Document:

Exhibit 4.1

 Exhibit 4.1 
 CERTIFICATE OF DESIGNATIONS 
 OF 
 MANDATORILY CONVERTIBLE CUMULATIVE NON-VOTING PERPETUAL 
 PREFERRED STOCK, SERIES B 
 OF 
 CITIZENS SOUTH BANKING CORPORATION 
 Pursuant to Section 151 of the 
 General Corporation Law 
 of the State of Delaware 
 CITIZENS SOUTH BANKING CORPORATION, a corporation organized and existing under the laws of the State of Delaware (the “Corporation”), in accordance with the provisions of Section 151(g) of the General Corporation Law of the
State of Delaware thereof, does hereby certify: 
 The Board of Directors of the Corporation (the “Board of
Directors”), in accordance with the certificate of incorporation and bylaws of the Corporation and applicable law, adopted the following resolution creating a series of shares of Preferred Stock of the Corporation designated as
“Mandatorily Convertible Cumulative, Non-Voting Perpetual Preferred Stock, Series B”. 
 RESOLVED, that
pursuant to the provisions of the certificate of incorporation and the bylaws of the Corporation and applicable law, a series of Preferred Stock, par value $0.01 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:

 RIGHTS AND PREFERENCES 
 Section 1. Designation. There is hereby created out of the authorized and unissued shares of preferred stock of the Corporation
a series of preferred stock designated as the “Mandatorily Convertible Cumulative Non-Voting Perpetual Preferred Stock, Series B” (the “Series B Preferred Stock”). The number of shares constituting such series shall
be 8,280. The par value of the Series B Preferred Stock shall be $.01 per share, and the liquidation preference shall be $1,000 per share. 
 Section 2. Ranking. The Series B Preferred Stock will, with respect to dividend rights and rights on liquidation, winding up and dissolution, rank (i) on a parity with the
Corporation’s Fixed Rate Cumulative Perpetual Preferred Stock, Series A, and with each other class or series of equity securities of the Corporation the terms of which do not expressly provide that such class or series will rank senior or
junior to the Series B Preferred Stock as to dividend rights and rights on liquidation, winding-up and dissolution of the Corporation (collectively referred to as “Parity Securities”), and (ii) senior to the Corporation’s
common stock, par value $.01 per share (the “Common Stock”), and each other class or series of capital stock of the Corporation outstanding or established after the Effective Date by the Corporation the terms of which do not
expressly provide that it ranks on a parity with or senior to the Series B Preferred Stock as to dividend rights and rights on liquidation, winding-up and dissolution of the Corporation (collectively referred to as “Junior
Securities”). The Corporation has the power to authorize and/or issue additional shares or classes or series of Junior Securities or Parity Securities without the consent of the Holders. 
 Section 3. Definitions. The following initially capitalized terms shall have the following meanings, whether used in the
singular or the plural: 
 (a) “Affiliate” of any specified Person means any other Person directly or
indirectly controlling or controlled by or under common control with such specified Person. For the purposes of this definition, “control” when used with respect to any specified Person means the power to direct the management and policies
of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing. 
 (b) “Applicable Conversion Price” means the Conversion Price in effect at any given time. 
 (c) “Affiliated Person” means, with respect to any Person, its Affiliates which for purposes of this definition include all
“affiliates” as defined in the Part 574 of the Rules and Regulations of the OTS. 
 (d) “Business
Day” means any day that is not Saturday or Sunday and that, in New York City, is not a day on which banking institutions generally are authorized or obligated by law or executive order to be closed. 
 (e) “Certificate of Designations” means this Certificate of Designations of Citizens South Banking Corporation, dated
March 17, 2010. 

 (f) “CIBC Act” means the Change in Bank Control Act of 1978, as amended.

 (g) “Closing Price” of the Common Stock (or other relevant capital stock or equity interest) on any date of
determination means the closing sale price or, if no closing sale price is reported, the last reported sale price of the shares of the Common Stock (or other relevant capital stock or equity interest) on The NASDAQ Global Market on such date. If the
Common Stock (or other relevant capital stock or equity interest) is not traded on The NASDAQ Global Market on any date of determination, the Closing Price of the Common Stock (or other relevant capital stock or equity interest) on such date of
determination means the closing sale price as reported in the composite transactions for the principal U.S. national or regional securities exchange on which the Common Stock (or other relevant capital stock or equity interest) is so listed or
quoted, or, if no closing sale price is reported, the last reported sale price on the principal U.S. national or regional securities exchange on which the Common Stock (or other relevant capital stock or equity interest) is so listed or quoted, or
if the Common Stock (or other relevant capital stock or equity interest) is not so listed or quoted on a U.S. national or regional securities exchange, the last quoted bid price for the Common Stock (or other relevant capital stock or equity
interest) in the over-the-counter market as reported by Pink OTC Markets Inc. or similar organization, or, if that bid price is not available, the market price of the Common Stock (or other relevant capital stock or equity interest) on that date as
determined by a nationally recognized independent investment banking firm retained by the Corporation for this purpose. 
 For
purposes of this Certificate of Designations, all references herein to the “Closing Price” and “last reported sale price” of the Common Stock (or other relevant capital stock or equity interest) on The NASDAQ Global
Market shall be such closing sale price and last reported sale price as reflected on the website of The NASDAQ Global Market (http://www.nasdaq.com) and as reported by Bloomberg Professional Service; provided that in the event that there is a
discrepancy between the closing sale price or last reported sale price as reflected on the website of The NASDAQ Global Market and as reported by Bloomberg Professional Service, the closing sale price and last reported sale price on the website of
The NASDAQ Global Market shall govern. 
 (h) “Common Stock” has the meaning set forth in Section 2.

 (i) “Corporation” means Citizens South Banking Corporation, a Delaware corporation. 
 (j) “Conversion Price” means for each share of Series B Preferred Stock, $4.50 provided that the foregoing shall be
subject to adjustment or limitation as set forth herein. 
 (k) “Current Market Price” means, on any date, the
average of the daily Closing Price per share of the Common Stock or other securities on each of the five consecutive Trading Days preceding the earlier of the day before the date in question and the day before the Ex-Date with respect to the
issuance or distribution giving rise to an adjustment to the Conversion Price pursuant to Section 10. 
 (l)
“Dividend Rate” means, with respect to any Section 4 Dividend Period, 14% per annum. 
 (m)
“Effective Date” means the date on which shares of the Series B Preferred Stock are first issued. 

 (n) “Exchange Property” has the meaning set forth in Section 11(a).

 (o) “Ex-Date”, when used with respect to any issuance or distribution, means the first date on which the
Common Stock or other securities trade without the right to receive the issuance or distribution giving rise to an adjustment to the Conversion Price pursuant to Section 10. 
 (p) “Holder” means the Person in whose name the shares of the Series B Preferred Stock are registered, which may be treated
by the Corporation as the absolute owner of the shares of Series B Preferred Stock for the purpose of making payment and settling the related conversions and for all other purposes. 
 (q) “Junior Securities” has the meaning set forth in Section 2. 
 (r) “Liquidation Preference” means, as to the Series B Preferred Stock, $1,000 per share (as adjusted for any split,
subdivision, combination, consolidation, recapitalization or similar event with respect to the Series B Preferred Stock). 
 (s)
“Mandatory Conversion Date” means, with respect to the shares of Series B Preferred Stock of any Holder, the third Business Day after which the Corporation and/or such Holder, as applicable as to a Holder, has received the
Stockholder Approval (or if a Reorganization Event has theretofore been consummated, the date of consummation of such Reorganization Event), provided, however, that if a Mandatory Conversion Date would otherwise occur on or after an Ex-Date
for an issuance or distribution that results in an adjustment of the Conversion Price pursuant to Section 10 and on or before the Record Date for such issuance or distribution, such Mandatory Conversion Date shall instead occur on the first
calendar day after the Record Date for such issuance or distribution. 
 (t) “Notice of Mandatory Conversion”
has the meaning set forth in Section 9(a). 
 (u) “OTS” means the Office of Thrift Supervision.

 (v) “Parity Securities” has the meaning set forth in Section 2. 
 (w) “Person” means a legal person, including any individual, corporation, estate, partnership, joint venture, association,
joint-stock company, limited liability company or trust. 
 (x) “Record Date” has the meaning set forth in
Section 4(d). 
 (y) “Reorganization Event” has the meaning set forth in Section 11(a). 

(z) “Section 4 Dividend Payment Date” has the meaning set forth in Section 4(b). 
 (aa) “Section 4 Dividend Period” has the meaning set forth in Section 4(c). 
 (bb) “Section 4(g) Payment” has the meaning set forth in Section 4(g). 
 (cc) “Securities Purchase Agreement” means the Securities Purchase Agreement, effective as provided in Section 6.16
therein, as may be amended from time to time, between the Corporation and the Holder. 
 (dd) “Series B Preferred
Stock” has the meaning set forth in Section 1. 

 (ee) “Stockholder Approval” means the stockholder approval necessary to
approve the conversion of the Series B Preferred Stock into Common Stock for purposes of Rule 5635 of the Nasdaq Stock Market Rules. 
 (ff) “Trading Day” means a day on which the shares of Common Stock: 
 (i) are not
suspended from trading on any national or regional securities exchange or association or over-the-counter market at the close of business; and 
 (ii) have traded at least once on the national or regional securities exchange or association or over-the-counter market that is the primary market for the trading of the Common Stock. 
 (gg) “Violation” means a violation of the stockholder approval requirements of Rule 5635 of the Nasdaq Stock Market Rules.

 (hh) “Voting Stock” has the meaning set forth in Part 574 of the Rules and Regulations of the OTS.

 Section 4. Dividends. (a) From and after the Effective Date, the Holders shall be entitled to receive, when,
as and if declared by the Board of Directors or a duly authorized committee of the Board of Directors, out of funds legally available therefor, cumulative dividends of the type and in the amounts determined as set forth in this Section 4, and
no more. 
 (b) Commencing on the Effective Date, dividends shall accrue and shall be payable semi-annually in arrears on
June 30 and December 31 of each year (each, a “Section 4 Dividend Payment Date”) or, if any such day is not a Business Day, the next Business Day. Dividends payable pursuant to this Section 4, if, when and as
declared by the Board of Directors or a duly authorized committee of the Board of Directors, will be, for each outstanding share of Series B Preferred Stock, payable in cash at an annual rate equal to the Dividend Rate multiplied by the sum of
(A) the Liquidation Preference plus (B) all accrued and unpaid dividends for any prior Section 4 Dividend Period that are payable on such share of Series B Preferred Stock, payable in cash. 
 (c) Dividends payable pursuant to this Section 4 will be computed on the basis of a 360-day year of twelve 30-day months and, for any
Section 4 Dividend Period greater or less than a full Section 4 Dividend Period, will be computed on the basis of the actual number of days elapsed in the period divided by 360. The period from the Effective Date to but excluding
June 30, 2010 and each period from and including a Section 4 Dividend Payment Date to but excluding the following Section 4 Dividend Payment Date is herein referred to as a “Section 4 Dividend Period”. 
 (d) Each dividend will be payable to Holders of record as they appear in the records of the Corporation on the applicable record date (each,
a “Record Date”), which with respect to dividends payable pursuant to this Section 4, shall be on the fifteenth day of the month in which the relevant Section 4 Dividend Payment Date occurs. 
 (e) Dividends on the Series B Preferred Stock are cumulative. Such dividends shall begin to accrue and be cumulative from the Effective
Date, shall compound at the relevant rate on each subsequent Section 4 Dividend Payment Date (i.e., no dividends shall accrue on another dividend unless and until the first Section 4 Dividend Payment Date for such other dividends
has

 
passed without such other dividends having been paid on such date) and shall be payable semi-annually in arrears on each Section 4 Dividend Payment Date, commencing with the first such
Section 4 Dividend Payment Date. 
 (f) So long as any shares of Series B Preferred Stock remain outstanding, if all
dividends on all outstanding shares of the Series B Preferred Stock for any Section 4 Dividend Period have not been declared and paid, or declared and funds set aside therefor, the Corporation shall not (x) declare or pay dividends with
respect to, or make any distributions on, or directly or indirectly, redeem, purchase or acquire any of its Junior Securities or (y) directly or indirectly, redeem, purchase or acquire any of its Parity Securities, other than, in each case,
(i) redemptions, purchases or other acquisitions of Junior Securities or Parity Securities in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of any one or more employees, officers,
directors or consultants or in connection with a dividend reinvestment plan, (ii) any declaration of a dividend in connection with any stockholders’ rights plan, or the issuance of rights, stock or other property under any
stockholders’ rights plan, or the redemption or repurchase of rights pursuant thereto, (iii) conversions or exchanges of Junior Securities or Parity Securities for Junior Securities or Parity Securities and (iv) any purchase of
fractional interests in shares of the Corporation’s capital stock pursuant to the conversion or exchange provisions of such capital stock or the securities being converted or exchanged. If dividends payable pursuant to Section 4 for any
Section 4 Dividend Payment Date are not paid in full, or declared and funds set aside therefor on the shares of the Series B Preferred Stock and there are issued and outstanding shares of Parity Securities with the same Section 4 Dividend
Payment Date (or, in the case of Parity Securities having dividend payment dates different from the Section 4 Dividend Payment Dates, on a dividend payment date falling within a Section 4 Dividend Period applicable to such Section 4
Dividend Payment Date), then all dividends declared on shares of the Series B Preferred Stock and such Parity Securities on such date or dates, as the case may be, shall be declared pro rata so that the respective amounts of such dividends shall
bear the same ratio to each other as full semi-annual dividends per share payable on the shares of the Series B Preferred Stock pursuant to Section 4 and all such Parity Securities otherwise payable on such Section 4 Dividend Payment Date
(or, in the case of Parity Securities having dividend payment dates different from the Section 4 Dividend Payment Dates, on a dividend payment date falling within a Section 4 Dividend Period applicable to such Section 4 Dividend
Payment Date) (subject to such dividends on such Parity Securities having been declared by the Board of Directors out of legally available funds and including, in the case of any such Parity Securities that bear cumulative dividends, all accrued but
unpaid dividends) bear to each other. 
 (g) In addition, so long as any shares of Series B Preferred Stock are outstanding, the
Corporation shall not declare, pay or set apart for payment any dividend or make any Distribution on any Common Stock, unless at the time of such dividend or Distribution the Corporation simultaneously pays a dividend or makes a Distribution (in
either case, a “Section 4(g) Payment”), which dividend or Distribution shall be payable in the same cash, securities or other assets or other property as is paid to holders of Common Stock, on each outstanding share of Series B
Preferred Stock in an amount equal to the product of (i) the dividend payable or Distribution to be made on each share of Common Stock and (ii) the number of shares of Common Stock issuable upon conversion of a share of Series B Preferred
Stock (assuming receipt of the Stockholder Approval), calculated on the record date for determination of holders

 
entitled to receive such dividend or Distribution. For purposes hereof, “Distribution” shall mean the transfer from the Corporation to its stockholders of cash, securities or
other assets or property, including, without limitation, evidences of indebtedness, shares of capital stock or securities (including, without limitation, any dividend or distribution of (i) shares of capital stock of any class or series, or
similar equity interests, of or relating to a subsidiary or other business unit in a “spin-off” transaction or (ii) rights or warrants to purchase shares of Common Stock (other than rights issued pursuant to a shareholders’
rights plan, a dividend reinvestment plan or other similar plans)), without consideration, whether by way of dividend or otherwise. Notwithstanding the provisions of Section 10 hereof, if the Corporation pays a dividend or makes a Distribution
that causes it to make a Section 4(g) Payment to Holders of Series B Preferred Stock, no adjustment to the Conversion Price under Section 10 shall be made with respect to such dividend or Distribution. 
 (h) If the Mandatory Conversion Date with respect to any share of Series B Preferred Stock is prior to the Section 4 Dividend Payment
Date applicable to any Section 4 Dividend Period, the Holder of such share of Series B Preferred Stock will not have the right to receive any dividends payable pursuant to Section 4(b) on the Series B Preferred Stock with respect to such
Section 4 Dividend Period; provided that this provision shall not affect any rights to receive any accrued but unpaid dividends on the Series B Preferred Stock attributable to any Section 4 Dividend Period completed prior to the Mandatory
Conversion Date. 
 Section 5. Liquidation. (a) In the event the Corporation voluntarily or involuntarily
liquidates, dissolves or winds up, the Holders at the time shall be entitled to receive liquidating distributions in an amount equal to the greater of (i) the Liquidation Preference per share of Series B Preferred Stock, plus an amount equal to
any accrued but unpaid dividends, whether or not declared, thereon to and including the date of such liquidation and (ii) 110% of the payment or distribution to which such Holders would be entitled if the Series B Preferred Stock were converted
into Common Stock immediately before such liquidation, dissolution or winding-up, out of assets legally available for distribution to the Corporation’s stockholders, before any distribution of assets is made to the holders of the Common Stock
or any other Junior Securities. After payment of the full amount of such liquidation distribution, the Holders shall not be entitled to any further participation in any distribution of assets by the Corporation. 
 (b) In the event the assets of the Corporation available for distribution to stockholders upon any liquidation, dissolution or winding-up of
the affairs of the Corporation, whether voluntary or involuntary, shall be insufficient to pay in full the amounts payable with respect to all outstanding shares of the Series B Preferred Stock and the corresponding amounts payable on any Parity
Securities, Holders and the holders of such Parity Securities shall share ratably in any distribution of assets of the Corporation in proportion to the full respective liquidating distributions to which they would otherwise be respectively entitled.

