Document:

Execution Version 

 

 

 

 

INDEPENDENCE BANCSHARES,
INC. 

(d/b/a nD bancgroup)

 

Subscription Booklet

 

 

 

 

 

 

 

Execution Version 

INSTRUCTIONS

This Subscription Booklet
relates to the offering of shares of common stock of Independence Bancshares,
Inc., d/b/a nD bancgroup (the “Company”). 

This Subscription Booklet
contains the materials necessary for you to subscribe for shares of the
Company’s common stock, and if your subscription is accepted by the Company,
become a shareholder of the Company: 

	       	1.	       	Subscription Agreement – Preferred Shares
		2.		Accredited Investor Questionnaire
		3.		Signature Page (two copies)
		4.		Registration Rights Agreement

Each prospective investor
should read (A) all publicly available records and filings concerning the
Company and its subsidiary bank, Independence National Bank (the
“Bank”), including the Company’s Annual Report on Form
10-K for the year ended December 31, 2013 (the “2013 10-K”), as filed with the Securities and Exchange Commission (the
“SEC”) on March 31, 2014, the Company’s Quarterly
Report on Form 10-Q for the quarter ended September 30, 2014 (the
“3Q 10-Q”), as filed with the SEC on November 14, 2014;
the Company’s Current Report on Form 8-K relating to the termination of the
Bank’s Consent Order with its primary regulator, the Officer of the Comptroller
of the Currency (the “Consent
Order 8-K”), as filed with the
SEC on June 5, 2014; and the Company’s Current Report on Form 8-K relating to
the Company’s updated risk factors (the “Risk Factors 8-K”), as
filed with the SEC on July 18, 2014; (B) the Company’s overview of its digital
banking, payments and transaction services business, as filed with the SEC on
the Company’s Current Report on Form 8-K on July 14, 2014 (the “Company Overview”), as supplemented from time to time; (C) the
Subscription Agreement, including the Registration Rights Agreement attached as
Exhibit C hereto, and all other risk factors and
disclosures provided therein; (D) the Company’s “Investor Presentation” provided
to such prospective investor (the “Investor Presentation”);
and (E) all other documents, records, filings, reports, agreements and other
materials requested by the prospective investor and provided by the Company
regarding its and the Bank’s business, operations, regulatory status and
financial condition sufficient to enable the prospective investor to evaluate
its investment (collectively, the “Private Placement Documents”). After reviewing the Private Placement Documents, each prospective
investor should then complete the appropriate portions of the Subscription
Agreement and the Accredited Investor Questionnaire and execute the signature
pages contained herein. 

The Company does not intend
to register this offering of its shares of common stock under the Securities Act
of 1933 (the “1933
Act”) but rather intends to offer
and sell such shares pursuant to an exemption from registration thereunder,
which limits the types of investors that may be permitted to purchase the
shares. The Accredited Investor Questionnaire is designed to determine whether a
prospective subscriber of shares (each, a “Subscriber”) is a permissible investor, and the Company may reject any Subscriber
which it, in its sole discretion, determines not to be a permissible investor.

Execution Version 

THE COMPANY, IN ITS SOLE
DISCRETION, MAY ACCEPT OR REJECT ANY SUBSCRIPTION IN WHOLE OR IN PART.

THIS OFFERING OF SHARES
HAS NOT BEEN REGISTERED UNDER THE 1933 ACT OR UNDER THE SECURITIES LAWS OF ANY
STATE OR FOREIGN JURISDICTION AND MAY NOT BE SOLD OR TRANSFERRED WITHOUT
COMPLIANCE WITH APPLICABLE FEDERAL, STATE AND FOREIGN SECURITIES LAWS.

Please send two executed copies of this
Subscription Agreement, the Accredited Investor Questionnaire and the
Registration Rights Agreement, together with one properly executed Form W-9 to:

Independence Bancshares,
Inc. 
Attn: Martha L. Long, CFO 
500 East Washington Street

Greenville, SC 29601 

Each Subscriber whose
Subscription Agreement is accepted by the Company shall deliver the Purchase
Price (as defined herein) to the Company by means of wire transfer to the
following operating account on or prior to the Closing Date (as defined
herein):

Bank of New 
York ABA:
021000018 
A/C: Pershing LLC. 
A/C: 890-051238-5
FFC: QF7100075 - Independence Bancshares, Inc.

FAILURE TO COMPLY WITH
THE INSTRUCTIONS CONTAINED HEREIN WILL CONSTITUTE AN INVALID SUBSCRIPTION THAT
MAY RESULT IN THE REJECTION OF YOUR SUBSCRIPTION REQUEST. Questions regarding completion of subscription
documents should be directed to Martha L. Long, Chief Financial Officer of the
Company, by telephone at 864-672-1776. 

The registrar and transfer
agent for the Company’s common stock is Computershare, Limited. Currently, the
Company’s common stock is quoted on the OTC Bulletin Board under the symbol
“IEBS”. The Company has applied for listing of its common stock on the NASDAQ
Global Market under the symbol “IEBS”, but there can be no assurances that such
listing will occur.

Execution Version 

 

SUBSCRIPTION
AGREEMENT

 by and between

INDEPENDENCE BANCSHARES,
INC. 

(d/b/a nD bancgroup)

and 

THE SUBSCRIBER REFERRED
TO HEREIN 

 

 

 

 

 

 

 

 

 

 

 

 

 

TABLE OF CONTENTS

	1.	       	PURCHASE AND SALE OF SECURITIES	1
	 
			(a)	       	Purchase of
      Securities	1
			(b)		Form of Payment;
      Issuance of Purchased Shares	2
	 
	2.		REPRESENTATIONS
      AND WARRANTIES OF THE SUBSCRIBER	2
	 
			(a)		No Public Sale or
      Distribution; No Other Agreements with Respect to the	
					Securities	2
	 		(b)		Subscriber
      Status	3
			(c)		General
      Solicitation	3
			(d)		Reliance on
      Exemptions	3
			(e)		Review of
      Information and Consultation with Advisors	3
			(f)		No
      Reliance	5
			(g)		No Public Market;
      No Governmental Review; Securities Not Insured	6
			(h)		Brokers and
      Finders	6
			(i)		No
      Conflicts	7
			(j)		Investment
      Risk	7
			(k)		Residency	7
			(l)		Organization;
      Authorization	8
			(m)		Review of Risk
      Factors	8
	 
	(3)		REPRESENTATIONS
      AND WARRANTIES OF THE COMPANY	8
	 
			(a)		Organization and
      Qualification; Capitalization	9
			(b)		Authorization;
      Enforcement; Validity	10
			(c)		Issuance of
      Securities	10
			(d)		No
      Conflicts	11
			(e)		No
      Violation	11
			(f)		Consents	12
			(g)		No
      Registration	12
		 	(h)		Acknowledgment
      Regarding the Subscriber’s Purchase of the Securities	12
			(i)		No Integrated
      Offering	13
			(j)		Financial
      Statements	13
			(k)		Compliance with
      Law, Certain Banking Regulations and Other Matters	13
			(l)		Regulatory
      Permits and Reports	13
			(m)		Absence of
      Litigation and Other Proceedings	14
			(n)		Internal
      Accounting and Disclosure Controls	14
			(o)		Approval by
      Directors	15
			(p)		Brokers and
      Finders	15
			(q)		Adequate
      Capitalization; Bank Asset Size; Bank Asset Quality	15
			(r)		Purchase of MPIB
      Assets	15
	 
	4.		COVENANTS	15
	 
			(a)		Notice
      Filings	15

1 

			(b)		Required
      Disclosures	15
			(c)		Commercially
      Reasonable Efforts	15
			(d)		U.S. Real
      Property Interest Matters	16
	 
	5.	       	CLOSING COSTS AND
      EXPENSES; PLACEMENT AGENTS’ FEES	17
	 
	6.		CONDITIONS TO THE COMPANY’S OBLIGATION TO
      SELL	17
	 
	7.		CONDITIONS TO
      SUBSCRIBER’S OBLIGATION TO PURCHASE	18
	 
	8.		TRANSFER AGENT INSTRUCTIONS	19
	 
	9.		TERMINATION	20
	 
	10.		MISCELLANEOUS	22
	 
			(a)	       	Binding Effect;
      Assignability; Benefit	22
			(b)		Governing Law;
      Jurisdiction; Jury Trial	22
			(c)		Counterparts	22
			(d)		Headings	22
			(e)		Severability	22
			(f)		Entire Agreement;
      Amendments	22
			(g)		Notices	23
			(h)		Successors and
      Assigns	24
			(i)		No Third Party
      Beneficiaries	24
			(j)		Survival	24
			(k)		Further
      Assurances	25
			(l)		No Strict
      Construction	25
			(m)		Recapitalizations, Exchanges, Etc., Affecting
      the Securities	25
	 
	11.	 	ADDITIONAL DISCLOSURES	25
	 
			(a)		Director and
      Executive Officer Compensation	25
			(b)		Intellectual
      Property	26
			(c)		Use of
      Proceeds	27
			(d)		Shareholder
      Approval	27
			(e)		Observation
      Rights	27
			(f)		Rights to
      Participate in Follow-On Offerings	27
			(g)		Election of Two
      Additional Members to the Company’s Board of Directors	27
	 
	EXHIBIT A		CERTIFICATE OF
      DESIGNATIONS	
	 
	EXHIBIT
    B		ACCREDITED
      INVESTOR QUESTIONNAIRE	

2 

SUBSCRIPTION
AGREEMENT 

THIS SUBSCRIPTION
AGREEMENT (the “Agreement”), by and
between Independence Bancshares, Inc. d/b/a nD bancgroup (the “Company”), a South
Carolina corporation and bank holding company for Independence National Bank
(the “Bank”), a national bank, and the subscriber identified
on the signature page hereto (the “Subscriber”), shall be
effective as of the date it is accepted by the Company and executed by the
parties hereto (the “Effective
Date”). 

A. The
Offering. The Board of Directors
of the Company has authorized the Company to conduct a private placement of up
to 10,000 shares of its Series A preferred stock, par value $0.01 per share
(“Preferred
Stock”), at a purchase price
of not less than $1,000 per share (the “Private Placement”). The Private Placement is being made to a
limited number of other “accredited investors” as such term is defined in
Regulation D (defined below) (the “Other Subscribers”
and, together with the Subscriber, collectively, the “Subscribers”). The shares of Preferred Stock, being sold to
the Subscriber pursuant to this Agreement and to certain Other Subscribers
pursuant to subscription agreements, including all exhibits thereto, identical
to this Agreement (the “Other
Subscription Agreements”),
are convertible into shares of the Company’s common stock, par value $0.01 per
share (“Common
Stock”), as set forth in the
Company’s Certificate of Designations, substantially in the form attached as
Exhibit A hereto (“Certificate of
Designations”). The Company
will engage authorized agents from time to time (collectively with any subagents of the foregoing,
the “Placement
Agents”) to act as placement
agents for the Private Placement.

B. Registration Rights. Contemporaneously with the execution and delivery of this Agreement, the
Company will enter into a Registration Rights Agreement for the benefit of the
Subscribers that have requested this right, substantially in the form attached
as Exhibit C hereto (the “Registration Rights Agreement”), pursuant to which the Company will file a
registration statement as soon as reasonably practicable covering the resale of
the Securities (defined below). 

NOW,
THEREFORE, in consideration of
the premises and the representations, warranties, covenants and agreements
contained in this Agreement, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the Company and the
Subscriber hereby agree as follows: 

1. PURCHASE AND SALE OF SECURITIES. 

(a) Purchase of Securities.

On the terms set forth in
this Agreement and subject to the satisfaction (or waiver) of the conditions set
forth in Sections 6 and 7 below, at the Closing (as defined below) the Company
shall issue and sell to the Subscriber, and the Subscriber shall purchase from
the Company the number of shares of Preferred Stock as accepted by the Company
and set forth on the Company’s acceptance hereto (the “Purchased Shares”, and together with the shares of common stock of
the Company into which the Purchased Shares convert, the “Securities”). 

(i) Closing. The date and time
of the closing of the transactions contemplated by this Agreement (the
“Closing”) shall, subject to the satisfaction (or waiver)
of the conditions set forth in Sections 6
and 7 below, be 10:00 a.m., Eastern Time, on the date as declared by written
notice from the Company to the Subscriber (the “Closing Date”), provided the Company shall give such notice at
least five business days prior to the Closing Date. 

(ii) Purchase Price. The
purchase price for the Purchased Shares is indicated on the signature page
hereto, and the aggregate purchase price for the Purchased Shares to be
purchased by the Subscriber on the Closing Date (the “Purchase Price”) shall be the amount indicated below the
Subscriber’s name on the Company’s acceptance of this Agreement. 

(b) Form of Payment; Issuance of Purchased Shares. On the Closing Date, the Subscriber shall have
delivered the Purchase Price to the Company by means of wire transfer to the
following operating account:

Bank of New York 
ABA:
021000018 
A/C: Pershing LLC. 
A/C: 890-051238-5
FFC: QF7100075 - Independence Bancshares, Inc.

As soon as practicable
following delivery of the Purchase Price to the Company (but in no event prior
to the Closing), the Company shall issue, or shall cause its transfer agent,
Computershare, Limited, to issue, the Purchased Shares to the Subscriber in book
entry format by electronic delivery at the applicable balance account at The
Depository Trust Company (allocated in the amounts as the Subscriber shall
reasonably request).

2. REPRESENTATIONS AND WARRANTIES OF THE SUBSCRIBER. 

The Subscriber hereby
represents and warrants as of the date it executed this Agreement, as of the
Effective Date, and as of the Closing Date (except for the representations and
warranties that are as of a specific date, which shall be made as of such date)
to the Company that: 

(a) No
Public Sale or Distribution; No Other Agreements with Respect to
the Securities. 

The Subscriber was
contacted by the Company or one of the Placement Agents with respect to a
potential investment in the Securities. The Subscriber understands that the
Securities have not been registered pursuant to the Securities Act of 1933 (the
“1933”) Act or any applicable state securities law and
are therefore considered “restricted securities” under the 1933 Act and that the
Subscriber is acquiring the Securities in the ordinary course of its business
directly from the Company (and not from the Placement Agents), as principal for
its own account and not with a view towards, or for resale in connection with,
the public sale or distribution thereof in violation of the 1933 Act or any
applicable state securities laws. The Subscriber does not presently have any
agreement or understanding, directly or indirectly, with any Person (as defined
below) to: (i) distribute any of the Securities; (ii) hold or to dispose of the
Securities; (iii) vote the Securities (for the avoidance of doubt, nothing in
this Agreement shall prohibit any discussions or deliberations among the directors of the Company,
regardless of the affiliation of a director with, or the nomination of a
director by, the Subscriber or any other proposed subscriber in the Company); or
(iv) acquire any Securities from any other Person other than from the Company
pursuant to this Agreement. In connection herewith, the Subscriber represents
that it is aware of and understands the 1933 Act resale limitations imposed upon
the Securities. Notwithstanding the foregoing, subject to applicable banking
regulations or agreements, by making the representations herein, the Subscriber
does not agree to hold any of the Securities for any minimum or other specific
term and reserves the right to sell or dispose of the Securities at any time in
accordance with or pursuant to an effective registration statement or an
exemption under the 1933 Act, and in accordance with applicable state securities
laws. For purposes of this Agreement, “Person” means an
individual, a limited liability company, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization and a government or any
department or agency thereof. 

2 

(b) Subscriber Status.

The Subscriber is an
“accredited investor” as that term is defined in Rule 501(a) of Regulation D and
has provided the information in the Accredited Investor Questionnaire attached
as Exhibit B hereto, and all such information is correct and
complete. The Subscriber is not a registered broker-dealer under Section 15 of
the Securities Exchange Act of 1934 (the “1934 Act”) or an unregistered broker-dealer engaged in the
business of being a broker-dealer. To the extent that the Subscriber is
utilizing or has utilized a representative to assist it in the evaluation of an
investment in the Securities, the Subscriber has provided the requested
information about such representative as set forth on the Subscriber’s signature
page hereto, and all such information is correct and complete. 

(c) General Solicitation.

The Subscriber is not
purchasing the Securities as a result of any advertisement, article, notice or
other communication regarding the Securities, including the Purchased Shares,
published in any newspaper, magazine or similar media or broadcast over
television or radio or presented at any seminar or any other general
advertisement. 

(d) Reliance on Exemptions.

The Subscriber understands
that the Securities are being offered and sold to it in reliance on specific
exemptions from the registration requirements of United States federal and state
securities laws and regulations and that the Company is relying in part upon the
truth and accuracy of, and the Subscriber’s compliance with, the
representations, warranties, agreements, acknowledgments and understandings of
the Subscriber set forth herein in order to determine the availability of such
exemptions and the eligibility of the Subscriber to acquire the Securities.

3 

(e) Review of Information and Consultation with Advisors. 

The Subscriber, either
alone or through its representatives: 

(i) has consulted with its own legal, regulatory, tax,
business, investment, financial and accounting advisers in connection herewith
to the extent it has deemed necessary; 

(ii) has
had a reasonable opportunity to ask such questions as it has deemed necessary
of, and to receive answers from, the officers and representatives of the Company
and the Bank concerning the Company’s and the Bank’s financial condition and
results of operations, financial projections, and regulatory status, the
business plan for the Company and the Bank, all employment agreements and
benefit plans and other contractual arrangements among the Company, the Bank,
and their management teams, the Company’s and the Bank’s other material
contracts and agreements, the terms and conditions of the Private Placement and
any additional relevant information that the Company possesses, including, but
not limited to, asset quality, credit performance, technology status, compliance
functions, risk management, status of customer negotiations, or litigation, tax,
or accounting issues, and any such questions have been answered to its
satisfaction; 

(iii) has
had the opportunity to review and evaluate, in connection with its investment
decision with respect to the Securities: (A) all publicly available records and
filings concerning the Company and the Bank, including the Company’s Annual
Report on Form 10-K for the year ended December 31, 2013 (the
“2013 10-K”), as filed with the United States Securities and
Exchange Commission (the “SEC”) on March 31,
2014, the Company’s Quarterly Report on Form 10-Q for the quarter ended
September 30, 2014 (the “3Q
10-Q”); the Company’s Current
Report on Form 8-K relating to the termination of the Bank’s Consent Order with
its primary regulator, the Officer of the Comptroller of the Currency (the
“Consent Order
8-K”), as filed with the SEC
on June 5, 2014; and the Company’s Current Report on Form 8-K relating to the
Company’s updated risk factors (the “Risk Factors 8-K”), as
filed with the SEC on July 18, 2014; (B) the Company’s overview of its digital
banking, payments and transaction services business, as filed with the SEC on
the Company’s Current Report on Form 8-K on July 14, 2014 (the
“Company
Overview”), as supplemented
from time to time; (C) this Agreement, including the form of Registration Rights
Agreement attached as Exhibit
C hereto; (D) the Company’s
“Investor Presentation” provided to the Subscriber (the “Investor Presentation”); (E) the Certificate of Designations describing
the terms and condition of the Securities; and (F) all other documents, records,
filings, reports, agreements and other materials requested by the Subscriber and
provided by the Company regarding its and the Bank’s business, operations,
regulatory status and financial condition sufficient to enable the Subscriber to
evaluate its investment (collectively, the “Private Placement Documents”);

4 

(iv) understands that this Agreement, including the Registration Rights
Agreement attached hereto, and the Investor Presentation are confidential and
agrees that this Agreement, including the Registration Rights Agreement attached
hereto, the Investor Presentation, and any other non-public information provided
to Subscriber by or on behalf of the Company in connection with the Private
Placement (collectively, the “Confidential
Information”) shall be
kept in confidence by Subscriber, except that this obligation shall not apply to
any such Confidential Information that (i) is part of the public knowledge or
literature and readily accessible as of the date hereof, including the 2013
10-K, the 3Q 10-Q, the Consent Order 8-K, the Risk Factors 8-K, the Company
Overview, and other filings made by the Company with the SEC, including the 8-K
to be filed by the Company in accordance with Section 4(b) hereof, (ii)
becomes part of the public knowledge or literature and readily accessible by
publication (except as a result of a breach of this provision), (iii) is
received from a third party (except a third party who discloses such Information
in violation of any confidentiality agreement) or (iv) that Subscriber is
required to disclose under applicable laws or reasonably deems necessary to
disclose in any legal or administrative proceeding to enforce its rights or
remedies in connection with the Private Placement. This obligation does not
prohibit Subscriber’s discussion of such Confidential Information with
Subscriber’s counsel, accountant, or other financial adviser (in each case, who
agrees to keep the Confidential Information confidential) solely for the purpose
of assisting Subscriber’s analysis and assessment of such Confidential
Information and an investment in the Company. Subscriber understands (and has
advised Subscriber’s representatives who have been apprised of this matter)
Subscriber’s responsibility under the federal and state securities laws with
respect to purchasing or selling securities of the Company about which
Subscriber (or Subscriber’s Representatives) has material, non-public
information and agrees that Subscriber will neither use, nor cause any third
party to use, any information in contravention of such securities laws or any
rules or regulations promulgated thereunder;

(v) understands that the Placement Agents have acted as agent for the Company
in connection with the sale of the Securities (including the Purchased Shares),
and the Subscriber consents to the Placement Agents’ actions in this regard and
hereby waives any and all claims, actions, liabilities, damages or demands the
Subscriber may have against the Placement Agents in connection with any alleged
conflict of interest arising from the Placement Agents’ engagement as an agent
of the Company in connection with the sale by the Company of the Securities to
the Subscriber; and 

(vi) has
made its own investment decisions based upon its own judgment, due diligence and
advice from any advisers as it has deemed necessary and not upon any view
expressed by the Company, the Bank, the Placement Agents, or any of their
respective directors, officers, employees, Affiliates (as defined below),
shareholders, agents, representatives or advisors (including, without
limitation, attorneys, accountants, consultants, financing sources and financial
advisors) (collectively, including the Company, the Bank, and the Placement
Agents, the “Company
Persons”). Neither such
inquiries nor any other due diligence investigations conducted by the Subscriber
or its advisors or representatives, if any, shall modify, amend or affect the
Subscriber’s right to rely on the Company’s representations and warranties
contained herein. For purposes of this Agreement, “Affiliate” means, with respect to any person, any person
directly or indirectly controlling, controlled by or under common control with,
such other person. For purposes of this definition, “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”) when used with respect to any person, means the possession, directly
or indirectly, of the power to cause the direction of management or policies of
such person, whether through the ownership of voting securities by contract or
otherwise. 

5 

(f) No
Reliance. 

The Subscriber acknowledges
that the information in the Private Placement Documents is as of the date
thereof and may not contain all of the terms and conditions of the
Private Placement and understands and acknowledges that it is the
Subscriber’s responsibility to conduct its own independent investigation and
evaluation of the Company and the Bank, including without limitation, (i) the
business prospects and future operations of the Company and the Bank, and (ii)
the management teams that will continue to operate and manage the Company and
the Bank following the Closing. The Subscriber is not relying upon, and has not
relied upon, any advice, statement, representation or warranty made by any
Company Person, including, without limitation, the Placement Agents, except for
the statements, representations and warranties of the Company expressly made in
(1) Section 3 of this Agreement, and (2) the Registration Rights Agreement and,
to the extent applicable, any other Private Placement Documents that constitute
agreements to which the Company is a party. The Subscriber acknowledges that the
Placement Agents have been indemnified by the Company and make no representation
or warranty of any of the information contained in any of the Private Placement
Documents. Furthermore, the Subscriber acknowledges and agrees that: (A) the
Placement Agents have not performed any due diligence review on behalf of the
Subscriber; (B) the Subscriber has made, and has relied upon, its own
independent examination in purchasing the Securities, including, without
limitation, of the Company, the Bank, and the management teams of the Company
and the Bank that will continue to operate and manage the Company and the Bank
after the Closing; (C) nothing in this Agreement or any other materials
(including any Private Placement Documents) presented by or on behalf of the
Company to the Subscriber in connection with the purchase of the Securities
constitutes legal, tax or investment advice and the Subscriber has consulted
such legal, tax and investment advisors as it, in its sole discretion, has
deemed necessary or appropriate in connection with its purchase of the
Securities; and (D) the Subscriber has received or had access to all of the
information the Subscriber deemed necessary in order to make its investment
decision in the Securities. The Subscriber acknowledges that the Company, the
Placement Agents, and others will rely on the acknowledgments, understandings,
agreements, representations and warranties of the Subscriber contained in this
Agreement, and the Subscriber hereby agrees to promptly notify the Company and
the Placement Agents if any of such acknowledgments, understandings, agreements,
representations, and warranties set forth herein change or are no longer
accurate. 

(g) No
Public Market; No Governmental Review; Securities Not Insured. 

The Subscriber understands
that there is no established market for the Securities and that no public and/or
liquid trading market for the Securities may develop. The Subscriber understands
that no United States federal or state agency or any other government or
governmental agency has passed on or made any recommendation or endorsement of
the Securities or the fairness or suitability of the investment in the
Securities nor have such authorities passed upon or endorsed the merits of the
offering of the Securities. The Subscriber understands that the Securities are
not savings accounts, deposits or other obligations of a depository institution
and are not insured by the FDIC, including the FDIC’s Deposit Insurance Fund, or
any other governmental agency. 

6 

(h) Brokers and Finders.

No broker, finder or
investment banker is entitled to any brokerage, finder’s or other fee or
commission in connection with the transactions contemplated by this Agreement
based on arrangements made by and on behalf of the Subscriber. 

(i) No
Conflicts. 

The execution, delivery and
performance by the Subscriber of this Agreement, the Registration Rights
Agreement, and any other executed agreements between the Subscriber and the
Company (if any) relating to the purchase of the Securities (collectively, the
“Transaction
Documents”) to which it is a
party and the consummation by the Subscriber of the transactions contemplated
hereby and thereby will not (i) result in a violation of the organizational
documents of the Subscriber, if an entity, or (ii) conflict with, or constitute
a default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to which
the Subscriber is a party, or (iii) assuming the receipt of all required
approvals from Government Entities or the Bank Regulatory Authorities (the
“Required
Approvals”), result in a
violation of any law, rule, regulation, order, judgment or decree (including
federal and state securities and banking laws and regulations, assuming the
correctness of the representations and warranties made by the Company herein and
the Other Subscribers’ representations and warranties set forth in the Other
Subscription Agreements) applicable to the Subscriber, except in the case of
clauses (ii) and (iii) above, for such conflicts, defaults, rights or violations
which would not, individually or in the aggregate, reasonably be expected to
materially adversely affect the ability of the Subscriber to perform its
obligations hereunder and thereunder. 

(j) Investment Risk.

The Subscriber understands
that (i) its investment in the Securities involves a high degree of risk, (ii)
no representation is being made as to the business or prospects of the Company
or the Bank after the Closing or the future value of the Securities, and (iii)
no representation is being made as to any projections or estimates delivered to
or made available to the Subscriber (or any of its Affiliates or
representatives) of the Company’s or the Bank’s future assets, liabilities,
shareholders’ equity, regulatory capital ratios, net interest
income, net income or any component of any of the foregoing or any ratios
derived therefrom, except the representations of the Company expressly set forth
(A) in Section 3 of this Agreement, and (B) any other applicable Transaction
Documents. The Subscriber, either alone or together with its representatives, if
any, has the knowledge, sophistication and experience in financial and business
matters to fully understand and be capable of evaluating the merits and risks of
an investment in the Securities, has conducted its own due diligence as it has
deemed necessary for an investment in the Securities, and has the ability to
bear the economic risks of an investment in the Securities and, at the present
time, is able to afford a complete loss of such investment. 

7 

(k) Residency. 

The Subscriber has, if an entity, its principal place of
business or, if an individual, its primary residence, in the jurisdiction
indicated below the Subscriber’s name on the signature page hereto. 

(l) Organization; Authorization. 

The Subscriber, if an
entity, is duly organized, validly existing and in good standing (to the extent
such concept is applicable) under the laws of the jurisdiction in which it is
organized and has the requisite organizational power and authority to enter into
and perform its obligations under the Transaction Documents and to consummate
the transactions contemplated by such Transaction Documents. Assuming the
correctness of the representations and warranties made by the Company in Section
3 of this Agreement and the Other Subscribers’ representations and warranties
set forth in the Other Subscription Agreements, the execution and delivery of
the Transaction Documents to which the Subscriber is a party by the Subscriber
and performance by the Subscriber of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate or, if the
Subscriber is not a corporation, such partnership, limited liability company or
other applicable like action, on the part of the Subscriber, and no further
consent or authorization in connection therewith is required by the Subscriber,
its Board of Directors or its shareholders, or if the Subscriber is not a
corporation, such partnership, limited liability company or other applicable
like action, on the part of the Subscriber. The Transaction Documents to which
the Subscriber is a party have been (or upon delivery will have been) duly
executed by the Subscriber, and when delivered by the Subscriber in accordance
with the terms of this Agreement and thereof, will constitute the legal, valid
and binding obligations of the Subscriber, enforceable against it in accordance
with its respective terms, subject to (i) the application of bankruptcy,
receivership, conservatorship, reorganization, insolvency and similar laws
affecting creditors’ rights generally and (ii) equitable principles being
applied at the discretion of a court before which any proceeding may be brought
(clauses (i) and (ii) collectively, the “Bankruptcy and Equity
Exception”), and except that
rights to indemnification and contribution thereunder may be limited by virtue
of public policy under federal or state securities laws. 

(m) Review of Risk Factors.

The Subscriber recognizes
that an investment in the Securities involves risks. The Subscriber has read and
understands the risk factors outlining certain, but not all, risks related to
the Company, the Bank, and an investment in the Company, included (and
referenced) in the Risk Factors 8-K, it being understood and agreed that in the
event of any inconsistencies between this Agreement and the risk factors, the
terms of this Agreement shall govern. 

3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. 

The Company hereby
represents and warrants as of the Effective Date and as of the Closing Date
(except for the representations and warranties that are as of a specific date
which shall be made as of that date and subject to the exceptions noted in
Section 11 hereto) to the Subscriber that: 

8 

(a) Organization and Qualification; Capitalization. 

(i) The
Company has been duly organized, is validly existing as a South Carolina
corporation, is duly registered as a bank holding company under the Bank Holding
Company Act of 1956 (the “BHC
Act”), and is supervised and
regulated by the Board of Governors of the Federal Reserve System (the
“Federal
Reserve”). The Bank has been
duly organized and is validly existing as a national bank in good standing under
laws of United States of America and is supervised and regulated by the Office
of the Comptroller of the Currency (the “OCC”) and is an insured depository institution pursuant to the provisions of
the Federal Deposit Insurance Act, and its accounts are insured up to applicable
limits by the FDIC (collectively with the OCC and the Federal Reserve, the
“Bank Regulatory
Authorities”), and all
premiums and assessments required to be paid in connection therewith have been
paid when due. The Company has the requisite corporate power and authority to
carry on its business as now being conducted and, if necessary, will have
obtained any requisite regulatory approval required in order to conduct its
business in the same manner as now being conducted following the closing of the
Private Placement, and, if necessary, has been duly qualified as a foreign
corporation for the transaction of business and is in good standing under the
laws of each other jurisdiction in which it owns or leases properties, or
conducts its business in a manner or to an extent that would require such
qualification, other than such failures to be so qualified or in good standing
as, individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect. The Company has furnished or made available to the
Subscriber, prior to the date hereof, true, correct and complete copies of the
Company’s Articles of Incorporation (the “Articles of Incorporation”), the Company’s Bylaws (the “Bylaws”), and the
Bank’s Articles of Association and Bylaws (the “Bank’s Organizational
Documents”), each as amended
through the Effective Date. For purposes of this Agreement, a
“Material Adverse
Effect” means any
circumstance, event, change, development or effect that, individually or in the
aggregate, would reasonably be expected to (A) have a material and adverse
effect on the business, results of operations, prospects or condition (financial
or otherwise) of the Company and the Bank (as hereinafter defined), taken as a
whole, or (B) materially impair or delay the ability of the Company to perform
its obligations under this Agreement and the Registration Rights Agreement and
to consummate the issuance and sale of the Securities, including the Purchased
Shares, in the Private Placement; provided, however, that a
Material Adverse Effect shall not be deemed to include the effects of (1)
changes after the Effective Date in general business, economic or market
conditions (including changes generally in prevailing interest rates, credit
availability and liquidity, currency exchange rates and price levels or trading
volumes in the United States or foreign securities or credit markets), or any
outbreak or escalation of hostilities, declared or undeclared acts of war or
terrorism, in each case generally affecting the industries in which the Company
and the Bank operate, (2) changes or proposed changes after the Effective Date
in generally accepted accounting principles as applied in the United States
(“GAAP”) or regulatory accounting requirements, or
authoritative interpretations thereof, or (3) changes or proposed changes after
the Effective Date in securities, banking, and other laws of general
applicability or related policies or interpretations of any federal or state
agency charged with supervision or regulation of depository institutions or
holding companies of depository institutions, or engaged in the insurance of
depository institution deposits, or any court, administrative agency or
commission or other Governmental Entities (in the case of each of these clauses (1), (2), and (3), other than changes or
occurrences to the extent that such changes or occurrences have or would
reasonably be expected to have a disproportionate adverse effect on the Company
and the Bank, taken as a whole, relative to comparable U.S. banking or financial
services organizations).

9 

(ii) Immediately prior to the Closing, the authorized capital stock of the
Company consisted of 300,000,000 shares of Common Stock and 10,000,000 shares of
preferred stock, and there were 20,502,760 shares of Common Stock issued and
outstanding and no shares of preferred stock issued and outstanding. As of the
Effective Date, as well as immediately prior to the Closing, all outstanding
shares of Common Stock have been duly authorized and validly issued and are
fully paid and non-assessable, have been issued in compliance in all material
respects with all applicable federal and state securities laws and none of the
outstanding shares of Common Stock has been issued in violation of preemptive
rights or any similar rights of any Person, with no personal liability attaching
to the ownership thereof. Except as described in the Company’s SEC Reports (as
defined below), this Agreement (together with all Other Subscription
Agreements), the Registration Rights Agreements, and any other transaction
documents entered into in connection with this Private Placement, there are no
options, warrants, or other rights, agreements, arrangements, or commitments to
which the Company is a party or by which the Company is bound relating to the
issued or unissued shares of Common Stock or Preferred Stock of the Company.

(b) Authorization; Enforcement; Validity.

The Company has the
requisite corporate power and authority to enter into and perform its
obligations under the Transaction Documents and the Other Subscription
Agreements and to issue the Securities in accordance with the terms of this
Agreement. The execution and delivery by the Company of the Transaction
Documents and of the Other Subscription Agreements, and the consummation by the
Company of the transactions contemplated by such Transaction Documents and such
Other Subscription Agreements, including, without limitation, the issuance and
sale of the Securities (including the Purchased Shares pursuant to this
Agreement) have been duly authorized by the Company’s Board of Directors and no
further consent or authorization in connection therewith is required by the
Company, its Board of Directors or its shareholders that has not been obtained.
The Transaction Documents and Other Subscription Agreements have been (or upon
delivery will have been) duly executed and delivered by the Company and
constitute (or will constitute upon their execution and delivery) the legal,
valid and binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, subject to the Bankruptcy and Equity
Exception, and except that rights to indemnification and contribution thereunder
may be limited by virtue of public policy under federal or state securities and
banking laws. The Board of Directors has resolved that the transactions
contemplated hereby and by the Transaction Documents and the Other Subscription
Agreements are in the best interests of the shareholders of the Company (the
“Shareholders”).

10 

(c) Issuance of Securities.

The Securities, including
the Purchased Shares to be issued and sold to the Subscriber by the Company
pursuant to this Agreement, have been duly authorized and, when issued and
delivered to the Subscribers against full payment therefor in accordance with
the terms of this Agreement and the Other Subscription Agreements, will be
validly issued, fully paid and non-assessable, will have been issued in
compliance with all applicable state and federal securities laws and free of any
preemptive or similar rights, and such issuance will not result in the violation
or triggering of any price-based anti-dilution adjustments under any agreement
to which the Company or the Bank is a party, and will not subject the holders
thereof to personal liability. The delivery of the Securities, including the
Purchased Shares, being issued and sold pursuant to the terms of this Agreement
and the Other Subscription Agreements will pass valid title to such Securities
free and clear of any and all liens, charges, claims, encumbrances, security
interests, rights of first refusal, preemptive rights or other restrictions of
any kind (“Liens”) or defect in
title to the purchaser thereof, which is purchasing such Securities in good
faith and without notice of any Lien or defect in title.

(d) No
Conflicts. 

The execution, delivery and
performance by the Company of the Transaction Documents and Other Subscription
Agreements, and the consummation by the Company of the transactions contemplated
hereby or thereby (including, without limitation, the issuance of the Securities
do not and will not (i) conflict with or violate any provisions of the Company’s
Articles of Incorporation, Bylaws or otherwise result in a violation of the
Bank’s Organizational Documents, (ii) conflict with, or constitute a default (or
an event that with notice or lapse of time or both would become a default)
under, result in the creation of any Lien upon any of the properties or assets
of the Company or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both) of,
any contract of the Company that was filed, or should have been filed, as an
exhibit to the SEC Reports (as defined below) pursuant to Item 601 of Regulation
S-K (“Material
Contract”), or (iii) subject
to the Required Approvals, conflict with or result in a violation of any law,
rule, regulation, order, judgment, or decree or other restriction of any court
or governmental authority to which the Company is subject (including federal and
state securities laws and regulations and the rules and regulations thereunder,
assuming, without investigation, the correctness of the representations and
warranties made by the Subscribers herein, of any self-regulatory organization
to which the Company or its shares are subject), or by which any property or
asset of the Company is bound or affected, except in the case of clauses (ii)
and (iii) such as would not have or reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect.

(e) No
Violation.

(i) Neither the Company nor the Bank (as applicable) is currently in breach
of or in default under (A) the Articles of Incorporation, the Bylaws, or the
Bank’s Organizational Documents, or (B) except as described in Section 11
hereto, any law, rule, regulation, order, judgment or decree of any court,
tribunal, administrative agency, commission, applicable industry self-regulatory
organization or other governmental authority or instrumentality, whether
federal, state, local or foreign (each, a “Governmental Entity” and collectively, “Governmental Entities”) applicable to the Company or the Bank or any of
their respective properties or assets, except for breaches or defaults that would not have, individually or in
the aggregate, a Material Adverse Effect.

11 

(ii) Other than unpaid
invoices pertaining to the Company’s agreements with a software provider and a
software developer, neither the Company nor the Bank is currently in breach of
or in default under any Material Contract, except for breaches or defaults that
would not have, individually or in the aggregate, a Material Adverse Effect.

(f) Consents. 

Except for any report or
notice required under any applicable state securities laws, neither the Company
nor the Bank is required to obtain any consent, waiver, authorization or order
of, give any notice to, or make any filing or registration with, any
Governmental Entity or any other Person in order for the Company to execute,
deliver or perform any of its obligations under, or to consummate the
transactions contemplated by, the Transaction Documents and Other Subscription
Agreements, in each case, in accordance with the terms of this Agreement or
thereof. The Company is unaware of any facts or circumstances that might prevent
the Company or the Bank from obtaining or effecting any of the registrations,
applications or filings pursuant to the preceding sentence required to be
obtained or effected, or otherwise from satisfying a condition for the
consummation of the transactions contemplated by this Agreement or the other
Transaction Documents. 

(g) No
Registration. 

Assuming the accuracy of
the representations and warranties made by the Subscriber in this Agreement and
by the Other Subscribers in the Other Subscription Agreements, the issuance and
sale to the Subscribers of the Securities, including the Purchased Shares, in
the manner contemplated by this Agreement and the Other Subscription Agreements
are exempt from the registration requirements of the 1933 Act and applicable
state securities laws (or are in compliance therewith).

(h) Acknowledgment Regarding the Subscriber’s Purchase of the
Securities. 

The Company acknowledges
and agrees that the Subscriber is acting solely in the capacity of an
arm’s-length purchaser with respect to the Transaction Documents and the
transactions contemplated hereby and thereby and that, except in the case of a
Subscriber that is currently an officer or a director of the Company, the
Subscriber is not (i) currently an officer or director of the Company or the
Bank, (ii) to the knowledge of the Company, an “affiliate” of the Company or the
Bank (as defined in Rule 144 of the 1933 Act) or (iii) to the knowledge of the
Company, a “beneficial owner” of more than 9.9% of the Common Stock. For
purposes of this Agreement, a “beneficial owner”
shall have the definition set forth in Rule 13d-3 of the 1934 Act. The Company
further acknowledges that the Subscriber is not acting as a financial advisor or
fiduciary of the Company or the Bank (or in any similar capacity) with respect
to the Private Placement Documents and the transactions contemplated hereby and
thereby, and any advice given by the Subscriber or any of its representatives or
agents in connection with the Private Placement Documents and the transactions
contemplated hereby and thereby is merely incidental to Subscriber’s purchase of the Securities. The
Company further represents to the Subscriber that the Company’s decision to
enter into the Transaction Documents has been based solely on an independent
evaluation by the Company and its representatives. 

12 

(i) No
Integrated Offering. 

Neither the Company nor any
of its Affiliates, nor any Person acting on its or their behalf, has, directly
or indirectly made any offers or sales of any Company security or solicited any
offers to buy any security, under circumstances that would require registration
of the issuance of any of the Securities, including the Purchased Shares, under
the 1933 Act, whether through integration with prior offerings or otherwise.

(j) Financial Statements.

From and after December 31,
2011, all financial statements of the Company present fairly in all material
respects the consolidated financial position of the Company as of and at the
date thereof and the results of its operations and cash flows for the periods
then ended, subject, in the case of unaudited statements, to normal year-end
audit adjustments which would not be material, either individually or in the
aggregate (the “Financial
Statements”). The Financial
Statements complied as to form in all material respects with applicable
accounting requirements and have been prepared in conformity with GAAP applied
on a consistent basis throughout the periods involved (except (A) as may be
otherwise indicated in such financial statements or the notes thereto and (B) in
the case of unaudited interim financial statements, to the extent they may
exclude footnotes, may be subject to customary year-end adjustments or may be
condensed or summary statements). The books and records of the Company and the
Bank have been, and are being, maintained in all material respects in accordance
with GAAP and all other applicable legal and accounting requirements.

(k) Compliance with Law, Certain Banking Regulations and Other
Matters.

The Company and the Bank
are in compliance with, and neither of them is, to the knowledge of the Company,
under investigation with respect to (other than in connection with routine
examinations or investigations) or, to the knowledge of the Company, has been
threatened to be charged with or given notice of any violation of, any
applicable domestic (federal, state or local) or foreign law, statute,
ordinance, license, rule, regulation, policy or guideline, order, demand, writ,
injunction, decree or judgment of any Governmental Entity, other than such
noncompliance, defaults or violations that would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect.

(l) Regulatory Permits and Reports.

Each of the Company and the
Bank possesses all material certificates, authorizations and permits issued by
the Bank Regulatory Authorities and other Governmental Entities, as applicable,
necessary to conduct its business as presently conducted. The Company and the
Bank have not received any notice of proceedings relating to the revocation or
modification of any such certificate, authorization or permit. Each of the
Company and the Bank has filed all reports,
registrations, documents, filings, statements and submissions, together with any
required amendments thereto, that it is required to file with any federal or
state banking authority, and such reports, registrations and statements complied
as to form in all material respects with all the rules and regulations
promulgated by such federal or state banking authorities, and have paid all fees
and assessments due and payable in connection therewith. The Company has filed
all reports, schedules, forms, registration statements and other documents,
together with any required amendments thereto, that it is required to file with
the SEC under the 1934 Act and SEC regulations (the foregoing materials,
including the exhibits thereto and documents incorporated by reference therein,
being collectively referred to herein as the “SEC Reports”), and each such SEC Report complied in all
material respects with the requirements of the 1934 Act and SEC regulations, and
none of the SEC Reports, as of their respective filing dates, contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. There are no
outstanding comments from the SEC with respect to any SEC Report. 

13 

(m) Absence of Litigation and
Other Proceedings.

Except in the ordinary
course of the Company’s and the Bank’s respective businesses, there is no
action, suit, proceeding, inquiry or investigation before or by any court,
tribunal, commission, self-regulatory organization or other Governmental Entity
pending or, to the knowledge of the Company, threatened against or affecting the
Company or the Bank, the proposed issuance of the Securities in the Private
Placement or any of the Company’s or the Bank’s officers or directors. Neither
the Company nor the Bank is subject to any injunction, order, judgment or decree
and, to the knowledge of the Company, no such proceedings with respect to the
foregoing are pending or threatened. No order or decree preventing the use of
the Private Placement Documents, or any order asserting that the transactions
contemplated by this Agreement or the Other Subscription Agreements are subject
to the registration requirements of the 1933 Act or SEC regulations has been
issued and no proceeding for that purpose has commenced or is pending or, to the
knowledge of the Company, is contemplated. 

(n) Internal Accounting and
Disclosure Controls.

The Company and the Bank
maintain a system of internal accounting controls adequate to provide all
necessary information and controls that (i) transactions are executed in
accordance with management’s general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain asset and liability
accountability, (iii) access to assets or incurrence of liabilities is permitted
only in accordance with management’s general or specific authorization, and (iv)
the recorded accountability for assets and liabilities is compared with the
existing assets and liabilities at reasonable intervals and appropriate action
is taken with respect to any difference. The Company has not received any notice
or correspondence from any accountant relating to any material weakness in any
part of the system of internal accounting controls of the Company or the
Bank.

14

(o) Approval by
Directors. A majority of the
members of the Board of Directors of the Company voted in favor of entering into
this Agreement and the Other Subscription Agreements, and the consummation of
the transactions contemplated by this Agreement and the Other Subscription
Agreements, including the issuance of the Securities. 

(p) Brokers and
Finders. Other than the Placement
Agents, no Person will have, as a result of the transactions contemplated by
this Agreement, any valid right, interest or claim against or upon the Company
or the Subscriber for any commission, fee or other compensation pursuant to any
agreement, arrangement or understanding entered into by or on behalf of the
Company. 

(q) Adequate Capitalization; Bank Asset Size; Bank
Asset Quality. As of December 31,
2014, the Bank (i) was deemed “well capitalized” under the capital adequacy
requirements of the OCC, (ii) held deposits of at least $75,000,000 and (iii)
had Non-Performing Assets of less than 2.5% of total assets. For purposes of
this provision, “Non-performing Assets” shall include all nonaccrual loans,
loans past due 90 days or more, other restructured loans, and other real estate
owned. 

(r) Purchase of MPIB
Assets. As of the Closing Date,
the Company shall have purchase all of the assets of MPIB Holdings LLC (“MPIB”)
necessary to pursue its business of mobile payments and digital banking, free
and clear of all liens, security interests, restrictions, claims and
encumbrances as set forth in the asset purchase agreement (the “Asset Purchase
Agreement”) pertaining thereto.

4. COVENANTS. 

(a) Notice
Filings.

The Company agrees to
timely file any notices and other filings that may be required under applicable
federal and state securities and banking laws and regulations in connection with
the transactions contemplated by the Transaction Documents and the Other
Subscription Agreements. 

(b) Required
Disclosures. 

The Company shall, by 5:00
p.m., New York City time, on the day of Closing, issue a Current Report on Form
8-K, including a form of subscription agreement as an exhibit thereto,
disclosing the material terms of the transactions contemplated hereby and by the
Other Subscription Agreements.

15

(c) Commercially Reasonable
Efforts. 

Subject to the terms and
conditions of this Agreement, each of the parties hereto agrees to use its
commercially reasonable efforts in good faith to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper or
desirable, or advisable under applicable laws, so as to permit consummation of
the transactions contemplated hereby as promptly as practicable and otherwise to
enable consummation of the transactions contemplated hereby and shall cooperate
fully with the other parties hereto to that end, including in relation to the
satisfaction of the conditions to Closing set forth in Sections 6 and 7 below
and cooperating in seeking to obtain any consent, approval or waiver required
from, and submitting any required notices or other documentation to, the Federal
Reserve or the OCC; provided,
however, that any such
information will be provided subject to such confidentiality requests as the
party providing such information may reasonably seek. In the event the
Subscriber is required by the Federal Reserve to make any “passivity” or similar
non-control or anti-association commitments in connection with the purchase of
Securities hereunder, the Subscriber agrees to make any such commitments on a
timely basis; provided,
however, that such commitments
shall not include any restrictions (other than customary restrictions typically
contained in the Federal Reserve’s form of passivity and anti-association
commitments for similar transactions) that are materially and unreasonably
burdensome to the Subscriber or the Company; provided, further, that if the
Subscriber is required to provide confidential and proprietary information of
itself or its Affiliates to the Federal Reserve, such information may be so
provided directly to the Federal Reserve with the Investor giving prompt notice
of any such request and disclosure. 

(d) U.S. Real Property
Interest Matters. 

(i) As and when requested by the
Subscriber, the Company agrees to provide reasonable assistance in connection
with determinations by the Subscriber of whether the Preferred Stock the
Subscriber holds or has held constitutes a United States real property interest
under Section 897 of the Internal Revenue Code of 1986 and the regulations and
published interpretations thereunder (the “Code”). The Company shall timely and duly comply with the notice requirement
to the Internal Revenue Service described in Treasury Regulation Section 1.897-2(h)(2). 

(ii) The Company shall, prior to
making a distribution to the Subscriber, based on the information that is
reasonably available to the Company at the time, calculate the percentage of the
dividend distribution that is expected to be out of the Company’s earnings and
profits, including current or accumulated earnings and profits, (and therefore
constitutes a dividend for U.S. federal income tax purposes pursuant to Section
301(c)(1) of the Code). If any amount of the distribution is reasonably expected
to be in excess of the Company’s earnings and profits, including current or
accumulated earnings and profits, the Company will notify the Subscriber, and if
requested by the Subscriber, at the Subscriber’s expense, consult with a
nationally recognized accounting firm to determine whether the stock in the
Company is a “United States real property interest” (a “USRPI”) for purposes of Section 897 of the Code, and, if based on such
consultation, the Company’s stock is reasonably expected to be a USRPI, the
Company will notify the Subscriber of its conclusion at least 30 days prior to
making the distribution (and shall update such information, if applicable, on
the date such distribution is made and as soon as practicable after the
Company’s tax year end). If it is determined that the interest in the Company is
not a USRPI, the Company shall provide the Subscriber with a properly executed
statement from the Company that meets the requirements of Treasury Regulations
Sections 1.1445-2(c)(3) and 1.897-2(h)(1) or notify the Subscriber of its
inability to provide such a certificate and the basis for such inability. If
such a certificate cannot be provided, the Company shall cooperate with the
Subscriber in good faith to determine the percentage of the dividend
distribution that is in excess of the Subscriber adjusted basis in the stock of
the Company.

16

(iii) Upon receiving
written notice thereof, in the case of a direct or indirect disposition of the
stock of the Company by the Subscriber (or its beneficiaries), the Company shall
provide the Subscriber with a properly executed statement from the Company that
meets the requirements of Treasury Regulations Sections 1.1445-2(c)(3) and
1.897-2(h)(1), or notify the Subscriber of its inability to provide such a
certificate and the basis for such inability. The Subscriber shall pay for the
reasonable expenses of the Company in connection with the preparation of such
certificate solely if the Subscriber requests such certificate in connection
with a disposition of the stock of the Company by the Subscriber (or its
beneficiaries).

(iv) The Company will not
distribute a USRPI to the Subscriber without such Subscriber’s consent.

5. CLOSING COSTS AND
EXPENSES; PLACEMENT AGENTS’ FEES.

Except as otherwise
expressly provided herein, each of the parties hereto will bear and pay all
costs and expenses incurred by it or on its behalf in connection with the
transactions contemplated by the Private Placement Documents, including fees and
expenses of its own financial or other consultants, investment bankers,
accountants and counsel. In connection with, and from the proceeds of, the
Private Placement, the Company will pay costs, fees, and expenses of the
Placement Agents (provided that commissions to Placement Agents shall not exceed
5.5% of the gross offering proceeds) as well as the Company’s costs, fees, and
expenses associated with the Private Placement and the satisfaction of closing
condition related thereto, including, but not limited to, legal and accounting
fees and out-of-pocket expenses. 

6. CONDITIONS TO THE
COMPANY’S OBLIGATION TO SELL.

The obligation of the
Company hereunder to issue and sell the Securities to the Subscriber at the
Closing is subject to the sole satisfaction of the Company, at or before the
Closing Date, of each of the following conditions, provided that these
conditions are for the Company’s sole benefit and may be waived by the Company
at any time in its sole discretion by providing the Subscriber with prior
written notice thereof: 

(a) The Subscriber shall have
duly executed each of the Transaction Documents required to be executed at (or
prior to) Closing and delivered the same to the Company. 

(b) The Subscriber shall have
duly executed a fully completed Accredited Investor Questionnaire in the form
attached as Exhibit
B. 

(c) All of the Subscribers shall
have delivered their respective Purchase Price to the Company, and all of the
other conditions to the Company’s obligation to close set forth in the Other
Subscription Agreements shall have been satisfied or (in the Company’s sole
discretion) waived. 

17

(d) The representations and
warranties of the Subscriber contained in Sections 2(k) and (l) of this
Agreement shall be true and correct as of the Closing Date as though made at and
as of the Closing Date (except for such representations and warranties that
expressly speak as of a specific date, which shall be true and correct as of
such specified date) and (ii) contained in all other subsections of Section 2
hereof shall, without giving effect to any materiality qualifications therein,
be true and correct at and as of the Closing Date as though made at and as of
the Closing Date (except for such representations and warranties that expressly
speak as of an earlier date, which representations and warranties shall be true
and correct as of such specified date) except for such failures to be true and
correct as, individually or in the aggregate, would not be material; and the
Subscriber shall have performed, satisfied and complied in all material respects
with the covenants, agreements and conditions required by the Transaction
Documents to be performed, satisfied or complied with by the Subscriber at or
prior to the Closing Date, and the Company shall have received a certificate
executed by an authorized officer of the Subscriber (or by the Subscriber
himself or herself if the Subscriber is a natural person), dated as of the
Closing Date, certifying to the foregoing. 

(e) The Subscriber and/or the
Company (as applicable) shall have received all required approvals, consents or
non-objections of Governmental Entities, if any, and the Subscriber shall have
entered into any required passivity or similar non-control or anti-association
commitments, if any, prior to the Closing Date for the transactions contemplated
by this Agreement and the Other Subscription Agreements.

(f) No provisions of any
applicable law or regulation and no judgment, injunction, order or decree of any
Governmental Entity shall prohibit the Closing or any of the transactions
contemplated by the Private Placement Documents to be executed at Closing, and
no lawsuit or formal administrative proceeding shall have been commenced by any
Governmental Entity seeking to effect any of the foregoing. 

7. CONDITIONS TO SUBSCRIBER’S
OBLIGATIONS TO PURCHASE.

The obligation of the
Subscriber to purchase the Securities at the Closing is subject to the
satisfaction, at or before the Closing Date, of each of the following
conditions, provided that these conditions are for the Subscriber’s sole benefit
and may be waived by the Subscriber at any time in its sole discretion by
providing the Company with prior written notice thereof: 

(a) The Company shall have
executed and delivered the Transaction Documents contemplated to become
effective as of the Closing Date.

(b) No Material Adverse Effect
shall have occurred since the Effective Date. 

(c) The Company, and to the
extent applicable, each Subscriber, shall have received all required approvals,
consents or non-objections of Governmental Entities prior to the Closing Date
for the transactions contemplated by this Agreement and the Other Subscription
Agreements, and such approvals, consents and non-objections shall be in full
force and effect, in each case without the imposition of a specific condition,
limitation, restriction or requirement as described in Section 4(a) and Section
4(d)(iii).

18

(d) The Company shall have
prepared an officer’s certificate confirming that (i) the Company has met (in
person or by conference call) with staff of the Federal Reserve Bank of Richmond
and/or the Federal Reserve and with staff of the OCC, respectively, to present
information about the Company’s business objectives, plans and related financial
information (“Business”), as well as information about the Private
Placement and the use of proceeds as described in Section 11(e) hereof; (ii) the
Company has provided these regulatory agencies with an amount of time that is
reasonably sufficient in the circumstances to consider and respond to such
information; and (iii) none of these regulatory agencies has objected, or
through any response to such information, given the Company a reason to believe
that either agency will object, to the Business, Private Placement or use of
proceeds. 

(e) The Company shall have
obtained any third party consents and approvals, if any, necessary for the
completion of the transactions contemplated by this Agreement and the Other
Subscription Agreements, and such consents and approvals shall be in full force
and effect. 

(f) No provisions of any
applicable law or regulation and no judgment, injunction, order or decree of any
Governmental Entity shall prohibit the Closing or any of the transactions
contemplated by the Private Placement Documents to be executed at Closing, and
no lawsuit or formal administrative proceeding shall have been commenced against
the Company by any Governmental Entity seeking to effect any of the foregoing.

(g) The Subscriber shall have
duly executed a fully completed Accredited Investor Questionnaire in the form
attached as Exhibit
B. 

(h) The Company shall have
executed and filed the Certificate of Designations with the South Carolina
Secretary of State and shall be in effect. 

(i) The Asset Purchase Agreement
shall have been executed by the Company and MPIB. 

8. TRANSFER AGENT
INSTRUCTIONS. 

(a) The Subscriber hereby
represents, warrants and covenants that the Subscriber: 

(i) agrees, for all Securities
held in book entry format, to the Company’s transfer agent recording, so long as
is required by this Section 8, of the following legend on the share register for
the Securities, in substantially the following form: 

THE ISSUANCE OF THE SHARES
REPRESENTED HEREBY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
“SECURITIES ACT”), ANY STATE SECURITIES LAWS (THE “STATE ACTS”), OR ANY OTHER
APPLICABLE SECURITIES LAWS. THE SHARES REPRESENTED HEREBY MAY NOT BE OFFERED,
SOLD, OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED, ENCUMBERED OR
OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT, THE STATE
ACTS, AND ANY OTHER APPLICABLE SECURITIES LAW OR UNLESS, IN THE OPINION OF
COUNSEL ACCEPTABLE TO INDEPENDENCE BANCSHARES, INC., SUCH TRANSACTION IS EXEMPT
FROM, OR NOT SUBJECT TO, REGISTRATION UNDER THE SECURITIES ACT, THE STATE ACTS,
AND ANY OTHER APPLICABLE SECURITIES LAW. 

19

(ii) acknowledges that the book
entries for the Securities shall not contain the legend set forth in this
Section 8: (A) while a registration statement covering the resale of such
security is effective under SEC regulations or the 1933 Act, (B) following any
sale of such securities pursuant to an exemption under SEC regulations or the
1933 Act which permits the removal of the legend (i.e., Rule 144), or (C) when
the Securities are eligible for sale under Rule 144, without the requirement for
the Company to be in compliance with the current public information required
under Rule 144(c)(1) (or Rule 144(i)(2), if applicable) as to such securities
and without volume or manner-of-sale restrictions; and 

(iii) agrees that the
removal of the legend from the book entries for the Securities as set forth in
this Section 8 is predicated upon the Company’s reliance that the Subscriber
will sell any Securities pursuant to either the registration requirements set
forth in the SEC regulations, including any applicable prospectus delivery
requirements, or an exemption therefrom. 

(b) If required by the
Company’s transfer agent, the Subscriber may cause its counsel to issue a legal
opinion to the Company’s transfer agent to effect the removal of the legend set
forth in this Section 8. The Company agrees that at such time as such legend is
no longer required under this Section 8 it will, as soon as possible, but in any
event within three business days, following the delivery by the Subscriber to
the Company, or its transfer agent, of a certificate or other instrument
representing securities issued with a restrictive legend, together with any
required legal opinion, deliver or cause to be delivered to the Subscriber a
certificate representing such securities that is free from such first
restrictive legend. 

9. TERMINATION. 

This Agreement may be
terminated and the sale and purchase of the Securities abandoned at any time
prior to the Closing by either the Company or the Subscriber upon written notice
to the other, if the Closing has not been consummated on or prior to 5:00 p.m.,
New York City time, on March 31, 2015; provided however that the Company may
extend such date for an additional 90 day period solely to secure any necessary
regulatory approvals (the “Termination Date”);
provided, however, that the right to terminate this Agreement under
this Section 9 shall not be available to any Person whose failure to comply with
its obligations under this Agreement has been the cause of or resulted in the
failure of the Closing to occur on or before such time; provided, further, that
the right to terminate by the Subscriber under this Section 9 shall only permit
the Subscriber to terminate its obligations under this Agreement and not the
obligations of any Other Subscribers. Nothing in this Section 9 shall be deemed
to release any party from any liability for any breach by such party of the
terms and provisions of this Agreement or the other Private Placement Documents
or to impair the right of any party to compel specific performance by any other
party of its obligations under this Agreement or the other Private Placement
Documents. In the event of a termination pursuant to this Section 9, the Company
shall promptly notify all non-terminating Subscribers. 

20

Upon a termination in
accordance with this Section 9, the Company will return the Subscriber’s
subscription funds within five business days of such termination, and the
Company and the Subscriber shall not have any further obligation or liability
(including arising from such termination) to the other, and no Subscriber will
have any liability to any Other Subscribers under the Private Placement
Documents as a result therefrom. Notwithstanding the foregoing, this Agreement
may be terminated prior to the Closing: 

(a) by the Company or the
Subscriber, upon written notice to the other parties, in the event that any
Governmental Entity shall have issued any order, decree or injunction or taken
any other action restraining, enjoining or prohibiting any of the transactions
contemplated by this Agreement, and such order, decree, injunction or other
action shall have become final and nonappealable, 

(b) by the Subscriber or
the Company, if the Subscriber or its Affiliates receives written notice from or
is otherwise advised by the Federal Reserve that the Federal Reserve will not
issue a determination (formal or informal) that the Subscriber will not be
deemed in control of the Company for purposes of the BHC Act or the Change in
Bank Control Act of 1978, or that it will not make such determination without
the imposition of a burdensome condition, or otherwise indicates that it will
deem the Subscriber or any of its Affiliates to control the Company for purposes
of the BHC Act, 

(c) by the Company with
respect to the Subscriber if there has been a breach of any representation,
warranty, covenant or agreement made by such Subscriber in this Agreement, or
any such representation and warranty shall have become untrue after the date of
this Agreement, such that Section 6 would not be satisfied and such breach or
condition is not curable or, if curable, is not cured within the earlier of (i)
30 days after written notice thereof is given by the Company to the Subscriber
and (ii) the Termination Date; provided that the Company
is not then in breach of any representation, warranty, covenant, agreement or
other obligation contained in this Agreement and, provided, further, that such termination by the Company shall only
be as to the breaching Subscriber and that notice of such termination shall be
provided to the Other Subscribers, or 

(d) by the Subscriber if
there has been a breach of any representation, warranty, covenant or agreement
made by the Company in this Agreement, or any such representation and warranty
shall have become untrue after the date of this Agreement, such that Section 7
would not be satisfied and such breach or condition is not curable or, if
curable, is not cured within the earlier of (i) 30 days after written notice
thereof is given by the Subscriber to the Company and (ii) the Termination Date;
provided, that the terminating Subscriber is not then in
material breach of any representation, warranty, covenant, agreement or other
obligation contained in this Agreement, and provided, further, that
such termination by the Subscriber shall only be as to the
Subscriber. 

21

10. MISCELLANEOUS. 

(a) Binding Effect;
Assignability; Benefit.

This Agreement shall inure
to the benefit of and be binding upon the parties hereto and their respective
heirs, successors, legal representatives and permitted assigns. Any Subscriber
that ceases to beneficially own the Securities shall cease to be bound by the
terms hereof (other than Sections 10(a), 10(b), 10(e), 10(f), 10(g), 10(j), and
10(m)). 

(b) Governing Law;
Jurisdiction; Jury Trial.

All questions concerning
the construction, validity, enforcement and interpretation of this Agreement
shall be governed by the internal laws of the State of South Carolina, without
giving effect to any choice of law or conflict of law provision or rule (whether
of the State of South Carolina or any other jurisdictions) that would cause the
application of the laws of any jurisdictions other than the State of South
Carolina. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.

(c) Counterparts.

This Agreement may be
executed in two or more identical counterparts, all of which shall be considered
one and the same agreement and shall become effective when counterparts have
been signed by each party and delivered to the other party; provided that a facsimile signature shall be considered due
execution and shall be binding upon the signatory thereto with the same force
and effect as if the signature were an original, not a facsimile signature.

(d) Headings.

The headings of this
Agreement are for convenience of reference and shall not form part of, or affect
the interpretation of, this Agreement. 

(e) Severability.

If any provision of this
Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity
or unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.

22

(f) Entire Agreement;
Amendments. 

The Transaction Documents,
together with the appendices, schedules and exhibits hereto and thereto,
supersede all other prior oral or written agreements between the Subscriber, the
Company, their Affiliates and Persons acting on their behalf with respect to the
matters discussed herein, and this Agreement, the other Transaction Documents
and the instruments referenced herein and therein contain the entire
understanding of the parties with respect to the matters covered herein and
therein and, except as specifically set forth herein or therein, neither the
Company nor the Subscriber makes any representation, warranty, covenant or
undertaking with respect to such matters. No amendment to this Agreement may
limit the right of the Subscriber to waive any provision which it has the right
to waive, and no provision of this Agreement, including the additional
disclosures provided in Section 11 hereto, may be amended other than by an
instrument in writing signed by the Company and the Subscriber. No provision of
this Agreement, including the additional disclosures provided in Section 11
hereto, may be waived other than by an instrument in writing signed by the party
against whom enforcement is sought; provided, however, that no
modification, amendment or waiver may cause the Subscriber (together with its
Affiliates) to be deemed to “control” the Company or the Bank for purposes of
the BHC Act, by reason of the purchase of the Securities or the consummation of
the other transactions contemplated by this Agreement or the other Private
Placement Documents. No amendment to the proviso in Section 10(i) that is
adverse to the Placement Agents may be effected without the express written
consent of the Placement Agents. 

(g) Notices.

Any notices, consents,
waivers or other communications required or permitted to be given under the
terms of this Agreement must be in writing, which, unless otherwise provided for
in this Agreement, includes an e-mail, and will be deemed to have been
delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when
sent by facsimile (provided confirmation of transmission is mechanically or
electronically generated and kept on file by the sending party); or one business
day after deposit with an overnight courier service, in each case properly
addressed to the party to receive the same. The addresses and facsimile numbers
for such communications shall be: 

	                            	If to the Company:
		       	
		 	500 E. Washington
      Street
	 		Greenville, SC
      29601
			Attn: Corporate
      Secretary
	 		Fax:
      864.672.1777
			mlong@independencenb.com
		 	
		with copies (for informational purposes only)
      to:
		 	
			Nelson Mullins
      Riley & Scarborough LLP
			Poinsett Plaza,
      9th Floor
			104 S. Main
      Street
			Greenville, SC
      29601
			Attn: Neil E.
      Grayson
			
      Fax: 864.232.2925
      
neil.grayson@nelsonmullins.com 

23

If to the Subscriber, to
its address and facsimile number set forth under the Subscriber’s name on the
signature page hereto, with copies to the Subscriber’s representative as set
forth under the Subscriber’s name on the signature page hereto, or to such other
address or facsimile number or to the attention of such other Person as the
recipient party has specified by written notice given to each other party five
days prior to the effectiveness of such change. Written confirmation of receipt
(A) given by the recipient of such notice, consent, waiver or other
communication, (B) mechanically or electronically generated by the sender’s
facsimile machine containing the time, date, recipient facsimile number and an
image of the first page of such transmission, or (C) provided by an overnight
courier service, shall be rebuttable evidence of personal service, receipt by
facsimile or e-mail or receipt from an overnight courier service in accordance
with clause (A), (B) or (C) above, respectively. 

(h) Successors and
Assigns.

This Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors and assigns. The Company shall not assign this Agreement or any
rights or obligations hereunder. The Subscriber may assign some or all of its
rights hereunder to its Affiliates or Persons that share a common discretionary
investment adviser with the Subscriber without the consent of the Company if in
compliance with this Agreement and applicable law, in which event such assignee
shall be deemed to be a Subscriber hereunder with respect to such assigned
rights and shall be bound by the terms and conditions of this Agreement that
apply to a “Subscriber.”

(i) No Third Party
Beneficiaries. 

Except as expressly set
forth herein, this Agreement is intended for the benefit of the parties hereto
and their respective permitted successors and assigns, and is not for the
benefit of, nor may any provision of this Agreement be enforced by, any other
Person; provided,
however, that the Placement
Agents and their legal advisors, solely in their capacities as placement agents
(and counsel thereto) in connection with the transactions contemplated hereby,
are third party beneficiaries solely for purposes of the representations and
warranties contained in Section 2 and Section 3 of this Agreement. 

(j) Survival. 

Each of the representations
and warranties set forth in this Agreement shall survive the Closing under this
Agreement but only for a period of 30 months following the Closing Date (or
until final resolution of any claim or action arising from the breach of any
such representation and warranty, if notice of such breach was provided prior to
the end of such period) and thereafter shall expire and have no further force
and effect; provided that the representations and warranties in Sections 3(a),
3(b), 3(c) and 3(e) shall survive indefinitely. Except as otherwise provided
herein, all covenants and agreements contained herein shall survive for the
duration of any statutes of limitations applicable thereto or until, by their
respective terms, they are no longer operative. 

24

(k) Further
Assurances.

Each party shall do and
perform, or cause to be done and performed, all such further acts and things,
and shall execute and deliver all such other agreements, certificates,
instruments and documents, as any other party may reasonably request in order to
carry out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated by the Private Placement
Documents. 

(l) No Strict
Construction.

The language used in this
Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be applied against
any party. 

(m) Recapitalizations,
Exchanges, Etc., Affecting the Securities. 

The provisions of this
Agreement shall apply, to the full extent set forth herein with respect to the
Securities, and to any and all shares of the Company or any successor or assign
of the Company (whether by merger, consolidation, sale of assets or otherwise)
which may be issued in respect of, in exchange for, or in substitution of the
Securities, by reason of any stock dividend, stock split, stock issuance,
reverse stock split, combination, recapitalization, reclassification, merger,
consolidation or otherwise. Upon the occurrence of any of such events, amounts
hereunder shall be appropriately adjusted. 

11. ADDITIONAL
DISCLOSURES. 

The purpose of this section
is to memorialize and confirm certain disclosures that the Company has made or
hereby intends to make in connection with Subscriber’s decision to invest in the
Securities. In addition to the information contained in the Private Placement
Documents, as well as any other information that the Company has provided to
Subscriber in connection with Subscriber’s due diligence of the Company, the
Company hereby discloses the following information to the Subscriber. Following
the Closing, the Company will disclose this information in accordance with
Section 4(b) hereof.

(a) Director and Executive
Officer Compensation. 

The Company seeks to follow
industry best practices when establishing its compensation programs. The
Company’s guiding philosophy is as follows with a focus on ensuring compensation
practices are aligned with sound risk management:

	●	Use its best efforts to develop compensation
      policies that create a direct relationship between pay levels, corporate
      performance and long-term return to shareholders;

25

	●	Ensure that compensation policies, including
      any incentive compensation, appropriately balance risk and reward and are
      compatible with the effective controls and risk management that the
      Company has established and do not encourage inappropriate risks that
      could lead to a material financial loss for the Company;
		 
	●	Monitor the results of such policies to assure
      that compensation payable to the Company’s senior leadership team provides
      overall competitive pay levels, creates proper incentives to enhance
      shareholder value, rewards performance and is justified by the returns
      available to shareholders particularly when compared to the returns
      received by the shareholders of the Company’s principal competitors;
  and
		 
	●	The Company’s 2013 Equity Incentive Plan
      provides that the number of shares available for issuance under the Plan
      (together with the Company’s 2005 Stock Incentive Plan) shall at all times
      equal 20% of our total outstanding shares of common stock on an as-diluted
      basis. These shares are available for issuance to directors and officers.
      The Company intends to seek shareholder approval to amend the 2013 Equity
      Incentive Plan such that the number of shares shall at all times equal 20%
      of our total outstanding shares of common stock on an as-diluted and
      as-converted (for classes of securities convertible into our common stock)
      basis.

(b) Intellectual
Property. 

In March 2013, the Company
filed a provisional patent application with the U.S. Patent and Trademark Office
covering several different potentially patentable concepts, including concepts
associated with mobile wallet messages among different software platforms,
temporary electronic currency messages, digital identities, improved credit
score data collected from a mobile device and/or individual activities, improved
interfaces for carrying out mobile financial transactions, closed loop mobile
enablement bridging, software-related building blocks for performing financial
transactions, social networking, encryption protocols and insurance risk
analysis. On March 15 and 17, 2014, the Company filed three patent applications
covering these concepts. The Company has not been granted any form of
intellectual property protection from the U.S. Patent and Trademark Office or
other government entity that grants intellectual property protections and is
continuing to explore its alternatives regarding the type of protection to
pursue regarding its proprietary technology and software. 

On December 31, 2012, the
Company completed a recapitalization which included a business plan to expand a
mobile payments and transaction processing business. On July 2011, Gordon A.
Baird, the Company’s current Chief Executive Officer, formed MPIB to develop the
business plan and intellectual property for a transaction processing and mobile
payment bank. In December 2011, Alvin G. Hageman, a non employee director of the
Company, became a member of MPIB. Concurrent with the Closing, the Company will
enter into an agreement to purchase any and all of the assets of MPIB. The
purchase price for such assets will consist of $250,000 upfront, and the
remainder being paid out over time based on performance of the business (the
“Deferred Purchase
Price”). The Deferred Purchase
Price will be payable within seven business days following the date the
Company’s (i) cumulative aggregate consolidated core positive net income exceeds
$2,000,000.00, for the period commencing as of the Closing Date or (ii)
cumulative aggregate consolidated gross revenues of net interest income and
non-interest revenues exceeds $8,000,000.00 for any consecutive five quarterly
periods and the Company’s average market capitalization for the 30 day period
immediately prior to the Deferred Purchase Price Trigger Event exceeds
$50,000,000.00. The Deferred Purchase Price will consist of $1,500,000 payment
in cash and 1,500,000 shares of common stock (with registration
rights). 

26

(c) Use of
Proceeds. 

The Company expects to use
the net proceeds from the Private Placement for general corporate purposes,
including but not limited to supporting the Company’s and Bank’s regulatory
capital position and continuing business and customer development including the
development of its transaction services and mobile banking business. The
Company’s board will establish customary policies and procedures relating to
expenditures, budgets and oversight.

(d) Shareholder
Approval. 

The Company requires
shareholder approval to make certain changes to its 2013 Equity Incentive Plan
and take certain actions required to execute its business plan. On November 20,
2014, the Company received shareholder approval of a 10:1 reverse stock split to
facilitate listing on the NASDAQ Global Market. The Company may elect to seek
shareholder approval for an adjusted stock split ratio of up to 20:1 to further
facilitate the NASDAQ listing process. Following the Closing, the Company will
seek shareholder approval for the necessary shareholder actions.

(e) Observation Rights. 

The Company may from time
to time offer certain board observation rights to individuals who may or may not
be holders of the Designated Preferred Stock, which observation rights may
include the right to observe meetings of the Board of Directors of the Company.

(f) Rights to Participate in Follow-On
Offerings. 

The Company may from time
to time offer certain parties, including investors, the right to participate in
future offerings of the Company which could facilitate future capital raises for
the Company. Such rights may be in the form of rights of first offer, refusal or
limited pre-emptive rights.

(g) Election of Two Additional Members to the
Company’s Board of Directors.

The Board of Directors of
the Company intends to elect two new individuals as directors of the Company
effective as of the Closing Date, subject only to regulatory
nonobjection. 

[Signatures appear on the
following pages.] 

27

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

	NAME
      OF SUBSCRIBER:

	By:	 

	Name:	 

	Title:	 

	SUBSCRIPTION
AMOUNT:

	Number of
      Purchased Shares:	 

	Purchase Price
      Per Share:   $	

	Aggregate
      Purchase Price: $	 

	Accepted:
	 
	INDEPENDENCE BANCSHARES,
  INC.

	By:	 

	Name:	 

	Title:	 

	By:	 

	Name:	 

	Title:	 

	Number of
      Purchased Shares:	 

	Purchase Price
      Per Share:   $	

	Aggregate
      Purchase Price: $	 

	Date:	 

Signature Page to
Subscription Agreement 

	Information of Subscriber

	Name: 	 

	Address: 	 

	Contact
      Name: 	 

	Telephone: 	 

	Facsimile: 	 

	E-mail: 	 

	Tax ID No. (for
      entities): 	 

	Social Security
      Number
	(for natural
      persons): 	 

Information about
Subscriber Representative: 

	Name:	 

	Title:	 

	Address:	 

	Telephone:	 

	Facsimile:	 

	E-mail:	 

[Remainder of page
intentionally left blank.] 

Subscriber Information Page 

EXHIBITS

	EXHIBIT
    A	     	CERTIFICATE OF
      DESIGNATIONS
		 	
	EXHIBIT
    B	 	ACCREDITED
      INVESTOR QUESTIONNAIRE
		 	
	EXHIBIT
    C		FORM OF
      REGISTRATION RIGHTS AGREEMENT

EXHIBIT A 
CERTIFICATE OF DESIGNATIONS 

CERTIFICATE OF
DESIGNATIONS
OF
PREFERRED
STOCK, SERIES A
OF
INDEPENDENCE
BANCSHARES, INC. 

Independence Bancshares,
Inc., a corporation organized and existing under the laws of the State of South
Carolina (the “Corporation”), in accordance with the provisions of Sections
33-6-102 and 33-10-106 of the South Carolina Business Corporation Act of 1988,
as amended, does hereby certify as follows:

The board of directors of the
Corporation (the “Board of Directors”), in accordance with the articles of
incorporation and bylaws of the Corporation and applicable law, adopted the
following resolution on January __, 2015, creating a series of 10,000 shares of
Preferred Stock of the Corporation designated as “Preferred Stock, Series A”.

RESOLVED, that pursuant to
the provisions of the articles of incorporation and the bylaws of the
Corporation and applicable law, a series of Preferred Stock, $.01 par value per
share, of the Corporation be and hereby is created, and that the designation and
number of shares of such series, and the voting and other powers, preferences
and relative, participating, optional or other rights, and the qualifications,
limitations and restrictions thereof, of the shares of such series, are as
follows:

Section 1. Designation. The designation of the series of Preferred
Stock created hereby shall be Preferred Stock, Series A, with $.01 par value and
a liquidation preference of $1,000.00 per share (hereinafter referred to as the
“Designated Preferred Stock”). Each share of Designated Preferred Stock shall be
identical in all respects to every other share of Designated Preferred Stock.
The Designated Preferred Stock will rank equally with any Parity Stock (as
defined below) with respect to the distribution of assets in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the affairs
of the Corporation, if any, and will rank senior to the Common Stock (as defined
below) with respect to the distribution of assets in the event of any voluntary
or involuntary liquidation, dissolution or winding up of the affairs of the
Corporation. 

Section 2. Number of
Shares. The number of shares of Designated Preferred Stock shall be 10,000.

Section 3. Definitions. As
used herein with respect to the Designated Preferred Stock: 

“Applicable Dividend Rate”
shall mean 6% per annum.

“Articles of Incorporation”
shall mean the Corporation’s articles of incorporation, as they may be amended,
restated, supplemented or modified from time to time. 

“Bylaws” shall mean the
bylaws of the Corporation, as they may be amended, restated, supplemented or
modified from time to time. 

“Certificate of
Designations” shall mean the Certificate of Designations of the Designated
Preferred Stock of the Corporation, as it may be amended, restated, supplemented
or modified from time to time. 

“Common Stock” shall mean the
common stock, $0.01 par value per share, of the Corporation. 

“Designated Preferred Stock”
shall have the meaning set forth in Section 1 of this Certificate of
Designations. 

“Dividend Payment Commencement
Date” shall mean September 30, 2016. 

“Dividend Payment Date” shall
mean June 15 and December 15 of each year. 

“Junior Stock” shall mean the
Common Stock and any other class or series of capital stock of the Corporation
the terms of which expressly provide that it ranks junior to the Designated
Preferred Stock with respect to the distribution of assets in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the affairs
of the Corporation. 

“Parity Stock” shall mean any
class or series of capital stock of the Corporation (other than the Designated
Preferred Stock) the terms of which do not expressly provide that it ranks
senior or junior to the Designated Preferred Stock with respect to the
distribution of assets in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation. 

“Record Date” shall mean the
1st day of the calendar month in which the applicable Dividend Payment Date
falls on or such other record date, not more than thirty calendar days nor less
than ten calendar days preceding the applicable Dividend Payment Date, as is
fixed by the Board of Directors.

“ROA Calculation” shall mean
the percentage calculated by dividing (i) the Corporation’s reported GAAP net income for any two
consecutive quarters, as adjusted for any extraordinary non-recurring charges or
gains relating to securities gains and gains on the sale of assets or their
equivalent (provided, that if any single upfront payments are received during
that quarter, the amount of the upfront payment shall be amortized over the life
of the contract to which such payment relates), and (ii) the Corporation’s
reported average consolidated assets, the average of which will be calculated by
averaging the beginning of the period asset balance and the end of period asset
balance.

“ROA Test” shall be satisfied
when the ROA Calculation exceeds 2.00% (on an annualized basis calculated by
multiplying the quarterly amount by four) as reported under GAAP for any
calendar reporting period.

“SCBCA” shall mean the South
Carolina Business Corporation Act of 1988, as amended. 

Section 4. Dividends. Holders
of Designated Preferred Stock shall be entitled to receive, on each share of
Designated Preferred Stock if, as and when declared by the Board of Directors or
any duly authorized committee of the Board of Directors, but only out of assets
legally available therefor, cash dividends in arrears at a rate per annum equal
to the Applicable Dividend Rate. Such dividends shall be payable Holders of
Designated Preferred Stock on each Dividend Payment Date (except that if any
such date is a Saturday, Sunday or legal holiday, then such dividend shall be
payable on the next day that is not a Saturday, Sunday or legal holiday),
commencing with the first such Dividend Payment Date to occur after the Dividend
Payment Commencement Date to holders of record as they appear upon the stock
transfer books of the Corporation on the Record Date. Dividends shall be
non-cumulative. After the Dividend Payment Commencement Date, the Corporation
shall not declare, pay or set aside any dividends on shares of any Junior Stock
unless (in addition to the obtaining of any consents required elsewhere in the
Certificate of Designations) the holders of the Designated Preferred Stock then
outstanding first receive, or simultaneously receive, a cash dividend in arrears
on each outstanding share of Designated Preferred Stock in an amount no less
than the Applicable Dividend Rate.

Section 5. Liquidation Rights.

(a) Liquidation. In the event of
any voluntary or involuntary liquidation, dissolution or winding up of the
affairs of the Corporation, the holders of Designated Preferred Stock shall be
entitled to receive for each share of Designated Preferred Stock, (i) any
declared but unpaid dividends, and (ii) out of the assets of the Corporation or
proceeds thereof (whether capital or surplus) available for distribution to
shareholders of the Corporation, subject to the rights of the holders of any
class or series of securities ranking senior to the Designated Preferred Stock,
the rights of the holders of any Parity Stock and the rights of the
Corporation’s creditors, before any distribution of such assets or proceeds is
made to or set aside for the holders of any Junior Stock as to such
distribution, payment in full of an amount equal to $1,000.00 per share of
Designated Preferred Stock (the “Liquidation Preference”). The holders of
Designated Preferred Stock shall not be entitled to any further payments in the
event of any such voluntary or involuntary liquidation, dissolution or winding
up of the affairs of the Corporation other than what is expressly provided for
in this Section 5. 

(b) Partial Payment. If in any
distribution described in Section 5(a) above the assets of the Corporation or
proceeds thereof are not sufficient to pay in full the Liquidation Preference to
all holders of Designated Preferred Stock and the corresponding amounts payable
with respect to any Parity Stock as to such distribution to all holders of such
Parity Stock, the holders of Designated Preferred Stock and the holders of such
Parity Stock shall share ratably in any such distribution in proportion to the
full respective distributions to which they are entitled. 

(c) Residual Distributions. If
the Liquidation Preference has been paid in full to all holders of Designated
Preferred Stock and the corresponding amounts payable with respect of any Parity
Stock as to such distribution have been paid in full to the holders of such
Parity Stock, the holders of other capital stock of the Corporation shall be
entitled to receive all remaining assets of the Corporation according to their
respective rights and preferences. 

(d) Merger, Consolidation and
Sale of Assets Not Liquidation. For purposes of this Section 5, the sale,
conveyance, exchange or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all of the property and assets of the
Corporation shall not be deemed a voluntary or involuntary dissolution,
liquidation or winding up of the affairs of the Corporation, nor shall the
merger, consolidation or any other business combination transaction of the
Corporation into or with any other corporation or person or the merger,
consolidation or any other business combination transaction of any other
corporation or person into or with the Corporation be deemed to be a voluntary
or involuntary dissolution, liquidation or winding up of the affairs of the
Corporation.

Section 6. Redemption.

(a) Optional Redemption by the
Corporation. The Corporation, at the option of its board of directors, may
redeem the shares of Designated Preferred Stock at a redemption price equal to
the Liquidation Preference per share of Designated Preferred Stock (the
“Redemption Price”) at any time, provided such redemption is conducted per this
Section 6 (b) and the holder has the option to elect conversion prior to such
redemption. The Corporation may require the holder of shares of Designated
Preferred Stock to effect the conversion of its shares of Designated Preferred
Stock as provided for in Section 8 hereof. Any written request by the
Corporation in respect of the foregoing shall be deemed to have the same force
and effect as the notice of redemption described in Section 6(b). 

(b) Notice by the Corporation of
Redemption. Notice of redemption of the shares of Designated Preferred Stock
shall be mailed by first class mail, postage prepaid, addressed to each holder
of record of such shares at its last address appearing on the books of the
Corporation. Such mailing shall be at least 30 days and not more than 60 days
before the date fixed for redemption. Any such notice mailed as provided in this
Section 6(b) shall be conclusively presumed to have been duly given, whether or
not the holders receive such notice. Each notice shall state (i) the redemption
date; and (ii) the number of shares of Designated Preferred Stock held by the
holder that the Corporation shall redeem on the redemption date specified in the
notice; and (iii) the place where the Designated Preferred Stock is to be
redeemed. Upon receiving notice by the Corporation of Redemption, a Holder will
have 5 business days to elect optional conversion per Section 8 herein.

(c) Effectiveness of Redemption.
If notice of redemption has been duly given by the Corporation and if on or
before the redemption date specified in the notice all funds necessary for such
redemption have been set aside by the Corporation, separate and apart from its
other funds, in trust for the benefit of the holders of such shares, so as to be
and continue to be available therefor, then, notwithstanding that the
certificate for the shares so called for redemption has not been surrendered for
cancellation, on and after the redemption date such shares shall cease to be
outstanding, and all rights with respect to such shares shall forthwith on such
redemption date cease and terminate, except only the right of the holders
thereof to receive the amount payable on such redemption. 

(d) Status of Redeemed Shares.
Shares of Designated Preferred Stock that are redeemed, repurchased or otherwise
acquired by the Corporation shall revert to authorized but unissued shares of
Preferred Stock (provided that any such cancelled shares of Designated Preferred
Stock may be reissued only as shares of any series of preferred stock other than
Designated Preferred Stock). 

(e) Partial Redemption. In
case of the redemption of less than all of the then-outstanding shares of
Designated Preferred Stock, the Corporation shall have the discretion to
designate the shares to be redeemed pro rata, by lot or by a substantially
equivalent method selected by the Board of Directors. The right of the
Corporation to redeem all or a portion of the Designated Preferred Stock is
subject to the Corporation having received prior approval from the Federal
Reserve Board (or other applicable federal agency) if such approval is required
under applicable capital guidelines or policies of the Federal Reserve Board (or
other applicable federal agency).

Section 7. Voting
Rights.

(a) General. The holders of
Designated Preferred Stock shall have such voting rights as set forth below or
as otherwise required by law.

(b) Voting with the Common
Stock as a Single Class. Except as provided by law or by Section 7(c) below and
so long as any shares of Designated Preferred Stock are outstanding, (i) holders
of Designated Preferred Stock shall vote together with the holders of Common
Stock as a single class, and (ii) on any matter that is presented to the
shareholders of the Corporation for their action or consideration at any meeting
of shareholders of the Corporation (or by written consent of shareholders in
lieu of meeting), each holder of outstanding shares of Designated Preferred
Stock shall be entitled to cast the number of votes equal to the number of whole
shares of Common Stock into which the shares of Designated Preferred Stock held
by such holder are convertible as of the record date for determining
shareholders entitled to vote on such matter.

(c) Class Voting Rights as to
Particular Matters. So long as any shares of Designated Preferred Stock are
outstanding, in addition to any other vote or consent of shareholders required
by law or by the Articles of Incorporation, without the vote or consent of the
holders of at least a 66 2/3% of the shares of Designated Preferred Stock at the
time outstanding, voting as a separate class, given in person or by proxy,
either in writing without a meeting or by vote at any meeting called for the
purpose, the Corporation shall not: (i) issue or authorize for issuance any
shares of Designated Preferred Stock or any rights, warrants, options,
commitments or securities to acquire any Designated Preferred Stock (including
any securities directly or indirectly convertible or exchangeable into any of
the foregoing), (ii) increase or decrease the authorized number of shares of
Designated Preferred Stock, or (iii) amend, alter or repeal any provision of the
Certificate of Designations, the Articles of Incorporation or the Bylaws in any
respect (including any amendment, alteration or repeal by means of a merger,
consolidation or otherwise) so as to adversely affect the rights, preferences,
privileges or voting powers of the Designated Preferred Stock, including but not
limited to by creating any other series of preferred stock or other new class or
series of capital stock or other securities having general voting rights or
having the right to vote on any share exchange, reclassification, merger,
consolidation or other business combination transaction involving the
Corporation other than any such rights as are currently held by holders of any
Parity Stock outstanding as of the date hereof; provided, however, that the
authorization of Parity Stock or Junior Stock shall not be deemed to adversely
affect the rights, preferences, privileges or voting powers of the Holders of
outstanding Series A Preferred Stock and shall not require affirmative vote or
consent of the Holders of outstanding Series A Preferred Stock. On each matter
voted on by the holders of Designated Preferred Stock voting as a separate class
as provided in this Section 7(c), each share of Designated Preferred Stock is
entitled to one vote. 

(d) Changes after Provision
for Redemption. No vote or consent of the holders of Designated Preferred Stock
shall be required pursuant to Sections 7(a) through 7(c) above if, at or prior
to the time when any such vote or consent would otherwise be required pursuant
to such Section, all outstanding shares of the Designated Preferred Stock shall
have been redeemed, or shall have been called for redemption upon proper notice
and sufficient funds shall have been deposited in trust for such redemption, in
each case pursuant to Section 6 above.

(e) Procedures for Voting and
Consents. The rules and procedures for calling and conducting any meeting of the
holders of Designated Preferred Stock (including, without limitation, the fixing
of a Record Date in connection therewith), the solicitation and use of proxies
at such a meeting, the obtaining of written consents and any other aspect or
matter with regard to such a meeting or such consents shall be governed by any
rules of the Board of Directors or any duly authorized committee of the Board of
Directors, in its discretion, may adopt from time to time, which rules and
procedures shall conform to the requirements of the Articles of Incorporation,
the Bylaws, and applicable law and the rules of any national securities exchange
or other trading facility on which Designated Preferred Stock is listed or
traded at the time.

Section 8. Conversion.

(a) General. Subject to Section
8(g), each share of Designated Preferred Stock shall be convertible, at the
option of the holder thereof, into 1,250 fully paid and non-assessable shares
of Common Stock (“Conversion Rate”). If the Corporation effects a stock split,
this Conversion Rate will be adjusted proportionally to such split and will be
reflected in the Corporation’s books and records and applicable stock registers.

(b) Rights upon Conversion.
Immediately upon conversion, the rights of a holder with respect to such
holder’s shares of Designated Preferred Stock so converted shall cease and the
person entitled to receive the shares of Common Stock upon the conversion of
such shares of Designated Preferred Stock shall be treated for all purposes as
having become the record and beneficial owner of such shares of Common Stock.

(c) Notice and Effectiveness of
Conversion. A holder of any shares of Designated Preferred Stock may exercise
the conversion rights in whole or in part as to any such shares of Designated
Preferred Stock by delivering to the Corporation during regular business hours,
at the principal office of the Corporation with notice to the attention of
Corporate Secretary, the certificate or certificates for the shares to be
converted, duly endorsed for transfer to the Corporation (if required by it),
accompanied by written notice stating that such holder elects to convert such
shares. Conversion shall be deemed to have been effected on the date when such
delivery is made, and such date is referred to herein as the “Conversion Date.”
As promptly as practicable thereafter, the Corporation shall issue and deliver
to such holder, a certificate or certificates for the number of shares of Common
Stock to which such holder is entitled. The holder shall be deemed to have
become a shareholder of record on the applicable Conversion Date unless the
transfer books of the Corporation are closed on such date, in which event he
shall be deemed to have become a Common Stock shareholder of record on the next
succeeding date on which the transfer books are open. Upon conversion of only a
portion of the number of shares of Designated Preferred Stock represented by a
certificate surrendered for conversion, the Corporation shall issue and deliver
upon the written order of the holder of the certificate so surrendered for
conversion, at the expense of the Corporation, a new certificate covering the
number of shares of Designated Preferred Stock representing the unconverted
shares of the certificate so surrendered.

(d) Reservation of Shares. The
Corporation shall at all times reserve and keep available, out of its authorized
but unissued Common Stock, solely for the purpose of effecting the conversion of
Designated Preferred Stock as provided for herein, the full number of shares of
Common Stock deliverable upon the conversion of all Designated Preferred Stock
from time to time outstanding. 

(e) Automatic Conversion. The
Designated Preferred will automatically convert to Common Stock (i) in full if
the Corporation’s Common Stock becomes listed on the NASDAQ (or equivalent
nationally recognized exchange) and the market capitalization of the Common
Stock (including all shares of Common Stock on an as-converted basis), measured
by the volume weighted average price for the 30 calendar days preceding the date
of conversion, exceeds each of (A) the liquidation value of the Designated
Preferred Stock and (B) 20% of the prior period reported GAAP balance sheet
total assets; (ii) in full if the Corporation has satisfied the ROA Test; or
(iii) in full or in part (proportionally based on the outstanding shares of
Designated Preferred Stock) upon the cash investment by the Corporation
(“Invested Amount”) in any of the Corporation’s subsidiary federally insured
depository institution(s), in which case the number of converted shares will be
equal to the Invested Amount divided by the Conversion Rate. Notice of
conversion of the shares of Designated Preferred Stock shall (x) be mailed by
first class mail, postage prepaid, addressed to each holder of record of such
shares at its last address appearing on the books of the Corporation, with
instruction on how to receive the converted shares in certificate or book entry
form, (x) shall be recorded in the stock register of the Corporation and (z)
notice provided to the Corporation’s applicable stock transfer agent.

(f) Conversion subject to
Regulatory Requirements. To the extent a holder of any shares of the Designated
Preferred Stock is required by federal banking laws to receive regulatory
approval or nonobjection from the Federal Reserve Board (or other applicable
federal agency) to own shares of the Corporation’s Common Stock issuable upon
conversion of one or more shares of Designated Preferred Stock, the Corporation
shall not effect such conversion to Common Stock until the holder of such shares
of Designated Preferred Stock shall have received such approval or
nonobjection.

(g) Partial Conversion. In the
event some but not all of the Designated Preferred Stock represented by a
certificate or certificates surrendered by the holder of the Designated
Preferred Stock are converted, the Corporation shall execute and deliver to or
on the order of the holder of the Designated Preferred Stock, at the expense of
the Corporation, a new certificate representing the shares of the Designated
Preferred Stock not converted. 

(h) Fractional Shares. No
fractional shares of Common Stock shall be issued upon conversion of the
Designated Preferred Stock. In lieu of any fractional shares to which the holder
would otherwise be entitled, the Corporation shall pay cash equal to such
fraction multiplied by the fair market value of a share of Common Stock as
determined in good faith by the Board of Directors of the Corporation. Whether
or not fractional shares would be issuable upon such conversion shall be
determined on the basis of the total number of shares of Designated Preferred
Stock the holder is at the time converting into Common Stock and the aggregate
number of shares of Common Stock issuable upon such conversion.

Section 9. No Sinking Fund.
The shares of Designated Preferred Stock are not subject to the operation of a
sinking fund. 

Section 10. No Preemptive
Rights. No share of Designated Preferred Stock shall have any rights of
preemption whatsoever as to any securities of the Corporation, or any warrants,
rights or options issued or granted with respect thereto, regardless of how such
securities, or such warrants, rights or options, may be designated, issued or
granted.

Section 11. Transfer. Subject
to applicable securities laws, regulation and restrictions, the holders of
Designated Preferred Stock shall be able to sell, assign, transfer, or otherwise
dispose of, or enter into any contract, option or other arrangement or
understanding with respect to the direct or indirect sale, assignment, transfer,
encumbrance or other disposition of, the Designated Preferred Stock. 

Section 12. Record Holders. To
the fullest extent permitted by applicable law, the Corporation may deem and
treat the record holder of any share of Designated Preferred Stock as the true
and lawful owner thereof for all purposes, and the Corporation shall not be
affected by any notice to the contrary. 

Section 13. Notices. Except as
otherwise expressly set forth herein, all notices or communications in respect
of the Designated Preferred Stock shall be sufficiently given if given in
writing and delivered in person or by first class mail, postage prepaid, or if
given in such other manner as may be permitted in the Certificate of
Designations, the Articles of Incorporation or Bylaws or by applicable law.

Section 14. Replacement
Certificates. The Corporation shall replace any mutilated certificate at the
holder’s expense upon surrender of that certificate to the Corporation. The
Corporation shall replace certificates that become destroyed, stolen or lost at
the holder’s expense upon delivery to the Corporation of reasonably satisfactory
evidence that the certificate has been destroyed, stolen or lost, together with
any indemnity that may be reasonably required by the Corporation. 

Section 15. Directors of the
Bank. So long as any shares of Designated Preferred Stock are outstanding, the
Corporation shall take such action as is necessary to ensure that at all times
no less than two directors of the Corporation (the “Appointed Bank Directors”)
are serving as directors of Independence National Bank, the wholly-owned banking
subsidiary of the Corporation. Further, the Appointed Bank Directors shall both
serve on the Credit Committee and the Investment Committee of Independence
National Bank. 

Section 16. Other Rights. The
shares of Designated Preferred Stock shall not have any rights, preferences,
privileges or voting powers or relative, participating, optional or other
special rights, or qualifications, limitations or restrictions thereof, other
than as set forth herein or in the Articles of Incorporation or as provided by
applicable law. 

EXHIBIT B 
ACCREDITED INVESTOR QUESTIONNAIRE 

 

 

 

 

 

 

 

 

 

 

Note to
Subscriber: 

For Corporations,
Partnerships, Trusts, Foundations, Joint Subscribers (other than married
couples) and Other Entities, please provide the information requested by
Exhibit A-1. 

For Individuals (including
married couples), please provide the information requested by Exhibit A-2. 

All Subscribers, please
complete the Form W-9 found in Exhibit A-3. 

Capitalized terms not defined
herein have the meaning ascribed to them in the Agreement. 

Accredited Investor
Questionnaire for 
Corporations, Partnerships, Trusts,
Foundations,
Joint
Subscribers (other than married couples) and Other Entities 

If the undersigned is a
corporation, partnership, trust, pension plan, foundation, joint Subscriber
(other than a married couple) or other entity, an authorized officer, partner,
or trustee must complete, date and sign this Certificate. 

CERTIFICATE 

The undersigned certifies that
the representations and responses below are true and accurate: 

(a) The undersigned has been
duly formed and is validly existing and has full power and authority to invest
in the Company. The person signing on behalf of the undersigned has the
authority to execute and deliver the Investment Agreement on behalf of the
undersigned and to take other actions with respect thereto. 

(b) Indicate the form of
entity of the undersigned: 

	                
    	__       	Limited Partnership
	 	 	 
		__	General Partnership
	 	 	 
		__	Corporation
	 	 	 
		__	Revocable Trust (identify each grantor and indicate under what
      circumstances the trust is revocable by the grantor):
			 
			 
			 
			 
			(Continue on a separate piece of paper, if necessary.)
	  	 	 
		__	Other Type of Trust (indicate type of trust and, for trusts other
      than pension trusts, name the grantors and beneficiaries):
			 
		 
			(Continue on a separate piece of paper, if necessary.)
	  	 	 
		__	Other form of organization (indicate form of
    organization):
			 

(c) Indicate the approximate
date the undersigned entity was formed: ___________

(d) In order for the Company
to offer and sell the Securities in conformance with state and federal
securities laws and regulations, the following information must be obtained
regarding your investor status. Please initial each category
applicable to you as a Subscriber
of the Securities of the Company. 

	            __	(1)	     	A bank as defined in Section 3(a)(2) of the 1933 Act, or any
      savings and loan association or other institution pursuant to Section
      3(a)(5)(A) of the 1933 Act whether acting in its individual or fiduciary
      capacity;
	 
	            __	(2)		A broker or dealer registered pursuant to Section 15 of the
      Securities Exchange Act of 1934;
	 
	__	(3)		An insurance company as defined in Section 2(13) of the 1933
      Act;
	 
	__	(4)		An investment company registered under the Investment Company Act
      of 1940 or a business development company as defined in Section 2(a)(48)
      of that act;
	 
	__	(5)		A Small Business Investment Company licensed by the U.S. Small
      Business Administration under Section 301(c) or (d) of the Small Business
      Investment Act of 1958;
	 
	__	(6)		A plan established and maintained by a state, its political
      subdivisions, or any agency or instrumentality of a state or its political
      subdivisions, for the benefit of its employees, if such plan has total
      assets in excess of $5,000,000;
	 
	__	(7)		An employee benefit plan within the meaning of the Employee
      Retirement Income Security Act of 1974, if the investment decision is made
      by a plan fiduciary, as defined in Section 3(21) of such act, which is
      either a bank, savings and loan association, insurance company, or
      registered investment adviser, or if the employee benefit plan has total
      assets in excess of $5,000,000 or, if a self-directed plan, with
      investment decisions made solely by persons that are accredited
      investors;
				 
	__	(8)		A business development company as defined in Section 202(a)(22) of
      the Investment Advisers Act of 1940;
	 
	__	(9)		An organization described in Section 501(c)(3) of the Internal
      Revenue Code, a corporation, Massachusetts or similar business trust, or
      partnership, not formed for the specific purpose of acquiring the
      Securities, with total assets in excess of $5,000,000;
				 
	__ 
    	(10)		A trust, with total assets in excess of $5,000,000, not formed for
      the specific purpose of acquiring the Securities, whose purchase is
      directed by a sophisticated person who has such knowledge and experience
      in financial and business matters that such person is capable of
      evaluating the merits and risks of investing in the
  Company;

	            __  	(11)        	An entity in which all of the equity owners qualify under any of
      the above subparagraphs. If the undersigned belongs to this investor
      category only, list the equity owners of the undersigned, and the investor
      category which each such equity owner satisfies:
			 
			 
			  
			 
			(Continue on a separate piece of paper, if
  necessary.)

	Dated:	                      
    	,
      2015

	Name of Subscriber:
		
	By:	  
		

	Name:	  
		

	Title:	  

An Authorized Officer, Partner
or Trustee 

Accredited Investor
Questionnaire 
for 
Individuals (including married couples)

If the undersigned is an
Individual (or married couple), the undersigned must complete, date and sign
this Certificate. 

CERTIFICATE 

I certify that the
representations and responses below are true and accurate: 

(a) In order for the Company
to offer and sell the Securities in conformance with state and federal
securities laws, the following information must be obtained regarding your
investor status. Please initial
each category applicable to you
as a Subscriber of the Securities of the Company. 

	       	__ 
      	       	(1) A natural
    person whose individual net worth, or joint net worth        with that person’s spouse, at the time of his or her
    purchase exceeds        $1,000,000 (excluding in such calculation the value of your primary        residence and the related
    amount of indebtedness secured by your primary        residence up to its fair market value and including in such
    calculation,        if applicable, the related amount of indebtedness secured by your primary        residence that exceeds
    its fair market value);
			    
		__ 
      		(2) A natural
    person who had an individual income in excess of $200,000        in each of the two most recent years, or joint income with
    that person’s        spouse in excess of $300,000, in each of those years, and has a reasonable        expectation of
    reaching the same income level in the current      year;
			    
		__ 
      		(3) An
    executive officer or director of the    Company.

(b) Set forth in the space
provided below the state(s), if any, in the U.S. in which you maintained your
residence during the past two years and the dates during which you resided in
each state: 

	       	  
		            
                 
		 

	       	Dated:	                      
    	,
      2015

	       	 
		
      Name(s) of Subscriber:
      

		 
		
      Signature:
  

		 
		Signature:	  
		(If
      joint ownership, both individuals must execute this
  Certificate.)

FEDERAL INCOME TAX
BACKUP WITHHOLDING

In order to prevent the
application of federal income tax backup withholding, each subscriber must
provide us with a correct Taxpayer Identification Number (“TIN”). An individual’s social security number is his or her TIN. The TIN
should be provided in the space provided in the Substitute Form W-9 below.

Under federal income tax law,
any person who is required to furnish his or her correct TIN to another person,
and who fails to comply with such requirements, may be subject to a $50 penalty
imposed by the IRS. 

Backup withholding is not an
additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If backup withholding
results in an overpayment of taxes, a refund may be obtained from the IRS.
Certain taxpayers, including all corporations, are not subject to these backup
withholding and reporting requirements. 

If the shareholder has not
been issued a TIN and has applied for a TIN or intends to apply for a TIN in the
near future, “Applied For” should be written in the space provided for the TIN
on the Substitute Form W-9. 

SUBSTITUTE FORM
W-9 

Under penalties of perjury, I
certify that: (i) The number shown on this form is my correct Taxpayer
Identification Number (or I am waiting for a Taxpayer Identification Number to
be issued to me), and (ii) I am not subject to backup withholding because: (a) I
am exempt from backup withholding; or (b) I have not been notified by the
Internal Revenue Service (“IRS”) that I am
subject to backup withholding as a result of a failure to report all interest or
dividends; or (c) the IRS has notified me that I am no longer subject to backup
withholding. 

You must cross out item (ii)
above if you have been notified by the IRS that you are subject to backup
withholding because of underreporting interest or dividends on your tax return.
However, if after being notified by the IRS that you were subject to backup
withholding you received another notification from the IRS that you are no
longer subject to backup withholding, do not cross out item (ii). 

Each subscriber should
complete this section. 

	 	         	
	Signature of Subscriber	 	Signature of Co-Subscriber (if applicable)
	 		
	 		
	Printed Name	 	Printed Name
	  		
	 		
	Social Security or Employer	 	Social Security or Employer
	 		
	 		
	Identification No.		Identification No.

INDEPENDENCE BANCSHARES,
INC. 
(d/b/a nD bancgroup) 
____________________________________________ 

SUPPLEMENT TO THE PREFERRED STOCK SUBSCRIPTION
BOOKLET 
DATED JANUARY 15, 2015 

FOR PERSONS WHO HAVE
PREVIOUSLY SUBMITTED
A
SUBSCRIPTION AGREEMENT 
_____________________________________________ 

The date of this Supplement
is April 13, 2015. 

This Supplement has been
prepared solely for use in conjunction with the preferred stock subscription
booklet of Independence Bancshares, Inc., d/b/a nD bancgroup, a South Carolina
corporation (the “Company”), dated
January 15, 2015 (the “Subscription Booklet”), pursuant to which we are offering up to 10,000 shares of Series A
preferred stock, par value $0.01 per share (“Preferred Stock”), at a purchase price of not less than $1,000
per share (the “Private
Placement”).

As previously disclosed, the
Federal Reserve Board (“Federal
Reserve”) requested certain
amendments to the Certificate of Designations for the Preferred Stock and
Subscription Agreement since the date of the Subscription Booklet. All
amendments to the Certificate of Designation and Subscription Agreement are set
forth below. This Supplement provides you with an update on the terms of the
Private Placement discussed above so that you may decide whether you would still
like to participate in the Private Placement. In addition, the Company notes
that, as permitted in Section 9 of the Subscription Agreement, on March 30,
2015, the Company extended the closing deadline for the offering for 90 days to
allow time to obtain necessary regulatory nonobjections. 

After reviewing the
information contained in this Supplement, any subscriber who previously
submitted a subscription agreement and desires to purchase shares in the Private
Placement in accordance with the terms of the Private Placement as revised by
this Supplement, may elect to do so by completing the Investment Confirmation
attached hereto as Exhibit
A. If a person who has previously submitted a
subscription agreement does not complete and return the Investment Confirmation,
then such subscriber’s previously submitted subscription agreement will not be
accepted and we will return all funds received from such subscriber without
interest promptly. In
addition, execution of the Investment Confirmation shall satisfy each
subscriber’s obligation under Section 6(d) of the Subscription Booklet for an
officer’s certificate attesting to the accuracy of certain representation and
warranties of the subscriber as of the Closing Date. 

Any subscriber who desires to
submit an Investment Confirmation should e-mail a properly
completed and signed Investment Confirmation, and also send the original
to:

Independence Bancshares,
Inc. 
Attn: Martha L. Long, CFO 
500 East Washington Street 
Greenville, SC 29601

mlong@indepbanc.com 
(864) 672-1770 

THIS SUPPLEMENT IS NOT A
SUMMARY OF THE INFORMATION IN THE SUBSCRIPTION BOOKLET, AND IT MAY NOT BE USED
EXCEPT IN CONJUNCTION WITH SUCH BOOKLET. TO THE EXTENT ANY INFORMATION SET FORTH
IN THIS SUPPLEMENT IS INCONSISTENT WITH OR CONTRARY TO THE INFORMATION SET FORTH
IN THE SUBSCRIPTION BOOKLET, THE INFORMATION SET FORTH HEREIN SHALL MODIFY AND
SUPERSEDE THE INFORMATION CONTAINED IN THE SUBSCRIPTION BOOKLET. THIS SUPPLEMENT
DOES NOT CONTAIN A COMPLETE DESCRIPTION OF THE TERMS OF THE PRIVATE PLACEMENT
AND INFORMATION RELATING TO OUR COMPANY. PROSPECTIVE INVESTORS SHOULD READ THE
SUBSCRIPTION BOOKLET AND THIS SUPPLEMENT IN THEIR ENTIRETY PRIOR TO DECIDING
WHETHER TO PURCHASE SHARES OF OUR PREFERRED STOCK IN THE PRIVATE PLACEMENT.

1 

CHANGES TO CERTIFICATE OF
DESIGNATIONS 

Section 6. Redemption.

(a) Notice by the Corporation of
Redemption. Notice of redemption of the shares of Designated Preferred Stock
shall be mailed by first class mail, postage prepaid, addressed to each holder
of record of such shares at its last address appearing on the books of the
Corporation. Such mailing shall be at least 30 days and not more than 60 days
before the date fixed for redemption. Any such notice mailed as provided in this
Section 6(b) shall be conclusively presumed to have been duly given, whether or
not the holders receive such notice. Each notice shall state (i) the redemption
date; and (ii) the number of shares of Designated Preferred Stock held by the
holder that the Corporation shall redeem on the redemption date specified in the
notice; and (iii) the place where the Designated Preferred Stock is to be
redeemed. A Holder will have 10 business days following the date notice is
deemed given to elect optional conversion per Section 8 herein. 

(b) Effectiveness of Redemption.
Subject to Section 8(f), if notice of redemption has been duly given by the
Corporation and if on or before the redemption date specified in the notice all
funds necessary for such redemption have been set aside by the Corporation,
separate and apart from its other funds, in trust for the benefit of the holders
of such shares, so as to be and continue to be available therefor, then,
notwithstanding that the certificate for the shares so called for redemption has
not been surrendered for cancellation, on and after the redemption date such
shares shall cease to be outstanding, and all rights with respect to such shares
shall forthwith on such redemption date cease and terminate, except only the
right of the holders thereof to receive the amount payable on such redemption.

Section 7. Voting
Rights.

(c) Class Voting Rights as to
Particular Matters. So long as any shares of Designated Preferred Stock are
outstanding, in addition to any other vote or consent of shareholders required
by law or by the Articles of Incorporation, without the vote or consent of the
holders of at least a 66 2/3% of the shares of Designated Preferred Stock at the
time outstanding, voting as a separate class, given in person or by proxy,
either in writing without a meeting or by vote at any meeting called for the
purpose, the Corporation shall not amend, alter or repeal any provision of the
Certificate of Designations, the Articles of Incorporation or the Bylaws in any
respect (including any amendment, alteration or repeal by means of a merger,
consolidation or otherwise) so as to significantly and adversely affect the
rights, preferences, privileges or voting powers of the Designated Preferred
Stock; provided, however, that the authorization of Designated Preferred Stock,
Parity Stock or Junior Stock shall not be deemed to adversely affect the rights,
preferences, privileges or voting powers of the Holders of outstanding
Designated Preferred Stock and shall not require affirmative vote or consent of
the Holders of outstanding Designated Preferred Stock. On each matter voted on
by the holders of Designated Preferred Stock voting as a separate class as
provided in this Section 7(c), each share of Designated Preferred Stock is
entitled to one vote. 

Section 8. Conversion.

(f) Conversion and Redemption
subject to Regulatory Requirements. To the extent a holder of any shares of the
Designated Preferred Stock is required by federal banking laws to receive
regulatory approval or nonobjection from the Federal Reserve Board (or other
applicable federal agency) to own shares of the Corporation’s Common Stock
issuable upon conversion of one or more shares of Designated Preferred Stock or
hold shares of Designated Preferred Stock following a redemption of Designated
Preferred Stock, the Corporation shall not effect such conversion to Common
Stock or redemption until the holder of such shares of Designated Preferred
Stock shall have received such approval or nonobjection.

2 

CHANGES TO SUBSCRIPTION
AGREEMENT 

Section 3(r) the
Subscription Agreement is revised as follows: 

(r) Purchase of MPIB Assets. On the Closing Date, that certain asset purchase
agreement between the Company and MPIB Holdings LLC (“MPIB”) relating to the
purchase of certain assets will be held in escrow and remain unexecuted until
the Company has received notice from the Federal Reserve that (i) any necessary
notices or applications from the Company or MPIB have been filed in form and
substance acceptable to the Federal Reserve and (ii) the agency does not object
to the consummation of the contemplated transaction based on its compliance with
applicable Federal law and regulation.

Section 3(s) the
Subscription Agreement has been added as follows: 

(s) On the Closing Date, the
Company and the Bank possess all material licenses, sublicenses, certificates,
title, and permits necessary to conduct its business. 

Section 7(i) of the
Subscription Agreement is revised as follows: 

(i) The Company shall have
submitted to the Federal Reserve such notices or applications requested by the
Federal Reserve as described in Section 3(r) above. In addition, MPIB shall have
submitted to the Federal Reserve a Notice of Change in Control on Form FR 2081a
relating to the restricted common stock which is proposed to constitute a
portion of the purchase price under the Asset Purchase Agreement. The Asset
Purchase Agreement shall contain a closing condition that the transaction
contemplated thereby shall not be consummated until the Federal Reserve shall
have provided nonobjection to or approval of the notices and applications
described in this Section 7(i).

Section 11(b) the
Subscription Agreement is revised as follows: 

On December 31, 2012, the
Company completed a recapitalization which included a business plan to expand a
mobile payments and transaction processing business. On July 2011, Gordon A.
Baird, the Company’s current Chief Executive Officer, formed MPIB to develop the
business plan and intellectual property for a transaction processing and mobile
payment bank. In December 2011, Alvin G. Hageman, a non employee director of the
Company, became a member of MPIB. The Company will enter into an agreement to
purchase any and all of the assets of MPIB. The purchase price for such assets
will consist of $250,000 upfront, and the remainder being paid out over time
based on performance of the business (the “Deferred Purchase Price”). The Deferred Purchase Price will be payable
within seven business days following the date the Company’s (i) cumulative
aggregate consolidated core positive net income exceeds $2,000,000.00, for the
period commencing as of the Closing Date or (ii) cumulative aggregate
consolidated gross revenues of net interest income and non-interest revenues
exceeds $8,000,000.00 for any consecutive five quarterly periods and the
Company’s average market capitalization for the 30 day period immediately prior
to the Deferred Purchase Price Trigger Event exceeds $50,000,000.00. The
Deferred Purchase Price will consist of $1,500,000 payment in cash and 1,500,000
shares of common stock (with registration rights). 

3 

EXHIBIT A 

INVESTMENT CONFIRMATION

Reference is made to that
certain preferred stock subscription booklet (the “Subscription Booklet”) dated January 15,
2015, of Independence Bancshares, Inc., d/b/a nD bancgroup, a South Carolina
corporation (the “Company”), the
supplement, dated April 13, 2015, to the Subscription Booklet for persons who
have previously submitted a subscription agreement (the “Supplement”), and the Subscription Agreement previously
submitted by the undersigned to the Company (the “Subscription Agreement”). 

Confirmation of
Investment. The undersigned
subscriber (the “Subscriber”) hereby
elects to purchase shares of Series A preferred stock (“Preferred Stock”) of the Company pursuant to the Subscription
Agreement, as modified by this Investment Confirmation, at a purchase price per
share of $1,000. The Subscriber
understands that the Subscriber may revoke all or a portion of the Subscriber’s
subscription at any time on or prior to April 17, 2015, and that in such event
the Company will promptly return all funds (or the applicable portion thereof,
if the Subscriber revokes only a portion of the Subscriber’s subscription)
received from such Subscriber without interest. The Subscriber understands that,
if the Subscriber does not to complete and return this Investment Confirmation,
then the Subscriber’s Subscription Agreement will not be accepted and the
Company will return all funds received from the Subscriber without interest
promptly. 

Maximum Aggregate Purchase
Price, Number and Percentage of Shares to Be Purchased. Unless otherwise set forth below, each of the Subscriber’s maximum
aggregate purchase price, maximum percentage of pro forma Preferred Stock
outstanding to be purchased, and maximum number of shares to be purchased will
remain as set forth on the Subscriber’s signature page to the Subscription
Agreement. If the Subscriber
desires to establish a maximum aggregate purchase price and/or maximum number of
shares to be purchased that is different from the applicable maximum set forth
on the Subscriber’s signature page to the Subscription Agreement, then the
Subscriber must set forth such amounts below.

	Maximum No. of Shares to be Purchased:	                                               
      	 Maximum Aggregate Purchase Price:	 

Bring down of Representations and
Warranties. The Subscriber hereby
confirms that (A) its representations and warranties (i) contained in Sections
2(k) and (l) of its Subscription Agreement are true and correct as of the date
hereof (except for such representations and warranties that expressly speak as
of a specific date, which shall be true and correct as of such specified date)
and (ii) contained in all other subsections of Section 2 thereof are, without
giving effect to any materiality qualifications therein, true and correct at and
as of the date herof (except for such representations and warranties that
expressly speak as of an earlier date, which representations and warranties
shall be true and correct as of such specified date) except for such failures to
be true and correct as, individually or in the aggregate, would not be material;
and (B) it has performed, satisfied and complied in all material respects with
the covenants, agreements and conditions required by the Transaction Documents
to be performed, satisfied or complied with by the Subscriber at or prior to the
date hereof. 

IN WITNESS
WHEREOF, the undersigned has
executed this Investment Confirmation. 

	COMPANY:
	  
  
	INDEPENDENCE BANCSHARES, INC.
	  
	Signature:	  
		 

	Name:	  
		 

	Title:	  
		 

	Number of Purchased Shares:	  
	 	

	Date:	  

	SUBSCRIBER:
	(if individual)
	  
	Signature:	   

	Name:	  

	Date:	  

	  
	(if entity)
	 
    
	(print entity name)
	Signature:	   

	Name:	  

	Title/Office/Position:	  

	Date:	  

A-1EXHIBIT C 
FORM OF REGISTRATION RIGHTS AGREEMENT 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REGISTRATION RIGHTS
AGREEMENT 

This Registration Rights
Agreement (this “Agreement”) is made
and entered into January __, 2015, by and among Independence Bancshares, Inc.
d/b/a nD bancgroup, a South Carolina corporation (the “Company”), and the purchasers signatory hereto (each a “Purchaser” and collectively, the “Purchasers”).

This Agreement is made
pursuant to the Subscription Agreements, dated as of January __, 2015, between
the Company and each Purchaser (the “Subscription Agreement”).

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

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

“Advice” shall have the meaning set forth in Section 6(d).

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

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

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

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

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

“Commission” means the Securities and Exchange
Commission.

“Common Stock” means the common stock of the Company, par value
$0.01 per share, and any securities into which such shares of common stock may
hereinafter be reclassified.

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

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

“Effectiveness Deadline” means, with respect to the Initial Registration
Statement or the New Registration Statement, the earlier of (i) the 90th
calendar day following the Closing Date (or the 120th calendar day following the
Closing Date in the event that such registration statement is subject to review
by the Commission) and (ii) the 5th Business Day after the date the Company is
notified (orally or in writing, whichever is earlier) by the Commission that
such Registration Statement will not be “reviewed” or will not be subject to
further review; provided, that if the Effectiveness Deadline falls on a
Saturday, Sunday or other day that the Commission is closed for business, the
Effectiveness Deadline shall be extended to the next Business Day on which the
Commission is open for business.

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

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

“Filing Deadline” means, with respect to the Initial Registration
Statement required to be filed pursuant to Section 2(a), the 45th calendar day
following the Closing Date, provided, that if the
Filing Deadline falls on a Saturday, Sunday or other day that the Commission is
closed for business, the Filing Deadline shall be extended to the next business
day on which the Commission is open for business.

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

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

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

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

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

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

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

“Preferred Shares” means the Series A preferred shares of the
Company, par value $0.01 per share.

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

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

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

“Registrable Securities” means all of the Preferred Shares and Underlying
Shares and any securities issued or issuable upon any stock split, dividend or
other distribution, recapitalization or similar event with respect to the
Preferred Shares and the Underlying Shares, provided, that the Holder has completed and delivered to the Company a Selling
Shareholder Questionnaire; and
provided, further, that Preferred
Shares and the Underlying Shares shall cease to be Registrable Securities upon
the earliest to occur of the following: (A) a sale pursuant to a Registration
Statement or Rule 144 under the Securities Act (in which case, only such
security sold shall cease to be a Registrable Security); (B) becoming eligible
for sale without the requirement for the Company to be in compliance with the
current public information required under Rule 144(c)(1) (or Rule 144(i)(2), if
applicable) and without volume or manner of sale restrictions by Holders who are
not Affiliates of the Company; (C) if such Preferred Shares and the Underlying
Shares have ceased to be outstanding; or (D) if such Preferred Shares and the
Underlying Shares have been sold in a private transaction in which the Holder’s
rights under this Agreement have not been assigned to the transferee.

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

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

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

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

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

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

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

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

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

“Underlying Shares” means all shares underlying the Preferred
Shares, including the shares of Common Stock.

2. Registration.

(a) On or
prior to the Filing Deadline, the Company shall file a Registration Statement
with the Commission covering the resale of all of the Registrable Securities not
already covered by an existing and effective Registration Statement for an
offering to be made on a continuous basis pursuant to Rule 415 or, if Rule 415
is not available for offers and sales of the Registrable Securities, by such
other means of distribution of Registrable Securities as the Company may
reasonably determine (the “Initial Registration Statement”). The Initial Registration Statement shall be on Form S-1 or such other
Commission form which the Company is eligible to use with respect to the resale
from time to time, whether underwritten or otherwise, of the Registrable
Securities by the Holders (except if the Company is then eligible to register
for resale the Registrable Securities on Form S-3, then such registration shall
be on Form S-3) subject to the provisions of Section 2(e) and shall contain
(except if otherwise required pursuant to written comments received from the
Commission upon a review of such Registration Statement) the “Plan of
Distribution” section substantially in the form attached hereto as
Annex A. Notwithstanding the
registration obligations set forth in this Section 2, in the event the
Commission informs the Company that all of the Registrable Securities cannot, as
a result of the application of Rule 415, be registered for resale as a secondary
offering on a single registration statement, the Company agrees to (i) inform
each of the Holders thereof and use its commercially reasonable efforts to file
amendments to the Initial Registration Statement as required by the Commission
and/or (ii) withdraw the Initial Registration Statement and file a new
registration statement (a “New
Registration Statement”), in
either case covering the maximum number of Registrable Securities permitted to
be registered by the Commission, on Form S-1 or such other form available to the
Company to register for resale the Registrable Securities as a secondary
offering; provided, that prior to filing such amendment or New
Registration Statement, the Company shall be obligated to use its commercially
reasonable efforts to advocate with the Commission for the registration of all
of the Registrable Securities in accordance with the SEC Guidance, including
without limitation, Compliance and Disclosure Interpretation 612.09.
Notwithstanding any other provision of this Agreement, if any SEC Guidance sets
forth a limitation of the number of Registrable Securities or other shares of
Common Stock permitted to be registered on a particular Registration Statement
as a secondary offering (and notwithstanding
that the Company used diligent efforts to advocate with the Commission for the
registration of all or a greater number of Registrable Securities), the number
of Registrable Securities or other shares of Common Stock to be registered on
such Registration Statement will be reduced on a pro rata basis. In the event
the Company amends the Initial Registration Statement or files a New
Registration Statement, as the case may be, under clauses (i) or (ii) above, the
Company will use its commercially reasonable efforts to file with the Commission
one or more registration statements on Form S-1 or such other form available to
the Company to register for resale those Registrable Securities that were not
registered for resale on the Initial Registration Statement, as amended, or the
New Registration Statement (the “Remainder Registration Statements”). No Holder shall be named as an “underwriter”
in any Registration Statement without such Holder’s prior
consent.

(b) The
Company shall use its commercially reasonable efforts to cause each Registration
Statement to be declared effective by the Commission as soon as practicable (and
in no event later than the Effectiveness Deadline) and keep each Registration
Statement continuously effective under the Securities Act until the earlier of
(i) such time as all of the Registrable Securities covered by such Registration
Statement have been publicly sold by the Holders or (ii) the date that all
Registrable Securities covered by such Registration Statement may be sold by
non-affiliates of the Company without volume or manner of sale restrictions
under Rule 144, without the requirement for the Company to be in compliance with
the current public information requirements under Rule 144(c)(1) (or Rule
144(i)(2), if applicable), as determined by counsel to the Company pursuant to a
written opinion letter to such effect, addressed and reasonably acceptable to
the Company’s transfer agent and the affected Holders (the “Effectiveness Period”). Upon receipt of notice from the Commission
that the Company may request acceleration of the effectiveness of a Registration
Statement, the Company shall request such effectiveness. The Company shall
notify the Holders via facsimile or electronic mail of a “.pdf” format data file
of the effectiveness of a Registration Statement. The Company shall file a final
Prospectus with the Commission, as required by Rule 424(b).

(c) Each
Holder agrees to furnish to the Company a completed Selling Shareholder
Questionnaire not more than 10 Business Days following the date of this
Agreement. At least five Business Days prior to the first anticipated filing
date of a Registration Statement for any registration under this Agreement, the
Company will notify each Holder of the information the Company requires from
that Holder other than the information contained in the Selling Shareholder
Questionnaire, if any, which shall be completed and delivered to the Company
promptly upon request and, in any event, within two Business Days prior to the
applicable anticipated filing date. Each Holder further agrees that it shall not
be entitled to be named as a selling securityholder in the Registration
Statement or use the Prospectus for offers and resales of Registrable Securities
at any time, unless such Holder has returned to the Company a completed and
signed Selling Shareholder Questionnaire and a response to any requests for
further information as described in the previous sentence. If a Holder of
Registrable Securities returns a Selling Shareholder Questionnaire or a request
for further information, in either case, after its respective deadline, the
Company shall use its commercially reasonable efforts at the expense of the
Holder who failed to return the Selling Shareholder Questionnaire or to respond
for further information to take such actions as are required to name such Holder
as a selling security holder in the Registration Statement or any pre-effective
or post-effective amendment thereto and to
include (to the extent not theretofore included) in the Registration Statement
the Registrable Securities identified in such late Selling Shareholder
Questionnaire or request for further information. Each Holder acknowledges and
agrees that the information in the Selling Shareholder Questionnaire or request
for further information as described in this Section 2(c) will be used by the
Company in the preparation of the Registration Statement and hereby consents to
the inclusion of such information in the Registration
Statement.

(d) Notwithstanding anything to the contrary herein, at any time after the
Registration Statement has been declared effective by the Commission, the
Company may delay the disclosure of material non-public information concerning
the Company if the disclosure of such information at the time is not, in the
good faith judgment of the Company, in the best interests of the Company (a
“Grace
Period”); provided, the Company shall promptly (i) notify the Holders in writing of the
existence of material non-public information giving rise to a Grace Period
(provided that the Company shall not disclose the content of such material
non-public information to the Holders) or the need to file a post-effective
amendment, as applicable, and the date on which such Grace Period will begin,
(ii) use commercially reasonable efforts to terminate a Grace Period and (iii)
notify the Holders in writing of the date on which the Grace Period ends;
provided, further, that no single Grace Period shall exceed forty-five (45)
consecutive days, and during any three hundred sixty-five (365) day period, the
aggregate of all Grace Periods shall not exceed an aggregate of ninety (90) days
(each Grace Period complying with this provision being an “Allowable Grace Period”). For purposes of determining the length of a
Grace Period, the Grace Period shall be deemed to begin on and include the date
the Holders receive the notice referred to in clause (i) above and shall end on
and include the later of the date the Holders receive the notice referred to in
clause (iii) above and the date referred to in such notice; provided that no
Grace Period shall be longer than an Allowable Grace Period. Notwithstanding
anything to the contrary, the Company shall cause its transfer agent to deliver
unlegended Common Stock to a transferee of a Holder in accordance with the terms
of the Subscription Agreement in connection with any sale of Registrable
Securities with respect to which a Holder has entered into a contract for sale
prior to the Holder’s receipt of the notice of a Grace Period and for which the
Holder has not yet settled.

(e) In the
event that Form S-3 becomes available for the registration of the resale of
Registrable Securities hereunder, the Company shall (i) use commercially
reasonable efforts to register the resale of the Registrable Securities on Form
S-3 and (ii) use commercially reasonable efforts to undertake to register the
Registrable Securities on Form S-3 after such form becomes available,
provided that the Company shall maintain the effectiveness
of the Registration Statement then in effect until such time as a Registration
Statement on Form S-3 covering the Registrable Securities has been declared
effective by the Commission.

3. Registration Procedures

In connection with the
Company’s registration obligations hereunder:

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

(b) (i)
the Company shall prepare and file with the Commission such amendments
(including post-effective amendments), and supplements, to each Registration
Statement and the Prospectus used in connection therewith as may be necessary to
keep such Registration Statement continuously effective as to the applicable
Registrable Securities for its Effectiveness Period (except during an Allowable
Grace Period); (ii) the Company shall cause the related Prospectus to be amended
or supplemented by any required Prospectus supplement (subject to the terms of
this Agreement), and, as so supplemented or amended, to be filed pursuant to
Rule 424 (except during an Allowable Grace Period); (iii) the Company shall
respond to any comments received from the Commission with respect to each
Registration Statement or any amendment thereto and provide the Holders true and
complete copies of all correspondence from and to the Commission relating to
such Registration Statement that pertains to the Holders as “Selling
Shareholders” but not any comments that would result in the disclosure to the
Holders of material and non-public information concerning the Company; and (iv)
the Company shall comply with the provisions of the Securities Act and the
Exchange Act with respect to the disposition of all Registrable Securities
covered by a Registration Statement until such time as all of such Registrable
Securities shall have been disposed of (subject to the terms of this Agreement)
in accordance with the intended methods of disposition by the Holders thereof as
set forth in such Registration Statement as so amended or in such Prospectus as
so supplemented; provided, that each
Purchaser shall be responsible for the delivery of the Prospectus to the Persons
to whom such Purchaser sells any of the Registrable Securities (including in
accordance with Rule 172 under the Securities Act), and each Purchaser agrees to
dispose of Registrable Securities in compliance with the plan of distribution
described in the Registration Statement and otherwise in compliance with
applicable federal and state securities laws. In the case of amendments and
supplements to a Registration Statement which are required to be filed pursuant
to this Agreement (including pursuant to this Section 3(b)) by reason of the
Company filing a report on Form 10-K, Form 10-Q or Form 8-K or any analogous
report under the Exchange Act, the Company shall have incorporated such report
by reference into such Registration Statement, if applicable, or shall file such
amendments or supplements with the Commission on the same day on which the
Exchange Act report which created the requirement for the Company to amend or
supplement such Registration Statement was filed.

(c) the
Company shall promptly notify the Holders (which notice shall, pursuant to
clauses (iii) through (v) hereof, be accompanied by an instruction to suspend
the use of the Prospectus until the requisite changes have been made) (i)(A)
when a Prospectus or any Prospectus supplement or post-effective amendment to a
Registration Statement is proposed to be filed; (B) when the Commission notifies
the Company whether there will be a “review” of such Registration Statement and
whenever the Commission comments in writing on any Registration Statement
(in which case the Company shall provide to each of the Holders true and
complete copies of all comments that pertain to the Holders as a “Selling
Shareholder” or to the “Plan of Distribution” and all written responses thereto,
but not information that the Company believes would constitute material and
non-public information); and (C) with respect to each Registration Statement or
any post-effective amendment, when the same has become effective; (ii) of any
request by the Commission or any other Federal or state governmental authority
for amendments or supplements to a Registration Statement or Prospectus or for
additional information that pertains to the Holders as “Selling Shareholder” or
the “Plan of Distribution”; (iii) of the issuance by the Commission or any other
federal or state governmental authority of any stop order suspending the
effectiveness of a Registration Statement covering any or all of the Registrable
Securities or the initiation of any Proceedings for that purpose; (iv) of the
receipt by the Company of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction, or the initiation or threatening of any
Proceeding for such purpose; and (v) of the occurrence of any event or passage
of time that makes the financial statements included in a Registration Statement
ineligible for inclusion therein or any statement made in such Registration
Statement or Prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or that
requires any revisions to such Registration Statement, Prospectus or other
documents so that, in the case of such Registration Statement or the Prospectus,
as the case may be, it will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein (in the case of any Prospectus, form of prospectus
or supplement thereto, in light of the circumstances under which they were
made), not misleading.

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

(e) the
Company shall, if requested by a Holder, furnish to such Holder, without charge,
at least one conformed copy of each Registration Statement and each amendment
thereto and all exhibits to the extent requested by such Person (including those
previously furnished or incorporated by reference) after the filing of such
documents with the Commission; provided, that the Company
shall have no obligation to provide any document pursuant to this clause that is
available on the Commission’s EDGAR system. The Company further agrees to
promptly deliver to each Holder, without charge, as many copies of each
Prospectus or Prospectuses (including each form of prospectus) and each
amendment or supplement thereto as such Persons may reasonably request. The
Company hereby consents to the use of such Prospectus and each amendment or
supplement thereto by each of the selling Holders in connection with the
offering and sale of Registrable Securities covered by such Prospectus and any
amendment or supplement thereto.

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

(g) the
Company shall cooperate with the Holders to facilitate the timely preparation
and delivery of certificates representing Registrable Securities to be delivered
to a transferee pursuant to the Registration Statement, which certificates shall
be free, to the extent permitted by the Subscription Agreement and under law, of
all restrictive legends, and to enable such Registrable Securities to be in such
denominations and registered in such names as any such Holders may reasonably
request. Certificates for Registrable Securities free from all restrictive
legends may be transmitted by the transfer agent to a Holder by crediting the
account of such Holder’s prime broker with DTC as directed by such
Holder.

(h) the
Company shall, as promptly and reasonably practicable following the occurrence
of any event contemplated by Section 3(c)(iii)-(v), prepare and file a
supplement or amendment, including a post-effective amendment, to the affected
Registration Statements or a supplement to the related Prospectus or any
document incorporated or deemed to be incorporated therein by reference, and
file any other required document so that, as thereafter delivered, no
Registration Statement nor any Prospectus will contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein (in the case of any Prospectus, form of
prospectus or supplement thereto, in light of the circumstances under which they
were made), not misleading.

(i) the
Company may require each selling Holder to furnish to the Company a certified
statement as to (i) the number of shares of Common Stock beneficially owned by
such Holder and any Affiliate thereof, (ii) any Financial Industry Regulatory
Authority (“FINRA”) affiliations,
(iii) any natural persons who have the power to vote or dispose of the Common
Stock and (iv) any other information as may be requested by the Commission,
FINRA or any state securities commission.

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

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

(l) the
Company shall otherwise use commercially reasonable efforts to comply with all
applicable rules and regulations of the Commission under the Securities Act and
the Exchange Act, including Rule 172, notify the Holders if the Company no
longer satisfies the conditions of Rule 172 and take such other actions as may
be reasonably necessary to facilitate the registration of the Registrable
Securities hereunder; and make available to its security holders, as soon as
reasonably practicable, but not later than the Availability Date (as defined
below), an earnings statement covering a period of at least twelve (12) months,
beginning after the effective date of each Registration Statement, which earning
statement shall satisfy the provisions of Section 11(a) of the Securities Act,
including Rule 158 promulgated thereunder (for the purpose of this Section 3,
“Availability
Date” means the 45th day
following the end of the fourth fiscal quarter that includes the effective date
of such Registration Statement, except that, if such fourth fiscal quarter is
the last quarter of the Company’s fiscal year, “Availability Date” means the 90th day after the end of such fourth
fiscal quarter), in each case subject to extensions permissible under applicable
law.

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

5. Indemnification.

(a) Indemnification by the Company. The Company shall, notwithstanding any termination of this Agreement,
indemnify, defend and hold harmless each Holder, the officers, directors,
agents, general partners, managing members, managers, Affiliates, employees and
investment advisors of each of them, each Person who controls any such Holder
(within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) and the officers, directors, general partners, managing members,
managers, agents, employees and investment advisors of each such controlling
Person, to the fullest extent permitted by applicable law, from and against any
and all losses, claims, damages, liabilities, costs (including, without
limitation, reasonable costs of preparation and investigation and reasonable
attorneys’ fees) and expenses (collectively, “Losses”), as incurred, that arise out of or are based upon (i) any untrue or
alleged untrue statement of a material fact contained in any Registration
Statement, any Prospectus or any form of prospectus or in any amendment or
supplement thereto or in any preliminary prospectus, or arising out of or
relating to any omission or alleged omission to state a material fact required
to be stated therein or necessary to make the statements therein (in the case of
any Prospectus or form of prospectus or supplement thereto, in light of the
circumstances under which they were made) not misleading, or (ii) any violation
or alleged violation by the Company of the Securities Act, Exchange Act or any
state securities law or any rule or regulation thereunder, in connection with
the performance of its obligations under this Agreement, except to the extent,
but only to the extent, that (A) such untrue statements, alleged untrue
statements, omissions or alleged omissions are based solely upon information
regarding such Holder furnished in writing to the Company by such Holder
expressly for use therein, or to the extent that such information relates to
such Holder or such Holder’s proposed method of distribution of Registrable
Securities and was reviewed and approved (or deemed reviewed and approved) by
such Holder expressly for use in the Registration Statement, such Prospectus or
such form of Prospectus or in any amendment or supplement thereto (it being
understood that each Holder has approved Annex A hereto for this
purpose), or (B) in the case of an occurrence of an event of the type specified
in Section 3(c)(iii)-(v), related to the use by a Holder of an outdated or
defective Prospectus after the Company has notified such Holder in writing that
the Prospectus is outdated or defective and prior to the receipt by such Holder
of the Advice contemplated and defined in Section 6(d) below, but only if and to
the extent that following the receipt of the Advice the misstatement or omission
giving rise to such Loss would have been corrected. The Company shall notify the
Holders of the institution, threat or assertion of any Proceeding arising from
or in connection with the transactions contemplated by this Agreement of which
the Company is aware. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of an Indemnified Party (as
defined in Section 5(c)) and shall survive the transfer of the Registrable
Securities by the Holders.

(b) Indemnification by Holders. Each Holder shall, severally and not jointly, indemnify and hold
harmless the Company, its directors, officers, agents and employees, each Person
who controls the Company (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act), and the directors, officers, agents
or employees of such controlling Persons, to the fullest extent permitted by
applicable law, from and against all Losses, as incurred, arising out of or are
based upon any untrue or alleged untrue statement of a material fact contained
in any Registration Statement, any Prospectus, or any form of prospectus, or in
any amendment or supplement thereto or in any preliminary prospectus, or arising
out of or relating to any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein (in
the case of any Prospectus, or any form of prospectus or supplement thereto, in
light of the circumstances under which they were made) not misleading (i) to the
extent, but only to the extent, that such untrue statements or omissions are
based solely upon information regarding such Holder furnished in writing to the
Company by such Holder expressly for use therein or (ii) to the extent, but only
to the extent, that such information relates to such Holder or such Holder’s
proposed method of distribution of Registrable Securities and was reviewed and
approved (or deemed reviewed and approved) by such Holder expressly for use in a
Registration Statement (it being understood that the Holder has approved
Annex A hereto for this purpose), such Prospectus or such
form of Prospectus or in any amendment or supplement thereto or (iii) in the
case of an occurrence of an event of the type specified in Section
3(c)(iii)-(v), to the extent, but only to the extent, related to the use by such
Holder of an outdated or defective Prospectus after the Company has notified
such Holder in writing that the Prospectus is outdated or defective and prior to
the receipt by such Holder of the Advice contemplated in Section 6(d), but only
if and to the extent that following the receipt of the Advice the misstatement
or omission giving rise to such Loss would have been corrected. In no event
shall the liability of any selling Holder hereunder be greater in amount than
the dollar amount of the net proceeds received by such Holder upon the sale of
the Registrable Securities giving rise to such indemnification
obligation.

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

An Indemnified Party shall
have the right to employ separate counsel in any such Proceeding and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Party or Parties unless: (1) the
Indemnifying Party has agreed in writing to pay such fees and expenses; (2) the
Indemnifying Party shall have failed promptly to assume the defense of such
Proceeding and to employ counsel reasonably satisfactory to such Indemnified
Party in any such Proceeding; or (3) the named parties to any such Proceeding
(including any impleaded parties) include both such Indemnified Party and the
Indemnifying Party, and such Indemnified Party shall have been advised by
counsel that a conflict of interest exists if the same counsel were to represent
such Indemnified Party and the Indemnifying Party; provided, that the Indemnifying Party shall not be liable for the fees and
expenses of more than one separate firm of attorneys at any time for all
Indemnified Parties. The Indemnifying Party shall not be liable for any
settlement of any such Proceeding effected without its written consent, which
consent shall not be unreasonably withheld, delayed or conditioned. No
Indemnifying Party shall, without the prior written consent of the Indemnified
Party, effect any settlement of any pending Proceeding in respect of which any
Indemnified Party is a party, unless such settlement includes an unconditional
release of such Indemnified Party from all liability on claims that are the
subject matter of such Proceeding.

Subject to the terms of
this Agreement, all fees and expenses of the Indemnified Party (including
reasonable fees and expenses to the extent incurred in connection with
investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section 5(c)) shall be paid to the Indemnified Party, as
incurred, within 20 Business Days of written notice thereof to the Indemnifying
Party; provided, that the Indemnified Party shall promptly
reimburse the Indemnifying Party for that portion of such fees and expenses
applicable to such actions for which such Indemnified Party is finally
judicially determined to not be entitled to indemnification hereunder). The
failure to deliver written notice to the Indemnifying Party within a reasonable
time of the commencement of any such action shall not relieve such Indemnifying
Party of any liability to the Indemnified Party under this Section 5, except to
the extent that the Indemnifying Party is materially and adversely prejudiced in
its ability to defend such action.

(d) Contribution. If a claim
for indemnification under Section 5(a) or 5(b) is unavailable to an Indemnified
Party or insufficient to hold an Indemnified Party harmless for any Losses, then
each Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such Losses, in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and Indemnified Party in connection with the
actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such Indemnifying
Party and Indemnified Party shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission of a material fact,
has been taken or made by, or relates to information supplied by, such
Indemnifying Party or Indemnified Party, and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission. The amount paid or payable by a party as a result
of any Losses shall be deemed to include, subject to the limitations set forth
in this Agreement, any reasonable attorneys’ or other reasonable fees or
expenses incurred by such party in connection with any Proceeding to the extent
such party would have been indemnified for such fees or expenses if the
indemnification provided for in this Section 5(d) was available to such party in
accordance with its terms.

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

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

6. Miscellaneous.

(a) Remedies. In the event of
a breach by the Company or by a Holder of any of their obligations under this
Agreement, each Holder or the Company, as the case may be, in addition to being
entitled to seek to exercise all rights granted by law and under this Agreement,
will be entitled to specific performance of its rights under this Agreement. The
Company and each Holder agree that monetary damages would not provide adequate
compensation for any losses incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agrees that, in the event of any
action for specific performance in respect of such breach, it shall waive the
defense that a remedy at law would be adequate.

(b) No
Piggyback on Registrations; Prohibition on Filing Other
Registration Statements. Neither the Company nor any of its security holders may include
securities of the Company in a Registration Statement hereunder and the Company
shall not prior to the Effective Date enter into any agreement providing any
such right to any of its security holders. The Company shall not, from the date
hereof until the date that is 60 days after the Effective Date of the Initial
Registration Statement, prepare and file with the Commission a registration
statement relating to an offering for its own account under the Securities Act
of any of its equity securities, other than (i) a registration statement on Form
S-8, (ii) in connection with an acquisition on Form S-4, (iii) one shelf
registration statement and one resale registration statement on Form S-1 or (iv)
a registration statement to register for resale securities issued by the Company
pursuant to acquisitions or strategic transactions approved by a majority of the
disinterested directors of the Company, provided that any such issuance shall
only be to a Person which is, itself or through its subsidiaries, an operating
company in a business synergistic with the business of the Company and in which
the Company receives benefits in addition to the investment of funds, but shall
not include a transaction in which the Company is issuing securities primarily
for the purpose of raising capital or to an entity whose primary business is
investing in securities. For the avoidance of doubt, the Company shall not be
prohibited from preparing and filing with the Commission a registration
statement relating to an offering of Common Stock by existing shareholders of
the Company under the Securities Act pursuant to the terms of registration
rights held by such shareholder or from filing amendments to registration
statements filed prior to the date of this Agreement (or, for the avoidance of
doubt, filing any prospectus supplements related thereto pursuant to Rule
424).

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

(d) Discontinued Disposition.
By its acquisition of Registrable Securities, each Holder agrees that, upon
receipt of a notice from the Company of the occurrence of any event of the kind
described in Section 3(c)(iii)-(v), such Holder will forthwith discontinue
disposition of such Registrable Securities under a Registration Statement until
it is advised in writing (the “Advice”) by the
Company that the use of the applicable Prospectus (as it may have been
supplemented or amended) may be resumed. The Company may provide appropriate
stop orders to enforce the provisions of this paragraph.

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

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

(g) Notices. Any and all
notices or other communications or deliveries required or permitted to be
provided hereunder shall be delivered as set forth in the Subscription
Agreement; provided that the Company may deliver to each Holder the documents
required to be delivered to such Holder under Section 3(a) of this Agreement by
e-mail to the e-mail addresses provided by such Holder to the Company solely for
such specific purpose.

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

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

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

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

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

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

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

(o) Effectiveness; Termination. This Agreement shall become automatically effective, without further
action of the parties, upon the Closing. Notwithstanding anything to the
contrary herein, this Agreement shall automatically terminate and be of no
further force and effect immediately upon the termination of the Subscription
Agreement.

[REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK]

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

		INDEPENDENCE BANCSHARES, INC.
			 
			 
		By:  	
		Name: Gordon A. Baird
		Title: Chief Executive
  Officer

[REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK, 
SIGNATURE PAGES OF HOLDERS TO FOLLOW]

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

	[NAME OF INVESTING ENTITY]
	 
	AUTHORIZED SIGNATORY
	 
	By: 	
	Name:
	Title:
		 
	ADDRESS FOR
NOTICE

	c/o 
    	 

	Street 
      	 

	City/State/Zip  	 

	Attention: 
      	 

	Tel: 
    	 

	Fax: 
    	 

	Email: 
      	 

Annex A 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PLAN OF DISTRIBUTION

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

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

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

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

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

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

	●	
      privately negotiated transactions;
      

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

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

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

	●	
      a combination of any such methods of sale;
      and 

	●	
      any other method permitted pursuant to
      applicable law.

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

Broker-dealers engaged by
the selling shareholders may arrange for other broker-dealers to participate in
sales. If the selling shareholders effect such transactions by selling
Securities to or through underwriters, broker-dealers, or agents, such
underwriters, broker-dealers, or agents may receive commissions in the form of
discounts, concessions or commissions from the selling shareholders, or
commissions from purchasers of the Securities for whom they may act as agent
or to whom they may sell as principal. Such
commissions will be in amounts to be negotiated, but, except as set forth in a
supplement to this prospectus, in the case of an agency transaction will not be
in excess of a customary brokerage commission in compliance with FINRA Rule
2121; and in the case of a principal transaction, a markup or markdown in
compliance with FINRA Rule 2121.

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

The selling shareholders
may, from time to time, pledge or grant a security interest in some or all of
the Securities owned by them and, if they default in the performance of their
secured obligations, the pledgees or secured parties may offer and sell the
Securities from time to time pursuant to this prospectus or any amendment to
this prospectus under Rule 424(b)(3) or other applicable provision of the
Securities Act of 1933, as amended, amending, if necessary, the list of selling
shareholders to include the pledgee, transferee, or other successors in interest
as selling shareholders under this prospectus. The selling shareholders also may
transfer and donate the Securities in other circumstances in which case the
transferees, donees, pledgees, or other successors in interest will be the
selling beneficial owners for purposes of this prospectus.

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

Each selling shareholder
has informed the Company that it is not a registered broker-dealer and does not
have any written or oral agreement or understanding, directly or indirectly,
with any person to distribute the Securities. Upon the Company being notified in
writing by a selling shareholder that any material arrangement has been entered
into with a broker-dealer for the sale of Securities through a block trade,
special offering, exchange distribution or secondary distribution or a purchase
by a broker or dealer, a supplement to this prospectus will be filed, if
required, pursuant to Rule 424(b) under the Securities Act, disclosing (i) the
name of each such selling shareholder and of the participating broker-dealer(s),
(ii) the number of shares involved, (iii) the price at which such the Securities
were sold, (iv) the commissions paid or discounts or concessions allowed to such
broker-dealer(s), where applicable, (v) that such broker-dealer(s) did not
conduct any investigation to verify the information set out or incorporated by
reference in this prospectus, and (vi) other facts material to the transaction.
In no event shall any broker-dealer receive fees, commissions and markups,
which, in the aggregate, would exceed eight percent (8%).

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

There can be no assurance
that any selling shareholder will sell any or all of the Securities registered
pursuant to the shelf registration statement, of which this prospectus forms a
part.

Each selling shareholder
and any other person participating in such distribution will be subject to
applicable provisions of the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder, including, without limitation, to the
extent applicable, Regulation M of the Exchange Act, which may limit the timing
of purchases and sales of any of the Securities by the selling shareholder and
any other participating person. To the extent applicable, Regulation M may also
restrict the ability of any person engaged in the distribution of the Securities
to engage in market-making activities with respect to the Securities. All of the
foregoing may affect the marketability of the Securities and the ability of any
person or entity to engage in market-making activities with respect to the
Securities.

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

#       
#        # 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Annex B 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INDEPENDENCE BANCSHARES,
INC. 

SELLING SHAREHOLDER
NOTICE AND QUESTIONNAIRE 

The undersigned holder of
securities of Independence Bancshares, Inc. d/b/a nD bancgroup, a South Carolina
corporation (the “Company”), issued
pursuant to a Subscription Agreement by and among the Company and the Purchasers
named therein, dated January __, 2015, understands that the Company intends to
file with the Securities and Exchange Commission a registration statement on
Form S-1 (the “Resale Registration Statement”) for the registration and the
resale under Rule 415 of the Securities Act of 1933, as amended (the “Securities
Act”), of the Registrable Securities in accordance with the terms of a certain
Registration Rights Agreement by and among the Company and the Purchasers named
therein, dated as of January __, 2015 (the “Agreement”). All capitalized terms not otherwise defined
herein shall have the meanings ascribed thereto in the Agreement.

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

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

NOTICE 

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

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

QUESTIONNAIRE

	1.	       	Name.
					 
			(a)		Full Legal Name
      of Selling Shareholder:
					 
			(b)		Full Legal Name
      of Registered Holder (if not the same as (a) above) through which
      Registrable Securities Listed in Item 3 below are held:
					 
	 
			(c)	 	Full Legal Name
      of Natural Control Person (which means a natural person who directly or
      indirectly alone or with others has power to vote or dispose of the
      securities covered by the questionnaire):
		 			
					 
	2.		Address for Notices to Selling
      Shareholder:

	 
	 
	 
	Telephone:      
      	 
	Fax:	

	Contact
      Person:       	 

	E-mail address of
      Contact Person:       	 

	3.	       	Beneficial Ownership of Registrable Securities Issuable Pursuant to
      the Subscription Agreement:
	 
			(a)	 	Type and
      Number of Registrable Securities beneficially owned and issued pursuant to
      the Agreement:
					 
					 
					 
					 
	 
			(b)		Number of
      Securities to be registered pursuant to this Notice for
  resale:
					 
					 
					 
					 

4.       Broker-Dealer Status:

	(a)		Are you a broker-dealer?	
	 			
			Yes ☐	No ☐
	 
	(b)		If “yes” to
      Section 4(a), did you receive your Registrable Securities as compensation
      for investment banking services to the Company?
	 			
			Yes ☐	No ☐
	 
	Note: If no, the
      Commission’s staff has indicated that you should be identified as an
      underwriter in the Registration Statement.
	 	
	(c)		Are you an affiliate of a
      broker-dealer?	
	 			
			Yes ☐	No ☐
	 
	Note: If yes,
      provide a narrative explanation below:	
			 
	(d)	 	If you are an affiliate of a
      broker-dealer, do you certify that you bought the Registrable Securities
      in the ordinary course of business, and at the time of the purchase of the
      Registrable Securities to be resold, you had no agreements or
      understandings, directly or indirectly, with any person to distribute the
      Registrable Securities?
			
			
			
				
			Yes ☐	No ☐

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

	5.	       	Beneficial Ownership of Other Securities of the
      Company Owned by the Selling Shareholder.
	 
			Except as set forth below in this Item 5, the
      undersigned is not the beneficial or registered owner of any securities of
      the Company other than the Registrable Securities listed above in Item
      3.
	 
			Type and amount
      of other securities beneficially owned:
	 	 	 
	 	 	 
	 	 	 

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

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

***********

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

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

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

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

	Dated: 
      	 	 

	Beneficial
      Owner:  	 	 

	By: 
    	 	 

	Name: 
      	 	 

	Title:

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