Exhibit 10.2

 

 

registration RIGHTS AGREEMENT

 

This REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made as of __________,
2015, by and among Cornerstone Bancshares, Inc., a Tennessee corporation (the
“Company”), and each of the investors who has executed a joinder hereto (each of
which is referred to in this Agreement as an “Investor,” and, together,
collectively, the “Investors”).

 

RECITALS

 

 

WHEREAS, the Company and each Investor have executed a Subscription Agreement
(each, a “Purchase Agreement,” and together, collectively, the “Purchase
Agreements”) whereby each Investor has agreed to purchase Common Stock (as
defined below) of the Company in connection with the Private Placement (as
defined below).

 

WHEREAS, the Investors desire to enter into this Agreement in order to provide
for certain registration rights with respect to the Company.

 

NOW, THEREFORE, in consideration of the mutual covenants contained herein and
for other valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:

 

1.Definitions.

 

For purposes of this Agreement:

 

“Affiliate” means, with respect to any specified Person, any other Person who or
which, directly or indirectly, controls, is controlled by, or is under common
control with such specified Person, including without limitation any general
partner, limited partner, officer, director, or manager of such Person.

 

“Common Stock” means shares of the Company’s common stock, $1.00 par value per
share, sold pursuant to the Purchase Agreements.

 

“Damages” means any loss, damage, or liability (joint or several) to which a
party hereto may become subject under the Securities Act, the Exchange Act, or
other federal or state law, insofar as such loss, damage, or liability (or any
action in respect thereof) arises out of or is based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in any
registration statement of the Company, including any preliminary prospectus or
final prospectus contained therein or any amendments or supplements thereto;
(ii) an omission or alleged omission to state therein a material fact required
to be stated therein, or necessary to make the statements therein not
misleading; or (iii) any violation or alleged violation by the indemnifying
party (or any of its agents or Affiliates) of the Securities Act, the Exchange
Act, any state securities law, or any rule or regulation promulgated under the
Securities Act, the Exchange Act, or any state securities law.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.

 

“Holder” means any holder of Registrable Securities who is a party to this
Agreement.

 

“Immediate Family Member” means a child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, domestic partner, sibling, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law,
including adoptive relationships, of a natural person referred to herein.

 

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“Person” means any individual, corporation, partnership, trust, limited
liability company, association or other entity.

 

“Private Placement” means the sale of up to $15,000,000 of Common Stock pursuant
to the Purchase Agreements entered into between each Investor and the Company.

 

“Purchase Agreement” has the meaning set forth in the recitals hereto.

 

“Registrable Securities” means any Common Stock, excluding in all cases,
however, any Registrable Securities which have been previously registered or
which have been, or could be, sold to the public either pursuant to a
registration statement or Rule 144.

 

“Restricted Securities” means the securities of the Company required to bear the
legend set forth in Section 2.8(b) hereof.

 

“SEC” means the U.S. Securities and Exchange Commission.

 

“SEC Rule 144” means Rule 144 promulgated by the SEC under the Securities Act.

 

“SEC Rule 145” means Rule 145 promulgated by the SEC under the Securities Act.

 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

 

2.Registration Rights.

 

The Company covenants and agrees as follows:

 

2.1.Registration.

 

(a)          Subject to the limitations of Section 2.1(b) below, as soon as
practicable, the Company agrees to use its best efforts to prepare and file a
registration statement with respect to the Registrable Securities, and use its
best efforts to cause such registration statement to become effective under the
Securities Act within ninety (90) days after the date of this Agreement and,
thereafter, keep such registration statement effective until the earlier of (i)
six (6) months following the date of this Agreement or (ii) all Registrable
Securities are resold pursuant to such registration statement. Following the
earlier of (x) six (6) months following the date of this Agreement, or (y) all
of the Registrable Securities are resold pursuant to such registration
statement, the Company may, in its sole discretion, elect to deregister all
Registrable Securities covered by such registration statement.

 

(b)          Notwithstanding the foregoing obligations, if the Company furnishes
to the Holders a certificate signed by the Company’s chief executive officer
stating that in the good faith judgment of the Company’s Board of Directors it
would be materially detrimental to the Company and its stockholders for such
registration statement to either become effective or remain effective for as
long as such registration statement otherwise would be required to remain
effective, because such action would (i) materially interfere with a significant
acquisition, corporate reorganization, or other similar transaction involving
the Company; (ii) require premature disclosure of material information that the
Company has a bona fide business purpose for preserving as confidential; or
(iii) render the Company unable to comply with requirements under the Securities
Act or Exchange Act, then the Company shall have the right to defer taking
action with respect to such filing, and any time periods with respect to filing
or effectiveness thereof shall be tolled correspondingly, for a period of not
more than ninety (90) days; provided, however, that the Company may not invoke
this right more than once in any six (6) month period; and provided further that
the Company shall not register any securities for its own account or that of any
other stockholder during such ninety (90) day period other than pursuant to a
registration relating to the sale of securities to employees of the Company or a
subsidiary pursuant to a stock option, stock purchase, or similar plan; a
registration on any form that does not include substantially the same
information as would be required to be included in a registration statement
covering the sale of the Registrable Securities; or a registration relating to
an SEC Rule 145 transaction.

 

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2.2.Obligations of the Company.

 

Whenever required under this Section 2 to effect the registration of any
Registrable Securities, the Company shall, as expeditiously as reasonably
possible:

 

(a)          prepare and file with the SEC a registration statement with respect
to the Registrable Securities and use its best efforts to cause such
registration statement to become effective and, thereafter, keep such
registration statement effective until the earlier of (i) six (6) months
following the date of this Agreement or (ii) all Registrable Securities are
resold pursuant to such registration statement;

 

(b)          prepare and file with the SEC such amendments and supplements to
such registration statement, and the prospectus used in connection with such
registration statement, as may be necessary to comply with the Securities Act in
order to enable the disposition of all securities covered by such registration
statement;

 

(c)          furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, as required by the Securities Act, and such
other documents as the Holders may reasonably request in order to facilitate
their disposition of their Registrable Securities;

 

(d)          use its commercially reasonable efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue-sky laws of such jurisdictions as shall be reasonably required; provided
that the Company shall not be required to qualify to do business or to file a
general consent to service of process in any such states or jurisdictions,
unless the Company is already subject to service in such jurisdiction and except
as may be required by the Securities Act;

 

(e)          use its commercially reasonable efforts to cause all such
Registrable Securities covered by such registration statement to be listed on a
national securities exchange or trading system and each securities exchange and
trading system (if any) on which similar securities issued by the Company are
then listed;

 

(f)          provide a transfer agent and registrar for all Registrable
Securities registered pursuant to this Agreement and provide a CUSIP number for
all such Registrable Securities, in each case not later than the effective date
of such registration;

 

(g)          notify each Holder, promptly after the Company receives notice
thereof, of the time when such registration statement has been declared
effective or a supplement to any prospectus forming a part of such registration
statement has been filed; and

 

(h)          after such registration statement becomes effective, notify each
Holder of any request by the SEC that the Company amend or supplement such
registration statement or prospectus.

 

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2.3.Furnish Information.

 

It shall be a condition precedent to the obligations of the Company to take any
action pursuant to this Section 2 with respect to the Registrable Securities of
any Holder that such Holder shall furnish to the Company such information
regarding itself, the Registrable Securities held by it, and the intended method
of disposition of such securities as is reasonably required to effect the
registration of such Holder’s Registrable Securities.

 

2.4.Expenses of Registration.

 

All expenses incurred in connection with registrations, filings, or
qualifications pursuant to Section 2, including all registration, filing, and
qualification fees, printers’ and accounting fees, and fees and disbursements of
counsel for the Company shall be borne and paid by the Company.

 

2.5.Delay of Registration.

 

No Holder shall have any right to obtain or seek an injunction restraining or
otherwise delaying any registration pursuant to this Agreement as the result of
any controversy that might arise with respect to the interpretation or
implementation of this Section 2.

 

2.6.Indemnification.

 

If any Registrable Securities are included in a registration statement under
this Section 2:

 

(a)          To the extent permitted by law, the Company will indemnify and hold
harmless each selling Holder, and the partners, members, officers, directors,
and stockholders of each such Holder; legal counsel and accountants for each
such Holder; and each Person, if any, who controls such Holder within the
meaning of the Securities Act or the Exchange Act, against any Damages, and the
Company will pay to each such Holder, controlling Person, or other
aforementioned Person any legal or other expenses reasonably incurred thereby in
connection with investigating or defending any claim or proceeding from which
Damages may result, as such expenses are incurred; provided, however, that the
indemnity agreement contained in this Section 2.6(a) shall not apply to amounts
paid in settlement of any such claim or proceeding if such settlement is
effected without the consent of the Company, which consent shall not be
unreasonably withheld, nor shall the Company be liable for any Damages to the
extent that they arise out of or are based upon actions or omissions made in
reliance upon and in conformity with written information furnished by or on
behalf of any such Holder, controlling Person, or other aforementioned Person
expressly for use in connection with such registration.

 

(b)          To the extent permitted by law, each selling Holder, severally and
not jointly, will indemnify and hold harmless the Company, and each of its
directors, each of its officers who has signed the registration statement, each
Person (if any), who controls the Company within the meaning of the Securities
Act, legal counsel and accountants for the Company, any other Holder selling
securities in such registration statement, and any controlling Person of any
such other Holder, against any Damages, in each case only to the extent that
such Damages arise out of or are based upon actions or omissions made in
reliance upon and in conformity with written information furnished by or on
behalf of such Holder expressly for use in connection with such registration;
and each such Holder will pay to the Company and each other aforementioned
Person any legal or other expenses reasonably incurred thereby in connection
with investigating or defending any claim or proceeding from which Damages may
result, as such expenses are incurred; provided, however, that the indemnity
agreement contained in this Section 2.6(b) shall not apply to amounts paid in
settlement of any such claim or proceeding if such settlement is effected
without the consent of the Holder, which consent shall not be unreasonably
withheld.

 

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(c)          Promptly after receipt by an indemnified party under this
Section 2.6 of notice of the commencement of any action (including any
governmental action) for which a party may be entitled to indemnification
hereunder, such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 2.6, give the
indemnifying party notice of the commencement thereof. The indemnifying party
shall have the right to participate in such action and, to the extent the
indemnifying party so desires, participate jointly with any other indemnifying
party to which notice has been given, and to assume the defense thereof with
counsel mutually satisfactory to the parties; provided, however, that an
indemnified party (together with all other indemnified parties that may be
represented without conflict by one counsel) shall have the right to retain one
separate counsel, with the fees and expenses to be paid by the indemnifying
party, if representation of such indemnified party by the counsel retained by
the indemnifying party would be inappropriate due to actual or potential
differing interests between such indemnified party and any other party
represented by such counsel in such action. The failure to give notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall relieve such indemnifying party of any liability to the indemnified
party under this Section 2.6, to the extent that such failure materially
prejudices the indemnifying party’s ability to defend such action. The failure
to give notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section 2.6.

 

(d)          Notwithstanding anything else herein to the contrary, the foregoing
indemnity agreements of the Company and the Holders are subject to the condition
that, insofar as they relate to any Damages arising from any untrue statement or
alleged untrue statement of a material fact contained in, or omission or alleged
omission of a material fact from, a preliminary prospectus (or necessary to make
the statements therein not misleading) that has been corrected in the form of
prospectus included in the registration statement at the time it becomes
effective, or any amendment or supplement thereto filed with the SEC pursuant to
Rule 424(b) under the Securities Act (the “Final Prospectus”), such indemnity
agreement shall not inure to the benefit of any Person if a copy of the Final
Prospectus was furnished to the indemnified party and such indemnified party
failed to deliver, at or before the confirmation of the sale of the shares
registered in such offering, a copy of the Final Prospectus to the Person
asserting the loss, liability, claim, or damage in any case in which such
delivery was required by the Securities Act.

 

(e)          To provide for just and equitable contribution to joint liability
under the Securities Act in any case in which either (i) any party otherwise
entitled to indemnification hereunder makes a claim for indemnification pursuant
to this Section 2.6 but it is judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the expiration of
time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case, notwithstanding the fact that
this Section 2.6 provides for indemnification in such case, or (ii) contribution
under the Securities Act may be required on the part of any party hereto for
which indemnification is provided under this Section 2.6, then, and in each such
case, such parties will contribute to the aggregate losses, claims, damages,
liabilities, or expenses to which they may be subject (after contribution from
others) in such proportion as is appropriate to reflect the relative fault of
each of the indemnifying party and the indemnified party in connection with the
statements, omissions, or other actions that resulted in such loss, claim,
damage, liability, or expense, as well as to reflect any other relevant
equitable considerations. The relative fault of the indemnifying party and of
the indemnified party shall be determined by reference to, among other things,
whether the untrue or allegedly untrue statement of a material fact, or the
omission or alleged omission of a material fact, relates to information supplied
by the indemnifying party or by the indemnified party and the parties’ relative
intent, knowledge, access to information, and opportunity to correct or prevent
such statement or omission; provided, however, that, in any such case, no Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) will be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.

 

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(f)          The obligations of the Company and Holders under this Section 2.6
shall survive the completion of any offering of Registrable Securities in a
registration under this Section 2, and otherwise shall survive the termination
of this Agreement.

 

2.7.Reports Under Exchange Act.

 

With a view to making available to the Holders the benefits of SEC Rule 144 and
any other rule or regulation of the SEC that may at any time permit a Holder to
sell securities of the Company to the public without registration, the Company
shall:

 

(a)          make and keep available adequate current public information, as
those terms are understood and defined in SEC Rule 144, at all times after the
effective date of the registration statement filed by the Company in connection
with this Agreement;

 

(b)          use commercially reasonable efforts to file with the SEC in a
timely manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act (at any time after the Company has become
subject to such reporting requirements); and

 

(c)          furnish to any Holder, so long as the Holder owns any Registrable
Securities, forthwith upon request (i) to the extent accurate, a written
statement by the Company that it has complied with the reporting requirements of
SEC Rule 144 (at any time after ninety (90) days after the effective date of the
registration statement filed by the Company in connection with this Agreement),
the Securities Act, and the Exchange Act; (ii) a copy of or reference to the
most recent annual or quarterly report of the Company and such other reports and
documents so filed by the Company; and (iii) such other information as may be
reasonably requested in availing any Holder of any rule or regulation of the SEC
that permits the selling of any such securities without registration.

 

2.8.Restrictions on Transfer.

 

(a)          The Registrable Securities shall not be sold, pledged, or otherwise
transferred, and the Company shall not recognize any such sale, pledge, or
transfer, except upon the conditions specified in this Agreement, which
conditions are intended to ensure compliance with the provisions of the
Securities Act. A transferring Holder will cause any proposed purchaser,
pledgee, or transferee of the Registrable Securities held by such Holder to
agree to take and hold such securities subject to the provisions and upon the
conditions specified in this Agreement; provided, however, the transferor shall,
within sixty (60) days after such transfer or assignment, furnish to the Company
written notice of the name and address of such transferee or assignee and the
securities with respect to which such registration rights are being assigned.
Notwithstanding the foregoing and anything to the contrary set forth herein, it
is understood by the parties hereto that each Investor and any of its affiliated
investment funds may, in its sole discretion, transfer all or any portion of the
securities owned or held beneficially by it to any other affiliated investment
fund or grant an affiliated investment fund participation rights therein, and
any of the foregoing persons may distribute any such securities to any direct or
indirect shareholder, member or partner of such person; provided that (i) the
transferor shall, within thirty (30) days after such transfer or assignment,
furnish to the Company written notice of the name and address of such transferee
or assignee and the securities with respect to which such registration rights
are being assigned, and (ii) such transferee agrees to be bound by the relevant
terms and conditions of this Agreement.

 

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(b)          Each certificate or instrument representing (i) the Registrable
Securities, and (ii) any other securities issued in respect of the securities
referenced in clause (i), upon any stock split, stock dividend,
recapitalization, merger, consolidation, or similar event, shall (unless
otherwise permitted by the provisions of Section 2.8(c)) be stamped or otherwise
imprinted with a legend substantially in the following form:

 

“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES
LAWS OF ANY STATE OR OTHER JURISDICTION, AND MAY NOT BE OFFERED, SOLD, PLEDGED
OR OTHERWISE TRANSFERRED EXCEPT (1) PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT OR (2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ALL APPLICABLE STATE
SECURITIES LAWS AND THE SECURITIES LAWS OF OTHER JURISDICTIONS, AND IN THE CASE
OF A TRANSACTION EXEMPT FROM REGISTRATION, UNLESS THE COMPANY HAS RECEIVED AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT SUCH TRANSACTION DOES NOT
REQUIRE REGISTRATION UNDER THE SECURITIES ACT AND SUCH OTHER APPLICABLE LAWS.”

 

 

The Holders consent to the Company making a notation in its records and giving
instructions to any transfer agent of the Restricted Securities in order to
implement the restrictions on transfer set forth in this Section 2.8.

 

(c)          The holder of each certificate representing Restricted Securities,
by acceptance thereof, agrees to comply in all respects with the provisions of
this Section 2. Before any proposed sale, pledge, or transfer of any Restricted
Securities, unless there is in effect a registration statement under the
Securities Act covering the proposed transaction, the Holder thereof shall give
notice to the Company of such Holder’s intention to effect such sale, pledge, or
transfer. Each such notice shall describe the manner and circumstances of the
proposed sale, pledge, or transfer in sufficient detail and, if reasonably
requested by the Company, shall be accompanied at such Holder’s expense by
either (i) a written opinion of legal counsel who shall, and whose legal opinion
shall, be reasonably satisfactory to the Company, addressed to the Company, to
the effect that the proposed transaction may be effected without registration
under the Securities Act; (ii) a “no action” letter from the SEC to the effect
that the proposed sale, pledge, or transfer of such Restricted Securities
without registration will not result in a recommendation by the staff of the SEC
that action be taken with respect thereto; or (iii) any other evidence
reasonably satisfactory to counsel to the Company to the effect that the
proposed sale, pledge, or transfer of the Restricted Securities may be effected
without registration under the Securities Act, whereupon the Holder of such
Restricted Securities shall be entitled to sell, pledge, or transfer such
Restricted Securities in accordance with the terms of the notice given by the
Holder to the Company. The Company will not require such a legal opinion or “no
action” letter (x) in any transaction in compliance with SEC Rule 144 or (y) in
any transaction in which such Holder distributes Restricted Securities to an
Affiliate of such Holder for no consideration; provided that each transferee
agrees in writing to be subject to the terms of this Section 2.8. Each
certificate or instrument evidencing the Restricted Securities transferred as
above provided shall bear, except if such transfer is made pursuant to SEC
Rule 144, the appropriate restrictive legend set forth in Section 2.8(b), except
that such certificate shall not bear such restrictive legend if, in the opinion
of counsel for such Holder and the Company, such legend is not required in order
to establish compliance with any provisions of the Securities Act.

 

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3.Miscellaneous.

 

3.1.Successors and Assigns.

 

The rights under this Agreement may be assigned (but only with all related
obligations) by a Holder to a transferee of Registrable Securities that (i) is
an Affiliate, partner, member, limited partner, retired partner, retired member,
or stockholder of a Holder; or (ii) is a Holder’s Immediate Family Member or
trust (or other estate-planning entity) for the benefit of an individual Holder
or one or more of such Holder’s Immediate Family Members; provided, however,
that (x) the Company is, within a reasonable time after such transfer, furnished
with written notice of the name and address of such transferee and the
Registrable Securities with respect to which such rights are being transferred;
and (y) such transferee agrees in a written instrument delivered to the Company
to be bound by and subject to the terms and conditions of this Agreement. The
terms and conditions of this Agreement inure to the benefit of and are binding
upon the respective successors and permitted assignees of the parties. Nothing
in this Agreement, express or implied, is intended to confer upon any party
other than the parties hereto or their respective successors and permitted
assignees any rights, remedies, obligations or liabilities under or by reason of
this Agreement, except as expressly provided herein.

 

3.2.Governing Law.