 (c) The Corporation’s consolidation or merger with or into any other entity, the consolidation or merger of any other
entity with or into the Corporation, or the sale of all or substantially all of the Corporation’s property or business will not constitute its liquidation, dissolution or winding up. 
 Section 6. Maturity. The Series B Preferred Stock shall be perpetual unless converted or redeemed in accordance with this
Certificate of Designations. 

 Section 7. Redemptions. 
 (a) Optional Redemption. The Series B Preferred Stock may not be redeemed by the Corporation prior to June 30, 2015. The
Corporation, at its option, may redeem in whole at any time the shares of Series B Preferred Stock at the time outstanding, upon notice given as provided in Section 7(c) below, at a redemption price per share payable in cash equal to the
greater of (i) 125.0% of the sum of (A) the Liquidation Preference, plus (B) all accrued and unpaid dividends, whether or not declared, up to, but excluding, the date fixed for redemption and (ii) 110% of (A) the number of
shares of Common Stock into which a share of Series B Preferred Stock would be convertible on the Trading Day immediately prior to the date fixed for redemption (assuming receipt of Stockholder Approval) multiplied by (B) the Closing Price of
Common Stock on such Trading Day; provided that in no event shall such redemption price exceed 150% of the amount determined in accordance with clause (i) above. The redemption price for any shares of Series B Preferred Stock shall be
payable on the redemption date to the Holder of such shares against surrender of the certificate(s) evidencing such shares to the Corporation or its agent. Any declared but unpaid dividends payable on a redemption date that occurs subsequent to a
Record Date for a Section 4 Dividend Period shall not be paid to the Holder entitled to receive the redemption price on the redemption date, but rather shall be paid to the holder of record of the redeemed shares on such Record Date.

 (b) No Sinking Fund. The Series B Preferred Stock will not be subject to any mandatory redemption, sinking fund
or other similar provisions. Holders of Series B Preferred Stock will have no right to require redemption of any shares of Series B Preferred Stock. 
 (c) Notice of Redemption. Notice of every redemption of shares of Series B Preferred Stock shall be given by first class mail, postage prepaid, addressed to the Holders of the shares to be
redeemed at their respective last addresses 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; provided, that failure to give such notice by mail,
or any defect in such notice or in the mailing thereof, to any Holder of shares of Series B Preferred Stock designated for redemption shall not affect the validity of the proceedings for the redemption of any other shares of Series B Preferred Stock
to be so redeemed except as to the Holder to whom the Corporation has failed to give such notice or except as to the Holder to whom notice was defective. Notwithstanding the foregoing, if the Series B Preferred Stock or any depositary shares
representing interests in the Series B Preferred Stock are issued in book-entry form through The Depository Trust Company or any other similar facility, notice of redemption may be given to the Holders of Series B Preferred Stock at such time and in
any manner permitted by such facility. Each such notice given to a Holder shall state: (1) the redemption date; (2) the number of shares of Series B Preferred Stock to be redeemed and, if less than all the shares held by such Holder are to
be redeemed, the number of such shares to be redeemed from such Holder; (3) the redemption price (or manner of determination of the redemption price); and (4) the place or places where certificates for such shares are to be surrendered for
payment of the redemption price. 
 (d) Effectiveness of Redemption. If notice of redemption has been duly given
as provided in Section 7(c) and if on or before the redemption date specified in the notice all funds necessary for the redemption have been set aside by the Corporation, separate and apart from its other funds, in trust for the pro rata
benefit of the Holders of the shares called for redemption, so as to be and continue to be available therefor, then, notwithstanding that any certificate for any

 
share so called for redemption has not been surrendered for cancellation, on and after the redemption date unless the Corporation defaults in the payment of the redemption price, in which case
such rights shall continue until the redemption price is paid, dividends shall cease to accrue on all shares so called for redemption, all shares so called for redemption shall no longer be deemed 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, without interest. Any funds unclaimed at the end of two years from the redemption date
shall, to the extent permitted by law, be released to the Corporation, after which time the Holders of the shares so called for redemption shall look only to the Corporation for payment of the redemption price of such shares. Shares of outstanding
Series B Preferred Stock that are redeemed, purchased or otherwise acquired by the Corporation, or converted into another series of Preferred Stock, shall be cancelled and shall revert to authorized but unissued shares of Preferred Stock
undesignated as to series. 
 Section 8. Mandatory Conversion. Effective as of the close of business on the
Mandatory Conversion Date with respect to the shares of Series B Preferred Stock of a Holder, all such Holder’s shares of Series B Preferred Stock shall automatically convert into shares of Common Stock as set forth below. The number of shares
of Common Stock into which a share of Series B Preferred Stock shall be convertible shall be determined by dividing (i) the Liquidation Preference, plus all accrued and unpaid dividends, whether or not declared, with respect to any
Section 4 Dividend Period completed prior to the Mandatory Conversion Date (but not with respect to the Section 4 Dividend Period in which the Mandatory Conversion Date occurs), by (ii) the Applicable Conversion Price (subject to the
conversion procedures of Section 9 hereof). provided that, notwithstanding anything to the contrary contained in this Certificate of Designations, the number of Common Shares to be issued to any Holder pursuant to this Certificate of
Designations shall be issued to the extent (but only to the extent) that issuance of such Common Shares would not (i) cause or result in such Holder and its Affiliates, collectively, being deemed to own, control or have the power to vote
securities which (assuming, for this purpose only, full conversion and/or exercise of such securities) would represent 10.0% or more of the Voting Stock of the Corporation outstanding at such time, (ii) otherwise cause such Holder or any of its
Affiliates to violate any bank regulation or (iii) require such Holder or any of its Affiliates to obtain the prior approval of any bank regulator (collectively, the “Ownership Limit”); provided, further, however, that any Common
Shares that would otherwise be issued to the Holder upon conversion of shares of Series B Preferred Stock held by such Holder, but cannot be issued to such Holder at the time of conversion as a result of the Ownership Limit, shall thereafter be
issued to such Holder on the first date on which such issuance would not cause or result in a violation of the Ownership Limit. For purposes of the first proviso contained in the preceding sentence, any shares of Common Stock or Series B Preferred
Stock owned by Holder and not acquired pursuant to the Securities Purchase Agreement or this Certificate of Designations shall be disregarded in the calculation of the Ownership Limit. Upon conversion, Holders shall receive cash in lieu of
fractional shares in accordance with Section 13 hereof. 
 Section 9. Conversion Procedures. 
 (a) Upon receipt by the Corporation of Stockholder Approval, within two (2) Business Days thereafter, the Corporation shall provide
notice of mandatory conversion to each Holder (such notice a “Notice of Mandatory Conversion”). In addition to any information required by

