Exhibit 10.2



Execution Version



REGISTRATION RIGHTS AGREEMENT


                    This
Registration Rights Agreement (this “Agreement”)
is made and entered into as of March 26, 2014, by and among Codorus Valley
Bancorp, Inc., a Pennsylvania 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.


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


                    “Availability
Date” shall have the meaning set forth in Section 3(n).


                    “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, $2.50 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.


                    “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).


                    “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.


                    “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.


                    “FINRA” shall have the meaning set forth in
Section 3(j).


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


                    “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, shall be the NASDAQ Global Market.


2





                    “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.


                    “Registrable Securities” means all of the
Shares and any securities issued or issuable upon any stock split, dividend or
other distribution, recapitalization or similar event with respect to the
Shares, provided, that the Holder
has completed and delivered to the Company a Selling Stockholder Questionnaire;
and provided, further, that
Shares 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); or (B) becoming eligible for sale without the requirement for the Company to be in compliance with the current
public information required under Rule 144(c)(1) (or Rule 144(i)(2), if applicable)
and without volume or manner of sale restrictions. 


                    “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 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).


                    “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. 


3





                    “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.


                    “Shares” means the shares of Common Stock
issued or issuable to the Purchasers pursuant to the Purchase Agreement. 


                    “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) and (ii) 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.


          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 may reasonably determine (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 for resale of the Registrable Securities as a secondary
offering) subject to the provisions of Section 2(f) 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 (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 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 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, Securities Act Rules Compliance and
Disclosure Interpretation 612.09. Notwithstanding any other provision of this
Agreement and 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 


4





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 as follows: first, the Company
shall reduce or eliminate the shares of Common Stock to be included by any
Person other than a Holder; second, the Company shall reduce or eliminate any
shares of Common Stock to be included by any Affiliate of the Company; and
third, the Company shall reduce the number of Registrable Securities to be
included by all other Holders on a pro rata basis based on the total number of
unregistered Registrable Securities held by such Holders, subject to a
determination by the Commission that certain Holders must be reduced before
other Holders based on the number of Registrable Securities held by such
Holders. 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.


                    (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
the earlier of (i) such time as all of the Registrable Securities covered by
such Registration Statement have been publicly sold by the Holders or (ii) the
date that all Registrable Securities covered by such Registration Statement may
be sold by non-affiliates of the Company without volume or manner of sale
restrictions under Rule 144, 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), as determined by counsel to the
Company pursuant to a written opinion letter to such effect, addressed and
reasonably acceptable to the Company’s transfer agent and the affected Holders
(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, as required by Rule 424(b). 


                    (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
each case of (A) and (B), other than during an Allowable Grace Period), (iv) a
Grace Period 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 


5





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 partial 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 unregistered Registrable Securities held by such
Holder on the Event Date. The parties agree that notwithstanding anything to the contrary herein, no Liquidated
Damages shall be payable (i) 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 by counsel to the Company pursuant to a written
opinion letter to such effect, addressed and delivered to the Company’s
transfer agent and reasonably acceptable to the affected Holders 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 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 Stockholder
Questionnaire not more than five (5) 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 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 commercially reasonable 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(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.


6





                    (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 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 forty-five (45)
consecutive days, and during any three hundred sixty-five (365) day period, the
aggregate of all Grace Periods shall not exceed an aggregate of ninety (90)
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; provided, however,
that no Grace Period shall be longer than an Allowable Grace Period.
Notwithstanding anything to the contrary, the Company shall cause its 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 shall (i) register the
resale of the Registrable Securities on another appropriate form and (ii)
undertake 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


                    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 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 may be necessary
to keep such Registration Statement continuously effective as to the applicable
Registrable Securities for its Effectiveness Period (except 


7





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 Statement and otherwise in
compliance with applicable federal and state securities laws. 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 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.


                    (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 two Trading Days prior to such filing, in the case of (iii) and (iv)
below, not more than one 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; (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 


8





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 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, if requested by a Holder, furnish to such Holder, without
charge, at least one conformed copy of each Registration Statement and each
amendment thereto and all exhibits to the extent requested by such Person
(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.


                    (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 reasonably 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. Certificates for Registrable Securities free
from all restrictive legends may be transmitted by the Company’s 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 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 or 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. 


9





                    (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 (3) 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 FINRA Rule 5110 as requested by any such Holder and the Company
shall pay the filing fee required for the first such filing (but not additional
filings) 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 (upon advice of counsel)
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 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 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 3, “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), in each case subject to extensions permissible
under applicable law.


          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


10





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
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, stockholders, 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, stockholders, 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, 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 (including information
provided by any such Holder in Annex B, Selling Shareholder Notice and
Questionnaire), 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 


11





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.


                    (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
(including information provided by any such Holder in Annex B, Selling
Shareholder Notice and Questionnaire) 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
in writing 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 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: (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 


12





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.


                    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 5) shall be paid to the Indemnified Party, as
incurred, within twenty (20) 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 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 5 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 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. 


13





                    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. 


          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.


                    (b)          No Piggyback on Registrations; Prohibition on
Filing Other Registration Statements. Neither the Company nor any of its security holders (other than the
Holders in such capacity pursuant hereto) may include securities of the Company
in a Registration Statement other than the Registrable 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.


                    (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
event of the kind described in Section 3(c)(iii)-(v), 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 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 


14





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 3(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.


                    (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 


15





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
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 Shares 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.


16





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


	
  

 	
  

 	
  

 	
  

 
	
  

 	
 CODORUS VALLEY BANCORP,
 INC.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
 /s/ Larry
 J. Miller



 	
  

 
	
  

 	
  

 	
 Name: Larry
 J. Miller

 	
  

 
	
  

 	
  

 	
 Title: President & Chief Executive Officer

 	
  

 


[REMAINDER OF PAGE INTENTIONALLY
LEFT BLANK,

SIGNATURE PAGES OF HOLDERS TO FOLLOW]





                    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:

 	
  



 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Tel:

 	
  



 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Fax:

 	
  



 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Email:

 	
  



 









Annex A


PLAN
OF DISTRIBUTION


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


          The selling
stockholders may sell all or a portion of the Common Stock beneficially owned by them and offered hereby from
time to time directly or through one or more underwriters, broker-dealers or
agents. If the Common Stock is
sold through underwriters or broker-dealers, the selling stockholders will be
responsible for underwriting discounts or commissions or agent’s commissions.
The Common Stock 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
stockholders may use any one or more of the following methods when selling
shares:


          •     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 stockholders to sell a specified number of such
shares 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.


          The
selling stockholders also may resell all or a portion of the shares 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 stockholders may arrange for other broker-dealers to
participate in sales. If the selling stockholders effect such transactions by
selling Common Stock 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 stockholders or commissions from
purchasers of the Common Stock 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. 


          In
connection with sales of the Common
Stock or otherwise, the selling stockholders may enter into hedging
transactions with broker-dealers or other financial institutions, which may in
turn engage in short sales of the Common
Stock in the course of hedging in positions they assume. The selling
stockholders may also sell Common Stock
short and if such short sale shall take place after the date that this
Registration Statement is declared effective by the Commission, the selling
stockholders may deliver Common Stock covered
by this prospectus to close out short positions and to return borrowed shares
in connection with such short sales. The selling stockholders may also loan or
pledge Common Stock to
broker-dealers that in turn may sell such shares, to the extent permitted by
applicable law. The selling stockholders 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 stockholders have been advised that they may not use
shares registered on this registration statement to cover short sales of our
Common Stock made prior to the date the registration statement, of which this
prospectus forms a part, has been declared effective by the SEC.


          The selling
stockholders may, from time to time, pledge or grant a security interest in
some or all of the Common Stock
owned by them and, if they default in the performance of their secured
obligations, the pledgees or secured parties may offer and sell the Common Stock 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 stockholders to include
the pledgee, transferee or other successors in interest as selling stockholders
under this prospectus. The selling stockholders also may transfer and donate
the Common Stock 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
stockholders and any broker-dealer or agents participating in the distribution
of the Common Stock 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 Stockholders 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 stockholder 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 Common Stock. Upon the Company being notified in writing by
a selling stockholder that any material arrangement has been entered into with
a broker-dealer for the sale of Common Stock 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
stockholder and of the participating broker-dealer(s), (ii) the number of
shares involved, (iii) the price at which such the Common Stock was 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, would exceed eight percent (8%). 


          Under the
securities laws of some states, the Common Stock 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 stockholder will sell any or all of the Common Stock registered pursuant to
the shelf registration statement, of which this prospectus forms a part.


          Each
selling stockholder 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 Common Stock by the selling
stockholder 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 Common Stock to
engage in market-making activities with respect to the Common Stock. All of the foregoing may affect the marketability of
the Common Stock and the ability
of any person or entity to engage in market-making activities with respect to
the Common Stock.


          We will pay
all expenses of the registration of the Common
Stock pursuant to the registration rights agreement, including, without
limitation, Securities and Exchange Commission filing fees and expenses of
compliance with state securities or “blue sky” laws; provided, however,
that each selling stockholder will pay all underwriting discounts and selling
commissions, if any and any related legal expenses incurred by it. We will
indemnify the selling stockholders against certain liabilities, including some
liabilities under the Securities Act, in accordance with the registration
rights agreement, or the selling stockholders will be entitled to contribution.
We may be indemnified by the selling stockholders against civil liabilities,
including liabilities under the Securities Act, that may arise from any written
information furnished to us by the selling stockholders specifically for use in
this prospectus, in accordance with the related registration rights agreements,
or we may be entitled to contribution.





Annex B


Codorus
Valley Bancorp, Inc.


SELLING STOCKHOLDER NOTICE AND QUESTIONNAIRE


          The
undersigned holder of common stock, $2.50 par value per share, of Codorus Valley Bancorp, Inc., a Pennsylvania 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 [__], 2014, 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 [__],
2014 (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 stockholder 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 stockholders in the Prospectus. Holders of
Registrable Securities who do not complete, execute and return this Notice and
Questionnaire within five (5) Trading Days following the date of the Agreement
(1) will not be named as selling stockholders 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 stockholder 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 stockholder in the
Resale Registration Statement and the Prospectus. 


NOTICE


          The
undersigned holder (the “Selling Stockholder”)
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), unless otherwise specified in Item (3), 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: 


QUESTIONNAIRE


	
  

 	
  

 	
  

 
	
 1.

 	
 Name.

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 Full Legal Name of Selling Stockholder:

 
	
  

 	
  

 	
  



 













	
  

 	
  

 	
  

 
	
  

 	
 (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
Stockholder:


	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  



 
	
  



 
	
  



 
	
  

 	
 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 shares of
 Common Stock to be registered pursuant to this Notice for resale:

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
  


  

 
	
  

 	
  

 	
  


  

 
	
  

 	
  

 	
  


  

 


4. Broker-Dealer Status:


	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 Are you a
 broker-dealer?

 
	
  

 
	
  

 	
  

 	
  

 	
 Yes   o

 	
 No   o

 













	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (b)

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 Yes   o

 	
 No   o

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Note:

 	
 If no, the
 Commission’s staff has indicated that you should be identified as an
 underwriter in the Registration Statement.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
 Are you an
 affiliate of a broker-dealer?

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 Yes   o

 	
 No   o

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Note:

 	
 If yes,
 provide a narrative explanation below:

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  



 
	
  

 	
  

 	
  



 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
 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   o

 	
 No   o

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Note:

 	
 If no, the Commission’s staff has indicated that you should be
 identified as an underwriter in the Registration Statement.

 
	
  

 	
  

 	
  

 	
  

 	
  

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

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 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:

 
	
  

 	
  

 
	
  

 	
  



 
	
  

 	
  



 


***********


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: