Exhibit 10.2


 


REGISTRATION RIGHTS AGREEMENT


 


This Registration Rights
Agreement (this “Agreement”) is made and entered into as of March 31, 2015, by and among Carolina Bank
Holdings, Inc., a North Carolina 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 6(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.


 


“Business
Day” means a day, other than a Saturday or Sunday, on which banks in New York City are open for the general transaction
of business.


 


“Closing”
has the meaning set forth in the Purchase Agreement.


 


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


 


“Commission”
means the Securities and Exchange Commission.


 


“Common Stock”
means the common stock of the Company, $1.00 par value per share, and any securities into which such shares of common stock may
hereinafter be reclassified.


 


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


 


“Contractual
Securities” means collectively, (i) securities of the Company which are subject to an Existing Contract and (ii) Registrable
Securities.


 


“Contractual
Securityholder” means all Persons that hold Contractual Securities.


 


“Effective
Date” means the date that the Registration Statement filed pursuant to Section 2(a) is first declared effective by the
Commission.


 


“Effectiveness
Deadline” means, with respect to the Initial Registration Statement or the New Registration Statement, the earlier of
(i) the 90th calendar day following the Closing Date (or the 120th calendar day following the 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; provided, that 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” shall have the meaning set forth in Section 2(b).


 






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


 


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


 


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


 


“Existing
Contract” means any contract to which the Company is a party and in effect as of the date hereof, under which the Company
may be required to register securities on the Registration Statement, including but not limited to any securities issued to the
U.S. Treasury Department on January 9, 2009 in connection with the TARP Capital Purchase Program and other securities that may
be issued from time to time in connection therewith.


 


“Filing Deadline”
means, with respect to the Initial Registration Statement required to be filed pursuant to Section 2(a), the 30th calendar
day following the Closing Date, provided, however, that 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.


 


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


 


“Indemnified
Party” shall have the meaning set forth in Section 5(c).


 


“Indemnifying
Party” shall have the meaning set forth in Section 5(c).


 


“Initial Registration
Statement” means the initial Registration Statement filed pursuant to Section 2(a) of this Agreement.


 


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


 


“Losses”
shall have the meaning set forth in Section 5(a).


 


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


 


“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 Stock is primarily listed on and quoted for trading, which, as of
the Closing Date, is expected to be the NASDAQ Global Market.


 


“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.


 






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“Registrable
Securities” means all of the Underlying Shares (as defined in the Purchase Agreement) and any securities issued or issuable
upon any stock split, dividend or other distribution, recapitalization or similar event with respect to the Underlying Shares,
provided, that the Holder has completed and delivered to the Company a Selling Shareholder Questionnaire; and provided,
further, that an Underlying Share shall cease to be a Registrable Security upon the earliest to occur of the following: (A)
its sale pursuant to a Registration Statement or Rule 144 under the Securities Act or (B) its, and all other otherwise Registrable
Securities then held by the Holder thereof becoming eligible for sale under Rule 144, provided, that if such Underlying
Share shall again cease to be eligible for sale under Rule 144, because the Company has failed to remain current with respect to
required reports under the Exchange Act or otherwise, then such Underlying Share shall again be a Registrable Security until such
time as it ceases to be a Registrable in accordance with the provisions of this Agreement.


 


“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 and any Remainder Registration Statement(s)), 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).


 


“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 Shareholder
Questionnaire” means a questionnaire in substantially 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.


 


“Trading Day”
means (i) a day on which the Common Stock is listed or quoted and traded on its Principal Market or (ii) if the Common Stock is
not listed or quoted on any Trading Market, a day on which the Common Stock is 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 Stock is not listed or quoted as set forth in (i), (ii)
and (iii) hereof, then Trading Day shall mean a Business Day.


 


“Trading Market”
means whichever of the New York Stock Exchange, the NYSE MKT, the NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ
Capital Market or OTC Bulletin Board on which the Common Stock is listed or quoted for trading on the date in question.


 






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2.Registration.


 


a.On or prior to
the Filing Deadline, the Company shall prepare and file with the Commission 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 Company reasonably determines (the “Initial Registration
Statement”). The Initial Registration Statement shall be on Form S-3 (except if the Company is then ineligible to register
for resale of the Registrable Securities on Form S-3, in which case such registration shall be on such other form available to
the Company to register the Registrable Securities for resale) subject to the provisions of Section 2(f) and shall contain (except
to the extent 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 (i) inform each of the Holders thereof and use its commercially reasonable efforts to
file amendments to the Initial Registration Statement as required by the Commission and/or (ii) withdraw the Initial Registration
Statement and file a new registration statement (a “New Registration Statement”), in either case covering the
maximum number of Registrable Securities permitted to be registered by the Commission, on Form S-3 or such other form available
to the Company to register the Registrable Securities for resale; provided, however, that prior to filing such amendment
or New Registration Statement, the Company shall be obligated to use its commercially reasonable efforts to advocate with the Commission
for the registration of all of the Registrable Securities in accordance with the SEC Guidance, including without limitation, Compliance
and Disclosure Interpretation 612.09. Notwithstanding any other provision of this Agreement but subject to the payment of Liquidated
Damages in Section 2(c), if any SEC Guidance sets forth a limitation of the number of Registrable Securities or other shares of
Common Stock 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 shares of Common Stock to be registered on such Registration Statement
will be reduced on a pro rata basis. In the event the Company amends the Initial Registration Statement or files a New Registration
Statement, as the case may be, under clauses (i) or (ii) above, the Company will use its commercially reasonable efforts 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 Form S-3 or such other form available to the Company to register for resale
those Registrable Securities that were not registered for resale on the Initial Registration Statement, as amended, or the New
Registration Statement (the “Remainder Registration Statements”). No Holder shall be named as an “underwriter”
in any Registration Statement without such Holder’s prior written consent, except if required pursuant to written comments
received from the Commission upon a review of such Registration Statement; provided, however, that prior to naming a Holder as
an underwriter in any Registration Statement, (i) the Company shall use its commercially reasonable efforts to advocate with the
Commission against naming such Holder as an underwriter in accordance with Commission rules and regulations and SEC Guidance and
(ii) if, despite the Company’s commercially reasonable efforts to advocate with the Commission against naming such Holder
as an underwriter, the Commission continues to require that such Holder be named as an underwriter in any Registration Statement,
such Holder shall have the right (but not the obligation), prior to being so named, without any penalty to the Company, to either
(A) remove itself from such Registration Statement or (B) reduce its number of Registrable Securities included in such Registration
Statement such that it shall no longer be required to be named as an underwriter in such Registration Statement.


 


b.The Company shall
use its commercially reasonable efforts to cause each Registration Statement to be declared effective by the Commission as soon
as practicable and, with respect to the Initial Registration Statement or the New Registration Statement, as applicable, no later
than the Effectiveness Deadline, and shall use its commercially reasonable efforts to keep each Registration Statement continuously
effective under the Securities Act until there are no longer any Registrable Securities (the “Effectiveness Period”).
The Company shall request effectiveness of a Registration Statement as of 5:00 p.m. New York City time on a Trading Day. 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 of the Effective Date. The Company shall, by 9:30 a.m. New York City time
on the first Trading Day after the Effective Date, file a final Prospectus with the Commission, if and as required by Rule 424(b).


 






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c.If: (i) the Initial
Registration Statement is not filed with the Commission on or prior to the Filing Deadline, (ii) the 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 the 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(e) of this Agreement), (iv) a Grace Period (as defined in
Section 2(e) of this Agreement) exceeds the length of an Allowable Grace Period, or (v) after the date 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 SEC 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 0.5% 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 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 five (5) Business Days after the date payable,
the Company will pay interest thereon at a rate of 1.0% 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).


 


d.Each Holder agrees
to furnish to the Company a completed Selling Shareholder Questionnaire not more than ten (10) Trading Days following the date
of this Agreement. At least five (5) 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 Shareholder 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 Shareholder 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 Shareholder Questionnaire or a request for further
information, in either case, after its respective deadline, the Company shall use its commercially reasonable efforts at the expense
of the Holder who failed to return the Selling Shareholder 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 Shareholder Questionnaire or request for further information. Each Holder acknowledges and agrees
that the information in the Selling Shareholder Questionnaire or request for further information as described in this Section 2(d)
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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e.Notwithstanding
anything to the contrary herein, at any time after the 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 commercially reasonable 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
thirty (30) consecutive days, and during any three hundred sixty-five (365) day period, the aggregate of all Grace Periods shall
not exceed an aggregate of sixty (60) days (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. Notwithstanding anything
to the contrary, the Company shall cause the Transfer Agent to deliver unlegended Common Stock 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.


 


f.In the event that
Form S-3 is not available for the registration of the resale of Registrable Securities hereunder, the Company hereby undertakes
to register the Registrable Securities on Form S-3 promptly after such form is available, provided that the Company shall
maintain the effectiveness of the Registration Statement then in effect until such time as a Registration Statement on Form S-3
covering the Registrable Securities has been declared effective by the Commission.


 


3.Registration
Procedures


 


a.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), the Company shall 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
within such three (3) Trading Day or one (1) Trading Day period, as the case may be, then the Holder shall be deemed to have consented
to and approved the use of such documents). 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 are 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 Shareholders” 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
Statement and otherwise in compliance with applicable federal and state securities laws. In the case of amendments and supplements
to a Registration Statement required to be filed pursuant to this Agreement (including pursuant to this Section 3(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.


 






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c.The Company shall
notify the Holders (which notice shall, pursuant to clauses (iii) through (v) hereof, be accompanied by an instruction to suspend
the use of the Prospectus until the requisite changes have been made, but which notice shall not contain any material non-public
information regarding the Company) as promptly as reasonably practicable (and, in the case of (i)(A) below, not less than one (1)
Trading Day prior to such filing, in the case of (iii) and (iv) below, not more than one (1) Trading Day after such issuance or
receipt, and in the case of (v) below, 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; (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.


 


d.The Company shall
use commercially reasonable efforts to avoid the issuance of, or, if issued, obtain the withdrawal of (i) any order suspending
the effectiveness of the 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 agrees
to promptly deliver to each Holder, without charge, as many copies of each Prospectus or Prospectuses (including each form of prospectus)
and each amendment or supplement thereto as such Persons may reasonably request. The Company hereby consents to the use of such
Prospectus and each amendment or supplement thereto by each of the selling Holders in connection with the offering and sale of
the Registrable Securities covered by such Prospectus and any amendment or supplement thereto.


 






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f.The Company shall,
prior to any resale of Registrable Securities by a Holder, use its commercially reasonable 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.


 


g.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, or recordation on its stock transfer records if uncertified,
which 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.
Certificates for Registrable Securities free from all restrictive legends may be transmitted by the transfer agent to a Holder
by crediting the account of such Holder’s prime broker with DTC as directed by such Holder.


 


h.The Company shall
following the occurrence of any event contemplated by Section 3(c)(iii)-(v), as promptly as reasonably practicable (taking into
account the Company’s good faith assessment of any adverse consequences to the Company and its shareholders 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.


 


i.The Company may
require each selling Holder to furnish to the Company a certified statement as to (i) the number of shares of Common Stock 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 Common Stock 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
three 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.


 


j.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 NASD Rule 2710 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 therefore.


 


k.Provided the Company
is eligible to use Form S-3 as of the date of this Agreement or becomes eligible to use Form S-3 during the term of this Agreement,
the Company shall use its commercially reasonable efforts to maintain eligibility for use of Form S-3 (or any successor form thereto)
for the registration of the resale of Registrable Securities.


 


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.


 






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m.The Company shall
otherwise use commercially reasonable 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 earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act, including
Rule 158 promulgated thereunder (for the purpose of this Section 3, “Availability Date” means the 45th day
following the end of the fourth fiscal quarter after the 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).


 


4.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) 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 shall include, without limitation, (i) all registration and filing
fees (including, without limitation, fees and expenses (A) with respect to filings required to be made with any Trading Market
on which the Common Stock is then listed for trading, (B) 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 (C) if not previously paid by the Company in connection with an
issuer filing, 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, (ii) printing expenses (including, without limitation, expenses of printing
any 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), (iii) messenger, telephone
and delivery expenses, (iv) fees and disbursements of counsel for the Company, (v) Securities Act liability insurance, if the Company
so desires such insurance, and (vi) 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 or commissions of any Holder
or, except to the extent provided for in the Transaction Documents, any legal fees or other costs of the Holders.


 


5.Indemnification.


 


a.Indemnification
by the Company. The Company shall, notwithstanding any termination of this Agreement, indemnify, defend and hold harmless each
Holder, the officers, directors, agents, partners, members, managers, shareholders, Affiliates, employees and investment advisers
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, shareholders, agents, Affiliates, employees and
investment advisers of each such controlling Person, to the fullest extent permitted by applicable law, from and against any and
all losses, claims, damages, liabilities, reasonable costs (including, without limitation, reasonable costs of preparation and
investigation and reasonable attorneys' fees) and expenses (collectively, “Losses”), as incurred, that arise
out of or are based upon (i) 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 arising
out of or relating to 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, or (ii) any violation or alleged violation by the Company of the Securities Act, Exchange
Act or any state securities law or any rule or regulation thereunder, in connection with the performance of its obligations under
this Agreement, except to the extent, but only to the extent, that (A) 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 an event of the type specified in Section 3(c)(iii)-(v),
related to the use by a 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 and defined in Section
6(d) below, 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 5(c)) and shall survive the transfer of the Registrable Securities by the Holders.


 






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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 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 or (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 (it being understood that the Holder has approved Annex A hereto
for this purpose), such Prospectus or such form of Prospectus or in any amendment or supplement thereto or (iii) in the case of
an occurrence of an event of the type specified in Section 3(c)(iii)-(v), 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 6(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 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: (1) the Indemnifying Party has
agreed in writing to pay such fees and expenses; (2) 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 (3) 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 (in which case, if such Indemnified Party notifies the Indemnifying Party in
writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have
the right to assume the defense thereof and such counsel shall be at the expense of the Indemnifying Party); provided, that
the Indemnifying Party shall not be liable for the fees and expenses of more than one separate firm of attorneys at any time for
all Indemnified Parties. 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 reasonable 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
5(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 5(a) or 5(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 parties hereto agree
that it would not be just and equitable if contribution pursuant to this Section 5(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 5(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.


 


The indemnity and contribution
agreements contained in this Section 5 are in addition to any liability that the Indemnifying Parties may have to the Indemnified
Parties and are not in diminution or limitation of the indemnification provisions under the Purchase Agreement, except to the extent
duplicative.


 


6.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 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.


 






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b.No Piggyback
on Registrations; Prohibition on Filing Other Registration Statements. Neither the Company nor any of its security holders
(other than the Holders and the Contractual Securityholders) may include securities of the Company in a Registration Statement
hereunder other than the Registrable Securities and Contractual Securities and the Company shall not prior to the Effective Date
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, prepare and file with the Commission a
registration statement relating to an offering for its own account or for the account of its stockholders under the Securities
Act of any of its equity securities, other than (i) a registration statement on Form S-8, (ii) in connection with an acquisition,
on Form S-4 or (iii) a registration statement to register for resale securities issued by the Company pursuant to acquisitions
or strategic transactions, but 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.


 


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 a Grace Period or the occurrence of any event of the kind described in Section 3(c)(ii)-(iv), 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. The Company
may provide appropriate stop orders to enforce the provisions of this paragraph.


 


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 two-thirds (2/3) 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 holding at least two-thirds
(2/3) of the affected Registrable Securities.


 


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 Section 6.3 of the Purchase Agreement; provided that the Company may deliver to each Holder the documents required
to be delivered to such Holder under Section 3(a) of this Agreement by e-mail to the e-mail address(es) 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.


 






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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” or similar
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” or similar signature were the original thereof.


 


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.
Except as provided in Section 2.c with respect to Liquidated Damages, 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 Preferred Shares pursuant to
the Transaction Documents 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 Registrable
Securities or enforcing its rights under the Transaction Documents. 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 Registration Rights 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. It is expressly understood and agreed that each provision contained
in this Agreement is between the Company and a Purchaser, solely, and not between the Company and the Purchasers collectively and
not between and among the Purchasers.


 






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


 





	 	CAROLINA BANK HOLDINGS,
    INC.	 
	 	 	 	 
	 	By:		 
	 	 	Robert T. Braswell	 
	 	 	President and Chief Executive Officer	 


  






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


 





	 	NAME OF INVESTING ENTITY	 
	 	 	 	 
	 	AUTHORIZED SIGNATORY	 
	 	 	 	 
	 	By:	 	 
	 	 	Name	 
	 	 	Title	 







 





	 	ADDRESS FOR NOTICE:
	 	 	 
	 	c/o:  	 
	 	Street:  	 
	 	City/State/Zip:  	 
	 	Attention:  	 
	 	Telephone:  	 
	 	Facsimile:  	 
	 	Email:  	 




 






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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, involving 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;



 


		·	agreements with broker-dealers to sell a specified number of such securities at a stipulated price
per share;



 


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



 


		·	any other method permitted pursuant to applicable law; and



 


		·	a combination of any such methods.



 


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.


 






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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 Securities 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 Commission, 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 Securities 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 Securities 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 of 1933,
as amended, 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.


 


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, or the Exchange Act.


 


Each selling shareholder has informed the
Company 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 the Company 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, a supplement to this prospectus will be filed,
if required, pursuant to Rule 424(b) under the Securities Act, disclosing (i) the name of each such selling shareholder and of
the participating broker-dealer(s), (ii) the number of shares involved, (iii) the price at which such the Securities were sold,
(iv) the commissions paid or discounts or concessions allowed to such broker-dealer(s), where applicable, (v) that such broker-dealer(s)
did not conduct any investigation to verify the information set out or incorporated by reference in this prospectus, and (vi) other
facts material to the transaction. In no event shall any broker-dealer receive fees, commissions and markups, which, in the aggregate,
exceed eight percent (8%).


 


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
Common Stock 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 any or all of the Securities registered pursuant to the shelf registration statement, of which this prospectus
forms a part.


  






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Each selling shareholder and any other
person participating in such distribution will be subject to applicable provisions of the Securities Exchange Act of 1934, as amended,
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 Securities. 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 the 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 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. The selling shareholders will indemnify
us 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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Annex B


 


CAROLINA BANK HOLDINGS, INC.


 


SELLING SHAREHOLDER NOTICE AND QUESTIONNAIRE


 


The undersigned holder of securities of
Carolina Bank Holdings, Inc., a North Carolina corporation (the “Company”), issued pursuant to a certain Securities
Purchase Agreement by and among the Company and the Purchasers named therein, dated as of March [__], 2015, understands that
the Company intends to file with the Securities and Exchange Commission a registration statement on Form S-3 (the “Resale
Registration Statement”) for the registration and the resale under Rule 415 of the Securities Act of 1933, as amended
(the “Securities Act”), of the Registrable Securities in accordance with the terms of a certain Registration
Rights Agreement by and among the Company and the Purchasers named therein, dated as of March [__], 2015 (the “Agreement”).
All capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Agreement.


 


In order to sell or otherwise dispose of
any Registrable Securities pursuant to the Resale Registration Statement, a holder of Registrable Securities generally will be
required to be named as a selling shareholder in the related prospectus or a supplement thereto (as so supplemented, the “Prospectus”),
deliver the Prospectus to purchasers of Registrable Securities (including pursuant to Rule 172 under the Securities Act) and be
bound by the provisions of the Agreement (including certain indemnification provisions, as described below). Holders must complete
and deliver this Notice and Questionnaire in order to be named as selling shareholders in the Prospectus. Holders of Registrable
Securities who do not complete, execute and return this Notice and Questionnaire within ten (10) Trading Days following the date
of the Agreement (1) will not be named as selling shareholders in the Resale Registration Statement or the Prospectus and (2) may
not use the Prospectus for resales of Registrable Securities.


 


Certain legal consequences arise from being
named as a selling shareholder in the Resale Registration Statement and the Prospectus. Holders of Registrable Securities are advised
to consult their own securities law counsel regarding the consequences of being named or not named as a selling shareholder in
the Resale Registration Statement and the Prospectus.


 


NOTICE


 


The undersigned holder (the “Selling
Shareholder”) of Registrable Securities hereby gives notice to the Company of its intention to sell or otherwise dispose
of Registrable Securities owned by it and listed below in Item (3)(b) pursuant to the Resale Registration Statement. The undersigned,
by signing and returning this Notice and Questionnaire, understands and agrees that it will be bound by the terms and conditions
of this Notice and Questionnaire and the Agreement.


 


The undersigned hereby provides the following
information to the Company and represents and warrants that such information is accurate and complete:


 






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QUESTIONNAIRE


 


		1.	Name:



 


		(a)	Full Legal Name of Selling Shareholder:
	 	 	 
	 	 	 



    


		(b)	Full Legal Name of Registered Holder (if not the same as (a) above) through which Registrable Securities
Listed in Item 3 below are held:
	 	 	 
	 	 	 



  


		(c)	Full Legal Name of Natural Control Person (which means
a natural person who directly or indirectly alone or with others has power to vote or dispose of the securities covered by the
questionnaire):
	 	 	 
	 	 	 



  


	2.	Address for Notices to Selling Shareholder:
	 	 
	 	 
	 	 
	 	 



 





	 	Telephone:	 






	 	Fax:	 






	 	Contact Person:	 






	 	E-mail address of Contact Person:	 



   


	3.	Beneficial Ownership of Registrable Securities Issuable Pursuant to the Purchase Agreement:



 


		(a)	Type and Number of Registrable Securities beneficially owned and issued pursuant to the Agreement:
	 	 	 
	 	 	 
	 	 	 
	 	 	 



   


		(b)	Number of Securities to be registered pursuant to this Notice for resale:
	 	 	 
	 	 	 
	 	 	 
	 	 	 



   


	4.	Broker-Dealer Status:



 


		(a)	Are you a broker-dealer?



 


	Yes      ̈	No      ̈


 






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		(b)	If “yes” to Section 4(a), did you receive your Registrable Securities as compensation
for investment banking services to the Company?



 





	Yes      ̈	No      ̈


 


		(c)	Are you an affiliate of a broker-dealer?



 





	Yes      ̈	No      ̈


 


		Note:	If yes, provide a narrative explanation below:
	 	 	 
	 	 	 
	 	 	 
	 	 	 



  


		(d)	If you are an affiliate of a broker-dealer, do you certify that you bought the Registrable Securities
in the ordinary course of business, and at the time of the purchase of the Registrable Securities to be resold, you had no agreements
or understandings, directly or indirectly, with any person to distribute the Registrable Securities?



 





	Yes      ̈	No      ̈


 


		5.	Beneficial Ownership of Other Securities of the Company Owned by the Selling Shareholder:



 


Except as set forth below
in this Item 5, the undersigned is not the beneficial or registered owner of any securities of the Company other than the Registrable
Securities listed above in Item 3.


 


Type and amount
of other securities beneficially owned:


 





	 	 	 
	 	 	 
	 	 	 


 



 


		6.	Relationships with the Company:



 


Except as set forth below,
neither the undersigned nor any of its affiliates, officers, directors or principal equity holders (owners of 5% of more of the
equity securities of the undersigned) has held any position or office or has had any other material relationship with the Company
(or its predecessors or affiliates) during the past three years.


 


State any exceptions here:


 





	 	 	 
	 	 	 
	 	 	 


  


		7.	Plan of Distribution:



 


The undersigned has reviewed
the form of Plan of Distribution attached as Annex A to the Registration Rights Agreement, and hereby confirms that, except as
set forth below, the information contained therein regarding the undersigned and its plan of distribution is correct and complete.


 


State any exceptions here:


 





	 	 	 
	 	 	 
	 	 	 


   






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***********


 


By signing below, the undersigned consents
to the disclosure of the information contained herein in its answers to Items (1) through (7) above and the inclusion of such information
in the Resale Registration Statement and the Prospectus. The undersigned understands that such information will be relied upon
by the Company in connection with the preparation or amendment of any such Registration Statement and the Prospectus.


 


By signing below, the undersigned acknowledges
that it understands its obligation to comply, and agrees that it will comply, with the provisions of the Exchange Act and the rules
and regulations thereunder, particularly Regulation M in connection with any offering of Registrable Securities pursuant to the
Resale Registration Statement. The undersigned also acknowledges that it understands that the answers to this Questionnaire are
furnished for use in connection with Registration Statements filed pursuant to the Registration Rights Agreement and any amendments
or supplements thereto filed with the Commission pursuant to the Securities Act.


 


I confirm that, to the best of my knowledge
and belief, the foregoing statements (including without limitation the answers to this Questionnaire) are correct.


 


IN WITNESS WHEREOF the undersigned,
by authority duly given, has caused this Questionnaire to be executed and delivered either in person or by its duly authorized
agent.


 





	Dated:	 	 	Beneficial Owner:	 







 


 


	 	By:		 
	 	 	Name	 
	 	 	Title	 



  






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