 

This Agreement shall be governed by, and construed in accordance with, the laws
of the State of Tennessee, regardless of the laws that might otherwise govern
under applicable principles of conflicts of law.

 

3.3.Counterparts; Facsimile.

 

This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original, and all of which together shall constitute
one and the same document. This Agreement may be executed by facsimile
signatures each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument.

 

3.4.Titles and Subtitles.

 

The titles and subtitles used in this Agreement are for convenience only and are
not to be considered in construing or interpreting this Agreement.

 

3.5.Notices.

 

All notices, requests, consents and other communications under this Agreement
shall be in writing and shall be deemed delivered (a) three business days after
being sent by registered or certified mail, return receipt requested, postage
prepaid or (b) one business day after being sent via a reputable nationwide
overnight courier service guaranteeing next business day delivery, in each case
to the intended recipient as set forth below:

 

If to the Company, at Cornerstone Bancshares, Inc., 835 Georgia Avenue,
Chattanooga, TN 37402, Attention: CEO, or at such other address as may have been
furnished in writing by the Company to the other parties hereto, with a copy
(which shall not constitute notice) to Miller & Martin, PLLC, 832 Georgia
Avenue, Suite 1200, Chattanooga, TN 37402, Attention: Roddy Bailey; or

 

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If to an Investor, at its address (and to any counsel for such Investor
specified in writing to the Company) set forth in the Company’s records from
time to time.

 

Any party may give any notice, request, consent or other communication under
this Agreement using any other means (including, without limitation, personal
delivery, messenger service, telecopy, first class mail or electronic mail), but
no such notice, request, consent or other communication shall be deemed to have
been duly given unless and until it is actually received by the party for whom
it is intended. Any party may change the address to which notices, requests,
consents or other communications hereunder are to be delivered by giving the
other parties notice in the manner set forth in this Section.

 

3.6.Amendments and Waivers.

 

Any term of this Agreement may be amended and the observance of any term of this
Agreement may be waived (either generally or in a particular instance, and
either retroactively or prospectively) only with the written consent of (i) the
Company, and (ii) the holders of at least a majority of the Registrable
Securities; provided that the Company may in its sole discretion waive
compliance with Section 2.8(c) (and the Company’s failure to object promptly in
writing after notification of a proposed assignment allegedly in violation of
Section 2.8(c) shall be deemed to be a waiver); and provided further that any
provision hereof may be waived by any waiving party on such party’s own behalf,
without the consent of any other party. Notwithstanding the foregoing, this
Agreement may not be amended or terminated and the observance of any term hereof
may not be waived with respect to any Investor without the written consent of
such Investor, unless such amendment, termination, or waiver applies to all
Investors in the same fashion. The Company shall give prompt notice of any
amendment or termination hereof to any party hereto that did not consent in
writing to such amendment or termination. Any amendment, termination, or waiver
effected in accordance with this Section 3.6 shall be binding on all parties
hereto, regardless of whether any such party has consented thereto. No waivers
of or exceptions to any term, condition, or provision of this Agreement, in any
one or more instances, shall be deemed to be or construed as a further or
continuing waiver of any such term, condition, or provision.

 

3.7.Severability.

 

In case any one or more of the provisions contained in this Agreement is for any
reason held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality, or unenforceability shall not affect any other provision
of this Agreement, and such invalid, illegal, or unenforceable provision shall
be reformed and construed so that it will be valid, legal, and enforceable to
the maximum extent permitted by law.

 

3.8.Additional Investors.

 

Notwithstanding anything to the contrary contained herein, if the Company issues
additional shares of Common Stock after the date hereof in the Private
Placement, any purchaser of such shares of Common Stock in the Private Placement
may become a party to this Agreement by executing a joinder signature page to
this Agreement and thereafter shall be deemed a Investor for all purposes
hereunder. No action or consent by the Investors shall be required for such
joinder to this Agreement by such additional Investor, so long as such
additional Investor has agreed in writing to be bound by all of the obligations
as a Investor hereunder.

 

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3.9.Entire Agreement.

 

This Agreement and the Purchase Agreements entered into between each Investor
and the Company constitute the full and entire understanding and agreement
between the parties with respect to the subject matter hereof, and any other
written or oral agreement relating to the subject matter hereof existing between
the parties are expressly canceled.

 

3.10.Dispute Resolution.

 

With respect to any suit, action or other proceeding arising out of or based
upon this Agreement, the parties irrevocably submit to the jurisdiction of the
federal or state courts located in Hamilton County, Tennessee, which submission
shall be exclusive. The parties hereby waive, and agree not to assert, by way of
motion, as a defense, or otherwise, in any such suit, action or proceeding, any
claim that it is not subject personally to the jurisdiction of the above-named
courts, that its property is exempt or immune from attachment or execution, that
the suit, action or proceeding is brought in an inconvenient forum, that the
venue of the suit, action or proceeding is improper or that this Agreement or
the subject matter hereof may not be enforced in or by such court. The
prevailing party shall be entitled to reasonable attorneys’ fees, costs, and
necessary disbursements in addition to any other relief to which such party may
be entitled.

 

3.11.         Waiver of Jury Trial. THE UNDERSIGNED IRREVOCABLY WAIVES ANY AND
ALL RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDING ARISING OUT OF
THE TRANSACTIONS CONTEMPLATED BY THIS SUBSCRIPTION AGREEMENT.

  

3.12.Delays or Omissions.

 

No delay or omission to exercise any right, power, or remedy accruing to any
party under this Agreement, upon any breach or default of any other party under
this Agreement, shall impair any such right, power, or remedy of such
nonbreaching or nondefaulting party, nor shall it be construed to be a waiver of
or acquiescence to any such breach or default, or to any similar breach or
default thereafter occurring, nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. All remedies, whether under this Agreement or by law or
otherwise afforded to any party, shall be cumulative and not alternative.

 

[Signature Page Follows]

 

 10 

 

 

IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement
as of the date first written above.

 

  COMPANY:       CORNERSTONE BANCSHARES, INC.       By:     Name:     Title:  

 

Cornerstone Bancshares, Inc.

Signature Page to

Registration Rights Agreement

 

 

 

  

JOINDER TO REGISTRATION RIGHTS AGREEMENT

 

This JOINDER (the “Joinder) to the Registration Rights Agreement (the
“Agreement”), dated as of __________, 2015, by and among Cornerstone Bancshares,
Inc., a Tennessee corporation (the “Company”), and certain equityholders of the
Company, is made as of __________, 2015 by and between the Company and
____________________ (“Investor”). Capitalized terms used herein but not
otherwise defined shall have the meanings set forth in the Agreement.

 

WHEREAS, on the date hereof, Investor has acquired __________ shares of Common
Stock of the Company pursuant to the Private Placement and the Investor desires
to become a party to the Agreement.

 

NOW, THEREFORE, in consideration of the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties to this Joinder hereby agree as follows:

 

1.          Agreement to be Bound. Investor hereby (i) acknowledges that it has
received and reviewed a complete copy of the Agreement and (ii) agrees that upon
execution of this Joinder, it shall become a party to the Agreement and shall be
fully bound by, and subject to, all of the covenants, terms and conditions of
the Agreement as though an original party thereto and shall be deemed an
Investor for all purposes thereof.

 

2.          Successors and Assigns. Except as otherwise provided herein, this
Joinder shall bind and inure to the benefit of and be enforceable by the Company
and its successors and assigns and Investor and any subsequent holders of
Registrable Securities and the respective successors and assigns of each of
them, so long as they hold any Registrable Securities.

 

3.          Counterparts. This Joinder may be executed in separate counterparts
each of which shall be an original and all of which taken together shall
constitute one and the same agreement.

 

4.          Notices. For purposes of Section 3.5 of the Agreement, all notices,
demands or other communications to Investor shall be directed to:

 

____________________

____________________

____________________

 

5.          Governing Law. All questions concerning the construction, validity
and interpretation of this Joinder shall be governed by and construed in
accordance with the domestic laws of the State of Tennessee, without giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of Tennessee or any other Jurisdiction) that would cause the application
of the laws of any jurisdiction other than the State of Tennessee.

 

Cornerstone Bancshares, Inc.           By:     By:   Name:   Name: Title:  
Title: