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Exhibit 10.7  

 

 
 

STOCKHOLDER AGREEMENT    
    
    by and between    
    
    Spirit Finance Corporation    
    
    and    
    
    Spirit Finance Holdings, LLC    
    

Dated
as of October 15, 2003 

 

   Table of Contents  

	 
	 	 
	 	Page

	ARTICLE I

GENERAL
	

Section 1.01.	
 	

Construction of Terms	
 	

1
	

Section 1.02.	
 	

Defined Terms	
 	

1
	

ARTICLE II

REPRESENTATIONS AND WARRANTIES
	

Section 2.01.	
 	

Representations and Warranties of the Stockholder	
 	

2
	

Section 2.02.	
 	

Representations and Warranties of the Company	
 	

2
	

ARTICLE III

RESTRICTIONS ON TRANSFER; SHARE REPURCHASE;
	

Section 3.01.	
 	

Restrictions on Transfer	
 	

3
	

Section 3.02.	
 	

Effect of Prohibited Transfers	
 	

3
	

Section 3.03.	
 	

Common Stock Repurchase	
 	

3
	

Section 3.04.	
 	

Reverse Stock Split	
 	

3
	

ARTICLE IV

COVENANTS OF THE COMPANY
	

Section 4.01.	
 	

Corporate Existence	
 	

4
	

Section 4.02.	
 	

Properties, Business Insurance	
 	

4
	

Section 4.03.	
 	

Directors and Officers' Insurance	
 	

4
	

Section 4.04.	
 	

Bylaws	
 	

4
	

Section 4.05.	
 	

Restrictive Agreements Prohibited	
 	

4
	

Section 4.06.	
 	

Compliance with Laws	
 	

4
	

Section 4.07.	
 	

Keeping of Records and Books of Account	
 	

4
	

Section 4.08.	
 	

Prohibited Actions	
 	

4
	

Section 4.09.	
 	

Compensation Committee Action	
 	

4
	 	 	 	 	 

i

 

	

ARTICLE V

MISCELLANEOUS PROVISIONS
	

Section 5.01.	
 	

Survival of Covenants	
 	

5
	

Section 5.02.	
 	

Legend on Securities	
 	

5
	

Section 5.03.	
 	

Notices	
 	

5
	

Section 5.04.	
 	

Headings	
 	

5
	

Section 5.05.	
 	

Counterparts	
 	

5
	

Section 5.06.	
 	

Remedies; Severability	
 	

6
	

Section 5.07.	
 	

Entire Agreement	
 	

6
	

Section 5.08.	
 	

Adjustments	
 	

6
	

Section 5.09.	
 	

Law Governing	
 	

6
	

Section 5.10.	
 	

Successors and Assigns	
 	

6
	

EXHIBIT A COMPENSATION COMMITTEE DEFINED ANNUAL PERFORMANCE CRITERIA	
 	

 

ii

STOCKHOLDER AGREEMENT  

        STOCKHOLDER AGREEMENT, dated as of October 15, 2003, by and between SPIRIT FINANCE
CORPORATION, a Maryland corporation (the "Company"), and SPIRIT FINANCE HOLDINGS, LLC (the "Stockholder"). 

W I T N E S S E T H:  

        WHEREAS, as of the date hereof, the Stockholder owns a total of 2,000,000 shares (the "Shares") of the Company's Common Stock (defined below); 

        WHEREAS,
the parties are willing to execute this Agreement and be bound by the provisions hereof; and 

        WHEREAS,
the Stockholder hereto desires to agree upon the terms on which the securities of the Company, now held by it, will be held and transferred. 

        NOW,
THEREFORE, in consideration of the foregoing and the mutual covenants and agreements hereinafter set forth, the parties hereto agree as follows: 

ARTICLE I

GENERAL  

        Section 1.01. Construction of Terms.    As used herein, the masculine, feminine or neuter gender, and the singular or
plural number, shall be deemed to be or to include the other genders or number, as the case may be, whenever the context so indicates or requires. 

        Section 1.02. Defined Terms.    The following capitalized terms, as used in this Agreement, shall have the meanings set
forth below. 

        "2003 Offering" means the Company's 2003 offering of Common Stock anticipated to be conducted pursuant to Regulation D,
Rule 144A and Regulation S. 

        "Common Stock" means the Company's Common Stock, par value $.01 per share, and any other common equity securities issued by the Company,
and any other shares of stock issued or issuable with respect thereto (whether by way of a stock dividend, stock split, reverse stock split or in exchange for or upon conversion of such shares or
otherwise in connection with a combination of shares, recapitalization, merger, consolidation or other corporate reorganization). 

        "Company" means Spirit Finance Corporation, a Maryland corporation and any successors thereto. 

        "Compensation Committee" means the Compensation Committee of the Company's Board of Directors to be appointed following the 2003 Offering. 

        "Exchange Act" means the Securities Exchange Act of 1934, as amended. 

        "Person" means an individual, a corporation, an association, a joint venture, a partnership, a limited liability company, an estate, a
trust, an unincorporated organization and any other entity or organization, governmental or otherwise. 

        "Qualified Public Offering" means the Company's first underwritten public offering on a firm commitment basis by a nationally recognized
investment banking organization or organizations pursuant to an effective registration statement under the Securities Act of 1933, as amended (the "Securities Act"), covering the offer and sale of
Common Stock with respect to which the Company receives aggregate net proceeds attributable to sales for the account of the Company (before deduction of underwriting discounts and commissions) of not
less than $100,000,000. 

        "Securities Act" means the Securities Act of 1933, as amended. 

        "Transfer" means any direct or indirect transfer, donation, sale, assignment, pledge, hypothecation, grant of a security interest in or
other disposal or attempted disposal of all or any portion of a security, 

 

any
interest or rights in a security, or any rights under this Agreement. "Transferred" means the accomplishment of a Transfer, and "Transferee" means the recipient of a Transfer. 

ARTICLE II

REPRESENTATIONS AND WARRANTIES  

        Section 2.01. Representations and Warranties of the Stockholder.    The Stockholder hereby represents, warrants and
covenants to the Company and as follows: (a) the Stockholder has full authority and power under its articles of organization and operating agreement, or comparable document (if applicable) to
enter into this Agreement and perform its obligations hereunder; (b) this Agreement constitutes the valid and binding obligation of such Stockholder enforceable against it in accordance with
its terms, except: (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors' rights generally;
(ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies; and (iii) to the extent the indemnification provisions may
be limited by applicable federal or state securities laws; and (c) the execution, delivery and performance by such Stockholder of this Agreement: (i) does not and will not violate any
laws, rules or regulations of the United States or any state or other jurisdiction applicable to such Stockholder, or require such Stockholder to obtain any approval, consent or waiver of, or to make
any filing with, any person that has not been obtained or made; and (ii) does not and will not result in a breach of, constitute a default under, accelerate any obligation under or give rise to
a right of termination of any indenture or loan or credit agreement or any other agreement, contract, instrument, mortgage, lien, lease, permit, authorization, order, writ, judgment, injunction,
decree, determination or arbitration award to which such Stockholder is a party or by which the property of such Stockholder is bound or affected, or result in the creation or imposition of any
mortgage, pledge, lien, security interest or other charge or encumbrance on any of the assets or properties of such Stockholder. 

        Section 2.02. Representations and Warranties of the Company.    The Company hereby represents, warrants and covenants to
the Stockholder as follows: (a) the Company has full corporate authority and power to enter into this Agreement and perform its obligations hereunder; (b) this Agreement constitutes the
valid and binding obligation of the Company enforceable against it in accordance with its terms, except: (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of creditors' rights generally; (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other
equitable remedies; and (iii) to the extent the indemnification provisions may be limited by applicable federal or state securities laws; and (c) the execution, delivery and performance
by the Company of this Agreement: (i) does not and will not violate any laws, rules or regulations of the United States or any state or other jurisdiction applicable to the Company, or require
the Company to obtain any approval, consent or waiver of, or to make any filing with, any Person that has not been obtained or made; and (ii) does not and will not result in a breach of,
constitute a default under, accelerate any obligation under or give rise to a right of termination of any indenture or loan or credit agreement or any other material agreement, contract, instrument,
mortgage, lien, lease, permit, authorization, order, writ, judgment, injunction, decree, determination or arbitration award to which the Company is a party or by which the property of the Company is
bound or affected, or result in the creation or imposition of any mortgage, pledge, lien, security interest or other charge or encumbrance on any of the assets or properties of the Company. 

2

 

ARTICLE III

RESTRICTIONS ON TRANSFER; SHARE REPURCHASE;

REVERSE STOCK SPLIT  

        Section 3.01. Restrictions on Transfer.    Following completion of the 2003 Offering, the Stockholder shall be entitled
to Transfer up to 1,000,000 of the Shares covered hereby without restriction except as set forth in the charter of the Company or in accordance with the terms of the Shares and any applicable law. The
Stockholder shall not sell, give, pledge, mortgage, permit to be taken by legal process, hypothecate or otherwise Transfer, encumber or dispose of 1,000,000 of the Shares covered hereby (such Shares,
the "Restricted Shares"), except as provided in this Article III. 

        (a)   Qualified Public Offering. The restrictions on transfer on 500,000 Restricted Shares shall immediately terminate upon the
completion of a Qualified Public Offering before October 15, 2013. 

        (b)   Performance Requirements. The restrictions on transfer on 500,000 Restricted Shares shall immediately terminate at a rate
of 100,000 Restricted Shares per year each year at the end of each fiscal year if the Company meets the annual performance requirements as determined by the Compensation Committee. The annual
performance requirements shall be determined by the Compensation Committee no later than January 31, 2004 and upon their determination, such annual
performance requirements shall be set forth in Exhibit A hereto and become a binding part hereof with no further action or consideration by the Parties hereto. 

        Section 3.02. Effect of Prohibited Transfers.    If any Transfer of Shares is made or attempted contrary to the
provisions of this Agreement, such purported Transfer shall be void ab initio; the Company and the other parties hereto shall have, in addition to any other legal or equitable remedies which they may
have, the right to enforce the provisions of this Agreement by actions for specific performance (to the extent permitted by law); and the Company shall have the right to refuse to recognize any
Transferee as one of its stockholders for any purpose, and in the case of Restricted Shares, shall refuse to recognize any Transferee as one of its stockholders for any purpose. 

        Section 3.03. Common Stock Repurchase.    The 1,000,000 Restricted Shares governed by Section 3.01 are subject to
repurchase at $.01 per Restricted Share as follows: 

        (a)   Qualified Public Offering. If the Company does not complete a Qualified Public Offering before October 15, 2013,
the Company shall repurchase from the Stockholder, and the Stockholder shall sell to the Company, 500,000 Restricted Shares on October 16, 2013, or the next business day thereafter. 

        (b)   Performance Criteria. If the Company does not meet the annual performance criteria as determined by the Compensation
Committee set forth in Exhibit A, the Company will repurchase from the Stockholder, and the Stockholder shall sell to the Company, 100,000 Restricted Shares for each fiscal year that it does
not meet, on a cumulative basis as set forth in Exhibit A, the specified criteria, up to a total of 500,000 Restricted Shares. The repurchase, if any, under this Section 3.03(b) shall
occur on March 31, 2009, or the next business day thereafter. 

        Section 3.04. Reverse Stock Split.    The Company and the Stockholder have agreed to cause the Company to effect a
reverse stock split, if necessary, immediately before the closing of the 2003 Offering so that the number of Shares that the Stockholder will own immediately before the closing of the 2003 Offering
will be no more than 4% of the Common Stock issued in the 2003 Offering. 

3

 
ARTICLE IV

COVENANTS OF THE COMPANY  

        The Company covenants and agrees with the Stockholder that: 

        Section 4.01. Corporate Existence.    The Company shall maintain and cause each of its subsidiaries, if any, to maintain,
their respective corporate existence. 

        Section 4.02. Properties, Business Insurance.    The Company shall obtain and maintain and cause each of its
subsidiaries, if any, to maintain as to their respective properties and business, with financially sound and reputable insurers, insurance against such casualties and contingencies and of such types
and in such amounts as is customary for companies similarly situated. 

        Section 4.03. Directors and Officers' Insurance.    The Company shall, as promptly as practicable following the date
hereof, obtain and maintain directors and officers' liability insurance coverage on terms satisfactory to the Directors with coverage limits per occurrence as are customary for a company similarly
situated to the Company, covering, among other things, violations of federal or state securities laws. The Company shall use its reasonable best efforts prior to any initial public offering of the
Company's stock to increase its directors' and officers' liability insurance to provide for limits at least as high as customarily covered by a public company of similar size and with similar
operations, including coverage of claims under the Securities Act and the Exchange Act. 

        Section 4.04. Bylaws.    The Company shall at all times maintain provisions in its Bylaws indemnifying all directors
against liability and limiting all directors from liability to the Company and its stockholders to the maximum extent permitted under the laws of the State of Maryland. 

        Section 4.05. Restrictive Agreements Prohibited.    Neither the Company nor any of its subsidiaries shall become a party
to any agreement which by its terms expressly restricts the Company's performance of this Agreement. 

        Section 4.06. Compliance with Laws.    The Company shall comply, and cause each subsidiary to comply, with all applicable
laws, rules, regulations and orders, noncompliance with which could materially adversely affect its business or condition, financial or otherwise. 

        Section 4.07. Keeping of Records and Books of Account.    The Company shall keep, and cause each subsidiary, if any, to
keep, adequate records and books of account, in which complete entries will be made in accordance with generally accepted accounting principles consistently applied, reflecting all financial
transactions of the Company and such subsidiary, and in which, for each fiscal year, all proper reserves for depreciation, depletion, obsolescence, amortization, taxes, bad debts and other purposes in
connection with its business shall be made. 

        Section 4.08. Prohibited Actions.    Without the prior written consent of the Stockholder, the Company shall not: 

        (a)   make,
or permit any subsidiary, if any, to make, any material change in the nature of its business as of the date hereof; 

        (b)   permit
any subsidiary of the Company to issue any stock, other than to the Company; or 

        (c)   enter
into any agreement to do any of the foregoing. 

        Section 4.09. Compensation Committee Action.    The Company's Compensation Committee shall, as soon as reasonably
practical after their election but in no event later than January 31, 2004, define the performance criteria to be set forth on Exhibit A hereto. The Compensation Committee shall consider
the recommendations of the compensation consultants retained by the Company when determining the performance criteria, subject to their own independent discretion and review. 

4

 
ARTICLE V

MISCELLANEOUS PROVISIONS  

        Section 5.01. Survival of Covenants.    Each of the parties hereto agrees that each covenant and agreement made by it in
this Agreement or in any certificate, instrument or other document delivered pursuant to this Agreement is material, shall be deemed to have been relied upon by the other parties and shall remain
operative and in full force and effect after the date hereof regardless of any investigation. This Agreement shall not be construed so as to confer any right or benefit upon any Person other than the
parties hereto and their respective successors and permitted assigns to the extent contemplated herein. 

        Section 5.02. Legend on Securities.    The Company and the Stockholder acknowledge and agree that in addition to any
other legend on the certificates representing Shares held by the Stockholder, so long as Restricted Shares remains subject to the restrictions set forth in Section 3.01 hereof, substantially
the following legend shall be typed on each certificate representing any Restricted Shares covered by this agreement: 

        THE
SECURITIES REPRESENTED HEREBY ARE SUBJECT TO THE PROVISIONS OF A CERTAIN STOCKHOLDER AGREEMENT, DATED AS OF OCTOBER 15, 2003, BETWEEN THE
HOLDER AND THE COMPANY CONTAINING CERTAIN RESTRICTIONS ON TRANSFER, RIGHTS OF THE COMPANY TO REPURCHASE SHARES AND AN AGREEMENT TO EFFECTUATE A REVERSE STOCK SPLIT AS SET FORTH THEREIN. A COMPLETE AND
CORRECT COPY OF SUCH AGREEMENT IS AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE OF THE COMPANY AND WILL BE FURNISHED UPON WRITTEN REQUEST AND WITHOUT CHARGE. 

        Section 5.03. Notices.    All notices and other communications provided for herein shall be in writing and shall be
deemed to have been duly given, delivered and received (a) if delivered personally; or (b) if sent by facsimile, registered or certified mail (return receipt requested) postage prepaid,
or by courier guaranteeing next day delivery, in each case to the party to whom it is directed, which if to the Company, shall be at Spirit Finance Corporation, 8910 East Raintree Drive,
Suite 100, Scottsdale, AZ 85260, and if to the Stockholder, at the addresses set forth below such party's signature hereto, (or at such other address for any party as shall be specified by
notice given in accordance with the provisions hereof; provided that notices of a change of address shall be effective only upon receipt thereof). Notices delivered personally shall be effective on
the day so delivered, notices sent by registered or certified mail shall be effective five days after mailing, notices sent by facsimile shall be effective when receipt is acknowledged, and
notices sent by courier guaranteeing next day delivery shall be effective on the earlier of the second business day after timely delivery to the courier or the day of actual delivery by the courier. 

        Section 5.04. Headings.    The Article and Section headings used or contained in this Agreement are for
convenience of reference only and shall not affect the construction of this Agreement. The parties have participated jointly in the negotiation and drafting of this Agreement and the other agreements,
documents and instruments executed and delivered in connection herewith with counsel sophisticated in investment transactions. In the event an ambiguity or question of intent or interpretation arises,
this Agreement and the agreements, documents and instruments executed and delivered in connection herewith shall be construed as if drafted jointly by the parties and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement and the agreements, documents and instruments executed and delivered in connection
herewith. 

        Section 5.05. Counterparts.    This Agreement may be executed in one or more counterparts and by the parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an 

5

 

original
and all of which together shall be deemed to constitute one and the same agreement. The exchange of copies of this Agreement and of signature pages by facsimile transmission shall
constitute effective execution and delivery of this Agreement as to the parties and may be used in lieu of the original Agreement for all purposes. Signatures of the parties transmitted by facsimile
shall be deemed to be their original signatures for all purposes. 

        Section 5.06. Remedies; Severability.    It is specifically understood and agreed that any breach of the provisions of
this Agreement by any Person subject hereto will result in irreparable injury to the other parties hereto, that the remedy at law alone will be an inadequate remedy for such breach, and that, in
addition to any other legal or equitable remedies which they may have, such other parties may enforce their respective rights by actions for specific performance (to the extent permitted by law) and
the Company may refuse to recognize any unauthorized Transferee as one of its stockholders for any purpose, including, without limitation, for purposes of dividend and voting rights, until the
relevant party or parties have complied with all applicable provisions of this Agreement. 

        In
the event that any one or more of the provisions contained herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for any
reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be in any way impaired thereby, it being
intended that all of the rights and privileges of the parties hereto shall be enforceable to the fullest extent permitted by law. 

        Section 5.07. Entire Agreement.    This Agreement is intended by the parties as a final expression of their agreement and
intended to be complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. 

        Section 5.08. Adjustments.    All references to share prices, numbers and amounts herein shall be equitably adjusted to
reflect stock splits, reverse stock splits, recapitalizations and similar changes affecting the stock of the Company. 

        Section 5.09. Law Governing.    This Agreement shall be construed and enforced in accordance with and governed by the
laws of the State of Maryland (without giving effect to principles of conflicts of law). 

        Section 5.10. Successors and Assigns.    This Agreement shall be binding upon and inure to the benefit of the respective
successors and permitted assigns of the parties hereto as contemplated herein, and any successor to the Company by way of merger or otherwise shall specifically agree to be bound by the terms hereof
as a condition of such successor. The rights of the Stockholder hereunder shall be assignable to Transferees of their Shares as contemplated herein. 

6

 

        IN
WITNESS WHEREOF, the parties hereto have caused this Stockholder Agreement to be duly executed as of the date first set forth above. 

	

 	
 	
THE COMPANY:
	
 	
 	
SPIRIT FINANCE CORPORATION
	
 	
 	

By	
 	

/s/  CHRISTOPHER H. VOLK      
 Christopher H. Volk

President and Chief Operating Officer
	

 	
 	
STOCKHOLDER:
	
 	
 	
SPIRIT FINANCE HOLDINGS, LLC
	
 	
 	

By	
 	

/s/  MORTON H. FLEISCHER      
 Morton H. Fleischer

Chairman of the Board and Chief Executive Officer
	

 	
 	
ADDRESS
	
 	
 	

8910 East Raintree Drive, Suite 100

Scottsdale, Arizona 85260

7

EXHIBIT A  

 COMPENSATION COMMITTEE DEFINED ANNUAL PERFORMANCE CRITERIA  

        The annual performance criteria for purposes of Section 3.01(b) and Section 3.03(b) shall be as follows: 

        The
Restricted Shares governed by such sections shall vest if (i) all conditions for vesting contained in the Agreement are satisfied and (ii) the Company meets any
one of the following targets for the applicable vesting date: 

        (a)   the
Company's total return to shareholders increases by at least 110% of the increase in the Morgan Stanley REIT Index (Ticker: RMS) ("RMS"); 

        (b)   the
Company's total return to shareholders is equal to at least the Company's prior year annualized dividend yield plus 1.0%; or 

        (c)   the
Company has an annual total return to shareholders of 10% for the year. 

        For
purposes of the first vesting date in Section 3.01(b), paragraphs (a) and (b) above shall not apply. 

        The
Company's dividend yield and total return to shareholders shall be calculated using a methodology consistent with those employed in the computation of the RMS or those employed or
recommended by the Association for Investment Management and Research. The calculations shall be approved by an independent compensation consultant to the Company. 

        In
the event that the above annual performance criteria is exceeded on a vesting date, the amount of the total return to shareholders by which the criteria is exceeded may be carried
forward and applied toward any of the vesting criteria for any one or more subsequent vesting dates. In the event that none of the above annual performance criteria are met on a vesting date, such
Restricted Shares may still vest if on one or more succeeding vesting dates hereunder, the total return to shareholders for such succeeding vesting period or periods and the total return to
shareholders for any performance criteria for the original vesting period which was not met are collectively met on a cumulative basis; provided, however, that no Restricted Shares governed by
Section 3.01(b) that remain unvested hereunder following March 31, 2009 shall vest. Any Restricted Shares that remain unvested following March 31,
2009, and have not previously been repurchased by the Company, shall be repurchased by the Company within 30 days following March 31, 2009 in the manner prescribed in
Section 3.03. 

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Exhibit 10.8  

Execution Copy

 
 

REGISTRATION RIGHTS AGREEMENT    
    

        THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
entered into as of December 17, 2003, by and between Spirit Finance Corporation, a Maryland corporation (the
"Company") and Banc of America Securities LLC, a Delaware corporation limited liability company
("BAS") for the benefit of BAS and the Holders (as defined below). 

        THE PARTIES ENTER THIS AGREEMENT on the basis of the following facts, understandings and intentions: 

        A.    The Company, Spirit Finance Holdings, LLC and BAS entered into that certain Purchase/Placement Agreement dated as of
December 11, 2003 (the "Purchase Agreement") in connection with the offering and sale (the
"Offering") of 36,000,000 shares of common stock, par value $.01 per share, of the Company ("Common
Stock"), including 6,000,000 shares of Common Stock that may be issued pursuant to an additional allotment option grated to BAS. 

        B.    In order to induce the investors who are purchasing the Common Stock in the Offering to purchase such Common Stock and BAS
to enter into the Purchase Agreement, the Company has agreed to provide the registration rights provided for in this Agreement for the holders of Registrable Shares (as defined below). 

        C.    The execution and delivery of this Agreement is a condition to the closing of the transactions contemplated by the
Purchase Agreement. 

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

1.    Definitions.    As used in this Agreement, the following terms shall have the following meanings: 

         Additional Shares:    Shares (as defined below) or other securities issued in respect of the Shares by reason of or in connection with any
stock
dividend, stock distribution, stock split, or similar issuance. 

         Agreement:    As defined in the Introductory Paragraph of this Agreement. 

        Affiliate:    As to any specified Person, (i) any Person that directly, or indirectly through one or more intermediaries, controls or
is
controlled by, or is under common control with, the specified Person, (ii) any executive officer, director, trustee, managing member or general partner of the specified Person and
(iii) any legal entity for which the specified Person acts as an executive officer, director, trustee, managing member or general partner. For purposes of this definition, "control" (including
the correlative meanings of the terms "controlled by" and "under common control with"), as used with respect to any Person, shall mean the possession, directly, or indirectly through one or more
intermediaries, of the power to direct or cause the direction of the management and policies of such Person, whether by contract, through the ownership of voting securities, partnership or member
interests or other equity interests or otherwise. An indirect relationship shall include circumstances in which a Person's spouse, children, parents, siblings or mother-, father-, sister- or
brother-in-law is or has been associated with a Person. 

1

 

        Business Day:    With respect to any act to be performed hereunder, each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day
on which
banking institutions in New York, New York are authorized or obligated by applicable law, regulation or executive order to close. 

         Closing Time:    December 17, 2003 or such other time or such other date as BAS and the Company may agree. 

         Commission:    The Securities and Exchange Commission. 

        Common Stock:    As defined in Recital A hereof. 

         Company:    As defined in the Introductory Paragraph of this Agreement, and any successor thereto. 

         Controlling Person:    As defined in Section 6(a) hereof. 

         End of Suspension Notice:    As defined in Section 5(b) hereof. 

        Exchange Act:    The Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated by the Commission pursuant
thereto. 

         BAS:    As defined in the Introductory Paragraph of this Agreement, and any successor thereto. 

         Holder:    Each record owner of any Registrable Shares from time to time. 

        Indemnified Party:    As defined in Section 6(c) hereof. 

         Indemnifying Party:    As defined in Section 6(c) hereof. 

         IPO Registration Statement:    As defined in Section 2(b) hereof. 

         Liabilities:    As defined in Section 6(a) hereof. 

        Mandatory Shelf Registration Statement:    As defined in Section 2(a) hereof. 

         NASD:    The National Association of Securities Dealers, Inc. 

         Offering:    As defined in Recital A hereof. 

         Participants:    The directors, officers, stockholders, employees and other parties associated with the Company and certain other
individual accredited
investors who purchased Shares directly from the Company pursuant to the Purchase Agreement in accordance with Regulation D. 

         Person:    An individual, partnership, corporation, trust, limited liability company, unincorporated organization, government or agency or
political
subdivision thereof, or any other legal entity. 

         Proceeding:    An action, claim, suit or proceeding (including without limitation, an investigation or partial proceeding, such as a
deposition),
whether commenced or, to the knowledge of the Person subject thereto, threatened. 

        Prospectus:    The prospectus included in any Registration Statement, including any preliminary prospectus, and all other amendments and
supplements to
any such prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference, if any, in such prospectus. 

2

 

        Purchase Agreement:    As defined in Recital A of this Agreement, as amended from time to time. 

         Purchaser Indemnitee:    As defined in Section 6(a) hereof. 

         Registrable Shares:    Each of the Shares and any Additional Shares, upon original issuance thereof, and at all times subsequent thereto,
including upon
the transfer thereof by the original holder or any subsequent holder, until, in the case of any such Shares or Additional Shares, as applicable, the earliest to occur of: 

          (i)  the
second annual anniversary of the initial effective date of the Mandatory Shelf Registration Statement (subject to extension pursuant to Section 5(c)); 

         (ii)  the
date on which such Shares have been sold pursuant to a Registration Statement or sold, transferred or otherwise disposed of pursuant to Rule 144; or 

        (iii)  the
date on which such Shares not held by Affiliates of the Company are eligible for purchase without registration under the Securities Act pursuant to subparagraph
(k) of Rule 144 (or any successor or analogous rule) and the restrictive legend on such certificate has been removed. 

         Registration Expenses:    Any and all expenses of the Company incident to the performance of or compliance with this Agreement, including,
without
limitation: (i) all Commission, securities exchange, NASD registration, listing, inclusion and filing fees, (ii) all fees and expenses incurred in connection with compliance with
international, federal or state securities or blue sky laws (including, without limitation, any registration, listing and filing fees and reasonable fees and disbursements of counsel in connection
with blue sky qualification of any of the Registrable Shares and the preparation of a blue sky memorandum and compliance with the rules of the NASD), (iii) all expenses of any Persons in
preparing or assisting in preparing, word processing, duplicating, printing, delivering and distributing any Registration Statement, any Prospectus, any amendments or supplements thereto, any
underwriting agreements, securities sales agreements, certificates and any other documents relating to the performance of the Company under and compliance by the Company with this Agreement,
(iv) all fees and expenses incurred in connection with the listing or inclusion of any of the Registrable Shares on any securities exchange or national quotation system pursuant to
Section 4(n) of this Agreement, (v) the fees and disbursements of counsel for the Company and of the independent public accountants of the Company (including, without limitation, the
expenses of any special audit and "cold comfort" letters required by or incident to such performance), and reasonable fees and disbursements of one counsel and one accounting firm (as selected by
Holders holding a majority of the Registrable Shares) for the selling Holders to review the Mandatory Shelf Registration Statement, any Subsequent Shelf Registration Statement, and the IPO
Registration Statement, if any, provided that such fees and disbursements of counsel and the accounting firm for the selling Holders do not exceed an aggregate of $35,000 for any one Registration
Statement, and (vi) any fees and disbursements customarily paid or otherwise negotiated for payment by issuers in connection with issues and sales of securities (including the fees and expenses
of any experts retained by the Company in connection with any Registration Statement), provided, however, that Registration Expenses shall exclude
brokers' or underwriters' discounts and commissions and transfer taxes or transfer fees, if any, relating to the sale or disposition of Registrable Shares by a Holder and the fees and disbursements of
any counsel to the Holders other than as provided for in subparagraph (v) above. 

         Registration Statement:    Any Shelf Registration Statement or the IPO Registration Statement (that covers the resale of any Registrable
Shares),
including the Prospectus, amendments and supplements to such registration statement or Prospectus, including pre- and post-effective 

3

 

amendments,
all exhibits thereto and all material incorporated by reference or deemed to be incorporated by reference, if any, in such registration statement. 

         Regulation D:    Regulation D (Rules 501-508) promulgated by the Commission under the Securities Act, as such rules may
be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission as a replacement thereto having substantially the same effect as such regulation. 

        Regulation D Shares:    Shares initially sold by the Company to the Participants in accordance with the Purchase Agreement in
accordance with
Regulation D and pursuant to the Subscription Agreement (as defined in the Purchase Agreement). 

         Rule 144:    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 as a replacement thereto having substantially the same effect as such rule. 

        Rule 144A:    Rule 144A 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 as a replacement thereto having substantially the same effect as such rule. 

         Rule 158:    Rule 158 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 as a replacement thereto having substantially the same effect as such rule. 

        Rule 415:    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 as a replacement thereto having substantially the same effect as such rule. 

         Rule 424:    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 as a replacement thereto having substantially the same effect as such rule. 

        Rule 429:    Rule 429 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 as a replacement thereto having substantially the same effect as such rule. 

         Securities Act:    The Securities Act of 1933, as amended, and the rules and regulations promulgated by the Commission thereunder.

         Shares:    As defined in the Purchase Agreement. 

        Shelf Registration Statement:    The Mandatory Shelf Registration Statement or any Subsequent Shelf Registration Statement. 

         Subsequent Shelf Registration Statement:    As defined in Section 2(c) hereof. 

         Suspension Event:    As defined in Section 5(b) hereof. 

         Suspension Notice:    As defined in Section 5(b) hereof. 

        Underwritten Offering:    A sale of securities of the Company to an underwriter or underwriters for reoffering to the public. 

2.    Registration Rights.    

        (a)    Mandatory Shelf Registration.    As set forth in Section 4 hereof, the Company agrees to file with the
Commission as soon as reasonably practicable, but in no event later than June 14, 2004, a 

4

 

Shelf
Registration Statement on Form S-11 or such other form under the Securities Act then available to the Company providing for the resale pursuant to Rule 415 from time to
time by the Holders of all of the Registrable Shares (including for the avoidance of doubt any Additional Shares that are issued prior to the effectiveness of such shelf registration statement)
(including the Prospectus, amendments and supplements to such registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto and all
material incorporated by reference or deemed to be incorporated by reference, if any, in such registration statement, the "Mandatory Shelf Registration
Statement"). The Company shall use its best efforts to cause such Shelf Registration Statement to be declared effective by the Commission as promptly as practicable following
such filing. Such best efforts shall include responding to any comments issued by the staff of the Commission with respect to any Registration Statement and filing any related amendment to such
Registration Statement as soon as reasonably practicable after receipt of such comments. Any Shelf Registration Statement shall provide for the resale from time to time and pursuant to any method or
combination of methods legally available (including, without limitation, an Underwritten Offering so long as the Company shall not be required by the Commission to file a
post-effective amendment to the Shelf Registration Statement in connection with any such Underwritten Offering, a direct sale to purchasers, a sale through brokers or agents, or a sale
over the Internet) by the Holders of any and all Registrable Shares. 

        (b)    IPO Registration.    If the Company proposes to file a registration statement on
Form S-11 or such other form under the Securities Act providing for the initial public offering of shares of Common Stock (including the Prospectus, amendments and supplements to
such registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto and all material incorporated by reference or deemed to be
incorporated by reference, if any, in such registration statement, the "IPO Registration Statement"), the Company will notify each Holder of the
proposed filing and afford each Holder an opportunity to include in such IPO Registration Statement all or any part of the Registrable Shares then held by such Holder. Each Holder desiring to include
in any such IPO Registration Statement all or part of the Registrable Shares held by such Holder shall, within twenty (20) Business Days after delivery of the above-described notice by the
Company, so notify the Company in writing, and in such notice shall inform the Company of the number of Registrable Shares such Holder wishes to include in such IPO Registration Statement. Any
election by any Holder to include any Registrable Shares in such IPO Registration Statement will not affect the inclusion of such Registrable Shares in the Shelf Registration Statement until such
Registrable Shares have been sold under the IPO Registration Statement; provided, however, that at such time, the Company shall have the right to remove
from the Shelf Registration Statement the Registrable Shares sold pursuant to the IPO Registration Statement. 

          (i)  Right to Terminate IPO Registration. At any time, the Company shall have the right to terminate or withdraw any IPO
Registration Statement referred to in this Section 2(b) whether or not any Holder has elected to include Registrable Shares in such registration. 

         (ii)  Underwriting. The Company shall give notice to the Holders of the managing underwriters for the Underwritten Offering
proposed under the IPO Registration Statement. The right of any such Holder's Registrable Shares to be included in any IPO Registration Statement pursuant to this Section 2(b) shall be
conditioned upon such Holder's participation in such Underwritten Offering and the inclusion of such Holder's Registrable Shares in the Underwritten Offering to the extent provided herein. All Holders
proposing to distribute their Registrable Shares through such Underwritten Offering shall enter into an underwriting agreement in customary form with the managing underwriters selected for such
underwriting and complete and execute, as reasonably requested as to scope and form, any questionnaires, powers of attorney, indemnities, securities escrow agreements and other documents reasonably
required under the terms of such underwriting, and furnish to the Company such information in writing as the Company may reasonably request for inclusion in the Registration Statement; 

5

 

 provided, however, that no Holder shall be required to make any representations or warranties to or agreements with the Company or the underwriters other than representations,
warranties or agreements as are customary and reasonably requested by the underwriters. Notwithstanding any other provision of this Agreement, if the managing underwriters determine in their sole
discretion that marketing factors require a limitation on the number of shares to be included, then the managing underwriters may exclude shares (including Registrable Shares) from the IPO
Registration Statement and the Underwritten Offering and any Shares included in the IPO Registration Statement and the Underwritten Offering shall be allocated,  first, to the Company, and second, to each of the Holders requesting inclusion of their Registrable
Shares in such IPO Registration Statement on a pro rata basis based on the total number of Registrable Shares then held by each such Holder which is
requesting inclusion. If any Holder disapproves of the terms of any Underwritten Offering, such Holder may elect to withdraw therefrom by written notice to the Company and the underwriter, delivered
at least ten (10) Business Days prior to the effective date of the IPO Registration Statement. Any Registrable Shares excluded or withdrawn from such Underwritten Offering shall be excluded and
withdrawn from the IPO Registration Statement. In the case of an Underwritten Offering of the Company's securities other than its Common Stock, if the managing underwriters determine in their sole
discretion that marketing factors require a limitation or total exclusion on the number of Registrable Shares to be included, then the managing underwriters may exclude any or all Registrable Shares
from such Underwritten Offering. 

        (iii)  Hold-Back Agreement. By electing to include Registrable Shares in the IPO Registration Statement, if any,
the Holder shall be deemed to have agreed not to effect any sale or distribution of securities of the Company of the same or similar class or classes of the securities included in the Registration
Statement or any securities convertible into or exchangeable or exercisable for such securities, including a sale pursuant to Rule 144 or Rule 144A under the Securities Act, during such
periods as reasonably and customarily requested by the managing underwriter (but in no event for a period longer than sixty (60) days following the effective date of the IPO Registration
Statement, provided each of the executive officers and directors of the Company that hold shares of Common Stock of the Company or securities convertible into or exchangeable or exercisable for shares
of Common Stock of the Company are subject to the same restriction for the entire time period required of the Holders hereunder) by the representatives of the underwriters, if an Underwritten
Offering. 

        (iv)  Shelf Registration not Impacted by IPO Registration Statement. The Company's obligation to file any Shelf Registration
Statement shall not be affected by the filing or effectiveness of the IPO Registration Statement. 

        (c)    Subsequent Shelf Registration for Additional Shares Issued after Effectiveness of the Mandatory Shelf Registration
Statement.    If any Additional Shares are issued or distributed to Holders after the effectiveness of the Mandatory Shelf Registration Statement, or such Additional
Shares were otherwise not included in a prior Shelf Registration Statement, then the Company shall as soon as practicable file an additional shelf registration statement (including the Prospectus,
amendments and supplements to such registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto and all material incorporated by
reference or deemed to be incorporated by reference, if any, in such registration statement, a "Subsequent Shelf Registration Statement") covering such
Additional Shares on behalf of the Holders thereof in the same manner, and subject to the same provisions in this Agreement as the Mandatory Shelf Registration Statement, provided that the provisions
of Section 2(a), 2(b), 9 or 10(a) hereof will not apply to any such Subsequent Shelf Registration Statement. 

6

   
        (d)    Expenses.    The Company shall pay all Registration Expenses in connection with the registration of the
Registrable Shares pursuant to this Agreement. Each Holder participating in a registration pursuant to this Section 2 shall bear such Holder's proportionate share (based on the total number of
Registrable Shares sold in such registration) of all discounts and commissions payable to underwriters or brokers and all transfer taxes and transfer fees in connection with a registration of
Registrable Shares pursuant to this Agreement and any other expense of the Holders not specifically allocated to the Company pursuant to this Agreement relating to the sale or disposition of such
Holder's Registrable Shares pursuant to any Registration Statement. 

3.    Rules 144 and 144A Reporting.    

        With
a view to making available the benefits of certain rules and regulations of the Commission that may permit the sale of the Registrable Shares to the public without registration, the
Company agrees to, so long as any Holder owns any Registrable Shares: 

        (a)   at
all times after the effective date of the first registration under the Securities Act filed by the Company for an offering of its securities to the general public
make and keep public information available, as those terms are understood and defined in Rule 144(c) under the Securities Act; 

        (b)   use
its best efforts to timely file with the Commission all reports and other documents required to be filed by the Company under the Securities Act and the Exchange Act
at any time after it has become subject to such reporting requirements); 

        (c)   if
the Company is not required to file reports and other documents under the Securities Act and the Exchange Act, it will make available other information as required
by, and so long as necessary to permit sales of Registrable Shares pursuant to, Rule 144A; and 

        (d)   to
furnish to any Holder promptly upon request a written statement by the Company as to its compliance in all material respects with the reporting requirements of
Rule 144 (at any time after ninety (90) clays after the effective date of the first registration statement filed by the Company for an offering of its securities to the general public)
and of the Securities Act and the Exchange Act (at any time after it has become subject to the reporting requirements of the Exchange Act), a copy of the most recent annual and quarterly report(s) of
the Company, and such other reports, documents or shareholder communications of the Company, and take such reasonable further actions consistent with
this Section, as a Holder may reasonably request in availing itself of any rule or regulation of the Commission allowing a Holder to sell any such Registrable Shares without registration. 

4.    Registration Procedures.    

        In
connection with the obligations of the Company with respect to any registration pursuant to this Agreement, the Company shall use its best efforts to effect or cause to be effected
the registration of the Registrable Shares under the Securities Act to permit the public resale of such Registrable Shares by the Holder or Holders in accordance with the Holders' intended method or
methods of resale and distribution (which methods shall be commercially reasonable), and the Company shall: 

        (a)   prepare
and file with the Commission, as specified in this Agreement, a Shelf Registration Statement, which Shelf Registration Statement shall comply as to form with the
requirements of the applicable form and include all financial statements required by the Commission to be filed therewith, and use its best efforts to cause such Registration Statement to become
effective as soon as practicable after filing and to remain effective, subject to Section 5 hereof until the date on which no Holders hold Registrable Shares, provided,
however, that the Company shall not be required to cause any IPO Registration Statement to become effective if it elects to terminate or withdraw the IPO Registration Statement
pursuant to Section 2(b)(i) hereof 

7

 

and
Holders have promptly been so notified; provided, further, that if the Company has an effective Shelf Registration Statement on
Form S-11 under the Securities Act and becomes eligible to use Form S-3 or such other short-form registration statement under the Securities Act, the
Company may, upon twenty (20) Business Days' prior written notice to all Holders of Registrable Shares, register any Registrable Shares registered but not yet distributed under the effective
Shelf Registration Statement on such a short-form Shelf Registration Statement and, once the short-form Shelf Registration Statement is declared effective,
de-register such shares under the previous Registration Statement or transfer filing fees from the previous Registration Statement (such transfer pursuant to Rule 429) unless any
Holder of Registrable Shares registered under the initial Shelf Registration Statement notifies the Company within fifteen (15) Business Days of receipt of the Company notice that such a
registration under a new Registration Statement and de-registration of the initial Shelf Registration Statement would materially interfere with its distribution of Registrable Shares
already in progress, in which case the Company shall delay the effectiveness of the short-form Shelf Registration Statement and de-registration until not later than thirty
(30) Business Days from the date that the Company provides the notice referenced above to the Holder(s); 

        (b)   subject
to Section 4(i) hereof, (i) prepare and file with the Commission such amendments and post-effective amendments to each such
Shelf Registration Statement as may be necessary to keep such Shelf Registration Statement effective for the period described in Section 4(a) hereof, (ii) cause each Prospectus contained
therein to be supplemented by any required prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 or any similar rule that may be
adopted under the Securities Act, and (iii) comply with the provisions of the Securities Act with respect to the disposition of all securities covered by each Shelf Registration Statement
during the applicable period in accordance with the intended method or methods of distribution by the selling Holders thereof; 

        (c)   furnish
to the Holders, without charge, as many copies of each Prospectus, including each preliminary Prospectus, and any amendment or supplement thereto and such other
documents as such Holder may reasonably request, in order to facilitate the public sale or other disposition of the Registrable Shares; the Company consents to the use of such Prospectus, including
each preliminary Prospectus, by the Holders, if any, in connection with the offering and sale of the Registrable Shares covered by any such Prospectus; 

        (d)   use
its best efforts to (i) register or qualify, or obtain exemption from registration or qualification for, all Registrable Shares by the time the applicable
Registration Statement is declared effective by the Commission under all applicable state securities or "blue sky" laws of such domestic United States jurisdictions as BAS or any Holder covered by a
Registration Statement shall reasonably request in writing, (ii) keep each such registration or qualification or exemption effective during the period such Registration Statement is required to
be kept effective pursuant to Section 4(a) and (iii) do any and all other acts and things that may be reasonably necessary or advisable to enable such Holder to consummate the
disposition in each such jurisdiction of such Registrable Shares owned by such Holder; provided, however, that the Company shall not be required to
(i) qualify generally to do business in any jurisdiction or to register as a broker or dealer in such jurisdiction where it would not otherwise be required to qualify but for this
Section 4(d) and except as may be required by the Securities Act, (ii) subject itself to taxation in any such jurisdiction, or (iii) submit to the general service of process in
any such jurisdiction; 

        (e)   use
its best efforts to cause all Registrable Shares covered by such Registration Statement to be registered and approved by such other domestic state or local
governmental agencies or authorities in the United States, if any, as may be necessary to enable the Holders thereof to consummate the disposition of such Registrable Shares; 

8

 

        (f)    notify
BAS and each Holder with Registrable Shares covered by a Registration Statement promptly and, if requested by BAS or any such Holder, confirm such advice in
writing (i) when such Registration Statement has become effective and when any post-effective amendments and supplements thereto become effective, (ii) of the issuance by the
Commission or any state securities authority of any stop order suspending the effectiveness of such Registration Statement or the initiation of any proceedings for that purpose, (iii) of any
request by the Commission or any other federal or state governmental authority for amendments or supplements to such Registration Statement or related Prospectus or for additional information, and
(iv) of the happening of any event during the period such Registration Statement is effective as a result of which such Registration Statement or the related Prospectus or any document
incorporated by reference therein contains any untrue statement of a
material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading (which information shall be accompanied by an instruction to
suspend the use of the Registration Statement and the Prospectus until the requisite changes have been made); 

        (g)   during
the period of time referred to in Section 4(a) above, use its best efforts to avoid the issuance of, or if issued, to obtain the withdrawal of, any order
enjoining or suspending the use or effectiveness of a Shelf Registration Statement or suspending the qualification (or exemption from qualification) of any of the Registrable Shares for sale in any
jurisdiction, as promptly as practicable; 

        (h)   provide
to BAS and its counsel and any one counsel for the Holder (if not BAS's counsel) within one (1) Business Day of receipt by the Company or its counsel,
copies of any correspondence with or from the Commission or its staff with respect to the Registration Statement; and upon request, furnish to each requesting Holder with Registrable Shares covered by
a Registration Statement, without charge, at least one (1) conformed copy of such Registration Statement and any post-effective amendment or supplement thereto (without documents
incorporated therein by reference or exhibits thereto, unless requested); 

        (i)    except
as provided in Section 5, upon the occurrence of any event contemplated by Section 4(f)(iv) hereof, use its best efforts to promptly prepare
a supplement or post-effective amendment to a Shelf Registration Statement or the related Prospectus or any document incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of the Registrable Shares, such Prospectus will not contain any 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 light of the circumstances under which they were made, not misleading, and, upon request, promptly furnish to each requesting Holder
a reasonable number of copies each such supplement or post-effective amendment; 

        (j)    if
requested by the representative of the underwriters, if any, or any Holders of Registrable Shares being sold in connection with an Underwritten Offering,
(i) promptly incorporate in a prospectus supplement or post-effective amendment such material information as the representative of the underwriters, if any, or such Holders indicate
relates to them or otherwise reasonably request be included therein and (ii) make all required filings of such prospectus supplement or such post-effective amendment as soon as
practicable after the Company has received notification of the matters to be incorporated in such prospectus supplement or post-effective amendment; 

        (k)   in
the case of an Underwritten Offering, use its best efforts to furnish or caused to be furnished to each Holder of Registrable Shares covered by such Registration
Statement and the underwriters a signed counterpart, addressed to each such Holder and the underwriters, of: (i) an opinion of counsel for the Company, dated the date of each closing under the
underwriting agreement, reasonably satisfactory to such Holder; and (ii) a "comfort" letter, dated the effective 

9

 

date
of such Registration Statement and the date of each closing under the underwriting agreement, signed by the independent public accountants who have certified the Company's financial statements
included in such Registration Statement, covering substantially the same matters with respect to such Registration Statement (and the Prospectus included therein) and with respect to events subsequent
to the date of such financial statements, as are customarily covered in accountants' letters delivered to underwriters in underwritten public offerings of securities and such other financial matters
as such Holder and the underwriters may reasonably request and customarily obtained by underwriters in underwritten offerings; 

        (l)    enter
into customary agreements (including in the case of an Underwritten Offering, an underwriting agreement in customary form) and take all other action in connection
therewith in order to expedite or facilitate the distribution of the Registrable Shares included in such Registration Statement and, in the case of an Underwritten Offering, make representations and
warranties to the Holders of Registrable Shares covered by such Registration Statement and to the underwriters in such form and scope as are customarily made by issuers to underwriters in underwritten
offerings and confirm the same to the extent customary if and when requested; 

        (m)  in
connection with an Underwritten Offering, make available for inspection by one representative appointed by the Holders of a majority of the Registrable Shares and the
representative of any underwriters participating in any disposition pursuant to a Registration Statement and any special counsel and one accounting firm retained by the Holders and underwriters, all
financial and other records, pertinent corporate documents and properties of the Company and cause the respective officers, directors and employees of the Company to supply all information reasonably
requested by any such representatives, the representative of the underwriters, counsel thereto or accountants in connection with a Shelf Registration Statement; provided,
however, that such records, documents or information that the Company determines, in good faith, to be confidential and notifies such representative of the Holders,
representative of the underwriters, counsel thereto or accountants thereto are confidential shall not be disclosed by the representatives, representative of the underwriters, counsel thereto or
accountants unless (i) the disclosure of such records, documents or information is necessary to avoid or correct a misstatement or omission in a Registration Statement or Prospectus and the
Registrable Shares are not subject to a suspension of sales pursuant to Section 5 hereof, (ii) the release of such records, documents or information is ordered pursuant to a subpoena or
other order from a court of competent jurisdiction, or (iii) such records, documents or information have been generally made available to the public; provided
further, that to the extent practicable, the foregoing inspection and information gathering shall be coordinated on behalf of the Holders and the other parties entitled thereto
by one counsel designated by and on behalf of the Holders and the other parties, which counsel the Company determines in good faith is reasonably acceptable. 

        (n)   use
its commercially reasonable efforts to qualify for, and list or include all Registrable Shares on, the New York Stock Exchange or the Nasdaq National Market as soon
as practicable (including, without limitation, seeking to cure in the Company's listing or inclusion application any deficiencies cited by the exchange or market); 

        (o)   prepare
and timely file all documents, reports and certifications required by the Exchange Act and, in the event that the Company's obligation to file such reports
pursuant to Section 15(d) of the Exchange Act expires prior to the expiration of the effectiveness period of the Registration Statement as required by Section 4(a) hereof, the Company
shall register the Registrable Shares under the Exchange Act (if not yet done pursuant to Section 4(t) below) and shall maintain such registration through the effectiveness period required by
Section 4(a) hereof; 

        (p)   provide
a CUSIP number for all Registrable Shares, not later than the effective date of the Registration Statement; 

10

 

        (q)   (i) otherwise
use its best efforts to comply with all applicable rules and regulations of the Commission, (ii) make generally available to its
stockholders, as soon as reasonably practicable, earnings statements covering at least twelve (12) months beginning after the effective date of the Registration Statement that satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158 (or any similar rule promulgated under the Securities Act) thereunder, no later than forty-five
(45) days after the end of each fiscal quarter occurring after the first anniversary of the effective date of the Registration Statement (unless such fiscal quarter is the last fiscal quarter
of the Company's fiscal year, in which case such earnings statement shall be delivered no later than ninety (90) days after such fiscal quarter occurring after the first anniversary of the
effective date of the Registration Statement) and (iii) delay filing any Registration Statement or Prospectus or amendment or supplement to such Registration Statement or Prospectus to which
any Holder of Registrable Shares covered by any Registration Statement shall have reasonably objected on the grounds that such Registration Statement or Prospectus or amendment or supplement does not
comply in all material respects with the requirements of the Securities Act, such Holder having been furnished with a copy thereof at least three (3) Business Days prior to the filing thereof,
provided that the Company may file such Registration Statement or Prospectus or amendment or supplement following such time as the Company shall have made a good faith effort to resolve any such issue
with the objecting Holder and shall have advised the Holder in writing of its reasonable belief that such filing complies with the requirements of the Securities Act; 

        (r)   provide
and cause to be maintained a registrar and transfer agent for all Registrable Shares covered by any Registration Statement from and after a date not later than
the effective date of such Registration Statement; 

        (s)   in
connection with any sale or transfer of the Registrable Shares (whether or not pursuant to a Registration Statement) that will result in the security being delivered
no longer being Registrable Shares, cooperate with the Holders and the representative of the underwriters, if any, to facilitate the timely preparation and delivery of certificates representing the
Registrable Shares to be sold, which certificates shall not bear any transfer restrictive legends (other than as required by the Company's articles of incorporation) and to enable such Registrable
Shares to be in such denominations and registered in such names as the representative of the underwriters, if any, or the Holders may reasonably request at least three (3) Business Days prior
to any sale of the Registrable Shares; and 

        (t)    upon
effectiveness of the first registration statement filed by the Company, the Company will take such actions and make such filings as are necessary to effect the
registration of the Common Stock under the Exchange Act simultaneously with or immediately following the effectiveness of the Registration Statement. 

        The
Company may require the Holders to furnish to the Company such information regarding the proposed distribution by such Holder as the Company may from time to time reasonably request
in writing or as shall be required to effect the registration of the Registrable Shares and no Holder shall be entitled to be named as a selling stockholder in any Registration Statement and no Holder
shall be entitled to use the Prospectus forming a part thereof if such Holder does not provide such information to the Company. Any Holder that sells Registrable Shares pursuant to a Registration
Statement or as a selling stockholder pursuant to an Underwritten Offering shall be required to be named as a selling stockholder in the related prospectus and to deliver a prospectus to purchasers.
Each Holder further agrees to furnish promptly to the Company in writing all information required from time to time to make the information previously furnished by such Holder not misleading and each
Holder shall have an opportunity to review the Registration Statement with respect to the accuracy of the information provided by such Holder. The designated counsel, if any, for the Holders shall, on
behalf of the Holders, have the right to review the Registration Statement prior to the time it is filed with the 

11

 

Commission,
and shall have five business days after receipt of any Registration Statement to provide comments thereon to the Company or its counsel. 

        Each
Holder agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 4(f)(iii) or 4(f)(iv) hereof,
such Holder will immediately discontinue disposition of Registrable Shares pursuant to a Registration Statement until such Holder's receipt of copies of the supplemented or amended Prospectus. If so
directed by the Company, such Holder will deliver to the Company (at the reasonable expense of the Company) all copies in its possession, other than permanent file copies then in such Holder's
possession, of the Prospectus covering such Registrable Shares current at the time of receipt of such notice. 

5.    Black-Out Period.    

        (a)   Subject
to the provisions of this Section 5 and a good faith determination by a majority of the independent members of the Board of Directors of the Company that
it is in the best interests of the Company to suspend the use of the Registration Statement, following the effectiveness of a Registration Statement (and the filings with any international, federal or
state securities commissions), the Company, by written notice to BAS and the Holders, may direct the Holders to suspend sales of the Registrable Shares pursuant to a Registration Statement for such
times as the Company reasonably may determine is necessary and advisable (but in no event for more than an aggregate of ninety (90) days in any rolling twelve (12)-month period commencing on
the Closing Time or more than sixty (60) days in any rolling ninety (90)-day period), if any of the following events shall occur: (i) the representative of the underwriters
of an Underwritten Offering of primary shares by the Company has advised the Company that the sale of Registrable Shares pursuant to the Registration Statement would have a material adverse effect on
the Company's primary offering; (ii) the majority of the independent members of the Board of Directors of the Company in good faith determined that (A) the offer or sale of any
Registrable Shares would materially impede, delay or interfere with any proposed financing, offer or sale of securities, acquisition, corporate reorganization or other significant transaction
involving the Company, (B) after the advice of counsel, sale of Registrable Shares pursuant to the Registration Statement would require disclosure of non-public material information
not otherwise required to be disclosed under applicable law, and (C)(x) the Company has a bona fide business purposes for preserving the confidentiality of such transaction,
(y) disclosure would have a material adverse effect on the Company or the Company's ability to consummate such transaction, or (z) renders the Company unable to comply with Commission
requirements, in each case under circumstances that would make it impractical or inadvisable to cause the Registration Statement (or such filings) to become effective or to promptly amend or
supplement the Registration Statement on a post-effective basis, as applicable; or (iii) the majority of the independent members of the Board of Directors of the Company shall have
determined in good faith, after the advice of counsel, that it is required by law, rule or regulation or that it is in the best interests of the Company to supplement the Registration Statement or
file a post-effective amendment to the Registration Statement in order to incorporate information into the Registration Statement for the purpose of (1) including in the
Registration Statement any prospectus required under Section 10(a)(3) of the Securities Act; (2) reflecting in the prospectus included in the Registration Statement any facts or events
arising after the effective date of the Registration Statement (or of the most-recent post-effective amendment) that, individually or in the aggregate, represents a fundamental
change in the information set forth therein; or (3) including in the prospectus included in the Registration Statement any material information with respect to the plan of distribution not
disclosed in the Registration Statement or any material change to such information. Upon the occurrence of any such suspension, the Company shall use its best efforts to cause the Registration
Statement to become effective or to promptly amend or supplement the Registration Statement on a post-effective basis or to take such action as is necessary to make resumed use of the
Registration 

12

 

Statement
compatible with the Company's best interests, as applicable, so as to permit the Holders to resume sales of the Registrable Shares as soon as possible. 

        (b)   In
the case of an event that causes the Company to suspend the use of a Registration Statement (a "Suspension Event"),
the Company shall give written notice (a "Suspension Notice") to the Holders to suspend sales of the Registrable Shares and such notice shall state
generally the basis for the notice and that such suspension shall continue only for so long as the Suspension Event or its effect is
continuing and the Company is using its best efforts and taking all reasonable steps to terminate suspension of the use of the Registration Statement as promptly as possible. The Holders shall not
effect any sales of the Registrable Shares pursuant to such Registration Statement (or such filings) at any time after it has received a Suspension Notice from the Company and prior to receipt of an
End of Suspension Notice (as defined below). If so directed by the Company, each Holder will deliver to the Company (at the expense of the Company) all copies other than permanent file copies then in
such Holder's possession of the Prospectus covering the Registrable Shares at the time of receipt of the Suspension Notice. The Holders may recommence effecting sales of the Registrable Shares
pursuant to the Registration Statement (or such filings) following further notice to such effect (an "End of Suspension Notice") from the Company, which
End of Suspension Notice shall be given by the Company to the Holders and BAS in the manner described above promptly following the conclusion of any Suspension Event and its effect. 

        (c)   Notwithstanding
any provision herein to the contrary, if the Company shall give a Suspension Notice pursuant to this Section 5, the Company agrees that it shall
extend the period of time during which the applicable Registration Statement shall be maintained effective pursuant to this Agreement by the number of days during the period from the date of receipt
by the Holders of the Suspension Notice to and including the date of receipt by the Holders of the End of Suspension Notice and copies of the supplemented or amended Prospectus necessary to resume
sales. 

6.    Indemnification and Contribution.    

        (a)   The
Company agrees to indemnify and hold harmless (i) BAS and each Holder, (ii) each Person, if any, who controls (within the meaning of Section 15
of the Securities Act or Section 20(a) of the Exchange Act), any of the foregoing (any of the Persons referred to in this clause (ii) being hereinafter referred to as a
"Controlling Person"), and (iii) the respective officers, directors, partners, members, managers, employees, representatives and agents of BAS
and each Holder or any Controlling Person (any Person referred to in clause (i), (ii) or (iii) may hereinafter be referred to as a "Purchaser
Indemnitee") from and against any and all losses, claims, damages, judgments, actions, reasonable out-of-pocket expenses, and other liabilities
(collectively, the "Liabilities"), including, without limitation and as incurred, reimbursement of all reasonable costs of investigating, preparing,
pursuing or defending any claim or action, or any investigation or proceeding by any governmental agency or body, commenced or threatened, including to the extent hereinafter provided, the reasonable
fees and expenses of outside counsel to any Purchaser Indemnitee, joint or several, directly or indirectly related to, based upon, arising out of or in connection with any untrue statement or alleged
untrue statement of a material fact contained in any Registration Statement or Prospectus (as amended or supplemented if the Company shall have promptly furnished to such Purchaser Indemnitee any
amendments or supplements thereto), or any preliminary Prospectus or any other document prepared by the Company used to sell the Registrable Shares, or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, except to the extent
such Liabilities arise out of or are based upon (i) any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with information relating to
any Purchaser Indemnitee 

13

 

furnished
to the Company or any underwriter in writing by such Purchaser Indemnitee expressly for use therein, or (ii) any untrue statement contained in or omission from a preliminary
Prospectus if a copy of the Prospectus (as then amended or supplemented, if the Company shall have promptly furnished to or on behalf of the Holder participating in the distribution relating to the
relevant Registration Statement any amendments or supplements thereto) was not sent or given by or on behalf of such Holder to the Person asserting any such Liabilities who purchased Shares, if such
Prospectus (or Prospectus as amended or supplemented) is required by law to be sent or given at or prior to the written confirmation of the sale of such Shares to such Person and the untrue statement
contained in or omission from such preliminary Prospectus was corrected in the Prospectus (or the Prospectus as amended or supplemented). The indemnity provided for herein shall remain in full force
and effect regardless of any investigation made by or on behalf of any Purchaser Indemnitee. 

        (b)   In
connection with any Registration Statement in which a Holder is participating, such Holder agrees, severally and not jointly, to indemnify and hold harmless the
Company, each Person who controls the Company within the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act and the respective partners, directors,
officers, members, representatives, employees and agents of such Person or Controlling Person to the same extent as the foregoing indemnity from the Company to each Purchaser Indemnitee, but only with
reference to untrue statements or omissions or alleged untrue statements or omissions made in reliance upon and in strict conformity with information relating to such Purchaser Indemnitee furnished to
the Company in writing by such Purchaser Indemnitee expressly for use in any Registration Statement or Prospectus, any amendment or supplement thereto, or any preliminary Prospectus. The liability of
any Purchaser Indemnitee pursuant to this paragraph shall in no event exceed the net proceeds received by such Purchaser Indemnitee from sales of Registrable Shares giving rise to such obligations. If
the Holder elects to include Registrable Shares in an Underwritten Offering, the Holder shall be required to agree to such
customary indemnification provisions as may reasonably be required by the underwriter in connection with such Underwritten Offering. 

        (c)   If
any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand shall be brought or asserted against any Person in respect of
which indemnity may he sought pursuant to paragraph (a) or (b) above, such Person (the "Indemnified Party," or if more than one
Indemnified Party, the "Indemnified Parties"), shall promptly notify the Person against whom such indemnity may be sought (the
"Indemnifying Party"), in writing of the commencement thereof (but the failure to so notify an Indemnifying Party shall not relieve it from any
liability which it may have under this Section 6, except to the extent the Indemnifying Party is materially prejudiced by the failure to give notice), and the Indemnifying Party, upon request
of the Indemnified Party, shall retain counsel reasonably satisfactory to the Indemnified Party to represent the Indemnified Party and any others the Indemnifying Party may reasonably designate in
such proceeding and shall assume the defense of such proceeding and pay the reasonable fees and expenses actually incurred by such counsel related to such proceeding. Notwithstanding the foregoing, in
any such proceeding, any Indemnified Party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party, unless
(i) the Indemnifying Party and the Indemnified Party shall have mutually agreed in writing to the contrary, (ii) the Indemnifying Party failed within a reasonable time after notice of
commencement of the action to assume the defense and employ counsel reasonably satisfactory to the Indemnified Party, (iii) the Indemnifying Party and its counsel do not pursue in a reasonable
manner the defense of such action or (iv) the named parties to any such action (including any impleaded parties), include both such Indemnified Party and the Indemnifying Party, or any
affiliate of the Indemnifying Party, and such Indemnified Party shall have been reasonably advised by counsel that, either (x) there may be one or more legal defenses available to it which are
different from or additional to those available to the Indemnifying Party or such affiliate of the 

14

 

Indemnifying
Party or (y) a conflict may exist between such Indemnified Party and the Indemnifying Party or such affiliate of the Indemnifying Party, then the Indemnifying Party shall not have
the right to assume nor direct the defense of such action on behalf of such Indemnified Party, it being understood, however, that the Indemnifying Party shall not, in connection with any one such
action or separate but substantially similar or related actions arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one (1) separate
firm of attorneys (in addition to any local counsel), for all such Indemnified Parties, which firm shall be designated in writing by those Indemnified Parties who sold a majority of the Registrable
Shares sold by all such Indemnified Parties and any such separate firm for the Company, the directors, the officers and such control Persons of the Company as shall be designated in writing by the
Company. The Indemnifying Party shall not be liable for any settlement of any proceeding effected without its written consent, which consent shall not be unreasonably withheld or delayed, but if
settled with such consent or if there be a final judgment for the plaintiff, the Indemnifying Party agrees to indemnify any Indemnified Party from and against any loss or liability resulting from such
settlement or judgment. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending or threatened proceeding in respect of which any
Indemnified Party is or could have been a party and indemnity could have been sought hereunder by such Indemnified Party, unless (i) such settlement includes an unconditional release of such
Indemnified Party from all liability on claims that are the subject matter of such proceeding and (ii) does not include a statement as to, or an admission of, fault, culpability or a failure to
act by or on behalf of the other party. 

        (d)   If
the indemnification provided for in paragraphs (a) and (b) of this Section 6 is for any reason held to be unavailable to an Indemnified Party in
respect of any Liabilities referred to therein (other than by reason of the exceptions provided therein) or is insufficient to hold harmless a party indemnified thereunder, then each Indemnifying
Party under such paragraphs, in lieu of indemnifying such Indemnified Party thereunder, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Liabilities in such
proportion as is appropriate to reflect the relative fault of the Indemnifying Parties and the Indemnified Party, as well as any other relevant equitable considerations. The relative fault of the
Company, on the one hand, and any Purchaser Indemnitees, on the other, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information supplied by the Company or by such Purchaser Indemnitees and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. 

        (e)   The
parties agree that it would not be just and equitable if contribution pursuant to this Section 6 were determined by pro
rata allocation (even if such Indemnified Parties were treated as one entity for such purpose), or by any other method of allocation that does not take account of the equitable
considerations referred to in paragraph 6(d) above. The amount paid or payable by an Indemnified Party as a result of any Liabilities referred to paragraph 6(d) shall be deemed to
include, subject to the limitations set forth above, any reasonable legal or other expenses actually incurred by such Indemnified Party in connection with investigating or defending any such action or
claim. Notwithstanding the provisions of this Section 6, in no event shall a Purchaser Indemnitee be required to contribute any amount in excess of the amount by which proceeds (net of any
discounts or commissions) received by such Purchaser Indemnitee from sales of Registrable Shares exceeds the amount of any damages that such Purchaser Indemnitee has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged omission. For purposes of this Section 6, each Person, if any, who controls (within the meaning of Section 15 of
the Act or Section 20(a) of the Exchange Act) BAS or a Holder shall have the same rights to contribution as BAS or such Holder, as the case may be, and each Person, if any, who controls (within
the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act) the 

15

 

Company,
and each officer, director, partner, employee, representative, agent or manager of the Company shall have the same rights to contribution as the Company. Any party entitled to contribution
will, promptly after receipt of notice of commencement of any action, suit or proceeding against such party in respect of which a claim for contribution may be made against another party or parties,
notify each party or parties from whom contribution may be sought, but the omission to so notify such party or parties shall not relieve the party or parties from whom contribution may be sought from
any obligation it or they may have under this Section 6 or otherwise, except to the extent that any party is materially prejudiced by the failure to give notice. 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. 

        (f)    The
indemnity and contribution agreements contained in this Section 6 will be in addition to any liability which the indemnifying parties may otherwise have to
the indemnified parties referred to above. The Purchaser Indemnitee's obligations to contribute pursuant to this Section 6 are several in
proportion to the respective number of Shares sold by each of the Purchaser Indemnitees hereunder and not joint. 

7.    Market Stand-off Agreement.    

        Each
Holder hereby agrees that it shall not, to the extent requested by the Company or an underwriter of securities of the Company, directly or indirectly sell, offer to sell (including
without limitation any short sale), grant any option or otherwise transfer or dispose of any Registrable Shares or other shares of Common Stock of the Company or any securities convertible into or
exchangeable or exercisable for shares of Common Stock of the Company then owned by such Holder (other than to donees or partners of the Holder who agree to be similarly bound) within (60) days
following either (x) the effective date of the IPO Registration Statement of the Company filed under the Securities Act or (y) the date of an Underwritten Offering by the Company
pursuant to a shelf registration statement of the Company filed under the Securities Act; provided, however, that: 

        (a)   with
respect to the up to 60-day restriction that follows the effective date of the IPO Registration Statement, such agreement shall not be applicable to
Registrable Shares sold pursuant to such IPO Registration Statement; 

        (b)   all
executive officers and directors of the Company then holding shares of Common Stock or securities convertible into or exchangeable or exercisable for shares of
Common Stock of the Company shall enter into similar agreements for not less than the entire time period required of the Holders hereunder; and 

        (c)   the
Holders shall be allowed any concession or proportionate release allowed to any executive officer or director that entered into similar agreements. 

        In
order to enforce the foregoing covenant, the Company shall have the right to place restrictive legends on the certificates representing the securities subject to this Section 7
and to impose stop transfer instructions with respect to the Registrable Shares and such other securities of each Holder (and the securities of every other Person subject to the foregoing restriction)
until the end of such period. 

8.    Termination of the Company's Obligations.    

        The
Company shall have no further obligations pursuant to this Agreement at such time as no Registrable Shares are outstanding, provided, however, that the Company's obligations under
Sections 6 and 10(a) through and including 10(l) of this Agreement shall remain in full force and effect following such time. 

16

 

9.    Limitations on Subsequent Registration Rights.    

        From
and after the date of this Agreement, the Company shall not, without the prior written consent of the Holders of a majority of the then outstanding Registrable Shares, enter into
any agreement with any holder or prospective holder of any securities of the Company that would allow such holder or prospective holder to include such securities in the IPO Registration Statement, if
any, filed pursuant to the terms hereof, unless under the terms of such agreement, such holder or prospective holder may include such securities in any such registration only to the extent that the
inclusion of his securities will not reduce the amount of Registrable Shares of the Holders that is included. 

10.    Miscellaneous.    

        (a)    Remedies.    If (i) the Company does not initially file the Mandatory Shelf Registration Statement with
the Commission on or prior to June 14, 2004, (ii) the Company fails to file, when required, any documents or other materials required to be filed with the Commission in furtherance of
the Company's obligations pursuant to Sections 2 and 4 hereof to maintain the effectiveness of any Shelf Registration Statement, or (iii) the Board of Directors of the Company determines to
direct the Holders to suspend sales of Registrable Shares under any effective Registration Statement for more than ninety (90) days during any rolling twelve (12) month period commencing
on the Closing Time or for more than sixty (60) days during any rolling ninety (90) day period, then the Company hereby agrees and acknowledges that each Holder of the Registrable Shares
will be entitled as the sole and exclusive remedy for any and all concurrent breaches of this Agreement related to one or more concurrent such failures or excess periods of suspension, to liquidated
and agreed upon damages payable cumulatively on each Registrable Share for each day of each such delay, failure to maintain effectiveness or excess period of suspension, as the case may be. Such
liquidated damages shall be payable quarterly, in arrears within ten (10) days of the end of each fiscal quarter and shall accrue at a daily rate of (i) $0.25 per Registrable Share per
annum (or $0.00069444 per day) during the first 90 days of the delay, failure to maintain effectiveness or excess suspension period, (ii) $0.50 per Registrable Share per annum (or
$0.0013888 per day) during days 91 to 180 of the delay, failure to maintain effectiveness or excess suspension period, (iii) $0.75 per Registrable Share per annum (or $0.00208333 per day)
during days 181 to 270 of the delay, failure to maintain effectiveness or excess suspension period, and (iv) $1.00 per Registrable Share per annum (or $0.00277777 per day) after the 270th day
of the delay, failure to maintain effectiveness or excess suspension period. Liquidated damages will be computed on the basis of a 360-day year comprised of twelve 30-day
months. Affiliates of the Company shall not be entitled to any liquidated damages with respect to Registrable Shares held by such affiliates. 

        (b)    Amendments and Waivers.    The provisions of this Agreement, including the provisions of this sentence, may not
be amended, modified or supplemented, and waivers or consents to or departures from the provisions hereof may not be given, without the written consent of the Company and Holders beneficially owning
not less than fifty percent (50%) of the then outstanding Registrable Shares; provided, however, that for purposes of this Agreement, Registrable Shares
that are owned, directly or indirectly, by an Affiliate of the Company shall not be deemed to be outstanding. Notwithstanding the foregoing, a waiver or consent to or departure from the provisions
hereof with respect to a matter that relates exclusively to the rights of a Holder whose securities are being sold pursuant to a Registration Statement and that does not directly or indirectly affect,
impair, limit or compromise the rights of other Holders may be given by such Holder; provided that the provisions of this sentence may not be amended,
modified or supplemented except in accordance with the provisions of the immediately preceding sentence. 

17

   
        (c)    Notices.    All notices and other communications, provided for or permitted hereunder shall be made in
writing
by delivered by facsimile (with receipt confirmed), overnight courier or registered or certified mail, return receipt requested, or by telegram 

          (i)  if
to a Holder, at the most current address given by the transfer agent and registrar of the Shares to the Company; and 

         (ii)  if
to the Company, at the offices of the Company at 8910 East Raintree Drive, Suite 100, Scottsdale, Arizona 85260, Attention: Chief Financial Officer (facsimile
(480) 606-0826). 

Receipt
of any notice sent pursuant to this Agreement shall be deemed to occur five (5) days after mailing by the party giving such notice. 

        (d)    Successors and Assigns.    This Agreement shall inure to the benefit of and be binding upon the successors and
assigns of each of the parties hereto and shall inure to the benefit of each Holder. The Company agrees that the Holders (including, without limitation, Holders of Regulation D Shares) shall be
third party beneficiaries to the agreements made hereunder by BAS and the Company, and each Holder shall have the right to enforce such agreements directly to the extent it deems such enforcement
necessary or advisable to protect its rights hereunder; provided, however, that such Holder fulfills all of its obligations hereunder. 

        (e)    Counterparts.    This Agreement may be executed in any number of counterparts and by the parties hereto in
separate 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. 

        (f)    Governing Law.    THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE
PARTIES HERETO HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY STATE COURT IN THE STATE OF NEW YORK OR ANY FEDERAL COURT SITTING IN NEW YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH OF THE
PARTIES HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

        (g)    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 commercially 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 hereto 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. 

        (h)    Entire Agreement.    This Agreement, together with the Purchase Agreement, is intended by the parties hereto as
a final expression of their agreement, and is intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained
herein and therein. 

18

 

        (i)    Registrable Shares Held by the Company or its Affiliates.    Whenever the consent or approval of Holders of a
specified percentage of Registrable Shares is required hereunder, Registrable Shares held by the Company or its Affiliates shall not be counted in determining whether such consent or approval was
given by the Holders of such required percentage. 

        (j)    Survival.    This Agreement is intended to survive the consummation of the transactions contemplated by the
Purchase Agreement. The indemnification and contribution obligations under Section 6 of this Agreement shall survive the termination of the Company's obligations under Section 2 of this
Agreement. 

        (k)    Headings.    The headings in this Agreement are for convenience of reference only and shall not limit or
otherwise affect the provisions of this Agreement. All references made in this Agreement to "Section" refer to such Section of this Agreement, unless expressly stated otherwise. 

        (l)    Attorneys' Fees.    In any action or proceeding brought to enforce any provision of this Agreement, or where
any provision hereof is validly asserted as a defense, the prevailing party, as determined by the court, shall be entitled to recover its reasonable attorneys' fees in addition to any other available
remedy. 

[Signatures on the Following Page]

19

 

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

	 	 	SPIRIT FINANCE CORPORATION
	

 	
 	
By:	

/s/  MORTON FLEISCHER      

	 	 	 	Name:	Morton Fleischer
	 	 	 	Title:	Chairman/CEO
	
 	
 	

BANC OF AMERICA SECURITIES LLC
	

 	
 	
By:	

/s/  THOMAS MORRISON      

	 	 	 	Name:	Thomas Morrison
	 	 	 	Title:	Managing Director

[Signature Page of Registration Rights Agreement]

20

QuickLinks

REGISTRATION RIGHTS AGREEMENT

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