Exhibit 10.2

REGISTRATION RIGHTS AGREEMENT

This Registration Rights Agreement (this “Agreement”) is made and entered into
as of November 13, 2012, by and among Community Financial Shares, Inc., a
Delaware corporation (the “Company”), and the several purchasers signatory
hereto (each a “Purchaser” and collectively, the “Purchasers”).

This Agreement is made pursuant to the Securities Purchase Agreement, dated as
of the date hereof between the Company and each Purchaser (the “Purchase
Agreement”).

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Company and each of the
Purchasers agree as follows:

1. Definitions. Capitalized terms used and not otherwise defined herein that are
defined in the Purchase Agreement shall have the meanings given such terms in
the Purchase Agreement. As used in this Agreement, the following terms shall
have the following meanings:

“Advice” shall have the meaning set forth in Section 8(d).

“Affiliate” means, with respect to any Person, any other Person which directly
or indirectly controls, is controlled by, or is under common control with, such
Person.

“Agreement” shall have the meaning set forth in the Preamble.

“Allowable Grace Period” shall have the meaning set forth in Section 2(g).

“Availability Date” shall have the meaning set forth in Section 4(m).

“Business Day” means a day, other than Saturday, Sunday or other day on which
commercial banks in Chicago, Illinois are authorized or required by applicable
law to close.

“Closing” shall have the meaning set forth in the Purchase Agreement.

“Closing Date” shall have the meaning set forth in the Purchase Agreement.

“Commission” means the Securities and Exchange Commission.

“Common Shares” means shares of the common stock of the Company, no par value
per share, and any securities into which such Common Shares may hereinafter be
reclassified or otherwise converted.

“Company” shall have the meaning set forth in the Preamble.

“Demand” shall have the meaning set forth in Section 2(b).

 

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“Demand Registration” means a registration required to be effected by the
Company pursuant to Section 2(b).

“Demand Registration Statement” means a registration statement of the Company
filed under the Securities Act which covers the resale of all of the Registrable
Securities requested to be included therein pursuant to the provisions of
Section 2(b) and all amendments and supplements to such registration statement,
including post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto and all material incorporated by
reference (or deemed to be incorporated by reference) therein.

“Effective Date” means the date that any Registration Statement required to be
filed pursuant to this Agreement is first declared effective by the Commission.

“Effectiveness Deadline” means

(a) with respect to an Initial Registration Statement or a New Registration
Statement, the earlier of (i) the 90th calendar day following the applicable
Closing Date (or the 120th calendar day following such Closing Date in the event
that such registration statement is subject to review by the Commission) and
(ii) the 5th Trading Day after the date the Company is notified (orally or in
writing, whichever is earlier) by the Commission that such Registration
Statement will not be “reviewed” or will not be subject to further review; and

(b) with respect to a Demand Registration Statement or an Underwritten
Registration Statement, the earlier of (i) the 90th calendar day following any
Demand or Underwriting Demand, as applicable (or the 120th calendar day
following such Demand or Underwriting Demand in the event that such registration
statement is subject to review by the Commission) and (ii) the 5th Trading Day
after the date the Company is notified (orally or in writing, whichever is
earlier) by the Commission that such Demand Registration Statement or
Underwritten Registration Statement, as applicable, will not be “reviewed” or
will not be subject to further review;

provided, that in each of the foregoing clauses (a) and (b), if the
Effectiveness Deadline falls on a Saturday, Sunday or other day that the
Commission is closed for business, the Effectiveness Deadline shall be extended
to the next Business Day on which the Commission is open for business.

“Effectiveness Period” means, with respect to any Registration Statement, the
period from the Effective Date until the earlier of (a) such time as there are
no Registrable Securities covered by such Registration Statement remaining and
(b) such time that all Registrable Securities covered by such Registration
Statement may be sold pursuant to Rule 144 without restriction and without the
requirement for the Company to be in compliance with the current public
information requirements under Rule 144(c)(1) (or Rule 144(i)(2), if
applicable).

“Event” shall have the meaning set forth in Section 2(e).

“Event Date” shall have the meaning set forth in Section 2(e).

 

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

“Filing Deadline” means

(a) with respect to each Initial Registration Statement, the 30th calendar day
following the applicable Closing Date; and

(b) with respect to a Demand Registration Statement or an Underwritten
Registration Statement, the 30th calendar following any Demand or Underwriting
Demand, as applicable;

provided, that in each of the foregoing clauses (a) and (b), if the Filing
Deadline falls on a Saturday, Sunday or other day that the Commission is closed
for business, the Filing Deadline shall be extended to the next Business Day on
which the Commission is open for business.

“First Closing Date” shall have the meaning set forth in the Purchase Agreement.

“Grace Period” shall have the meaning set forth in Section 2(g).

“Holder” or “Holders” means the holder or holders (including Affiliates
thereof), as the case may be, from time to time of Registrable Securities.

“Indemnified Party” shall have the meaning set forth in Section 6(c).

“Indemnifying Party” shall have the meaning set forth in Section 6(c).

“Initiating Demand Holders” means, with respect to any Demand Registration, the
Required Demand Holders who initiated the Demand for such Demand Registration.

“Initiating Underwritten Demand Holders” means, with respect to any Underwritten
Demand Registration, the Required Underwritten Demand Holders who initiated the
Underwritten Demand for such Underwritten Demand Registration.

“Initial Registration Statement” shall have the meaning set forth in
Section 2(a).

“Inspectors” shall have the meaning set forth in Section 4(p).

“Lead Purchasers” shall have the meaning set forth in the Purchase Agreement.

“Liquidated Damages” shall have the meaning set forth in Section 2(e).

“Losses” shall have the meaning set forth in Section 6(a).

“New Registration Statement” shall have the meaning set forth in Section 2(a).

“Piggyback Registration” shall have the meaning set forth in Section 3(a).

 

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“Piggyback Registration Statement” means a registration statement of the Company
filed under the Securities Act which covers the resale of all of the Registrable
Securities requested to be included therein pursuant to the provisions of
Section 3 and all amendments and supplements to such registration statement,
including post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto and all material incorporated by
reference (or deemed to be incorporated by reference) therein.

“Person” means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind.

“Principal Market” means the Trading Market on which the Common Shares are
primarily listed on and quoted for trading, which, as of the Closing Date, shall
be the OTC Market Group Inc.’s OTC Pink.

“Proceeding” means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.

“Prospectus” means the prospectus included in a Registration Statement
(including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by a
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.

“Purchase Agreement” shall have the meaning set forth in the Recitals.

“Purchaser” or “Purchasers” shall have the meaning set forth in the Preamble.

“Records” shall have the meaning set forth in Section 4(p).

“Registrable Securities” means all of the Common Shares issuable upon the
conversion of the Series C Preferred Stock, the Series D Preferred Stock and the
Series E Preferred Stock (in each case, assuming that there are no restrictions
on the right of the Purchaser to effect such conversion and that there are
sufficient shares of Common Stock available to effect such conversion) and any
securities issued or issuable upon any stock split, dividend or other
distribution, recapitalization or similar event with respect to the such
securities, provided, that the Holder has completed and delivered to the Company
a Selling Stockholder Questionnaire; and provided, further, that such securities
shall cease to be Registrable Securities upon the earliest to occur of the
following: (a) a sale pursuant to a Registration Statement or Rule 144 under the
Securities Act (in which case, only such security sold shall cease to be a
Registrable Security); and (b) when such securities cease to be outstanding.

“Registration Expenses” shall have the meaning set forth in Section 5.

 

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“Registration Restriction Period” shall have the meaning set forth in Section
8(b).

“Registration Statements” means any one or more registration statements of the
Company filed under the Securities Act that covers the resale of any of the
Registrable Securities pursuant to the provisions of this Agreement (including
without limitation the Initial Registration Statement, the New Registration
Statement, any Remainder Registration Statement, any Demand Registration
Statements, any Underwritten Registration Statements and any Piggyback
Registration Statements), amendments and supplements to such Registration
Statements, including post-effective amendments, all exhibits and all material
incorporated by reference or deemed to be incorporated by reference in such
Registration Statements.

“Remainder Registration Statement” shall have the meaning set forth in
Section 2(a).

“Required Demand Holder” means Lead Purchasers holding at least a majority of
the Registrable Securities held by the Lead Purchasers for so long as the Lead
Purchasers and their respective Affiliates and Persons that share a common
investment advisor with a Lead Purchaser hold at least 12% of the Registrable
Securities in the aggregate.

“Required Underwritten Demand Holder” means any Lead Purchaser for so long as
such Lead Purchaser ands its Affiliates and Persons that share a common
investment advisor with such Lead Purchaser hold at least 5% of the Registrable
Securities in the aggregate.

“Rights Offering” shall have the meaning set forth in the Purchase Agreement.

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

“Rule 415” means Rule 415 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

“Rule 424” means Rule 424 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

“SEC Guidance” means (i) any publicly-available written or oral guidance,
comments, requirements or requests of the Commission staff and (ii) the
Securities Act.

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

“Selling Stockholder Questionnaire” means a questionnaire in the form attached
as Annex B hereto, or such other form of questionnaire as may reasonably be
adopted by the Company from time to time.

“Series C Preferred Stock” means the shares of Convertible Noncumulative
Perpetual Preferred Stock, Series C, $1.00 par value per share, of the Company.

 

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“Series D Preferred Stock” means the shares of Convertible Noncumulative
Perpetual Preferred Stock, Series D, $1.00 par value per share, of the Company.

“Series E Preferred Stock” means the shares of Convertible Noncumulative
Perpetual Preferred Stock, Series E, $1.00 par value per share, of the Company.

“Suspension Event” means any event of the types specified in Section 4(c)(iii),
Section 4(c)(iv) and Section 4(c)(v).

“Trading Day” means (i) a day on which the Common Shares are traded in any
Trading Market, or (ii) if the Common Shares are not quoted on any Trading
Market, a day on which the Common Shares are quoted in the over-the-counter
market as reported in the “pink sheets” by OTC Markets Group Inc. (or any
similar organization or agency succeeding to its functions of reporting prices);
provided that in the event that the Common Shares are not listed or quoted as
set forth in (i) and (ii) hereof, then Trading Day shall mean a Business Day.

“Trading Market” means the Over-the-Counter Bulletin Board or other national
securities exchange, quotation system or over-the-counter market on which the
Common Shares are listed or quoted for trading on the date in question.

“Transfer Agent” shall have the meaning set forth in Section 2(e).

“Underwriter” shall mean each of the investment banks and managers of an
Underwritten Offering.

“Underwriter Holder” shall have the meaning set forth in Section 4(p).

“Underwriting Demand” shall have the meaning set forth in Section 2(c).

“Underwritten Offering” shall mean an offering in which Registrable Securities
are sold to an Underwriter for reoffering to the public, which may be a marketed
underwritten offering.

“Underwritten Registration” means a registration required to be effected by the
Company pursuant to Section 2(c).

“Underwritten Registration Statement” means a registration statement of the
Company filed under the Securities Act which covers resale of all of the the
Registrable Securities requested to be included therein pursuant to the
provisions of Section 2(c) and all amendments and supplements to such
registration statement, including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference (or deemed to be incorporated by reference)
therein.

2. Registration.

(a) Initial Registration.

(i) Required Registration. On or prior to each applicable Filing Deadline with
respect to each Closing, the Company shall prepare and file with the Commission

 

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a Registration Statement covering the resale of all of the Registrable
Securities not already covered by an existing and effective Registration
Statement for an offering to be made on a continuous basis pursuant to Rule 415
or, if Rule 415 is not available for offers and sales of the Registrable
Securities, by such other means of distribution of Registrable Securities as the
Holders holding a majority of the Registrable Securities may reasonably
determine (each, an “Initial Registration Statement”). Each Initial Registration
Statement shall be on such form available to the Company to register for resale
of the Registrable Securities as a secondary offering, subject to the provisions
of Section 2(h) and shall contain (except if otherwise required pursuant to
written comments received from the Commission upon a review of such Registration
Statement) the “Plan of Distribution” section substantially in the form attached
hereto as Annex A. Notwithstanding the registration obligations set forth in
this Section 2, in the event the Commission informs the Company that all of the
Registrable Securities cannot, as a result of the application of Rule 415, be
registered for resale as a secondary offering on a single registration
statement, the Company agrees to promptly (A) inform each of the Holders thereof
and use its reasonable best efforts to file amendments to such Initial
Registration Statement as required by the Commission and/or (B) withdraw such
Initial Registration Statement and file a new registration statement (each, a
“New Registration Statement”), in either case covering the maximum number of
Registrable Securities permitted to be registered by the Commission, on such
form available to the Company to register for resale the Registrable Securities
as a secondary offering; provided, however, that prior to filing such amendment
or New Registration Statement, the Company shall be obligated to use its
reasonable best efforts to advocate with the Commission for the registration of
all of the Registrable Securities in accordance with the SEC Guidance, including
without limitation, Securities Act Rules Compliance and Disclosure
Interpretation 612.09. Each New Registration Statement shall be on such form
available to the Company to register for resale of the Registrable Securities as
a secondary offering, subject to the provisions of Section 2(h) and shall
contain (except if otherwise required pursuant to written comments received from
the Commission upon a review of such Registration Statement) the “Plan of
Distribution” section substantially in the form attached hereto as Annex A.

(ii) Priority in Initial Registration. Notwithstanding any other provision of
this Agreement and subject to the payment of Liquidated Damages in
Section 2(e)), if any SEC Guidance sets forth a limitation of the number of
Registrable Securities or other Common Shares permitted to be registered on a
particular Registration Statement as a secondary offering (and notwithstanding
that the Company used diligent efforts to advocate with the Commission for the
registration of all or a greater number of Registrable Securities), the number
of Registrable Securities or other Common Shares to be registered on such
Registration Statement will be reduced in order as follows: (1) the Company
shall reduce the number of Registrable Securities to be included by all Holders
other than a Lead Purchaser or any of its Affiliates on a pro rata basis based
on the total number of unregistered Registrable Securities held by such Holders
and (2) the Company shall reduce the number of Registrable Securities to be
included by all Lead Purchasers and their respective Affiliates on a pro rata
basis based on the total number of unregistered Registrable Securities held by
such Lead Purchaser and their respective Affiliates.

(iii) Additional Registration Statements. In the event the Company amends an
Initial Registration Statement or files a New Registration Statement, as the
case may be, under clauses (A) or (B) of Section 2(a)(i), the Company will use
its reasonable best efforts

 

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to file with the Commission, as promptly as allowed by Commission or SEC
Guidance provided to the Company or to registrants of securities in general, one
or more registration statements on such form available to the Company to
register for resale those Registrable Securities that were not registered for
resale on such Initial Registration Statement, as amended, or such New
Registration Statement for an offering to be made on a continuous basis pursuant
to Rule 415 or, if Rule 415 is not available for offers and sales of the
Registrable Securities, by such other means of distribution of Registrable
Securities as the Holders holding a majority of the Registrable Securities may
reasonably determine (the “Remainder Registration Statements”). Each Remainder
Registration Statement shall be on such form available to the Company to
register for resale of the Registrable Securities that were not registered for
resale on an Initial Registration Statement, as amended, or a New Registration
Statement as a secondary offering, subject to the provisions of Section 2(h) and
shall contain (except if otherwise required pursuant to written comments
received from the Commission upon a review of such Registration Statement) the
“Plan of Distribution” section substantially in the form attached hereto as
Annex A; provided that the information to be included in the Selling
Stockholders section which relates to a Holder shall be subject to the approval
of such Holder, and the Company shall make any changes to such section and the
Plan of Distribution section that are reasonably requested by such Holder.

(b) Demand Registration.

(i) Right to Demand. Subject to the limitations set forth in Section 2(a)(ii),
at any time or from time to time, the Required Demand Holders shall have the
right to request in writing that the Company register all or part of such
Required Demand Holders’ Registrable Securities not then already covered by
another Registration Statement (a “Demand”) by filing with the Commission a
Demand Registration Statement. As promptly as practicable, but no later than
five (5) days after receipt of a Demand, the Company shall give written notice
of such requested registration to all Holders of Registrable Securities. Subject
to Section 2(c)(iv), the Company shall include in a Demand Registration (A) the
Registrable Securities intended to be disposed of by the Initiating Demand
Holders and (B) the Registrable Securities intended to be disposed of by any
other Holder which shall have made a written request (which request shall
specify the amount of Registrable Securities to be registered and the intended
method of disposition thereof) to the Company for inclusion thereof in such
registration within twenty (20) days after the receipt of such written notice
from the Company. The Company shall, as promptly as possible following a Demand
(but in no event later than the applicable Filing Deadline), cause to be filed
with the Commission a Demand Registration Statement providing for the
registration under the Securities Act of the Registrable Securities which the
Company has been so requested to register by all such Holders, to the extent
necessary to permit the disposition of such Registrable Securities so to be
registered in accordance with the intended methods of disposition thereof
specified in such Demand or further requests.

(ii) Limitations. In no event shall the Company be required to effect a Demand
Registration within ninety (90) days of the effectiveness of another Demand
Registration Statement.

(iii) Non-Exclusive. The registration rights granted pursuant to the provisions
of this Section 2(b) shall be in addition to the registration rights granted
pursuant to the other provisions of Section 2.

 

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(c) Underwritten Registration.

(i) Right to Demand. Subject to the limitations set forth in Section 2(c)(iii),
at any time or from time to time, any Required Underwritten Demand Holder shall
have the right to request in writing that the Company file a post-effective
amendment or prospectus supplement to a Registration Statement to effect a take
down of the Registrable Securities included in such Registration Statement in
the form of an Underwritten Offering (an “Underwriting Demand”). As promptly as
practicable, but no later than five (5) days after receipt of an Underwritten
Demand, the Company shall give written notice of such requested registration to
all Holders of Registrable Securities. Subject to Section 2(c)(iv), the Company
shall include in an Underwritten Demand Registration (A) the Registrable
Securities intended to be disposed of by the Initiating Underwritten Demand
Holders and (B) the Registrable Securities intended to be disposed of by any
other Holder which shall have made a written request (which request shall
specify the amount of Registrable Securities to be registered and the intended
method of disposition thereof) to the Company for inclusion thereof in such
registration within twenty (20) days after the receipt of such written notice
from the Company. The Initiating Underwritten Demand Holders may require that
all Holders participating in such Underwritten Registration sell their
Registrable Securities to the Underwriters at the same price and on the same
terms of underwriting applicable to such Initiating Underwritten Demand Holders.

(ii) Selection of Underwriters. The sole or managing Underwriters and any
additional investment bankers and managers to be used in connection with such
registration shall be selected by the Initiating Underwritten Demand Holders,
subject to the approval of the Company.

(iii) Limitations; Delay. In no event shall the Company be required to effect an
Underwritten Registration within ninety (90) days of the effectiveness of
another Registration Statement. Notwithstanding anything to the contrary
contained herein, the Company shall have the right to delay its participation
in, the filing of or the effectiveness of any Underwritten Registration if in
the good faith opinion of the Board of Directors, the Company’s participation in
an Underwritten Registration would be impractical or inadvisable at such time,
provided that any such delay will count towards the maximum duration of any
Suspension Event pursuant to Section 8(d) (such that (i) if the Company files
the Underwritten Registration Statement at any time after the applicable Filing
Deadline, each day after such Filing Deadline shall count towards the Suspension
Event and (ii) if the Underwritten Registration Statement is declared effective
by the Commission at any time after the applicable Effectiveness Deadline, each
day after such Effectiveness Deadline shall count towards such Suspension
Event).

(iv) Priority in Underwritten Offerings.

(A) If the sole or lead managing Underwriter, as the case may be, of such
Underwritten Offering shall advise the Company in writing (with a copy to each
Holder requesting registration) on or before the date five (5) Business Days
prior to the date then scheduled for such offering that, in its opinion, the
amount of Registrable Securities, if any, requested to be included in such
Underwritten Registration exceeds the number which can be sold in such offering
within a price range reasonably acceptable to the Holders of a majority of the
Registrable Securities to be included in such Registration Statement (such
writing to state the

 

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basis of such opinion and the approximate number of Registrable Securities which
may be included in such offering), the amount of Registrable Securities included
in such Underwritten Registration shall be reduced in order as follows: (1) the
Company shall reduce the number of Registrable Securities to be included by all
other Holders (other than a Lead Purchaser or any of its Affiliates) on a pro
rata basis based on the total number of Registrable Securities held by such
Holders and (2) the Company shall reduce the number of Registrable Securities to
be included by all Lead Purchasers and their respective Affiliates on a pro rata
basis based on the total number of Registrable Securities held by such Lead
Purchaser and their respective Affiliates.

(B) In the event the Company shall not, by virtue of Section 2(c)(iv), include
in any Underwritten Registration all of the Registrable Securities of any Holder
requesting to be included in such Underwritten Registration, such Holder may,
upon written notice to the Company given within five (5) Business Days of the
time such Holder first is notified of such matter, reduce the amount of
Registrable Securities it desires to have included in such Underwritten
Registration, whereupon only the Registrable Securities, if any, it desires to
have included will be so included and the Holders not so reducing shall be
entitled to a corresponding increase in the amount of Registrable Securities to
be included in such Underwritten Registration.

(v) Non-Exclusive. The registration rights granted pursuant to the provisions of
this Section 2(c) shall be in addition to the registration rights granted
pursuant to the other provisions of Section 2.

(d) General.

(i) Effective Registration Statement.

(A) The Company shall use its reasonable best efforts to cause each Registration
Statement to be declared effective by the Commission as soon as practicable and
no later than the applicable Effectiveness Deadline, and shall use its
reasonable best efforts to keep each Registration Statement continuously
effective and in compliance with the Securities Act and usable for resale of
such Registrable Securities for the Effectiveness Period (including by
immediately refiling such Registration Statement (or a New Registration
Statement or a Remainder Registration Statement, as applicable) if such
Registration Statement expires). The Company shall request effectiveness of a
Registration Statement as of 5:00 p.m. New York City time on a Trading Day. Each
Registration Statement shall contain (except if otherwise required pursuant to
written comments received from the Commission upon a review of such Registration
Statement) the “Plan of Distribution” section substantially in the form attached
hereto as Annex A. The Company shall promptly notify the Holders via facsimile
or electronic mail of a “.pdf” format data file of the effectiveness of a
Registration Statement within one (1) Business Day after the effectiveness order
for the Registration Statement appears on the Commission’s EDGAR database. The
Company shall, by 9:30 a.m. New York City time on the first Trading Day after
the applicable Effective Date, file a final Prospectus with the Commission, as
required by Rule 424(b).

 

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(B) A Registration Statement shall not be deemed to have become effective (and
the related registration will not be deemed to have been effected) (1) unless it
has been declared effective by the Commission and remains effective for the
Effectiveness Period, (2) if the offering of any Registrable Securities pursuant
to such Registration Statement is interfered with by any stop order, injunction
or other order or requirement of the Commission or any other governmental agency
or court, or (iii) if, in the case of an Underwritten Offering, the conditions
to closing specified in an underwriting agreement to which the Company is a
party are not satisfied other than by the sole reason of any breach, failure or
action by the Holders of Registrable Securities or are not otherwise waived by
the parties entitled to do so.

(ii) Right to Withdraw. (A) A Demand or an Underwriting Demand may be withdrawn
prior to the filing of the Demand Registration Statement or the Underwritten
Statement, as applicable, by the Initiating Demand Holders or Initiating
Underwritten Demand Holders, as applicable, and (B) a Demand Registration
Statement or an Underwritten Registration Statement may be withdrawn prior to
the effectiveness thereof by the Initiating Demand Holders or Initiating
Underwritten Demand Holders, as applicable.

(e) Liquidated Damages. If: (i) an Initial Registration Statement is not filed
with the Commission on or prior to its Filing Deadline, (ii) an Initial
Registration Statement or the New Registration Statement, as applicable, is not
declared effective by the Commission (or otherwise does not become effective)
for any reason on or prior to its Effectiveness Deadline, (iii) after its
Effective Date, (A) such Registration Statement ceases for any reason (including
without limitation by reason of a stop order or the Company’s failure to update
the Registration Statement), to remain continuously effective as to all
Registrable Securities for which it is required to be effective or (B) the
Holders are not permitted to utilize the Prospectus therein to resell such
Registrable Securities, in the case of (A) and (B) (other than during an
Allowable Grace Period (as defined in Section 2(g) of this Agreement)), (iv) a
Grace Period (as defined in Section 2(g) of this Agreement) exceeds the length
of an Allowable Grace Period, or (v) after the date that is six months following
the Closing Date, and only in the event a Registration Statement is not
effective or available to sell all Registrable Securities, the Company fails to
file with the Commission any required reports under Section 13 or 15(d) of the
Exchange Act such that it is not in compliance with Rule 144(c)(1) (or Rule
144(i)(2), if applicable), as a result of which the Holders who are not
affiliates are unable to sell Registrable Securities without restriction under
Rule 144 (or any successor thereto) (any such failure or breach in clauses
(i) through (v) above being referred to as an “Event,” and, for purposes of
clauses (i), (ii), (iii) or (v), the date on which such Event occurs, or for
purposes of clause (iv) the date on which such Allowable Grace Period is
exceeded, being referred to as an “Event Date”), then in addition to any other
rights the Holders may have hereunder or under applicable law, on each such
Event Date and on each monthly anniversary of each such Event Date (if the
applicable Event shall not have been cured by such date) until the applicable
Event is cured, the Company shall pay to each Holder an amount in cash, as
liquidated damages and not as a penalty (“Liquidated Damages”), equal to 1.5% of
the aggregate purchase price paid by such Holder pursuant to the Purchase
Agreement for any Registrable Securities held by such Holder on the Event Date.
The parties agree that notwithstanding anything to the contrary herein or in the
Purchase Agreement, no Liquidated Damages shall be payable (i) to non-affiliates
of the Company if as of the relevant Event Date, the Registrable Securities may
be sold by non-affiliates without volume or manner of sale restrictions under
Rule 144 and the Company is in compliance with the current public information
requirements under Rule 144(c)(1) (or Rule 144(i)(2), if applicable), as
determined

 

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by counsel to the Company pursuant to a written opinion letter to such effect,
addressed and reasonably acceptable to the Company’s transfer agent (the
“Transfer Agent”) (provided, however, that in the case of any Lead Purchaser or
its Affiliates, such determination may not be made without the consent of the
applicable Lead Purchaser, which consent shall not be unreasonably withheld,
delayed or conditioned) and (ii) with respect to any period after the expiration
of the Effectiveness Period (it being understood that this sentence shall not
relieve the Company of any Liquidated Damages accruing prior to the expiration
of the Effectiveness Period). If the Company fails to pay any Liquidated Damages
pursuant to this Section 2(c) in full within three (3) Business Days after the
date payable, the Company will pay interest thereon at a rate of 1.5% per month
(or such lesser maximum amount that is permitted to be paid by applicable law)
to the Holder, accruing daily from the date such Liquidated Damages are due
until such amounts, plus all such interest thereon, are paid in full. The
Liquidated Damages pursuant to the terms hereof shall apply on a daily pro-rata
basis for any portion of a month prior to the cure of an Event, except in the
case of the first Event Date. With respect to a Purchaser, the Effectiveness
Deadline for a Registration Statement shall be extended without default or
Liquidated Damages hereunder in the event that the Company’s failure to obtain
the effectiveness of the Registration Statement on a timely basis results from
the failure of such Purchaser to timely provide the Company with information
requested by the Company and necessary to complete the Registration Statement in
accordance with the requirements of the Securities Act (in which case the
Effectiveness Deadline would be extended with respect to Registrable Securities
held by such Purchaser). On the date of this Agreement, the Company shall have
notified each Purchaser of all information required from such Purchaser in order
to complete the Initial Registration Statement (and the New Registration
Statement, if applicable) in accordance with the requirements of the Securities
Act.

(f) Supplied Information. Each Holder agrees to furnish to the Company a
completed Selling Stockholder Questionnaire (which shall be furnished by the
Company to each Holder no later than five (5) Trading Days following the date
hereof). At least ten (10) Trading Days prior to the first anticipated filing
date of a Registration Statement for any registration under this Agreement, the
Company will notify each Holder of the information the Company requires from
that Holder other than the information contained in the Selling Stockholder
Questionnaire, if any, which shall be completed and delivered to the Company
promptly upon request and, in any event, within two (2) Trading Days prior to
the applicable anticipated filing date. Each Holder further agrees that it shall
not be entitled to be named as a selling securityholder in the Registration
Statement or use the Prospectus for offers and resales of Registrable Securities
at any time, unless such Holder has returned to the Company a completed and
signed Selling Stockholder Questionnaire and a response to any requests for
further information as described in the previous sentence. If a Holder of
Registrable Securities returns a Selling Stockholder Questionnaire or a request
for further information, in either case, after its respective deadline, the
Company shall use its reasonable best efforts at the expense of the Holder who
failed to return the Selling Stockholder Questionnaire or to respond for further
information to take such actions as are required to name such Holder as a
selling security holder in the Registration Statement or any pre-effective or
post-effective amendment thereto and to include (to the extent not theretofore
included) in the Registration Statement the Registrable Securities identified in
such late Selling Stockholder Questionnaire or request for further information.
Each Holder acknowledges and agrees that the information in the Selling
Stockholder Questionnaire or request for further information as described in
this Section 2(f) will be used by the Company in the preparation of the
Registration Statement and hereby consents to the inclusion of such information
in the Registration Statement.

 

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(g) Suspension; Grace Period. Notwithstanding anything to the contrary herein,
at any time after a Registration Statement has been declared effective by the
Commission, the Company may delay the disclosure of material non-public
information concerning the Company if the disclosure of such information at the
time is not, in the good faith judgment of the Company, in the best interests of
the Company (a “Grace Period”); provided, however, the Company shall promptly
(i) notify the Holders in writing of the existence of material non-public
information giving rise to a Grace Period (provided, that the Company shall not
disclose the content of such material non-public information to the Holders) or
the need to file a post-effective amendment, as applicable, and the date on
which such Grace Period will begin, (ii) use reasonable best efforts to
terminate a Grace Period as promptly as practicable and (iii) notify the Holders
in writing of the date on which the Grace Period ends; provided, further, that
no single Grace Period shall exceed ten (10) consecutive days, and during any
three hundred sixty five (365) day period, the aggregate of all Grace Periods
shall not exceed an aggregate of forty-five (45) days and the first day of any
Grace Period must be at least five (5) Trading Days after the last day of any
prior Grace Period (each Grace Period complying with this provision being an
“Allowable Grace Period”). For purposes of determining the length of a Grace
Period, the Grace Period shall be deemed to begin on and include the date the
Holders receive the notice referred to in clause (i) above and shall end on and
include the later of the date the Holders receive the notice referred to in
clause (iii) above and the date referred to in such notice; provided, however,
that no Grace Period shall be longer than an Allowable Grace Period.
Notwithstanding anything to the contrary, the Company shall cause the Transfer
Agent to deliver unlegended Common Shares to a transferee of a Holder in
accordance with the terms of the Purchase Agreement in connection with any sale
of Registrable Securities with respect to which a Holder has entered into a
contract for sale prior to the Holder’s receipt of the notice of a Grace Period
and for which the Holder has not yet settled.

(h) Registration Statement Form. Each Purchaser acknowledges that the Common
Shares are not currently listed on a national securities exchange or an
“automated quotation system,” as such term is defined under the Exchange Act and
the rules of the Commission promulgated thereunder, and that the Company is not
currently eligible to use Form S-3 for the Registration Statements required to
be filed hereunder and is not eligible to use a “free writing prospectus.” The
Company, however, shall undertake to register the Registrable Securities on Form
S-3 or any similar short-form registration statement promptly after the Company
is permitted to use such short-form registration statement; provided, however
that the Company shall maintain the effectiveness of any Registration Statement
then in effect until such time as a Registration Statement on Form S-3 or any
similar short-form registration statement covering the Registrable Securities
has been declared effective by the Commission.

3. Piggyback Registrations.

(a) Right to Participate.

(i) If the Company at any time or from time to time proposes to register any of
its securities under the Securities Act, whether or not pursuant to registration

 

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rights granted to other holders of its securities and whether or not for sale
for its own account, the Company shall deliver prompt written notice (which
notice shall be given at least thirty (30) calendar days prior to such proposed
registration and which notice shall be given after the Company has publicly
disclosed such proposed registration) to all Holders of its intention to
undertake such registration, describing in reasonable detail the proposed
registration and distribution (including the anticipated range of the proposed
offering price, the class and number of securities proposed to be registered and
the distribution arrangements) and of such Holders’ right to participate in such
registration under this Section 3. Subject to the other provisions of this
Section 3, upon the written request of any Holder made within fifteen (15) days
after the receipt of such written notice from the Company (which request shall
specify the amount of Registrable Securities to be registered), the Company
shall effect the registration under the Securities Act of all Registrable
Securities requested by Holders to be so registered (a “Piggyback
Registration”), to the extent requisite to permit the disposition of such
Holders’ Registrable Securities so to be registered, by inclusion of such
Registrable Securities in the Registration Statement which covers the securities
of the Company which the Company proposes to register and shall cause such
Registration Statement to become and remain effective with respect to such
Holders’ Registrable Securities in accordance with Section 2 and the
registration procedures set forth in Section 4. If a Piggyback Registration
involves an Underwritten Offering, immediately upon notification to the Company
from the Underwriter(s) of the price at which such Registrable Securities are to
be sold, the Company shall so advise each participating Holder. The Holders
requesting inclusion in a Piggyback Registration may, at any time prior to the
effective date of the Piggyback Registration Statement (and for any reason),
revoke such request by delivering written notice to the Company revoking such
requested inclusion.

(ii) If at any time after giving written notice of its intention to register any
securities and prior to the effective date of the Piggyback Registration
Statement filed in connection with such registration, the Company shall
determine for any reason not to register or to delay registration of such
securities, the Company may, at its election, give written notice of such
determination to each Holder and, thereupon, (A) in the case of a determination
not to register, the Company shall be relieved of its obligation to register any
Registrable Securities in connection with such registration (but not from its
obligation to pay the Registration Expenses incurred in connection therewith),
without prejudice, however, to the rights of Holders to cause such registration
to be effected as a registration under Section 2(b) or the Company’s obligation
to effect a registration under Section 2(a), and (b) in the case of a
determination to delay such registration, the Company shall be permitted to
delay the registration of such Registrable Securities for the same period as the
delay in registering such other securities; provided, however, that if such
delay shall extend beyond one hundred twenty (120) days from the date the
Company received a request to include Registrable Securities in such Piggy
Registration, then the Company shall again give all Holders the opportunity to
participate therein and shall follow the notification procedures set forth in
the preceding paragraph.

(b) Priority in Piggyback Registration. If (x) a Piggyback Registration involves
an Underwritten Offering (on a firm commitment basis) and the sole or lead
managing Underwriter, as the case may be, of such Underwritten Offering shall
advise the Company in writing (with a copy to each Holder requesting
registration) on or before the date five (5) Business Days prior to the date
then scheduled for such offering that, in its opinion, the amount of Registrable
Securities, if any, requested to be included in such Piggyback Registration

 

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exceeds the number which can be sold in such offering within a price range
reasonably acceptable to the Holders of a majority of the Registrable Securities
to be included in such Registration Statement (such writing to state the basis
of such opinion and the approximate number of Registrable Securities which may
be included in such offering) or (y) if any SEC Guidance sets forth a limitation
of the number of Registrable Securities permitted to be registered on such
Piggyback Registration Statement as a secondary offering (and notwithstanding
that the Company used diligent efforts to advocate with the Commission for the
registration of all or a greater number of Registrable Securities), in each case
the number of Registrable Securities to be registered on such Piggyback
Registration Statement will be reduced in order as follows:

(i) in the case of a registration initiated by the Company, (1) the Company
shall reduce the number of Registrable Securities to be included by all other
Holders (other than a Lead Purchaser or any of its Affiliates) on a pro rata
basis based on the total number of Registrable Securities held by such Holders,
(2) the Company shall reduce the number of Registrable Securities to be included
by all Lead Purchasers and their respective Affiliates on a pro rata basis based
on the total number of Registrable Securities held by such Lead Purchasers and
their respective Affiliates and (3) the Company shall reduce the number of
Registrable Securities to be included by the Company; and

(ii) in the case of a registration initiated by anyone other than the Company,
(1) the Company shall reduce the number of Registrable Securities to be included
by all other Holders (other than a Lead Purchaser or any of its Affiliates) on a
pro rata basis based on the total number of Registrable Securities held by such
Holders, (2) the Company shall reduce the number of Registrable Securities to be
included by all Lead Purchasers and their respective Affiliates on a pro rata
basis based on the total number of Registrable Securities held by such Lead
Purchaser and their respective Affiliates and (3) the Company shall reduce the
number of Registrable Securities to be included by the Persons initiating such
registration on a pro rata basis based on the total number of Registrable
Securities held by such Persons;

provided, however, that in the event the Company will not, by virtue of this
Section 3, include in any such registration all of the Registrable Securities of
any Holder requested to be included in such registration, such Holder may, upon
written notice to the Company given within three days of the time such Holder
first is notified of such matter, reduce the amount of Registrable Securities it
desires to have included in such registration, whereupon only the Registrable
Securities, if any, it desires to have included will be so included and the
Holders not so reducing shall be entitled to a corresponding increase in the
amount of Registrable Securities to be included in such registration.

(c) Non-Exclusive. The registration rights granted pursuant to the provisions of
this Section 3 shall be in addition to the registration rights granted pursuant
to the provisions of Section 2.

(d) Limitations on Right to Participate. No Holder shall have be entitled to
exercise its rights under this Section 3 or to otherwise attempt to effect a
Piggyback Registration with respect to (i) the Rights Offering; (ii) a
registration statement on Form S-8, (iii) a registration statement on Form S-4
in connection with an acquisition by the Company or (iv) a registration
statement to register for resale securities issued by the Company pursuant to
acquisitions or strategic transactions approved by a majority of the
disinterested directors of the Company.

 

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4. Registration Procedures.

In connection with the Company’s registration obligations hereunder:

(a) the Company shall not less than three (3) Trading Days prior to the filing
of a Registration Statement and not less than one (1) Trading Day prior to the
filing of any related Prospectus or any amendment or supplement thereto (except
for Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K and any similar or successor reports), furnish to the Holder
copies of such Registration Statement, Prospectus or amendment or supplement
thereto, as proposed to be filed, which documents will be subject to the review
of such Holder (it being acknowledged and agreed that if a Holder does not
object to or comment on the aforementioned documents prior to the end of such
three (3) Trading Day or one (1) Trading Day period, as the case may be, then
such Holder shall be deemed to have consented to and approved the use of such
documents). The Company agrees to include in any Registration Statement all
information which any selling Holder shall reasonably request. The Company shall
not file any Registration Statement or amendment or supplement thereto in a form
to which a Holder reasonably objects in good faith, provided, that, the Company
is notified of such objection in writing within the three (3) Trading Day or one
(1) Trading Day period described above, as applicable;

(b) (i) the Company shall prepare and file with the Commission such amendments
(including post-effective amendments) and supplements, to each Registration
Statement and the Prospectus used in connection therewith as may be necessary to
keep such Registration Statement continuously effective as to the applicable
Registrable Securities for its Effectiveness Period (except during an Allowable
Grace Period); (ii) the Company shall cause the related Prospectus to be amended
or supplemented by any required Prospectus supplement (subject to the terms of
this Agreement), and, as so supplemented or amended, to be filed pursuant to
Rule 424 (except during an Allowable Grace Period); (iii) the Company shall
respond as promptly as reasonably practicable to any comments received from the
Commission with respect to each Registration Statement or any amendment thereto
and, as promptly as reasonably possible, provide the Holders true and complete
copies of all correspondence from and to the Commission relating to such
Registration Statement that pertains to the Holders as “Selling Stockholders”
but not any comments that would result in the disclosure to the Holders of
material and non-public information concerning the Company; and (iv) the Company
shall comply with the provisions of the Securities Act and the Exchange Act with
respect to the disposition of all Registrable Securities covered by a
Registration Statement until such time as all of such Registrable Securities
shall have been disposed of (subject to the terms of this Agreement) in
accordance with the intended methods of disposition by the Holders thereof as
set forth in such Registration Statement as so amended or in such Prospectus as
so supplemented; provided, however, that each Purchaser shall be responsible for
the delivery of the Prospectus to the Persons to whom such Purchaser sells any
of the Registrable Securities (including in accordance with Rule 172 under the
Securities Act), and each Purchaser agrees to dispose of Registrable Securities
in compliance with the plan of distribution described in the Registration

 

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Statement and otherwise in compliance with applicable federal and state
securities laws; provided that the plan of distribution may be modified to
comply with the requirements of the Securities Act, other applicable laws and
regulations or SEC Guidance. In the case of amendments and supplements to a
Registration Statement which are required to be filed pursuant to this Agreement
(including pursuant to this Section 4(b)) by reason of the Company filing a
report on Form 10-K, Form 10-Q or Form 8-K or any analogous report under the
Exchange Act, the Company shall have incorporated such report by reference into
such Registration Statement, if applicable, or shall file such amendments or
supplements with the Commission on the same day on which the Exchange Act report
which created the requirement for the Company to amend or supplement such
Registration Statement was filed;

(c) the Company shall notify the Holders (which notice shall, pursuant to
clauses (iii) through (v) of this Section 4(c), be accompanied by an instruction
to suspend the use of the Prospectus until the requisite changes have been made)
as promptly as reasonably practicable (and, in the case of (i)(A) of this
Section 4(c), not less than two (2) Trading Days prior to such filing, in the
case of (iii) and (iv) of this Section 4(c), not more than one Trading Day after
such issuance or receipt, and in the case of (v) of this Section 4(c), not more
than one Trading Day after the occurrence or existence of such development) and
(if requested by any such Person) confirm such notice in writing no later than
one Trading Day following the day (i)(A) when a Prospectus or any Prospectus
supplement or post-effective amendment to a Registration Statement is proposed
to be filed; (B) when the Commission notifies the Company whether there will be
a “review” of such Registration Statement and whenever the Commission comments
in writing on any Registration Statement (in which case the Company shall
provide to each of the Holders true and complete copies of all comments that
pertain to the Holders as a “Selling Stockholder” or to the “Plan of
Distribution” and all written responses thereto, but not information that the
Company believes would constitute material and non-public information); and
(C) with respect to each Registration Statement or any post-effective amendment,
when the same has become effective; (ii) of any request by the Commission or any
other Federal or state governmental authority for amendments or supplements to a
Registration Statement or Prospectus or for additional information that pertains
to the Holders as “Selling Stockholders” or the “Plan of Distribution”; (iii) of
the issuance by the Commission or any other federal or state governmental
authority of any stop order suspending the effectiveness of a Registration
Statement covering any or all of the Registrable Securities or the initiation of
any Proceedings for that purpose; (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; and (v) of the occurrence of any event or passage of time that makes
the financial statements included in a Registration Statement ineligible for
inclusion therein or any statement made in such Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires any revisions to such
Registration Statement, Prospectus or other documents so that, in the case of
such Registration Statement or the Prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
(in the case of any Prospectus, form of prospectus or supplement thereto, in
light of the circumstances under which they were made), not misleading;

 

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(d) the Company shall use reasonable best efforts to avoid the issuance of, or,
if issued, obtain the withdrawal of (i) any order suspending the effectiveness
of a Registration Statement, or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, as soon as practicable;

(e) the Company shall use its reasonable best efforts to cause the Registrable
Securities covered by a Registration Statement to be registered with or approved
by such other governmental agencies or authorities as may be necessary to
consummate the disposition of such Registrable Securities

(f) the Company shall, if requested by a Holder or an Underwriter of an
Underwritten Offering, if any, furnish to such Holder or such Underwriter,
without charge, (i) one conformed copy of each Registration Statement and each
amendment thereto, (ii) as many copies of each Prospectus, preliminary
Prospectus and each amendment thereto and (iii) all exhibits to the extent
requested by such Holder or Underwriter (including those previously furnished or
incorporated by reference) promptly after the filing of such documents with the
Commission; provided, that the Company shall have no obligation to provide any
document pursuant to this clause that is available on the Commission’s EDGAR
system;

(g) the Company shall, prior to any resale of Registrable Securities by a
Holder, use its reasonable best efforts to register or qualify or cooperate with
the selling Holders in connection with the registration or qualification (or
exemption from the registration or qualification) of such Registrable Securities
for the resale by the Holder under the securities or Blue Sky laws of such
jurisdictions within the United States as any Holder reasonably requests in
writing, to keep each registration or qualification (or exemption therefrom)
effective during the Effectiveness Period and to do any and all other acts or
things reasonably necessary to enable the disposition in such jurisdictions of
the Registrable Securities covered by each Registration Statement; provided,
that the Company shall not be required to qualify generally to do business in
any jurisdiction where it is not then so qualified, subject the Company to any
material tax in any such jurisdiction where it is not then so subject or file a
general consent to service of process in any such jurisdiction;

(h) the Company shall cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be delivered to a transferee pursuant to the Registration Statement, which
certificates shall be free, to the extent permitted by the Purchase Agreement
and under law, of all restrictive legends, and to enable such Registrable
Securities to be in such denominations and registered in such names as any such
Holders may reasonably request. Provided the Transfer Agent is participating in
the DTC Fast Automated Securities Transfer Program, the Transfer Agent may
credit such Registrable Securities, to the extent permitted by the Purchase
Agreement and under law, free from all restrictive legends, to such Holder’s or
its designee’s balance account with DTC through its Deposit Withdrawal Agent
Commission system. If the Transfer Agent is not participating in the DTC Fast
Automated Securities Transfer Program or if such Holder elected to not have the
Registrable Securities credited to such Holder’s balance account with DTC, the
Transfer Agent shall issue and deliver, to the address as specified by such
Holder, one or more certificates representing such Registrable Securities that
are, to the extent permitted by the Purchase Agreement and under law, free from
all restrictive legends;

 

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(i) the Company shall following the occurrence of any Suspension Event, as
promptly as reasonably practicable (taking into account the Company’s good faith
assessment of any adverse consequences to the Company and its stockholders of
the premature disclosure of such event), prepare and file a supplement or
amendment, including a post-effective amendment, to the affected Registration
Statements or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference, and file any
other required document so that, as thereafter delivered, no Registration
Statement nor any Prospectus will contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein (in the case of any Prospectus, form of prospectus
or supplement thereto, in light of the circumstances under which they were
made), not misleading;

(j) the Company may require each selling Holder to furnish to the Company a
certified statement as to (i) the number of Common Shares beneficially owned by
such Holder and any Affiliate thereof, (ii) any Financial Industry Regulatory
Authority (“FINRA”) affiliations, (iii) any natural Persons who have the power
to vote or dispose of the Registrable Securities and (iv) any other information
as may be requested by the Commission, FINRA or any state securities commission.
During any periods that the Company is unable to meet its obligations hereunder
with respect to the registration of Registrable Securities because any Holder
fails to furnish such information within five (5) Trading Days of the Company’s
request, any Liquidated Damages that are accruing at such time as to such Holder
only shall be tolled and any Event that may otherwise occur solely because of
such delay shall be suspended as to such Holder only, until such information is
delivered to the Company;

(k) the Company shall cooperate with any registered broker through which a
Holder proposes to resell its Registrable Securities in effecting a filing with
FINRA pursuant to FINRA Rule 5110 as requested by any such Holder and the
Company shall pay the filing fee required for the first such filing within two
(2) Business Days of the request therefor;

(l) if requested by a Holder, the Company shall (i) promptly incorporate in a
Prospectus supplement or post-effective amendment to the Registration Statement
such information as the Company reasonably agrees should be included therein and
(ii) make all required filings of such Prospectus supplement or such
post-effective amendment as soon as reasonably practicable after the Company has
received notification of the matters to be incorporated in such Prospectus
supplement or post-effective amendment;

(m) the Company shall otherwise use reasonable best efforts to comply with all
applicable rules and regulations of the Commission under the Securities Act and
the Exchange Act, including Rule 172, notify the Holders promptly if the Company
no longer satisfies the conditions of Rule 172 and take such other actions as
may be reasonably necessary to facilitate the registration of the Registrable
Securities hereunder; and make available to its security holders, as soon as
reasonably practicable, but not later than the Availability Date (as defined
below), an earnings statement covering a period of at least twelve (12) months,
beginning after the effective date of each Registration Statement, which earning
statement shall satisfy the provisions of Section 11(a) of the Securities Act,
including Rule 158 promulgated thereunder (for the purpose of this Section 4(m),
“Availability Date” means the 45th day following the end of the fourth fiscal
quarter that includes the effective date of such Registration Statement, except
that, if such fourth fiscal quarter is the last quarter of the Company’s fiscal
year, “Availability Date” means the 90th day after the end of such fourth fiscal
quarter);

 

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(n) if any Holder is required under applicable securities laws to be described
in the Registration Statement as an underwriter or a Holder believes that it
could reasonably be deemed to be an underwriter of Registrable Securities, the
Company shall furnish to such Holder, on the Effectiveness Date and thereafter
from time to time on such dates as a Holder may reasonably request (i) a letter,
dated such date, from the Company’s independent certified public accountants in
form and substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering, addressed to the
Holders, and (ii) an opinion, dated as of such date, of counsel representing the
Company for purposes of such Registration Statement, in form, scope and
substance as is customarily given in an underwritten public offering, addressed
to the Holders;

(o) no Holder shall be named as an “underwriter” in any Registration Statement
without such Holder’s prior written consent;

(p) the Company shall make available for inspection by (i) a Holder if such
Holder is required under applicable securities laws to be described in the
Registration Statement as an underwriter or a Holder believes that it could
reasonably be deemed to be an underwriter of Registrable Securities (an
“Underwriter Holder”), (iii) legal counsel retained by the Underwriter Holders,
(iv) legal counsel retained by each Underwriter, (iv) one firm of accountants or
other agents retained by the Underwriter Holders and (v) accountants or other
agents retained by each Underwriter (collectively, the “Inspectors”), all
pertinent financial and other records, and pertinent corporate documents and
properties of the Company (collectively, the “Records”), as shall be reasonably
deemed necessary by each Inspector, and cause the Company’s officers, directors
and employees to supply all information which any Inspector may reasonably
request; provided, however, that each Inspector shall agree to hold in strict
confidence and shall not make any disclosure (except to a Holder) or use of any
Record or other information which the Company determines in good faith to be
confidential, and of which determination the Inspectors are so notified, unless
(A) the disclosure of such Records is necessary to avoid or correct a
misstatement or omission in any Registration Statement or is otherwise required
under the Securities Act, (B) the release of such Records is ordered pursuant to
a final, non-appealable subpoena or order from a court or government body of
competent jurisdiction, or (C) the information in such Records has been made
generally available to the public other than by disclosure in violation of this
Agreement. Each Holder agrees that it shall, upon learning that disclosure of
such Records is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt notice to the Company and allow
the Company, at its expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, the Records deemed
confidential. Nothing herein (or in any other confidentiality agreement between
the Company and any Holder) shall be deemed to limit the Holders’ ability to
sell Registrable Securities in a manner which is otherwise consistent with
applicable laws and regulations;

 

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(q) the Company shall hold in confidence and not make any disclosure of
information concerning a Holder provided to the Company unless (i) disclosure of
such information is necessary to comply with federal or state securities laws,
(ii) the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (iii) the release of
such information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally available to the
public other than by disclosure in violation of this Agreement or any other
agreement. The Company agrees that it shall, upon learning that disclosure of
such information concerning a Holder is sought in or by a court or governmental
body of competent jurisdiction or through other means, give prompt written
notice to such Holder and allow such Holder, at the Holder’s expense, to
undertake appropriate action to prevent disclosure of, or to obtain a protective
order for, such information;

(r) the Company shall use its reasonable best efforts either to (i) cause all of
the Registrable Securities covered by a Registration Statement to be listed on
each Trading Market on which securities of the same class or series issued by
the Company are then listed, if any, if the listing of such Registrable
Securities is then permitted under the rules of such exchange or (ii) secure the
inclusion for quotation of all of the Registrable Securities on the Principal
Market or (iii) if, despite the Company’s reasonable best efforts, the Company
is unsuccessful in satisfying the preceding clauses (i) and (ii), to secure the
inclusion for quotation on another Trading Market for such Registrable
Securities and, without limiting the generality of the foregoing, to use its
reasonable best efforts to arrange for at least two (2) market makers to
register with FINRA as such with respect to such Registrable Securities. The
Company shall pay all fees and expenses in connection with satisfying its
obligation under this Section 4(r);

(s) the Company shall notify the Holders in writing no later than ten (10) days
before filing any other registration statement during a Registration Restriction
Period as contemplated by Section 8(b); and

(t) the Company enter into such customary agreements and take all such other
actions in connection therewith (including those requested by the Holders of a
majority of the Registrable Securities covered by the Registration Statement) in
order to expedite or facilitate the disposition of such Registrable Securities
including, but not limited to, an Underwritten Offering and in such connection,
(i) to the extent possible, make such representations and warranties to the
Holders and any Underwriters of such Registrable Securities with respect to the
business of the Company and its subsidiaries and the Registration Statement,
Prospectus, and documents incorporated by reference or deemed incorporated by
reference, if any, in each case, in form, substance and scope as are customarily
made by issuers to underwriters in underwritten offerings and confirm the same
if and when requested, (ii) obtain opinions of counsel to the Company (which
counsel and opinions, in form, scope and substance, shall be reasonably
satisfactory to the Holders and such Underwriters and their respective counsel)
addressed to each selling Holder and Underwriter of Registrable Securities,
covering the matters customarily covered in opinions requested in underwritten
offerings, (iii) obtain “comfort” letters from the independent certified public
accountants of the Company (and, if necessary, any other certified public
accountant of any subsidiary of the Company, or of any business acquired by the
Company for which financial statements and financial data are or are required to
be included in the Registration Statement) addressed to each Underwriter
(including any actual Underwriter Holders) and, at the request of the Company
and subject to the approval of such independent certified public accountants of
the Company, such “comfort” letters may also be addressed to the Board of
Directors, such letters to be in customary form and covering matters of the type
customarily covered in “comfort” letters

 

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in connection with underwritten offerings, including but not limited to
financial information contained in any preliminary prospectus or Prospectus and
(iv) deliver such documents and certificates to each Underwriter (including any
actual Underwriter Holders) as may be reasonably requested by the Holders of a
majority of the Registrable Securities being sold or the Underwriters (including
any actual Underwriter Holders), and which are customarily delivered in
underwritten offerings, to evidence the continued validity of the
representations and warranties of the Company made pursuant to clause (i) above
and to evidence compliance with conditions customarily contained in an
underwriting agreement.

5. Registration Expenses. All fees and expenses incident to the Company’s
performance of or compliance with its obligations under this Agreement
(excluding any underwriting discounts and selling commissions and all legal fees
and expenses of legal counsel for any Holder other than a Lead Purchaser) shall
be borne by the Company whether or not any Registrable Securities are sold
pursuant to a Registration Statement. The fees and expenses referred to in the
foregoing sentence (“Registration Expenses”) shall include, without limitation,
(a) all registration and filing fees (including, without limitation, fees and
expenses (i) with respect to filings required to be made with any Trading Market
on which the Common Shares are then listed for trading, (ii) with respect to
compliance with applicable state securities or Blue Sky laws (including, without
limitation, fees and disbursements of counsel for the Company in connection with
Blue Sky qualifications or exemptions of the Registrable Securities and
determination of the eligibility of the Registrable Securities for investment
under the laws of such jurisdictions as requested by the Holders) and (iii) if
not previously paid by the Company in connection with a filing by the issuer,
with respect to any filing that may be required to be made by any broker through
which a Holder intends to make sales of Registrable Securities with FINRA
pursuant to FINRA Rule 5110, so long as the broker is receiving no more than a
customary brokerage commission in connection with such sale, (b) printing
expenses (including, without limitation, expenses of printing certificates for
Registrable Securities and of printing prospectuses if the printing of
prospectuses is reasonably requested by the Holders of a majority of the
Registrable Securities included in the Registration Statement), (c) messenger,
telephone and delivery expenses, (d) fees and disbursements of counsel for the
Company, (e) reasonable fees and disbursements of counsel for the Lead
Purchasers, (f) Securities Act liability insurance, if the Company so desires
such insurance, and (g) fees and expenses of all other Persons retained by the
Company in connection with the consummation of the transactions contemplated by
this Agreement. In addition, the Company shall be responsible for all of its
internal expenses incurred in connection with the consummation of the
transactions contemplated by this Agreement (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit and the fees and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange as required hereunder. In no event shall the Company be
responsible for any underwriting, broker or similar fees, discounts or
commissions with respect to any Registrable Securities to be sold pursuant to a
Registration Statement or any legal fees or other costs of the Holders, except
for reasonable fees and disbursements of counsel for any Lead Purchaser.

6. Indemnification.

(a) Indemnification by the Company. The Company shall, notwithstanding any
termination of this Agreement, indemnify, defend and hold harmless each Holder,
the

 

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officers, directors, agents, partners, members, managers, stockholders,
Affiliates and employees of each of them, each Person who controls any such
Holder (within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act) and the officers, directors, partners, members, managers,
stockholders, agents and employees of each such controlling Person, to the
fullest extent permitted by applicable law, from and against any and all losses,
claims, damages, liabilities, costs (including, without limitation, reasonable
costs of preparation and investigation and reasonable attorneys’ fees) and
expenses (collectively, “Losses”), as incurred, that arise out of, related to,
or are based upon (i) any violation or alleged violation by the Company or its
agents of any rule or regulation promulgated under the Exchange Act, the
Securities Act, FINRA or any state securities laws applicable to the Company and
relating to action or inaction required of the Company in connection with any
registration, (ii) any untrue or alleged untrue statement of a material fact
contained in any Registration Statement, any Prospectus or any form of
prospectus or in any amendment or supplement thereto or in any preliminary
prospectus, or in any filing made in connection with the qualification of the
offering under the securities or other “blue sky” laws of any jurisdiction in
which any Registrable Securities are offered (iii) any omission or alleged
omission to state a material fact required to be stated therein or necessary to
make the statements therein (in the case of any Prospectus or form of prospectus
or supplement thereto, in light of the circumstances under which they were made)
not misleading, (iv) any failure to register or qualify the Registrable
Securities included in any such registration in any state where the Company or
its agents has affirmatively undertaken or agreed in writing that the Company
will undertake such registration or qualification on a Holder’s behalf, or
(v) any violation of this Agreement; provided, however, the Company will not be
liable in any such case to the extent, but only to the extent, that (A) any such
untrue statements, alleged untrue statements, omissions or alleged omissions are
based solely upon information regarding such Holder furnished in writing to the
Company by such Holder expressly for use therein, or to the extent that such
information relates to such Holder or such Holder’s proposed method of
distribution of Registrable Securities and was reviewed and approved by such
Holder expressly for use in the Registration Statement, such Prospectus or such
form of Prospectus or in any amendment or supplement thereto (it being
understood that each Holder has approved Annex A hereto for this purpose) or
(B) in the case of an occurrence of a Suspension Event, to the extent, but only
to the extent, related to the use by such Holder of an outdated or defective
Prospectus after the Company has notified such Holder in writing that the
Prospectus is outdated or defective and prior to the receipt by such Holder of
the Advice contemplated in Section 8(d), but only if and to the extent that
following the receipt of the Advice the misstatement or omission giving rise to
such Loss would have been corrected. The Company shall notify the Holders
promptly of the institution, threat or assertion of any Proceeding arising from
or in connection with the transactions contemplated by this Agreement of which
the Company is aware. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of an Indemnified Party (as
defined in Section 6(c)) and shall survive the transfer of the Registrable
Securities by the Holders.

(b) Indemnification by Holders. Each Holder shall, severally and not jointly,
indemnify and hold harmless the Company, its directors, officers, agents and
employees, each Person who controls the Company (within the meaning of
Section 15 of the Securities Act and Section 20 of the Exchange Act), and the
directors, officers, agents or employees of such controlling Persons, to the
fullest extent permitted by applicable law, from and against all Losses, as
incurred, arising out of or are based upon any untrue or alleged untrue
statement of a

 

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material fact contained in any Registration Statement, any Prospectus, or any
form of prospectus, or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or relating to any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein (in the case of any Prospectus, or any form of prospectus
or supplement thereto, in light of the circumstances under which they were made)
not misleading (i) to the extent, but only to the extent, that such untrue
statements or omissions are based solely upon information regarding such Holder
furnished in writing to the Company by such Holder expressly for use therein,
(ii) to the extent, but only to the extent, that such information relates to
such Holder or such Holder’s proposed method of distribution of Registrable
Securities and was reviewed and approved by such Holder expressly for use in a
Registration Statement, such Prospectus or such form of Prospectus or in any
amendment or supplement thereto (it being understood that the Holder has
approved Annex A hereto for this purpose) or (iii) in the case of an occurrence
of a Suspension Event, to the extent, but only to the extent, related to the use
by such Holder of an outdated or defective Prospectus after the Company has
notified such Holder in writing that the Prospectus is outdated or defective and
prior to the receipt by such Holder of the Advice contemplated in Section 8(d),
but only if and to the extent that following the receipt of the Advice the
misstatement or omission giving rise to such Loss would have been corrected. In
no event shall the liability of any selling Holder hereunder be greater in
amount than the dollar amount of the net proceeds received by such Holder upon
the sale of the Registrable Securities giving rise to such indemnification
obligation.

(c) Conduct of Indemnification Proceedings. If any Proceeding shall be brought
or asserted against any Person entitled to indemnity hereunder (an “Indemnified
Party”), such Indemnified Party shall promptly notify the Person from whom
indemnity is sought (the “Indemnifying Party”) in writing, and the Indemnifying
Party shall have the right to assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Indemnified Party and the
payment of all reasonable fees and expenses incurred in connection with defense
thereof; provided, that the failure of any Indemnified Party to give such notice
shall not relieve the Indemnifying Party of its obligations or liabilities
pursuant to this Agreement, except (and only) to the extent that it shall be
finally determined by a court of competent jurisdiction (which determination is
not subject to appeal or further review) that such failure shall have materially
and adversely prejudiced the Indemnifying Party.

An Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless: (i) the Indemnifying Party has agreed in writing to pay such fees and
expenses; (ii) the Indemnifying Party shall have failed promptly to assume the
defense of such Proceeding and to employ counsel reasonably satisfactory to such
Indemnified Party in any such Proceeding; or (iii) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified Party
and the Indemnifying Party, and such Indemnified Party shall have been advised
by counsel that a conflict of interest exists if the same counsel were to
represent such Indemnified Party and the Indemnifying Party. The Indemnifying
Party shall not be liable for any settlement of any such Proceeding effected
without its written consent, which consent shall not be unreasonably withheld,
delayed or conditioned. No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, effect any settlement of any pending
Proceeding in respect of which any Indemnified Party is a party, unless such
settlement includes an unconditional release of such Indemnified Party from all
liability on claims that are the subject matter of such Proceeding.

 

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Subject to the terms of this Agreement, all fees and expenses of the Indemnified
Party (including reasonable fees and expenses to the extent incurred in
connection with investigating or preparing to defend such Proceeding in a manner
not inconsistent with this Section 6(c)) shall be paid to the Indemnified Party,
as incurred, within twenty Trading Days of written notice thereof to the
Indemnifying Party; provided, that the Indemnified Party shall promptly
reimburse the Indemnifying Party for that portion of such fees and expenses
applicable to such actions for which such Indemnified Party is finally
judicially determined to not be entitled to indemnification hereunder).

(d) Contribution. If a claim for indemnification under Section 6(a) or
Section 6(b) is unavailable to an Indemnified Party or insufficient to hold an
Indemnified Party harmless for any Losses, then each Indemnifying Party, in lieu
of indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such Losses, in such proportion
as is appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable
considerations. The relative fault of such Indemnifying Party and Indemnified
Party shall be determined by reference to, among other things, whether any
action in question, including any untrue or alleged untrue statement of a
material fact or omission or alleged omission of a material fact, has been taken
or made by, or relates to information supplied by, such Indemnifying Party or
Indemnified Party, and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such action, statement or
omission. The amount paid or payable by a party as a result of any Losses shall
be deemed to include, subject to the limitations set forth in this Agreement,
any reasonable attorneys’ or other reasonable fees or expenses incurred by such
party in connection with any Proceeding to the extent such party would have been
indemnified for such fees or expenses if the indemnification provided for in
this Section 6(d) was available to such party in accordance with its terms.

The parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 6(d) were determined by pro rata allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 6(d), no Holder shall
be required to contribute, in the aggregate, any amount in excess of the amount
by which the net proceeds actually received by such Holder from the sale of the
Registrable Securities subject to the Proceeding exceeds the amount of any
damages that such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.

(e) Non-Exclusivity. The indemnity and contribution agreements contained in this
Section 6 are in addition to any liability that the Indemnifying Parties may
have to the Indemnified Parties and are not in diminution, limitation or in lieu
of the indemnification provisions under the Purchase Agreement.

 

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7. Other Obligations of the Company.

(a) Availability of Information.

(i) So long as the Company shall not have filed a registration statement
pursuant to Section 12 of the Exchange Act or a registration statement pursuant
to the requirements of the Securities Act, the Company shall, at any time and
from time to time, upon the request of any Holder and upon the request of any
Person designated by such Holder as a prospective purchaser of any Registrable
Securities, furnish in writing to such Holder or such prospective purchaser, as
the case may be, a statement as of a date not earlier than 12 months prior to
the date of such request of the nature of the business of the Company and the
products and services it offers and copies of the Company’s most recent balance
sheet and profit and loss and retained earnings statements, together with
similar financial statements for such part of the two preceding fiscal years as
the Company shall have been in operation, all such financial statements to be
audited to the extent audited statements are reasonable available, provided
that, in any event the most recent financial statements so furnished shall
include a balance sheet as of a date less than sixteen (16) months prior to the
date of such request, statements of profit and loss and retained earnings for
the twelve (12) months preceding the date of such balance sheet, and, if such
balance sheet is not as of a date less than six (6) months prior to the date of
such request, additional statements of profit and loss and retained earnings for
the period from the date of such balance sheet to a date less than 6 months
prior to the date of such request.

(ii) If the Company shall have filed a registration statement pursuant to the
requirements of Section 12 of the Exchange Act or a registration statement
pursuant to the requirements of the Securities Act, the Company covenants that
it shall timely file any reports required to be filed by it under the Securities
Act or the Exchange Act (including, but not limited to, the reports under
Sections 13 and 15(d) of the Exchange Act referred to in subparagraph (c) of
Rule 144 under the Securities Act), and that it shall take such further action
as any Holder may reasonably request, all to the extent required from time to
time to enable such Holder to sell Registrable Securities without registration
under the Securities Act within the limitation of the exemptions provided by
(A) Rule 144 and Rule 144A under the Securities Act, as such rules may be
amended from time to time, or (B) any other rule or regulation now existing or
hereafter adopted by the Commission. Upon the request of any Holder, the Company
shall deliver to such Holder (A) a written statement as to whether it has
complied with such requirements and (B) a copy of the Company’s most recent
Annual Report on Form 10-K or Quarterly Report on Form 10-Q.

8. Miscellaneous.

(a) Remedies. In the event of a breach by the Company or by a Holder of any of
their obligations under this Agreement, each Holder or the Company, as the case
may be, in addition to being entitled to exercise all rights granted by law and
under this Agreement, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. The Company and each
Holder agree that monetary damages would not provide

 

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adequate compensation for any losses incurred by reason of a breach by it of any
of the provisions of this Agreement and hereby further agrees that, in the event
of any action for specific performance in respect of such breach, it shall waive
the defense that a remedy at law would be adequate.

(b) No Piggyback on Registrations; Prohibition on Filing Other Registration
Statements. Neither the Company nor any of its security holders may include
securities of the Company in a Registration Statement hereunder and the Company
shall not enter into any agreement providing any such right to any of its
security holders. The Company shall not, from the date hereof until the date
that is 60 days after the Effective Date of the Initial Registration Statement,
a New Registration Statement, a Remainder Registration Statement or an
Underwritten Registration Statement (the “Registration Restriction Period”), as
applicable, prepare and file with the Commission a registration statement,
prospectus or prospectus supplement relating to an offering for its own account
or for the account of its stockholders (other than the Holders pursuant to the
terms of this Agreement) under the Securities Act of any of its equity
securities, other than (i) in connection with the Rights Offering, a
registration statement on Form S-1; (ii) a registration statement on Form S-8,
(iii) in connection with an acquisition, on Form S-4, (iv) a registration
statement to register for resale securities issued by the Company pursuant to
acquisitions or strategic transactions approved by a majority of the
disinterested directors of the Company, provided that any such issuance shall
only be to a Person which is, itself or through its subsidiaries, an operating
company in a business synergistic with the business of the Company and in which
the Company receives benefits in addition to the investment of funds, but, other
than with respect to the Rights Offering, shall not include a transaction in
which the Company is issuing securities primarily for the purpose of raising
capital or to an entity whose primary business is investing in securities or
(v) relating to an offering of Common Shares by existing stockholders of the
Company under the Securities Act pursuant to the terms of registration rights
held by such stockholders as of the date hereof or from filing amendments to
registration statements filed prior to the date of this Agreement.

(c) Compliance. Each Holder covenants and agrees that it will comply with the
prospectus delivery requirements of the Securities Act as applicable to it
(unless an exemption therefrom is available) in connection with sales of
Registrable Securities pursuant to the Registration Statement and shall sell the
Registrable Securities only in accordance with a method of distribution
described in the Registration Statement.

(d) Discontinued Disposition. By its acquisition of Registrable Securities, each
Holder agrees that, upon receipt of a notice from the Company of the occurrence
of any Suspension Event, such Holder will forthwith discontinue disposition of
such Registrable Securities under a Registration Statement until it is advised
in writing (the “Advice”) by the Company that the use of the applicable
Prospectus (as it may have been supplemented or amended) may be resumed;
provided, that the suspension as a result of a Suspension Event or pursuant to
Section 2(c)(iii) shall not be for more than forty-five (45) days in any three
hundred sixty-five (365) day period. The Company may provide appropriate stop
orders to enforce the provisions of this paragraph.

 

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(e) No Inconsistent Agreements. Neither the Company nor any of its Subsidiaries
has entered, as of the date hereof, nor shall the Company or any of its
Subsidiaries, on or after the date hereof, enter into any agreement with respect
to its securities, that would have the effect of impairing the rights granted to
the Holders in this Agreement or otherwise conflicts with the provisions hereof.

(f) Amendments and Waivers. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, or
waived unless the same shall be in writing and signed by the Company and Holders
holding at least a majority of the then outstanding Registrable Securities,
provided, that any party may give a waiver as to itself. Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with respect
to a matter that relates exclusively to the rights of Holders and that does not
directly or indirectly affect the rights of other Holders may be given by
Holders of all of the Registrable Securities to which such waiver or consent
relates; provided, however, that the provisions of this sentence may not be
amended, modified, or supplemented except in accordance with the provisions of
the immediately preceding sentence. Notwithstanding the foregoing, if any such
amendment, modification or waiver would adversely affect in any material respect
any Holder or group of Holders who have comparable rights under this Agreement
disproportionately to the other Holders having such comparable rights, such
amendment, modification, or waiver shall also require the written consent of the
Holder(s) so adversely affected.

(g) Notices. Any and all notices or other communications or deliveries required
or permitted to be provided hereunder shall be delivered as set forth in the
Purchase Agreement; provided, that the Company may deliver to each Holder the
documents required to be delivered to such Holder under Section 8(a) of this
Agreement by e-mail to the e-mail addresses provided by such Holder to the
Company solely for such specific purpose.

(h) Successors and Assigns. This Agreement shall inure to the benefit of and be
binding upon the successors and permitted assigns of each of the parties and
shall inure to the benefit of each Holder. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement. The Company may not assign its rights (except by merger or in
connection with another entity acquiring all or substantially all of the
Company’s assets) or obligations hereunder without the prior written consent of
all the Holders of the then outstanding Registrable Securities. Each Holder may
assign its respective rights hereunder in the manner and to the Persons as
permitted under the Purchase Agreement.

(i) Execution and Counterparts. This Agreement may be executed in two or more
counterparts, each of which when so executed shall be deemed to be an original
and, all of which taken together shall constitute one and the same Agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that both parties need not
sign the same counterpart. In the event that any signature is delivered by
facsimile transmission or by e-mail delivery of a “.pdf” format data file, such
signature shall create a valid and binding obligation of the party executing (or
on whose behalf such signature is executed) with the same force and effect as if
such facsimile or “.pdf” signature were the original thereof.

 

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(j) Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be determined in
accordance with the provisions of the Purchase Agreement.

(k) Cumulative Remedies. The remedies provided herein are cumulative and not
exclusive of any other remedies provided by law.

(l) Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their good faith reasonable efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.

(m) Headings. The headings in this Agreement are for convenience only and shall
not limit or otherwise affect the meaning hereof.

(n) Independent Nature of Purchasers’ Obligations and Rights. The obligations of
each Purchaser under this Agreement are several and not joint with the
obligations of any other Purchaser hereunder, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser hereunder. The decision of each Purchaser to purchase the Purchased
Shares pursuant to the Purchase Agreement has been made independently of any
other Purchaser. Nothing contained herein or in any other agreement or document
delivered at any closing, and no action taken by any Purchaser pursuant hereto
or thereto, shall be deemed to constitute the Purchasers as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Purchasers are in any way acting in concert with respect to
such obligations or the transactions contemplated by this Agreement. Each
Purchaser acknowledges that no other Purchaser has acted as agent for such
Purchaser in connection with making its investment hereunder and that no
Purchaser will be acting as agent of such Purchaser in connection with
monitoring its investment in the Purchased Shares or enforcing its rights under
the Purchase Agreement or this Agreement. Each Purchaser shall be entitled to
protect and enforce its rights, including, without limitation, the rights
arising out of this Agreement, and it shall not be necessary for any other
Purchaser to be joined as an additional party in any Proceeding for such
purpose. The Company acknowledges that each of the Purchasers has been provided
with the same Agreement for the purpose of closing a transaction with multiple
Purchasers and not because it was required or requested to do so by any
Purchaser.

 

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

 

COMMUNITY FINANCIAL SHARES, INC.

 

By:   Scott W. Hamer Its:   President and Chief Executive Officer

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,

SIGNATURE PAGES OF HOLDERS TO FOLLOW]

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

 

NAME OF PURCHASER AUTHORIZED SIGNATORY

     

By:   ADDRESS FOR NOTICE:

 

 

 

Attn:     Phone:     E-mail:    

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Annex A

PLAN OF DISTRIBUTION

We are registering the Securities issued to the selling shareholders to permit
the resale of these Securities by the holders of the Securities from time to
time after the date of this prospectus. We will not receive any of the proceeds
from the sale by the selling shareholders of the Securities. We will bear all
fees and expenses incident to our obligation to register the Securities.

The selling shareholders may sell all or a portion of the Securities
beneficially owned by them and offered hereby from time to time directly or
through one or more underwriters, broker-dealers or agents. If the Securities
are sold through underwriters or broker-dealers, the selling shareholders will
be responsible for underwriting discounts or commissions or agent’s commissions.
The Securities may be sold on any national securities exchange or quotation
service on which the securities may be listed or quoted at the time of sale, in
the over-the-counter market or in transactions otherwise than on these exchanges
or systems or in the over-the-counter market and in one or more transactions at
fixed prices, at prevailing market prices at the time of the sale, at varying
prices determined at the time of sale, or at negotiated prices. These sales may
be effected in transactions, which may involve crosses or block transactions.
The selling shareholders may use any one or more of the following methods when
selling Securities:

 

  •  

ordinary brokerage transactions and transactions in which the broker-dealer
solicits purchasers;

 

  •  

block trades in which the broker-dealer will attempt to sell the shares as agent
but may position and resell a portion of the block as principal to facilitate
the transaction;

 

  •  

purchases by a broker-dealer as principal and resale by the broker-dealer for
its account;

 

  •  

an exchange distribution in accordance with the rules of the applicable
exchange;

 

  •  

privately negotiated transactions;

 

  •  

settlement of short sales entered into after the effective date of the
registration statement of which this prospectus is a part;

 

  •  

broker-dealers may agree with the selling shareholders to sell a specified
number of such securities at a stipulated price per share;

 

  •  

through the writing or settlement of options or other hedging transactions,
whether such options are listed on an options exchange or otherwise;

 

  •  

a combination of any such methods of sale; and

 

  •  

any other method permitted pursuant to applicable law.

 

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The selling shareholders also may resell all or a portion of the Securities in
open market transactions in reliance upon Rule 144 under the Securities Act, as
permitted by that rule, or Section 4(1) under the Securities Act, if available,
rather than under this prospectus, provided, that they meet the criteria and
conform to the requirements of those provisions.

Broker-dealers engaged by the selling shareholders may arrange for other
broker-dealers to participate in sales. If the selling shareholders effect such
transactions by selling Securities to or through underwriters, broker-dealers or
agents, such underwriters, broker-dealers or agents may receive commissions in
the form of discounts, concessions or commissions from the selling shareholders
or commissions from purchasers of the Securities for whom they may act as agent
or to whom they may sell as principal. Such commissions will be in amounts to be
negotiated, but, except as set forth in a supplement to this prospectus, in the
case of an agency transaction will not be in excess of a customary brokerage
commission in compliance with NASD Rule 2440; and in the case of a principal
transaction a markup or markdown in compliance with NASD IM-2440-1 and
IM-2440-2.

In connection with sales of the Securities or otherwise, the selling
shareholders may enter into hedging transactions with broker-dealers or other
financial institutions, which may in turn engage in short sales of the Common
Shares in the course of hedging in positions they assume. The selling
shareholders may also sell Securities short and if such short sale shall take
place after the date that the registration statement of which this prospectus is
a part is declared effective by the Securities and Exchange Commission (the
“SEC”), the selling shareholders may deliver Securities covered by this
prospectus to close out short positions and to return borrowed shares in
connection with such short sales. The selling shareholders may also loan or
pledge Common Shares to broker-dealers that in turn may sell such shares, to the
extent permitted by applicable law. The selling shareholders may also enter into
option or other transactions with broker-dealers or other financial institutions
or the creation of one or more derivative securities which require the delivery
to such broker-dealer or other financial institution of shares offered by this
prospectus, which shares such broker-dealer or other financial institution may
resell pursuant to this prospectus (as supplemented or amended to reflect such
transaction). Notwithstanding the foregoing, the selling shareholders have been
advised that they may not use shares registered on this registration statement
to cover short sales of our Common Shares made prior to the date the
registration statement, of which this prospectus forms a part, has been declared
effective by the SEC.

The selling shareholders may, from time to time, pledge or grant a security
interest in some or all of the Securities owned by them and, if they default in
the performance of their secured obligations, the pledgees or secured parties
may offer and sell the Securities from time to time pursuant to this prospectus
or any amendment to this prospectus under Rule 424(b)(3) or other applicable
provision of the Securities Act, amending, if necessary, the list of selling
shareholders to include the pledgee, transferee or other successors in interest
as selling shareholders under this prospectus. The selling shareholders also may
transfer and donate the Securities in other circumstances in which case the
transferees, donees, pledgees or other successors in interest will be the
selling beneficial owners for purposes of this prospectus.

 

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The selling shareholders and any broker-dealer or agents participating in the
distribution of the Securities may be deemed to be “underwriters” within the
meaning of Section 2(11) of the Securities Act in connection with such sales. In
such event, any commissions paid, or any discounts or concessions allowed to,
any such broker-dealer or agent and any profit on the resale of the shares
purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act. Selling shareholders who are “underwriters” within the
meaning of Section 2(11) of the Securities Act will be subject to the applicable
prospectus delivery requirements of the Securities Act and may be subject to
certain statutory liabilities of, including but not limited to, Sections 11, 12
and 17 of the Securities Act and Rule 10b-5 under the Securities Exchange Act of
1934, as amended (the “Exchange Act”).

Each selling shareholder has informed us that it is not a registered
broker-dealer and does not have any written or oral agreement or understanding,
directly or indirectly, with any person to distribute the Securities. Upon being
notified in writing by a selling shareholder that any material arrangement has
been entered into with a broker-dealer for the sale of Securities through a
block trade, special offering, exchange distribution or secondary distribution
or a purchase by a broker or dealer, we will file a supplement to this
prospectus, if required, pursuant to Rule 424(b) under the Securities Act,
disclosing (1) the name of each such selling shareholder and of the
participating broker-dealer(s), (2) the number of shares involved, (3) the price
at which such Securities were sold, (4) the commissions paid or discounts or
concessions allowed to such broker-dealer(s), where applicable, (5) that such
broker-dealer(s) did not conduct any investigation to verify the information set
out or incorporated by reference in this prospectus, and (6) other facts
material to the transaction. In no event shall any broker-dealer receive fees,
commissions and markups, which, in the aggregate, would exceed eight percent.

Under the securities laws of some states, the Securities may be sold in such
states only through registered or licensed brokers or dealers. In addition, in
some states the Securities may not be sold unless such shares have been
registered or qualified for sale in such state or an exemption from registration
or qualification is available and is complied with.

There can be no assurance that any selling shareholder will sell, and the
selling shareholders are not obligated to sell, any or all of the Securities
registered pursuant to the registration statement, of which this prospectus
forms a part.

Each selling shareholder and any other person participating in such distribution
will be subject to applicable provisions of the Exchange Act and the rules and
regulations thereunder, including, without limitation, to the extent applicable,
Regulation M of the Exchange Act, which may limit the timing of purchases and
sales of any of the Securities by the selling shareholder and any other
participating person. To the extent applicable, Regulation M may also restrict
the ability of any person engaged in the distribution of the Securities to
engage in market-making activities with respect to the Common Shares. All of the
foregoing may affect the marketability of the Securities and the ability of any
person or entity to engage in market-making activities with respect to the
Securities. We will pay all expenses of the registration of the Securities
pursuant to a registration rights agreement, including, without limitation, SEC
filing fees and expenses of compliance with state securities or “blue sky” laws;
provided, however, that each selling shareholder will pay all underwriting
discounts and selling commissions, if any and any

 

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related legal expenses incurred by it. We will indemnify the selling
shareholders against certain liabilities, including some liabilities under the
Securities Act, in accordance with the registration rights agreement, or the
selling shareholders will be entitled to contribution. We may be indemnified by
the selling shareholders against civil liabilities, including liabilities under
the Securities Act, that may arise from any written information furnished to us
by the selling shareholders specifically for use in this prospectus, in
accordance with the related registration rights agreements, or we may be
entitled to contribution.

 

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