUs that vest shall be the greater of (i) 100% of target and (ii) the percent of target that would have been achieved based on actual TSR and ROAE Percentile Ranks calculated in accordance with the terms of this Exhibit A. 

 

	
TSR Percentile 

Rank1,2
	
Less than 25%
	
25%
	
50%
	
75% or Greater

	
ROAE 

Percentile 

Rank1
	
 

Less than 25%
	
 

25%
	
 

50%
	
 

75% or Greater

	
Number of 

RSUs Vesting 
	
0 RSUs
	
0% of target
	
100% of target
	
150% of target

 

1 If the applicable TSR or ROAE Percentile Rank is greater than 25% and less than 75% with respect to the relevant Performance Period, the number of RSUs that shall vest shall be prorated based on the actual level of performance achieved. For example, performance at the 37.5th percentile (halfway between the threshold of 25th percentile and the max of 50th percentile) for both metrics would result in 50% of target RSUs vesting (halfway between 0% at threshold and 100% at target).. 

 

2 Provided however, if the Corporation’s TSR over the Performance Period is negative, no more than 100% of the target number of RSUs subject to TSR will vest. 

 

4. For purposes of this Exhibit A, the following terms shall have the respective meanings set forth below:

 

	
 
	
a.
	
“Peer Group” means the following financial institutions:

 

[PEER GROUP LIST]

 

	 	
(1)
	
Notwithstanding the foregoing, if at any time prior to the expiration of the Performance Period a member of the Peer Group ceases to be a domestically domiciled publicly traded company on a national stock exchange or market system; or has gone private; or has reincorporated in a foreign (e.g., non-U.S.) jurisdiction, regardless of whether it is a reporting company in that or another jurisdiction; or has been acquired by another company (whether by a peer company or otherwise, but not including internal reorganizations), or has sold all or substantially all of its assets, then such member shall be immediately removed from the Peer Group. 

 

	
 
	
b.
	
“Performance Period” means (i) for measurement of ROAE, the 12-quarter period beginning [_____] and ending [_____]; and (i) for measurement of TSR, the 3-year period beginning [_____] and ending [_____].

 

 

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c.
	
“ROAE” means (a) net income applicable to the common shareholders of a company during the Performance Period, divided by (b) that company’s average common shareholders’ equity during the Performance Period (as reported in the company’s annual or quarterly report for the applicable fiscal period end) subject to adjustments for certain extraordinary or special items, in the form and manner determined in the Committee’s sole discretion and if permitted by the IRS regulations under Section 162(m) of the Internal Revenue Code of 1986, as amended, relating to the “pre-established performance goal” rules, for any: change in accounting policy; gain/loss on disposition of assets or business; charge for goodwill impairment; extraordinary legal/regulatory settlements; extraordinary market conditions; significant currency fluctuations; effects of nature or man-made disasters; hyperinflation; change in statutory tax rates/regulations; charges or costs associated with Board-approved restructurings of the Company, including but not limited to, acquisitions and mergers by the Company; results of discontinued operations held for sale after sale closing; other extraordinary, unusual or infrequently occurring items as determined under U.S. generally accepted accounting principles (“GAAP”). 

 

	
 
	
d.
	
“TSR” means, with respect to any company, the Company’s total shareholder return, which will be calculated by dividing (i) the Closing Average Share Value by (ii) the Opening Average Share Value.

 

	
 
	
e.
	
“Opening Average Share Value” means the average, over the trading days in the Opening Average Period, of the closing price of a company’s stock multiplied by the Accumulated Shares for each trading day during the Opening Average Period.

 

	
 
	
f.
	
“Opening Average Period” means the 20 trading days preceding [_____].

 

	
 
	
g.
	
“Accumulated Shares” means, solely for purposes of the calculation of TSR, for a given trading day, the sum of (i) one (1) share and (ii) a cumulative number of shares of the company’s common stock purchased with the dividends declared on a company’s common stock, assuming same day reinvestment of the dividends in the common stock of a company at the closing price on the ex-dividend date, for ex-dividend dates between the start of the Opening Average Period and the trading day.

 

	
 
	
h.
	
“Closing Average Share Value” means the average, over the trading days in the Closing Average Period, of the closing price of the company’s stock multiplied by the Accumulated Shares for each trading day during the Closing Average Period.

 

	
 
	
i.
	
“Closing Average Period” means (i) in the absence of a Change in Control, the 20 trading days preceding [_____]; or (ii) in the case of a Change in Control, the trading days during the period beginning thirty (30) calendar days prior to the Change in Control and ending on the Accelerated End Date.

 

	
 
	
j.
	
“Accelerated End Date” means the date five (5) calendar days (or such shorter period as may be established by the Compensation Committee in its sole discretion) prior to the Change in Control.

 

	
 
	
k.
	
“Percentile Rank” means the Company’s relative percentile positioning in respect of the TSR or ROAE, as applicable, of the other members of the Peer Group.

 

 

 

 -7-Exhibit
10.44

 

FORBEARANCE
EXTENSION UNDER LOAN AND SECURITY AGREEMENT

 

This
agreement (the “Forbearance Extension”) is entered into as of December 31, 2016 (such date, the “Forbearance
Extension Effective Date”) and is, inter alia, an extension of PFG’s forbearance under that certain Forbearance
under Loan and Security Agreement dated November 1, 2016 (the “Expiring Forbearance” and such date, the “Expiring
Forbearance Effective Date”), by and between Partners for Growth IV, L.P., a Delaware limited partnership with its principal
place of business at 1660 Tiburon Blvd., Suite D, Tiburon California 94920 (“PFG”) and ActiveCare, Inc., a
Delaware corporation with its principal place of business at 1365 West Business Park Drive, Suite 100, Orem, UT 84058 (“Borrower”).

 

WHEREAS,
PFG and Borrower entered into that certain Loan and Security Agreement dated as of February 19, 2016 (the “Loan Agreement”)
and certain other Security Documents (as defined below), pursuant to which PFG has made available credit to Borrower in the maximum
aggregate principal amount of $4,500,000 of which (Facility A) $929,518.43 (as of September 7, 2016) and (Facility B) $1,486,111
(as of December 31, 2016) in the aggregate of Tranche 1 and Tranche 2 of Facility is outstanding on the Forbearance Extension
Effective Date, assuming Borrower does not make the principal payment due January 1, 2017 on or prior to the Forbearance Extension
Effective Date;

 

WHEREAS,
PFG and Borrower entered into that certain Forbearance under Loan and Security Agreement dated as of September 9, 2016, pursuant
to which PFG agreed to forbear from exercising remedies under the Loan Agreement due to Borrower’s “Specified Defaults”
as defined therein until the earlier to occur of October 31, 2016 and certain therein-specified Termination Events (the “Original
Forbearance”);

 

WHEREAS,
PFG and Borrower entered into the Expiring Forbearance on the Expiring Forbearance Effective Date, pursuant to which PFG agreed
to forbear from exercising remedies under the Loan Agreement due to Borrower’s “Continuing Defaults” (as defined
therein) until the earlier to occur of December 31, 2016 and certain therein-specified Termination Events (the “Expiring
Forbearance”);

 

WHEREAS,
Borrower has notified PFG that it continues to be in default of the Loan Agreement due to the defaults inherent in the Specified
Defaults as defined in the Expiring Forbearance but for reporting periods subsequent thereto but prior to the Expiring Forbearance
Effective Date, together with failures to timely provide reports under Section 6 of the Schedules (the foregoing, the “Continuing
Defaults” under this Forbearance Extension) and PFG is willing to forbear from exercising remedies under the Loan Agreement
due to the Continuing Defaults upon the terms and conditions set forth herein;

 

WHEREAS,
Borrower has notified PFG that it continues to anticipate the consummation of the equity financing notified to PFG in connection
with the Expiring Forbearance (an equity financing expected to raise not less than the Minimum Proceeds or such lesser quantum
of proceeds as PFG agrees in its discretion may constitute as a Notified Financing for purposes of the Expiring Forbearance and
this Forbearance Extension, the “Notified Financing”);

 

WHEREAS,
Borrower has requested PFG’s consent to an increase in the amounts to which PFG consented could be paid under the Expiring
Forbearance to certain specified third parties in connection with the Notified Financing and PFG is willing to provide its consent
herein to such increased payment amounts;

 

WHEREAS,
Borrower agreed under the Expiring Forbearance to issue PFG a warrant to acquire 130,000 post-split shares of the Borrower’s
common stock (“Expiring Forbearance Warrants”) with an exercise price equal to the issue price per share in
Notified Financing and subject to a lock-up agreement executed and delivered by PFG in connection with the Expiring Forbearance;

 

     

     

    

 

WHEREAS,
in consideration of the PFG extending the term of its forbearance under this Forbearance Extension, Borrower is issuing PFG the
Forbearance Extension Warrants and the Forbearance Extension Stock, each as defined in Section 2 hereof;

 

NOW
THEREFORE, the parties hereby agree as follows:

 

1.             DESCRIPTION
OF EXISTING INDEBTEDNESS AND COLLATERAL: Borrower is indebted to PFG for Obligations pursuant to the Loan Documents, as set
forth in the Recitals. Defined terms used but not otherwise defined herein shall have the same meanings set forth in the Loan
Agreement. Repayment of the Obligations is secured by the Collateral, as described in the Loan Agreement and in an Intellectual
Property Security Agreement and other documents of even date therewith. The above-described security documents, together with
all other documents securing repayment of the Obligations, shall be referred to herein as the “Security Documents”.
Hereinafter, the Security Documents, together with all other documents evidencing or securing the Obligations are referred to
as the “Existing Loan Documents”. 

 

2.             ISSUANCE
OF FORBEARANCE EXTENSION WARRANT AND FORBEARANCE EXTENSION STOCK. Expressly subject to the consummation of the Notified Financing
and in each case on a post-split basis, Borrower shall issue to PFG and its designees promptly upon consummation of the Notified
Financing: (a) a Warrant to purchase (in the aggregate among PFG and its designees) 10,000 shares of the stock issued in the Notified
Financing, exercisable at the same issue price as such stock is sold to investors in the Notified Financing (the “Forbearance
Extension Warrants”); and (2) that number of shares as $50,000 would purchase at 80% of the at the same issue price
as such stock is sold to investors in the Notified Financing (the “Forbearance Extension Stock”). 

 

3.            CONSENTS.

 

(a)
      Conditional Consent to Special Permitted Payments. Expressly subject to (i) the consummation of the Notified Financing
with not less than the Minimum Proceeds, (ii) Borrower’s satisfaction of the conditions set forth in Section 11 (assuming
consummation of the Notified Financing), and (iii) Borrower’s payment in fact of the Special Permitted Payments on or promptly
following the consummation of the Notified Financing (assuming receipt of Minimum Proceeds), PFG hereby consents to Borrower paying
the following obligations, in each case materially as notified to PFG by electronic mail communications in connection with this
Forbearance Extension:: (1) payments to be made to holders of Borrower’s Series E Preferred Stock, (2) payment to be made
to Rapid Medical Response, LLC in payment of a promissory note in favor of such person, (3) monthly payments to be made or to
retire debt owed to, Tonaquint Inc., (4) payments for the purpose of repaying the bridge loans to which PFG consented in the Expiring
Forbearance, and (5) payment of costs associated with the Notified Financing (such payments specified in clauses (1) through (5),
the “Special Permitted Payments”). 

 

(b)
       Access to Line of Credit. PFG hereby consents to Borrower accessing the line
of credit under Schedule 1 of the Loan Agreement in accordance with its terms, provided that continued access to the line of credit
shall be subject to Borrower’s satisfaction of the conditions set forth in Section 11 of this Forbearance Extension and
its compliance with the terms of the Loan Agreement. 

 

(c)       Unspecified
Third Party Obligations. Payment of any obligations other than the Special Permitted Payments that Borrower proposes to pay
from the proceeds of the Notified Financing shall require PFG’s separate consent, which consent shall be in PFG’s
sole business discretion after considering Borrower’s disclosure of the details of all such proposed payments, provided
that PFG shall have no obligation to consider any Borrower request to pay Borrower obligations that are not Permitted Indebtedness
(as defined in the Loan Agreement). 

 

    	 	-2-	 

     

    

 

(d)       Certain
Definitions. For purposes of this Forbearance Extension: (i) “Minimum Proceeds” means Borrower’s receipt
of not less than $10,000,000 in unencumbered (other than the Lien of PFG) cash proceeds of a Notified Financing, such dollar amount
to be calculated assuming the payment and/or accounting for payment of all Special Permitted Payments and any payments to which
PFG consents under Section 3(c), above, and (ii) “promptly” in relation to payment of Special Permitted Payments means
no later than ten Business Days following the consummation of a Notified Financing providing Minimum Proceeds. 

 

(e)       Failure
to Pay Special Permitted Payments. If Borrower should fail to meet the condition specified in Section 3(a)(iii) (payment in
fact of the Special Permitted Payments upon or promptly following consummation of the Notified Financing), then any later Borrower
payment or proposed payment of such unpaid Special Permitted Payments shall require PFG’s further consent, which shall be
a matter of its sole business discretion. For the avoidance of doubt, the failure of Borrower to pay the Special Permitted Payments
upon or promptly following consummation of the Notified Financing shall not constitute an Event of Default under the Loan Agreement
or a Termination Event under this Forbearance Extension.

 

4.            Ratification
of Loan Documents; REAFFIRMATION OF OBLILGATIONS; Further Assurances.

 

(a)       Borrower
acknowledges and agrees that (i) each of the Existing Loan Documents remain in full force and effect in accordance with the original
terms, except as expressly modified hereby, (ii) the Liens granted by the Borrower to PFG under the Existing Loan Documents shall
remain in place, unimpaired by the transactions contemplated by this Forbearance Extension, and PFG’s priority with respect
thereto shall not be affected hereby or thereby, and (iii) the Existing Loan Documents shall continue to secure all Obligations
as stated therein except as expressly amended and modified by this Forbearance Extension and the Forbearance Extension Documents
(as hereinafter defined).

 

(b)       Borrower
ratifies, reaffirms, restates and incorporates by reference all of its representations, warranties, covenants, and agreements
made under the Existing Loan Documents.

 

(c)       Borrower
hereby ratifies, confirms, and reaffirms that the Obligations include, without limitation, the Loans, and any future modifications,
amendments, substitutions or renewals thereof.

 

(d)       Borrower
hereby agrees that this Forbearance Extension is the legal, valid and binding obligation of Borrower, enforceable against Borrower.

 

(e)       Borrower
and PFG acknowledge that the Continuing Defaults are ongoing, existing and continuing Defaults or Events of Default under the
Loan Agreement.

 

(f)       Borrower
and PFG confirm that neither party has heretofore waived or modified, and has not agreed to waive or modify, any term of the Existing
Loan Documents, and any actions that Borrower takes or fails to take (including the expenditure of any funds) is voluntary, informed
and taken at its own risk.

 

(g)       Borrower
shall, from and after the execution of this Forbearance Extension, execute and deliver to PFG whatever additional documents, instruments,
and agreements that PFG may reasonably require in order to perfect PFG’s security interest in the Collateral granted in
the Loan Agreement and to otherwise give effect to the terms and conditions of this Forbearance Extension.

 

(h)       Borrower
acknowledges and reaffirms its obligation to issue the Forbearance Warrants, as defined in the Expiring Forbearance, as and when
required therein; and

 

    	 	-3-	 

     

    

 

(i)       Borrower
acknowledges and reaffirms its obligations under the Conditionally-Effective Warrant Cancellation Agreement dated as of September
9, 2016 (the “Warrant Cancellation Agreement”).

 

5.             Extension
Forbearance Period. Subject to Borrower’s strict compliance and performance with the terms of this Forbearance
Extension and each Forbearance Document (as defined in Section 7(c)) and so long as no Event of Default (other than the Continuing
Defaults) or Termination Event occurs, PFG will forbear from enforcing its rights and remedies under the Existing Loan Documents
from the date hereof through February 15, 2017 (the “Extension Forbearance Period”). Except as expressly provided
herein, this Forbearance Extension does not constitute a waiver or release by PFG of any Obligations or of any Default or Event
of Default which may arise in the future after the Forbearance Extension Effective Date.

 

6.            Termination.
The Extension Forbearance Period shall terminate automatically and without notice to Borrower upon the occurrence of a Termination
Event.

 

7.            Termination
Events. The occurrence of any one or more of the following events shall constitute a termination event (hereinafter,
a “Termination Event”) under this Forbearance Extension:

 

(a)       the
failure of the Borrower to cause PFG’s Obligations to be repaid as and when required by the Loan Agreement, it being expressly
acknowledged and agreed that TIME IS OF THE ESSENCE;

 

(b)       the
filing of a petition for relief by or against Borrower under the United States Bankruptcy Code;

 

(c)       the
failure of the Borrower to promptly, punctually, or faithfully perform any other material term, condition, or covenant of this
Forbearance Extension or any of the other documents executed and delivered in connection with this Forbearance Extension (the
“Forbearance Extension Documents”) as and when due, it being expressly acknowledged and agreed that TIME IS
OF THE ESSENCE;

 

(d)       the
occurrence of any Default or Event of Default (other than the Continuing Defaults and for the periods specified within said definition)
under the Loan Agreement, any other Loan Document or any Forbearance Document;

 

(e)       any
recital, representation or warranty made herein, in any Forbearance Document, or in any report, certificate, financial statement
or other instrument or document previously, now or hereafter furnished by or on behalf of Borrower in connection with this Forbearance
Extension or any Forbearance Document, shall prove to have been false, incomplete or misleading in any material respect on the
date as of which it was made;

  

(f)       Borrower
making Special Permitted Payments materially in excess of the amounts notified to PFG in connection with this Forbearance Extension
or failing to pay third party costs incurred in connection with the Notified Financing, except to the extent of any such costs
that are the subject of a good faith and reasonable dispute;

  

(g)       Borrower
shall fail to provide written notice to PFG evidencing the failure or abandonment of the Notified Financing; or

 

(h)       a
material impairment in the perfection or priority of PFG’s security interest in the Collateral or in the value of such Collateral
taken as a whole occurs.

 

    	 	-4-	 

     

    

 

8.             Rights
Upon Termination. Upon the earlier of (i) the occurrence of any Termination Event or (ii) the expiration of the Extension
Forbearance Period, all of the Obligations shall, without notice or demand, become immediately due and payable in full and at
the sole discretion of PFG and PFG shall be entitled to immediately pursue any and all remedies available under applicable law
or pursuant to the Existing Loan Documents.

 

9.            Borrowers’
Representations And Warranties. Borrower represents and warrants that:

 

(a)       immediately
upon giving effect to this Forbearance Extension (i) the representations and warranties contained in the Loan Agreement are
true, accurate and complete in all material respects as of the date hereof (except to the extent such representations and warranties
relate to an earlier date, in which case they are true and correct in all material respects as of such date), and (ii) no
Default or Event of Default has occurred and is continuing (other than the Continuing Defaults);

 

(b)       Borrower
has the corporate power and authority to execute and deliver this Forbearance Extension and to perform its obligations under the
Existing Loan Documents, as amended by this Forbearance Extension;

 

(c)       the
certificate of incorporation, bylaws and other organizational documents of Borrower delivered to PFG on the Forbearance Extension
Effective Date of the Loan Agreement either remain true, accurate and complete as delivered on such Forbearance Extension Effective
Date or Borrower shall have delivered true and correct copies of the foregoing, as amended, supplemented or restated and, in each
case, all of the foregoing are and continue to be in full force and effect;

 

(d)       the
execution and delivery by Borrower of this Forbearance Extension and the performance by Borrower of its obligations under the
Existing Loan Documents, as amended by this Forbearance Extension, have been duly authorized by all necessary corporate action
on the part of Borrower;

 

(e)       this
Forbearance Extension has been duly executed and delivered by Borrower and is the binding obligation of Borrower, enforceable
against it in accordance with the terms of this Forbearance Extension, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, liquidation, moratorium or other similar laws of general application and equitable principles relating
to or affecting creditors’ rights;

 

(f)       Borrower
has no defenses, affirmative or otherwise, rights of setoff, rights of recoupment, claims, counterclaims, actions or causes of
action of any kind or nature whatsoever against PFG or any past, present or future agent, attorney, legal representative, predecessor-in-interest,
affiliate, successor, assign, employee, director or officer of PFG, directly or indirectly, arising out of, based upon, or in
any manner connected with, any transaction, event, circumstance, action, failure to act, or occurrence of any sort or type, whether
known or unknown, which occurred, existed, was taken, permitted, or began prior to the execution of this Forbearance Extension
and accrued, existed, was taken, permitted or begun in accordance with, pursuant to, or by virtue of the terms or conditions of
the Existing Loan Documents, or which directly or indirectly relate to or arise out of or in any manner are connected with any
of the Existing Loan Documents;

 

(g)       the
proceeds of the Notified Financing will be used (in part) by Borrower to make the Special Permitted Payments;

 

    	 	-5-	 

     

    

 

(h)       Borrower
has freely and voluntarily entered into this Forbearance Extension after an adequate opportunity and sufficient period of time
to review, analyze and discuss all terms and conditions of this Forbearance Extension and all factual and legal matters relevant
hereto with counsel freely and independently chosen by it. Borrower further acknowledges that it has actively and with full understanding
participated in the negotiation of this Forbearance Extension after consultation and review with its counsel and that this Forbearance
Extension has been negotiated, prepared and executed without fraud, duress, undue influence or coercion of any kind or nature
whatsoever having been exerted by or imposed upon any party to this Forbearance Extension.

 

(i)       Borrower
has not voluntarily or involuntarily, granted any Liens to any creditor not previously disclosed to PFG in writing on or before
the Forbearance Extension Effective Date or taken any action or failed to take any action which could or would impair, change,
jeopardize or otherwise adversely affect the priority, perfection, validity or enforceability of any Liens securing all or any
portion of the Obligations or the priority or validity of PFG’s claims with respect to the Obligations relative to any other
creditor of Borrower, subject only to Permitted Liens. Borrower acknowledges that PFG has acted in good faith and has conducted
in a commercially reasonable manner its relationship with such Borrower in connection with this Forbearance Extension and in connection
with the Existing Loan Documents;

 

(j)       the
Security Documents relating to Intellectual Property either disclose an accurate, complete and current listing of all Collateral
that consists of Intellectual Property or Borrower has included revised and updated Intellectual Property schedules as part of
an update to the Representations required in Section 11 of this Forbearance Extension;

 

(k)       as
of the Forbearance Extension Effective Date, Borrower ratifies, confirms and reaffirms, all and singular, the terms and disclosures
contained in the Representations last delivered to PFG, as amended by any update to the Representations made since such date or
delivered under or in connection with this Forbearance Extension, including under Section 11;

 

(l)       except
as expressly stated in this Forbearance Extension, neither PFG nor any agent, employee or representative of PFG has made any statement
or representation to Borrower regarding any fact relied upon by Borrower in entering into this Forbearance Extension;

 

(m)       Borrower
has made such investigation of the facts pertaining to this Forbearance Extension and all of the matters appertaining thereto,
as it deems necessary;

 

(n)       the
terms of this Forbearance Extension are contractual and not a mere recital;

 

(o)       appended
as Exhibit A hereto is a true, correct and complete capitalization to Borrower on a pre-Notified Financing basis and post
Notified Financing basis which does reflect the issue of the Expiring Forbearance Warrants and the stock issuable under the Warrant
Cancellation Agreement referenced in Section 4(i) but does not reflect the Forbearance Extension Warrants or the Forbearance Extension
Stock, all of which Borrower has agreed and reaffirms its agreement to issue to PFG and its designees promptly following the initial
consummation of the Notified Financing, all of the foregoing on a post-split basis.;

 

(p)       Borrower
represents and warrants that it is the sole and lawful owner of all right, title and interest in and to every claim and every
other matter which it releases herein, and that it has not heretofore assigned or transferred, or purported to assign or transfer,
to any person, firm or entity any claims or other matters herein released. Borrower shall indemnify PFG, defend and hold it harmless
from and against all claims based upon or arising in connection with prior assignments or purported assignments or transfers of
any claims or matters released herein.

 

    	 	-6-	 

     

    

 

Borrower
understands and acknowledges that PFG is entering into this Forbearance Extension in reliance upon, and in partial consideration
for, the above representations and warranties, and agrees that such reliance is reasonable and appropriate.

 

10.         CONTINUING
VALIDITY. Except as expressly set forth (if at all) in this Forbearance Extension, the terms of the Existing Loan Documents
remain unchanged and in full force and effect. PFG’s agreement to modifications to the existing Obligations in no way shall
obligate PFG to make any future consents, waivers or modifications to the Obligations. Nothing in this Forbearance Extension shall
constitute a satisfaction of the Obligations or a waiver of any default under the Existing Loan Documents. It is the intention
of PFG and Borrower to retain as liable parties all makers and endorsers of Existing Loan Documents, unless the party is expressly
released by PFG in writing. Unless expressly released herein, no maker, endorser, or guarantor will be released by virtue of this
Forbearance Extension. The terms of this paragraph apply not only to this Forbearance Extension, but also to all subsequent forbearances,
loan modification agreements and consents.

  

11.   
     CONDITIONS. The effectiveness of this Forbearance Extension is conditioned upon
each of:

 

(a)       Execution
and Delivery. Borrower shall have duly executed and delivered to PFG a counterpart of this Forbearance Extension.

 

(b)       Payment
of PFG Expenses. Borrower shall have paid upon demand all PFG expenses (including all reasonable attorneys’ fees and
expenses) incurred in connection with this Forbearance Extension.

 

(c)       Update
to Representations. Within twenty (20) Business Days from the Forbearance Extension Effective Date, Borrower shall have delivered
an update to the Representations, to the extent required under Section 6 of the Schedule.

 

(d)       Issuance
of Expiring Forbearance Warrant. Promptly following (and conditional upon) an initial closing of the Notified Financing, Borrower
shall have issued the Forbearance Warrant to PFG.

 

(e)       Issuance
of Stock under Warrant Cancelation Agreement. Promptly following (and conditional upon) an initial closing of the Notified
Financing, Borrower shall have issued to PFG and its designees the stock to be issued under the Warrant Cancelation Agreement.

 

(f)       Issuance
of Forbearance Extension Warrant. Promptly following (and conditional upon) an initial closing of the Notified Financing,
Borrower shall have issued the Forbearance Extension Warrant to PFG.

 

(g)       Issuance
of Forbearance Extension Stock. Promptly following (and conditional upon) an initial closing of the Notified Financing, Borrower
shall have issued the Forbearance Extension Stock to PFG and its designees.

 

12.           Non-Interference.
From and after the expiration or termination of the Extension Forbearance Period, Borrower agrees not to interfere with the exercise
by PFG of any of its rights and remedies. Borrower further agrees that it shall not seek to distrain or otherwise hinder, delay,
or impair PFG’s efforts to realize upon the Collateral, or otherwise to enforce its rights and remedies pursuant to the
Existing Loan Documents. The provisions of this Section 12 shall be specifically enforceable by PFG.

 

    	 	-7-	 

     

    

 

13.         INTEGRATION;
CONSTRUCTION. The Loan Agreement, other Existing Loan Documents, the Original Forbearance, the Warrant Cancelation Agreement,
the Expiring Forbearance and this Forbearance Extension and any documents executed in connection herewith or pursuant hereto,
contain the entire agreement between the parties with respect to the subject matter hereof and supersede all prior agreements,
understandings, offers and negotiations, oral or written, with respect thereto and no extrinsic evidence whatsoever may be introduced
in any judicial or arbitration proceeding, if any, involving this Forbearance Extension; provided, however, that any financing
statements or other agreements or instruments filed by PFG with respect to Borrower shall remain in full force and effect. The
quotation marks around modified clauses set forth herein and any differing font styles in which such clauses are presented herein
are for ease of reading only and shall be ignored for purposes of construing and interpreting this Forbearance Extension. This
Forbearance Extension is subject to the General Provisions of Section 8 of the Loan Agreement. The Recitals to this Forbearance
Extension are incorporated by reference herein.

 

14.         RELEASE
OF CLAIMS. 

 

(a)       FOR
AND IN CONSIDERATION OF PFG’S AGREEMENTS CONTAINED HEREIN, BORROWER, TOGETHER WITH ITS, SUCCESSORS AND ASSIGNS (INDIVIDUALLY
AND COLLECTIVELY, “RELEASORS”) HEREBY VOLUNTARILY AND KNOWINGLY RELEASES AND FOREVER WAIVES AND DISCHARGES PFG AND
EACH OF ITS RESPECTIVE PARENTS, DIVISIONS, SUBSIDIARIES, AFFILIATES, MEMBERS, MANAGERS, PARTICIPANTS, PREDECESSORS, SUCCESSORS,
AND ASSIGNS, AND EACH OF THEIR RESPECTIVE CURRENT AND FORMER DIRECTORS, OFFICERS, SHAREHOLDERS, MEMBERS, MANAGERS, PARTNERS, AGENTS,
AND EMPLOYEES, AND EACH OF THEIR RESPECTIVE PREDECESSORS, SUCCESSORS, HEIRS, AND ASSIGNS (INDIVIDUALLY AND COLLECTIVELY, THE “RELEASED
PARTIES”) FROM ALL POSSIBLE CLAIMS, COUNTERCLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES AND LIABILITIES
WHATSOEVER, WHETHER KNOWN OR UNKNOWN, ANTICIPATED OR UNANTICIPATED, SUSPECTED OR UNSUSPECTED, FIXED, CONTINGENT OR CONDITIONAL,
OR AT LAW OR IN EQUITY, IN ANY CASE ORIGINATING IN WHOLE OR IN PART ON OR BEFORE THE FORBEARANCE EXTENSION EFFECTIVE DATE THAT
ANY OF THE RELEASORS MAY NOW OR HEREAFTER HAVE AGAINST THE RELEASED PARTIES, IF ANY, IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS ARISE
OUT OF CONTRACT, TORT, VIOLATION OF LAW OR REGULATIONS, OR OTHERWISE, INCLUDING WITHOUT LIMITATION ARISING DIRECTLY OR INDIRECTLY
FROM THE LAWSUIT, ANY PRIOR OR EXISTING LOANS BETWEEN RELEASORS AND RELEASED PARTIES, ANY OF THE EXISTING LOAN DOCUMENTS, THE
EXERCISE OF ANY RIGHTS AND REMEDIES UNDER ANY OF THE EXISTING LOAN DOCUMENTS, AND/OR NEGOTIATION FOR AND EXECUTION OF THIS FORBEARANCE
EXTENSION, INCLUDING, WITHOUT LIMITATION, ANY CONTRACTING FOR, CHARGING, TAKING, RESERVING, COLLECTING OR RECEIVING INTEREST IN
EXCESS OF THE HIGHEST LAWFUL RATE APPLICABLE. EACH OF THE RELEASORS WAIVES THE BENEFITS OF ANY LAW INCLUDING SECTION 1542 OF THE
CALIFORNIA CIVIL CODE, WHICH MAY PROVIDE IN SUBSTANCE: “A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR SUSPECT TO EXIST IN ITS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY IT MUST HAVE MATERIALLY AFFECTED
ITS SETTLEMENT WITH THE DEBTOR.” EACH OF THE RELEASORS UNDERSTANDS THAT THE FACTS WHICH IT BELIEVES TO BE TRUE AT THE TIME
OF MAKING THE RELEASE PROVIDED FOR HEREIN MAY LATER TURN OUT TO BE DIFFERENT THAN IT NOW BELIEVES, AND THAT INFORMATION WHICH
IS NOT NOW KNOWN OR SUSPECTED MAY LATER BE DISCOVERED. EACH OF THE RELEASORS ACCEPTS THIS POSSIBILITY, AND EACH OF THEM ASSUMES
THE RISK OF THE FACTS TURNING OUT TO BE DIFFERENT AND NEW INFORMATION BEING DISCOVERED; AND EACH OF THEM FURTHER AGREES THAT THE
RELEASE PROVIDED FOR HEREIN SHALL IN ALL RESPECTS CONTINUE TO BE EFFECTIVE AND NOT SUBJECT TO TERMINATION OR RESCISSION BECAUSE
OF ANY DIFFERENCE IN SUCH FACTS OR ANY NEW INFORMATION.

 

    	 	-8-	 

     

    

 

(b)       By
entering into this release, Borrower recognizes that no facts or representations are ever absolutely certain and it may hereafter
discover facts in addition to or different from those which it presently knows or believes to be true, but that it is the intention
of Borrower hereby to fully, finally and forever settle and release all matters, disputes and differences, known or unknown, suspected
or unsuspected; accordingly, if Borrower should subsequently discover that any fact that it relied upon in entering into this
release was untrue, or that any understanding of the facts was incorrect, Borrower shall not be entitled to set aside this release
by reason thereof, regardless of any claim of mistake of fact or law or any other circumstances whatsoever. Borrower acknowledges
that it is not relying upon and has not relied upon any representation or statement made by PFG with respect to the facts underlying
this release or with regard to any of such party’s rights or asserted rights.

 

(c)       This
release may be pleaded as a full and complete defense and/or as a cross-complaint or counterclaim against any action, suit, or
other proceeding that may be instituted, prosecuted or attempted in breach of this release. Borrower acknowledges that the release
contained herein constitutes a material inducement to PFG to enter into this Forbearance Extension, and that PFG would not have
done so but for PFG’s expectation that such release is valid and enforceable in all events.

 

15.          Governing
Law; Venue. THIS FORBEARANCE EXTENSION SHALL BE GOVERNED BY AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF CALIFORNIA. Borrower and PFG submit to the exclusive jurisdiction of the State and Federal courts in
San Francisco County, California, in connection with any proceeding or dispute arising in connection herewith.

 

[Signature
Page Follows]

 

    	 	-9-	 

     

    

 

This
Forbearance Extension is executed as of the date first written above.

 

	Borrower:

                                                                                 
 ActiveCare, Inc.
	 	PFG:

                                                                                 
 PARTNERS FOR GROWTH IV, L.P. 

	 	 	 	 	 
	By		 	By	        
	 	 	 	 	 
	Name:	 	 	Name:	
	Title:
    	CEO
    or President	 	Title:	Manager,
    Partners for Growth IV, LLC, its General Partner
	 	 	 	 	 
	By		 		 
	 	 	 	 	 
	Name:		 		 
	Title:
	Secretary
    or CFO	 		

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Signature
Page Forbearance Extension under Loan and Security Agreement

 

    	 	-10-	 

     

    

 

EXHIBIT
A

 

Capitalization
Table

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