 
applicable law or regulation, the Notice of Mandatory Conversion with respect to such Holder shall state, as appropriate: 
 (i) the Mandatory Conversion Date; 
 (ii) the number of shares of Common Stock to be issued upon conversion of each share of Series B Preferred Stock held of
record by such Holder and subject to such mandatory conversion; and 
 (iii) if certificates are to be issued,
the place or places where certificates for shares of Series B Preferred Stock held of record by such Holder are to be surrendered for issuance of certificates representing shares of Common Stock. 
 (b) Effective immediately prior to the close of business on the Mandatory Conversion Date with respect to any shares of Series B Preferred
Stock dividends shall no longer be declared on any such shares of Series B Preferred Stock and such shares of Series B Preferred Stock shall cease to be outstanding, in each case, subject to the right of the Holder to receive (i) shares of
Common Stock issuable upon such mandatory conversion, (ii) any declared and unpaid dividends on such share to the extent provided in Section 4 and (iii) any other payments to which such Holder is otherwise entitled pursuant to
Section 8, Section 11 or Section 13 hereof, as applicable. 
 (c) No allowance or adjustment, except
pursuant to Section 10, shall be made in respect of dividends payable to holders of the Common Stock of record as of any date prior to the close of business on the Mandatory Conversion Date with respect to any share of Series B Preferred Stock.
Prior to the close of business on the Mandatory Conversion Date with respect to any share of Series B Preferred Stock, shares of Common Stock issuable upon conversion thereof, or other securities issuable upon conversion of, such share of Series B
Preferred Stock shall not be deemed outstanding for any purpose, and the Holder thereof shall have no rights with respect to the Common Stock or other securities issuable upon conversion (including voting rights, rights to respond to tender offers
for the Common Stock or other securities issuable upon conversion and rights to receive any dividends or other distributions on the Common Stock or other securities issuable upon conversion) by virtue of holding such share of Series B Preferred
Stock, except to the extent set forth in Section 4(g). 
 (d) Shares of Series B Preferred Stock duly converted in
accordance with this Certificate of Designations, or otherwise reacquired by the Corporation, will resume the status of authorized and unissued preferred stock, undesignated as to series and available for future issuance. The Corporation may from
time-to-time take such appropriate action as may be necessary to reduce the authorized number of shares of Series B Preferred Stock; provided, that the Corporation shall not take any such action if such action would reduce the authorized
number of shares of Series B Preferred Stock below the number of shares of Series B Preferred Stock then outstanding. 
 (e) The
Person or Persons entitled to receive the Common Stock and/or cash, securities or other property issuable upon conversion of Series B Preferred Stock shall be treated for all purposes as the record holder(s) of such shares of Common Stock and/or
securities as of the close of business on the Mandatory Conversion Date with respect thereto. In the event that a Holder shall not by written notice designate the name in which shares of Common Stock and/or

 
cash, securities or other property (including payments of cash in lieu of fractional shares) to be issued or paid upon conversion of shares of Series B Preferred Stock should be registered or
paid or the manner in which such shares should be delivered, the Corporation shall be entitled to register and deliver such shares, and make such payment, in the name of the Holder and in the manner shown on the records of the Corporation.

 (f) On the Mandatory Conversion Date with respect to any share of Series B Preferred Stock, certificates representing shares
of Common Stock shall be issued and delivered to the Holder thereof or such Holder’s designee (or, at the Corporation’s option such shares shall be registered in book-entry form) upon presentation and surrender of the certificate
evidencing the Series B Preferred Stock to the Corporation and, if required, the furnishing of appropriate endorsements and transfer documents and the payment of all transfer and similar taxes. 
 Section 10. Anti-Dilution Adjustments. 
 (a) The Conversion Price shall be subject to the following adjustments: 
 (i) Stock Dividends and Distributions. If the Corporation pays dividends or other distributions on the Common Stock in shares of Common Stock, then the Conversion Price in effect immediately prior to the Ex-Date for such dividend or
distribution will be multiplied by the following fraction: 
  

	
	 OS0

	 OS1

	

			
	 Where,
  
	 	
	 OS0 =
	 	 the number of shares of Common Stock outstanding immediately prior to Ex-Date for such dividend or distribution.
  

	 OS1 =
	 	the sum of the number of shares of Common Stock outstanding immediately prior to the Ex-Date for such dividend or distribution plus the total number of shares of Common Stock
constituting such dividend or distribution.

 For the purposes of this clause (i), the number of shares of
Common Stock at the time outstanding shall not include shares acquired by the Corporation. If any dividend or distribution described in this clause (i) is declared but not so paid or made, the Conversion Price shall be readjusted, effective as
of the date the Board of Directors publicly announces its decision not to make such dividend or distribution, to such Conversion Price that would be in effect if such dividend or distribution had not been declared. 
 (ii) Subdivisions, Splits and Combination of the Common Stock. If the Corporation subdivides, splits or combines the
shares of Common Stock, then the Conversion Price in effect immediately prior to the effective date of such share subdivision, split or combination will be multiplied by the following fraction: 

	
	 OS0

	OS1

  

			
	 Where,
  
	  	
	 OS0 =
	  	 the number of shares of Common Stock outstanding immediately prior to the effective date of such share subdivision, split or
combination.
  

	 OS1 =
	  	the number of shares of Common Stock outstanding immediately after the opening of business on the effective date of such share subdivision, split or
combination.

 For the purposes of this clause (ii), the number of shares of Common Stock at the time
outstanding shall not include shares acquired by the Corporation. If any subdivision, split or combination described in this clause (ii) is announced but the outstanding shares of Common Stock are not subdivided, split or combined, the
Conversion Price shall be readjusted, effective as of the date the Board of Directors publicly announces its decision not to subdivide, split or combine the outstanding shares of Common Stock, to such Conversion Price that would be in effect if such
subdivision, split or combination had not been announced. 
 (iii) Issuance of Stock Purchase Rights. If
the Corporation issues to all holders of the shares of Common Stock rights or warrants (other than rights or warrants issued pursuant to a stockholders’ rights plan, a dividend reinvestment plan or share purchase plan or other similar plans)
entitling them, for a period of up to 45 days from the date of issuance of such rights or warrants, to subscribe for or purchase the shares of Common Stock at less than the Current Market Price on the date fixed for the determination of
stockholders entitled to receive such rights or warrants, then the Conversion Price in effect immediately prior to the Ex-Date for such distribution will be multiplied by the following fraction: 
  

	
	 OS0 + Y

	OS0 + X

  

			
	 Where,
  
	  	
	 OS0 =
	  	 the number of shares of Common Stock outstanding immediately prior to the Ex-Date for such distribution.
  

	 X =
	  	 the total number of shares of Common Stock issuable pursuant to such rights or warrants.
  

	 Y =
	  	the number of shares of Common Stock equal to the aggregate price payable to

			
		  	exercise such rights or warrants divided by the Current Market Price on the date fixed for the determination of stockholders entitled to receive such rights or
warrants.

 For the purposes of this clause (iii), the number of shares of Common Stock at the time
outstanding shall not include shares acquired by the Corporation. The Corporation shall not issue any such rights or warrants in respect of shares of the Common Stock acquired by the Corporation. In the event that such rights or warrants described
in this clause (iii) are not so issued, the Conversion Price shall be readjusted, effective as of the date the Board of Directors publicly announces its decision not to issue such rights or warrants, to the Conversion Price that would then be
in effect if such issuance had not been declared. To the extent that such rights or warrants are not exercised prior to their expiration or shares of Common Stock are otherwise not delivered pursuant to such rights or warrants upon the exercise of
such rights or warrants, the Conversion Price shall be readjusted to such Conversion Price (but giving effect to any other adjustments that may have been made with respect to the Conversion Price pursuant to the terms of this Certificate of
Designations) that would then be in effect had the adjustment made upon the issuance of such rights or warrants been made on the basis of the delivery of only the number of shares of Common Stock actually delivered. In determining the aggregate
offering price payable for such shares of Common Stock, there shall be taken into account any consideration received for such rights or warrants and the value of such consideration (if other than cash, to be determined in a reasonable manner by the
Board of Directors). 
 (iv) Debt or Asset Distributions. If the Corporation distributes to all holders of
shares of Common Stock evidences of indebtedness, shares of capital stock, securities, cash or other assets (excluding any dividend or distribution referred to in clause (i) above, any rights or warrants referred to in clause (iii) above,
any dividend or distribution paid exclusively in cash, any consideration payable in connection with a tender or exchange offer made by the Corporation or any of its applicable subsidiaries, and any dividend of shares of capital stock of any class or
series, or similar equity interests, of or relating to a subsidiary or other business unit in the case of certain spin-off transactions as described below), then the Conversion Price in effect immediately prior to the Ex-Date for such distribution
will be multiplied by the following fraction: 
  

	
	SP0 – FMV
	
	SP0

  

			
	 Where,
  

	 SP0 =
	 	the Current Market Price per share of Common Stock on such date.
		
	 FMV =
	 	the fair market value of the portion of the distribution applicable to one share of Common Stock on such date as determined in good faith by the Board of

			
		 	Directors.

 In a “spin-off”,
where the Corporation makes a distribution to all holders of shares of Common Stock consisting of capital stock of any class or series, or similar equity interests of, or relating to, a subsidiary or other business unit, the Conversion Price will be
adjusted on the fifteenth Trading Day after the effective date of the distribution by multiplying such Conversion Price in effect immediately prior to such fifteenth Trading Day by the following fraction: 
  

	
	 MP0
  

	MP0 + MPs

  

			
	 Where,
  

	 MP0 =
	  	the average of the Closing Prices of the Common Stock over the first ten Trading Days commencing on and including the fifth Trading Day following the effective date of such
distribution.
		
	 MPs =
	  	the average of the Closing Prices of the capital stock or equity interests representing the portion of the distribution applicable to one share of Common Stock over the first ten
Trading Days commencing on and including the fifth Trading Day following the effective date of such distribution, or, if not traded on a national or regional securities exchange or over-the-counter market, the fair market value of the capital stock
or equity interests representing the portion of the distribution applicable to one share of Common Stock on such date as determined in good faith by the Board of Directors.

 In the event that such distribution described in this clause (iv) is not so paid or made, the Conversion Price shall be readjusted,
effective as of the date the Board of Directors publicly announces its decision not to pay or make such dividend or distribution, to the Conversion Price that would then be in effect if such dividend or distribution had not been declared.

 (v) Cash Distributions. If the Corporation makes a distribution consisting exclusively of cash to all
holders of the Common Stock, excluding, (a) any cash that is distributed in a Reorganization Event or as part of a “spin-off” referred to in clause (iv) above, (b) any dividend or distribution in connection with the
Corporation’s liquidation, dissolution or winding up, and (c) any consideration payable in connection with a tender or exchange offer made by the Corporation or any of its subsidiaries, then in each event, the Conversion Price in effect
immediately prior to the Ex-Date for such distribution will be multiplied by the following fraction: 

	
	   SP0 – DIV  

	SP0

  

			
	 Where,
  

	 SP0 =
	  	the Closing Price per share of Common Stock on the Trading Day immediately preceding the Ex-Date.
		
	 DIV =
	  	the amount per share of Common Stock of the cash distribution, as determined pursuant to the introduction to this paragraph (v).

 In the event that any distribution described in this clause (v) is not so made, the Conversion Price shall be readjusted, effective as
of the date the Board of Directors publicly announces its decision not to pay such distribution, to the Conversion Price which would then be in effect if such distribution had not been declared. 
 (vi) Self Tender Offers and Exchange Offers. If the Corporation or any of its subsidiaries successfully completes a
tender or exchange offer for the Common Stock where the cash and the value of any other consideration included in the payment per share of the Common Stock exceeds the Closing Price per share of the Common Stock on the Trading Day immediately
succeeding the expiration of the tender or exchange offer, then the Conversion Price in effect at the close of business on such immediately succeeding Trading Day will be multiplied by the following fraction: 
  

	
	         OS0 × SP0        

	AC + (SP0 × OS1)

  

			
	 Where,
  

	 SP0 =
	  	the Closing Price per share of Common Stock on the Trading Day immediately succeeding the expiration of the tender or exchange offer.
		
	 OS0 =
	  	the number of shares of Common Stock outstanding immediately prior to the expiration of the tender or exchange offer, including any shares validly tendered and not
withdrawn.
		
	 OS1 =
	  	the number of shares of Common Stock outstanding immediately after the expiration of the tender or exchange offer, giving effect to consummation of the acquisition of all shares
validly tendered or exchanged (and not withdrawn) in connection with such tender or exchange.

			
	 AC =
	  	the aggregate cash and fair market value of the other consideration payable in the tender or exchange offer, as determined in good faith by the Board of
Directors.

 In the event that the Corporation, or one of its subsidiaries, is obligated to purchase shares of
Common Stock pursuant to any such tender offer or exchange offer, but the Corporation, or such subsidiary, is permanently prevented by applicable law from effecting any such purchases, or all such purchases are rescinded, then the Conversion Price
shall be readjusted to be such Conversion Price that would then be in effect if such tender offer or exchange offer had not been made. 
 (vi) Rights Plans. To the extent that the Corporation has a rights plan in effect with respect to the Common Stock on the Mandatory Conversion Date, upon conversion of any shares of the Series B
Preferred Stock, Holders will receive, in addition to the shares of Common Stock, the rights under the rights plan, unless, prior to the Mandatory Conversion Date, the rights have separated from the shares of Common Stock, in which case the
Conversion Price will be adjusted at the time of separation as if the Corporation had made a distribution to all holders of the Common Stock as described in clause (iv) above, subject to readjustment in the event of the expiration, termination
or redemption of such rights. 
 (b) Subject to the limitations set forth in the provisos to the first paragraph of
Section 10(a), the Corporation may make such decreases in the Conversion Price, in addition to any other decreases required by this Section 10, if the Board of Directors deems it advisable to avoid or diminish any income tax to holders of
the Common Stock resulting from any dividend or distribution of shares of Common Stock (or issuance of rights or warrants to acquire shares of Common Stock) or from any event treated as such for income tax purposes or for any other reason.

 (c) (i) All adjustments to the Conversion Price shall be calculated to the nearest  1/
10 of a cent. No adjustment in the Conversion Price shall be required if such adjustment would be less than $0.01; provided, that any adjustments which by reason
of this subparagraph are not required to be made shall be carried forward and taken into account in any subsequent adjustment; provided further that on the Mandatory Conversion Date adjustments to the Conversion Price will be made with
respect to any such adjustment carried forward and which has not been taken into account before such date. 
 (ii) No adjustment to the Conversion Price shall be made if Holders may participate in the transaction that would otherwise give rise to an adjustment, as a result of holding the Series B Preferred Stock (including without limitation
pursuant to Section 4 hereof), without having to convert the Series B Preferred Stock, as if they held the full number of shares of Common Stock into which a share of the Series B Preferred Stock may then be converted. 
 (iii) The Applicable Conversion Price shall not be adjusted: 
 (A) upon the issuance of any shares of Common Stock pursuant to any present or future plan providing for the reinvestment of
dividends or interest payable on the Corporation’s securities and the investment of additional optional amounts in shares of Common Stock under any such plan; 
 (B) upon the issuance of any shares of Common Stock or rights or warrants to purchase those shares pursuant to any present or
future employee, director or

 
consultant benefit plan or program of or assumed by the Corporation or any of its subsidiaries; 
 (C) upon the issuance of any shares of Common Stock pursuant to any option, warrant, right or exercisable, exchangeable or convertible security outstanding as of the date shares of the Series B Preferred
Stock were first issued and not substantially amended thereafter; 
 (D) for a change in the par value or no par
value of Common Stock; or 
 (E) for accrued but unpaid dividends on the Series B Preferred Stock. 
 (d) Whenever the Conversion Price is to be adjusted in accordance with Section 10(a) or Section 10(b), the Corporation shall:
(i) compute the Conversion Price in accordance with Section 10(a) or Section 10(b), taking into account the $0.01 threshold set forth in Section 10(c) hereof; (ii) as soon as practicable following the occurrence of an event
that requires an adjustment to the Conversion Price pursuant to Section 10(a) or Section 10(b), taking into account the one percent threshold set forth in Section 10(c) hereof (or if the Corporation is not aware of such
occurrence, as soon as practicable after becoming so aware), provide, or cause to be provided, a written notice to the Holders of the occurrence of such event; and (iii) as soon as practicable following the determination of the revised
Conversion Price in accordance with Section 10(a) or Section 10(b) hereof, provide, or cause to be provided, a written notice to the Holders setting forth in reasonable detail the method by which the adjustment to the Conversion Price
was determined and setting forth the revised Conversion Price. 
 Section 11. Reorganization Events. (a) In the
event that, for so long as any shares of Series B Preferred Stock remains outstanding there occurs: 
 (i) any
consolidation, merger or other similar business combination of the Corporation with or into another Person, in each case pursuant to which the Common Stock will be converted into cash, securities or other property of the Corporation or another
Person; 
 (ii) any sale, transfer, lease or conveyance to another Person of all or substantially all of the
property and assets of the Corporation, in each case pursuant to which the Common Stock will be converted into cash, securities or other property of the Corporation or another Person; 
 (iii) any reclassification of the Common Stock into securities including securities other than the Common Stock; or

 (iv) any statutory exchange of the outstanding shares of Common Stock for securities of another Person (other
than in connection with a merger or acquisition); 
 (any such event specified in this Section 11(a), a “Reorganization
Event”); then each share of such Holder’s Series B Preferred Stock outstanding immediately prior to such Reorganization Event shall remain outstanding but shall automatically convert, effective as of the close of business on the
Mandatory Conversion Date with respect to the shares of Series B Preferred Stock of such Holder, into the type and amount of securities, cash and other property receivable in such Reorganization Event by the holder (excluding the counterparty to the
Reorganization Event or an Affiliate of such counterparty) of the number of shares of Common Stock obtained by dividing (x) the Liquidation Preference, plus all accrued but unpaid dividends, whether or not declared, up to, but excluding such
date, by (y) the Applicable Conversion Price as of such date

 
(such securities, cash and other property, the “Exchange Property”). In the event that a Reorganization Event referenced in Section 11(a) involves common stock as all or
part of the consideration being offered in a fixed exchange ratio transaction, the fair market value per share of such common stock shall be determined by reference to the average of the closing prices of such common stock for the ten Trading Day
period ending immediately prior to the consummation of such Reorganization Event. 
 (b) In the event that holders of the shares
of Common Stock have the opportunity to elect the form of consideration to be received in such transaction, the consideration that the Holders are entitled to receive shall be deemed to be the types and amounts of consideration received by the
majority of the holders of the shares of Common Stock that affirmatively make an election. 
 (c) The above provisions of this
Section 11 shall similarly apply to successive Reorganization Events and the provisions of Section 10 shall apply to any shares of capital stock of the Corporation (or any successor) received by the holders of the Common Stock in any such
Reorganization Event. 
 (d) The Corporation (or any successor) shall, within seven days of the consummation of any
Reorganization Event, provide written notice to the Holders of such consummation of such event and of the kind and amount of the cash, securities or other property that constitutes the Exchange Property. Failure to deliver such notice shall not
affect the operation of this Section 11. 
 (e) The Corporation shall not enter into any agreement for a transaction
constituting a Reorganization Event unless such agreement provides for or does not interfere with or prevent (as applicable) conversion of the Series B Preferred Stock into the Exchange Property in a manner that is consistent with and gives effect
to this Section 11. 
 Section 12. Voting Rights. (a) Holders will not have any voting rights, including
the right to elect any directors, except (i) voting rights, if any, required by law, and (ii) voting rights, if any, described in this Section 12. 
 (b) So long as any shares of Series B Preferred Stock are outstanding, the vote or consent of the Holders of a majority of the shares of Series B Preferred Stock at the time outstanding, voting as a
single class, given in person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, will be necessary for effecting or validating any of the following actions, whether or not such approval is required by
Delaware law: 
 (i) any amendment, alteration or repeal (including by means of a merger, consolidation or
otherwise) of any provision of the Certificate of Incorporation (including this Certificate of Designations) or the Corporation’s bylaws that would alter or change the rights, preferences or privileges of the Series B Preferred Stock so as to
affect them adversely; 
 (ii) any amendment or alteration (including by means of a merger, consolidation or
otherwise) of the Corporation’s Certificate of Incorporation to authorize, or create, or increase the authorized amount of, any shares of, or any securities convertible into shares of, any class or series of the Corporation’s capital stock
ranking senior to the Series B

 
Preferred Stock in the payment of dividends or in the distribution of assets on any liquidation, dissolution or winding up of the Corporation; or 
 (iii) the consummation of a binding share exchange or reclassification involving the Series B Preferred Stock or a merger or
consolidation of the Corporation with another entity, except that the Holders will have no right to vote under this provision or under Delaware law if in each case (x) the Series B Preferred Stock remains outstanding or, in the case of any such
merger or consolidation with respect to which the Corporation is not the surviving or resulting entity, is converted into or exchanged for preference securities of the surviving or resulting entity or its ultimate parent, that is an entity organized
and existing under the laws of the United States of America, any state thereof or the District of Columbia, and (y) such Series B Preferred Stock remaining outstanding or such preference securities, as the case may be, have such rights,
preferences, privileges and voting powers, taken as a whole, as are not materially less favorable to the Holders thereof than the rights, preferences, privileges and voting powers of the Series B Preferred Stock, taken as a whole. 
 provided, however, that any increase in the amount of the authorized preferred stock or any securities convertible into preferred stock or the
creation and issuance, or an increase in the authorized or issued amount, of any series of preferred stock or any securities convertible into preferred stock ranking equally with and/or junior to the Series B Preferred Stock with respect to the
payment of dividends (whether such dividends are cumulative or non-cumulative) and/or the distribution of assets upon the Corporation’s liquidation, dissolution or winding up will not, in and of itself, be deemed to adversely affect rights,
preferences or privileges of the Series B Preferred Stock and, notwithstanding any provision of Delaware law, Holders will have no right to vote solely by reason of such an increase, creation or issuance. 
 (c) Notwithstanding the foregoing, Holders shall not have any voting rights if, at or prior to the effective time of the act with respect to
which such vote would otherwise be required, all outstanding shares of Series B Preferred Stock shall have been converted into shares of Common Stock. 
 Section 13. Fractional Shares. 
 (a) No fractional shares of Common
Stock will be issued as a result of any conversion of shares of Series B Preferred Stock. 
 (b) In lieu of any fractional share
of Common Stock otherwise issuable in respect of any mandatory conversion pursuant to Section 8 hereof, the Corporation shall pay an amount in cash (computed to the nearest cent) equal to the same fraction of the Closing Price of the Common
Stock determined as of the second Trading Day immediately preceding the Mandatory Conversion Date. 
 (c) If more than one share
of the Series B Preferred Stock is surrendered for conversion at one time by or for the same Holder, the number of full shares of Common Stock issuable upon conversion thereof shall be computed on the basis of the aggregate number of shares of the
Series B Preferred Stock so surrendered. 

 Section 14. Reservation of Common Stock. 
 (a) The Corporation shall at all times reserve and keep available out of its authorized and unissued Common Stock or shares acquired by the
Corporation, solely for issuance upon the conversion of shares of Series B Preferred Stock as provided in this Certificate of Designations free from any preemptive or other similar rights, such number of shares of Common Stock as shall from time to
time be issuable upon the conversion of all the shares of Series B Preferred Stock then outstanding. For purposes of this Section 14(a), the number of shares of Common Stock that shall be deliverable upon the conversion of all outstanding
shares of Series B Preferred Stock shall be computed as if at the time of computation all such outstanding shares were held by a single Holder. 
 (b) Notwithstanding the foregoing, the Corporation shall be entitled to deliver upon conversion of shares of Series B Preferred Stock, as herein provided, shares of Common Stock acquired by the
Corporation (in lieu of the issuance of authorized and unissued shares of Common Stock), so long as any such acquired shares are free and clear of all liens, charges, security interests or encumbrances. 
 (c) All shares of Common Stock delivered upon conversion of the Series B Preferred Stock shall be duly authorized, validly issued, fully
paid and non-assessable, free and clear of all liens, claims, security interests and other encumbrances. 
 (d) Prior to the
delivery of any securities that the Corporation shall be obligated to deliver upon conversion of the Series B Preferred Stock, the Corporation shall use its reasonable best efforts to comply with all federal and state laws and regulations thereunder
requiring the registration of such securities with, or any approval of or consent to the delivery thereof by, any governmental authority. 
 (e) The Corporation hereby covenants and agrees that, if at any time the Common Stock shall be listed on The NASDAQ Global Market or any other national securities exchange or automated quotation system,
the Corporation will, if permitted by the rules of such exchange or automated quotation system, list and keep listed, so long as the Common Stock shall be so listed on such exchange or automated quotation system, all the Common Stock issuable upon
conversion of the Series B Preferred Stock. 
 Section 15. Replacement Certificates. 
 (a) 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 satisfactory evidence that the certificate has been destroyed, stolen or lost, together
with any indemnity that may be required by the Corporation. 
 (b) The Corporation shall not be required to issue any
certificates representing the Series B Preferred Stock on or after the Mandatory Conversion Date. In place of the delivery of a replacement certificate following the Mandatory Conversion Date, the Corporation, upon delivery of the evidence and
indemnity described in clause (a) above, shall deliver the shares of Common Stock pursuant to the terms of the Series B Preferred Stock formerly evidenced by the certificate. 

 Section 16. Miscellaneous. 
 (a) All notices referred to herein shall be in writing, and, unless otherwise specified herein, all notices hereunder shall be deemed to
have been given upon the earlier of receipt thereof or three Business Days after the mailing thereof if sent by registered or certified mail (unless first-class mail shall be specifically permitted for such notice under the terms of this Certificate
of Designations) with postage prepaid, addressed: (i) if to the Corporation, to its office at 519 South New Hope Road, Gastonia, North Carolina 28054-4040, Attention: President and Chief Executive Officer, or (ii) if to any Holder, to such
Holder at the address of such Holder as listed in the stock record books of the Corporation, or (iii) to such other address as the Corporation or any such Holder, as the case may be, shall have designated by notice similarly given. 

(b) The Corporation shall pay any and all stock transfer and documentary stamp taxes that may be payable in respect of any issuance or
delivery of shares of Series B Preferred Stock or shares of Common Stock or other securities issued on account of Series B Preferred Stock pursuant hereto or certificates representing such shares or securities. The Corporation shall not, however, be
required to pay any such tax that may be payable in respect of any transfer involved in the issuance or delivery of shares of Series B Preferred Stock or Common Stock or other securities in a name other than that in which the shares of Series B
Preferred Stock with respect to which such shares or other securities are issued or delivered were registered, or in respect of any payment to any Person other than a payment to the registered holder thereof, and shall not be required to make any
such issuance, delivery or payment unless and until the Person otherwise entitled to such issuance, delivery or payment has paid to the Corporation the amount of any such tax or has established, to the satisfaction of the Corporation, that such tax
has been paid or is not payable. 
 (c) All payments on the shares of Series B Preferred Stock shall be subject to withholding
and backup withholding of tax to the extent required by applicable law, subject to applicable exemptions, and amounts withheld, if any, shall be treated as received by the holders thereof. 
 (d) No share of Series B Preferred Stock shall have any rights of preemption whatsoever under this Certificate of Designations 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. 
 (e) The shares of Series B Preferred Stock shall not have any voting powers, preferences or relative, participating, optional or other
special rights, or qualifications, limitations or restrictions thereof, other than as set forth herein or in the Certificate of Incorporation or as provided by applicable law. 
 (f) The Corporation covenants (1) not to treat the Series B Preferred Stock as preferred stock for purposes of Section 305 of the
Internal Revenue Code of 1986, as amended, except as otherwise required by applicable law. 

 RESOLVED, that all actions taken by the officers and directors of the Corporation or
any of them in connection with the foregoing resolutions through the date hereof be, and they hereby are, ratified and approved. 
 IN WITNESS WHEREOF, Citizens South Banking Corporation has caused this Certificate of Designations to be signed by Kim S. Price its President and Chief Executive Officer this 16th day of March, 2010. 
  

			
	CITIZENS SOUTH BANKING CORPORATION
		
	By:	 	 /s/ Kim S. PriceExhibit 10.1

 Exhibit 10.1 
 SECURITIES PURCHASE AGREEMENT 
 This Securities
Purchase Agreement (this “Agreement”) is dated as of March 10, 2010, by and among Citizens South Banking Corporation, a Delaware corporation (the “Company”), and each purchaser identified on the signature pages
hereto (each, including its successors and assigns, a “Purchaser” and collectively, the “Purchasers”). 
 RECITALS 
 A. The Company and each Purchaser is executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506 of Regulation D
(“Regulation D”) as promulgated by the United States Securities and Exchange Commission (the “Commission”) under the Securities Act. 
 B. Each Purchaser, severally and not jointly, wishes to purchase, and the Company wishes to sell, upon the terms and conditions stated in
this Agreement, (i) that aggregate number of shares of the Company’s mandatorily convertible cumulative non-voting perpetual preferred stock, $1,000 liquidation preference per share (the “Preferred Stock”), set forth below
such Purchaser’s name on the signature page of this Agreement (which aggregate amount for all Purchasers together shall be 8,280 shares of Preferred Stock and shall be collectively referred to herein as the “Preferred Shares”),
and (ii) that aggregate number of shares of the Company’s common stock, par value $.01 per share (the “Common Stock”), set forth below such Purchaser’s name on the signature page of this Agreement (which aggregate
amount for all Purchasers together shall be 1,490,400 shares of Common Stock and shall be collectively referred to herein as the “Common Shares” and together with the Preferred Shares, referred to as the “Shares”).
When purchased, the Preferred Stock will have the terms set forth in a certificate of designations for the Preferred Stock in the form attached as Exhibit A hereto (the “Certificate of Designations”) made a part of the
Company’s Certificate of Incorporation, as amended, by the filing of the Certificate of Designations with the Secretary of State of the State of Delaware (the “Delaware Secretary”). The Preferred Stock will be convertible into
shares (the “Underlying Shares” and, together with the Shares, the “Securities”) of the Common Stock, subject to and in accordance with the terms and conditions of the Certificate of Designations. 
 C. The Company has engaged Keefe, Bruyette & Woods, Inc. as its exclusive placement agent (the “Placement Agent”)
for the offering of the Securities. 
 D. Contemporaneously with the execution and delivery of this Agreement, the parties
hereto are executing and delivering a Registration Rights Agreement, substantially in the form attached hereto as Exhibit B (the “Registration Rights Agreement”), pursuant to which, among other things, the Company will
agree to provide certain registration rights with respect to the Securities under the Securities Act and the rules and regulations promulgated thereunder and applicable state securities laws. 
 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 the Purchasers hereby agree as follows: 
 ARTICLE
1: 
 DEFINITIONS 

 1.1 Definitions. In addition to the terms defined elsewhere in this Agreement, for
all purposes of this Agreement, the following terms shall have the meanings indicated in this Section 1.1: 
 “Action” means any action, suit, inquiry, notice of violation, proceeding (including any partial proceeding such as a deposition) or investigation pending or, to the Company’s Knowledge, threatened in writing against
the Company, any Subsidiary or any of their respective properties or any officer, director or employee of the Company or any Subsidiary acting in his or her capacity as an officer, director or employee before or by any federal, state, county, local
or foreign court, arbitrator, governmental or administrative agency, regulatory authority, stock market, stock exchange or trading facility. 
 “Affiliate” means, with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries, Controls, is controlled by or is under common control with
such Person, as such terms are used in and construed under Rule 405 under the Securities Act. With respect to a Purchaser, any investment fund or managed account that is managed on a discretionary basis by the same investment manager as such
Purchaser will be deemed to be an Affiliate of such Purchaser. 
 “Agreement” shall have the meaning ascribed
to such term in the Preamble. 
 “Business Day” means a day, other than a Saturday or Sunday, on which banks in
New York City are open for the general transaction of business. 
 “Certificate of Designations” has the
meaning set forth in the Recitals. 
 “Certificate of Incorporation” means the Certificate of Incorporation of
the Company and all amendments and certificates of determination thereto, as the same may be amended from time to time. 
 “Closing” means the closing of the purchase and sale of the Shares pursuant to this Agreement. 
 “Closing Date” means the Trading Day when all of the Transaction Documents have been executed and delivered by the applicable parties thereto, and all of the conditions set forth in Sections 2.1, 2.2, 5.1 and 5.2 hereof are
satisfied, or such other date as the parties may agree. 
 “Commission” has the meaning set forth in the
Recitals. 
 “Common Shares” has the meaning set forth in the Recitals. 
 “Common Stock” has the meaning set forth in the Recitals, and also includes any securities into which the Common Stock may
hereafter be reclassified or changed. 
 “Company Counsel” means Luse Gorman Pomerenk & Schick, P.C.

 “Company Deliverables” has the meaning set forth in Section 2.2(a). 
 “Company Reports” has the meaning set forth in Section 3.1(kk). 
 “Company’s Knowledge” means with respect to any statement made to the knowledge of the Company, that the statement is
based upon the actual knowledge of the executive officers of the Company having responsibility for the matter or matters that are the subject of the statement after reasonable investigation. 
  

 2 

 “Control” (including the terms “controlling”, “controlled
by” or “under common control with”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or
otherwise. 
 “Disclosure Materials” has the meaning set forth in Section 3.1(h). 
 “Delaware Secretary” has the meaning set forth in the Recitals. 
 “DTC” means The Depository Trust Company. 
 “Effective Date” means the date on which the initial Registration Statement required by Section 2(a) of the Registration Rights Agreement is first declared effective by the
Commission. 
 “Environmental Laws” has the meaning set forth in Section 3.1(l). 
 “Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor statute, and the rules and
regulations promulgated thereunder. 
 “FDIC” means the Federal Deposit Insurance Corporation. 
 “GAAP” means U.S. generally accepted accounting principles, as applied by the Company. 
 “Indemnified Person” has the meaning set forth in Section 4.8(b). 
 “Intellectual Property” has the meaning set forth in Section 3.1(r). 
 “Lien” means any lien, charge, claim, encumbrance, security interest, right of first refusal, preemptive right or other
restrictions of any kind. 
 “Material Adverse Effect” means any of (i) a material and adverse effect on
the legality, validity or enforceability of any Transaction Document, (ii) a material and adverse effect on the results of operations, assets, properties, business, condition (financial or otherwise) of the Company and the Subsidiaries, taken
as a whole, or (iii) any adverse impairment to the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document; provided, that in determining whether a Material Adverse Effect has
occurred, there shall be excluded any effect to the extent resulting from the following: (A) changes, after the date hereof, in U.S. GAAP or regulatory accounting principles generally applicable to banks, savings associations or their holding
companies, (B) changes, after the date hereof, in applicable laws, rules and regulations or interpretations thereof by any court, administrative agency or other governmental authority, whether federal, state, local or foreign, or any applicable
industry self-regulatory organization, (C) actions or omissions of the Company expressly required by the terms of this Agreement or taken with the prior written consent of Purchaser, (D) changes, after the date hereof, in general economic,
monetary or financial conditions, including changes in prevailing interest rates, credit markets, secondary mortgage market conditions or housing price appreciation/depreciation trends, (E) changes in the market price or trading volumes of the
Common Stock (but not the underlying causes of such changes), (F) changes in global or national political conditions, including the outbreak or escalation of war or acts of terrorism and (G) the public disclosure of this Agreement or the
transactions contemplated hereby; except, with respect to clauses (A), (B), (D) and (F), to the extent that the effects of such changes have a disproportionate effect on the Company and the Subsidiaries, taken as a whole, relative to other
similarly situated banks, savings associations or their holding companies generally. 
 “Material Contract”
means any contract of the Company that was filed as an exhibit to the SEC Reports pursuant to Item 601 of Regulation S-K. 
  

 3 

 “Material Permits” has the meaning set forth in Section 3.1(p).

 “North Carolina Courts” means the state and federal courts sitting in the State of North Carolina.

 “OTS” has the meaning set forth in Section 3.1(kk). 
 “Person” means an individual, corporation, partnership, limited liability company, trust, business trust, association,
joint stock company, joint venture, sole proprietorship, unincorporated organization, governmental authority or any other form of entity not specifically listed herein. 
 “Placement Agent” has the meaning set forth in the Recitals. 
 “Preferred Shares” has the meaning set forth in the Recitals. 
 “Preferred Stock”
has the meaning set forth in the Recitals. 
 “Principal Trading Market” means the Trading Market on which the
Common Stock is primarily listed on and quoted for trading, which, as of the date of this Agreement and the Closing Date, shall be the NASDAQ Global Market. 
 “Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or
threatened. 
 “Purchase Price” means $1,000.00 per Preferred Share and $4.50 per Common Share. 
 “Purchaser Deliverables” has the meaning set forth in Section 2.2(b). 
 “Purchaser Party” has the meaning set forth in Section 4.8(a). 
 “Registration Rights Agreement” has the meaning set forth in the Recitals. 
 “Registration Statement” means a registration statement meeting the requirements set forth in the Registration Rights
Agreement and covering the resale by the Purchasers of the Registrable Securities (as defined in the Registration Rights Agreement). 
 “Regulation D” has the meaning set forth in the Recitals. 
 “Regulatory Agreement”
has the meaning set forth in Section 3.1(mm). 
 “Required Approvals” has the meaning set forth in
Section 3.1(e). 
 “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. 
 “Scheduled Date” has the meaning set forth in Section 6.16. 
 “SEC Reports” has the meaning set forth in Section 3.1(h). 
 “Secretary’s Certificate” has the meaning set forth in Section 2.2(a)(v). 
 “Securities” has the meaning set forth in the Recitals. 
 “Securities Act” means the Securities Act of 1933, as amended. 
 “Shares” means the Common Shares and Preferred Shares. 
 “Stockholder Approval” has the meaning set forth in Section 4.11. 
 “Stockholder Proposal” has the meaning set forth in Section 4.11. 
  

 4 

 “Subscription Amount” means with respect to each Purchaser, the aggregate
amount to be paid for the Shares purchased hereunder as indicated on such Purchaser’s signature page to this Agreement next to the heading “Aggregate Purchase Price (Subscription Amount)”. 
 “Subsidiary” means any entity in which the Company, directly or indirectly, owns sufficient capital stock or holds a
sufficient equity or similar interest such that it is consolidated with the Company in the financial statements of the Company. 
 “Trading Day” means (i) a day on which the Common Stock is listed or quoted and traded on its Principal Trading Market (other than the OTC Bulletin Board), or (ii) if the Common Stock is not listed on a Trading
Market (other than the OTC Bulletin Board), a day on which the Common Stock is traded in the over-the-counter market, as reported by the OTC Bulletin Board, or (iii) if the Common Stock is not quoted on any Trading Market, a day on which the
Common Stock is quoted in the over-the-counter market as reported in the “pink sheets” by Pink Sheets LLC (or any similar organization or agency succeeding to its functions of reporting prices); provided , that in the event that the
Common Stock is not listed or quoted as set forth in (i), (ii) and (iii) hereof, then Trading Day shall mean a Business Day. 
 “Trading Market” means whichever of the New York Stock Exchange, the NYSE Amex, the NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital Market or the OTC Bulletin Board on which the Common Stock is
listed or quoted for trading on the date in question. 
 “Transaction Documents” means this Agreement, the
schedules and exhibits attached hereto, the Registration Rights Agreement, the Certificate of Designations and any other documents or agreements executed in connection with the transactions contemplated hereunder. 
 “Transfer Agent” means The Registrar and Trust Company, or any successor transfer agent for the Company. 
 “Underlying Shares” has the meaning set forth in the Recitals. 
 ARTICLE 2: 
 PURCHASE AND SALE 
 2.1 Closing. 
 (a)
Purchase of Shares. Subject to the terms and conditions set forth in this Agreement, at the Closing the Company shall issue and sell to each Purchaser, and each Purchaser shall, severally and not jointly, purchase from the Company, the number
of Common Shares and Preferred Shares set forth below such Purchaser’s name on the signature page of this Agreement at a per Common Share price equal to the Purchase Price for a Common Share and Preferred Share price equal to the Purchase Price
for a Preferred Share. 
 (b) Closing. The Closing of the purchase and sale of the Shares shall take place at the offices
of DLA Piper LLP (US) 500 Eighth Street, NW, Washington, DC 20004, on the Closing Date or at such other locations or remotely by facsimile transmission or other electronic means as the parties may mutually agree. The “Closing Date”
shall be March 19, 2010, unless the FDIC shall have notified the P&A Closing will not occur on March 19, 2010. In the event that the FDIC notifies the Company that the P&A Closing will not occur on March 19, 2010 (or any other
Scheduled Date as contemplated by this paragraph), the Company will provide Purchaser notice thereof. Upon notice from the FDIC of a different Scheduled Date for the P&A Closing, the

  

 5 

 
Company shall promptly provide Purchaser notice thereof. Unless the FDIC shall have notified the Company that the P&A Closing will not occur on a particular Scheduled Date, then the
“Closing Date” shall mean such Scheduled Date. The “Closing” means the transfer of funds and issuance of Securities as contemplated hereby. 
 (c) Form of Payment. Unless otherwise agreed to by the Company and a Purchaser (as to itself only), on the Closing Date, (1) the
Company shall issue instructions to the Transfer Agent to issue, in book-entry form the number of Shares specified on such Purchaser’s signature page hereto (or, if the Company and Purchaser shall have agreed, as indicated on Purchaser’s
signature page hereto, that Purchaser will receive Securities in certificated form, then the Company shall instead instruct the Transfer Agent to issue such specified Securities in certificated form (the “Stock Certificates”), or as
otherwise set forth on the Stock Certificate Questionnaire included as Exhibit C-2 hereto) and (2) upon such book-entry issuance or receipt of Stock Certificates, as applicable, each Purchaser shall wire its Subscription Amount, in
United States dollars and in immediately available funds, in accordance with the Company’s written wire transfer instructions. 
 2.2 Closing Deliveries. 
 (a) On or prior to the Closing, the Company shall issue, deliver or cause to be delivered to
each Purchaser the following (the “Company Deliverables”): 
 (i) this Agreement, duly executed by the
Company; 
 (ii) as the Company and such Purchaser agree, the Company shall cause the Transfer Agent to issue, in book-entry
form the number of Shares specified on Purchaser’s signature page hereto (or, if the Company and Purchaser shall have agreed, as indicated on Purchaser’s signature pages hereto, that Purchaser will receive Stock Certificates for their
Securities, then the Company shall instead instruct the Transfer Agent to issue such specified Stock Certificates registered in the name of such Purchaser or as otherwise set forth on the Stock Certificate Questionnaire); 
 (iii) a legal opinion of Company Counsel, dated as of the Closing Date and in the form attached hereto as Exhibit D, executed
by such counsel and addressed to the Purchasers; 
 (iv) the Registration Rights Agreement, duly executed by the Company;

 (v) a certificate of the Secretary of the Company, in the form attached hereto as Exhibit E (the
“Secretary’s Certificate”), dated as of the Closing Date, (a) certifying the resolutions adopted by the Board of Directors of the Company or a duly authorized committee thereof approving the transactions contemplated by
this Agreement and the other Transaction Documents and the issuance of the Securities, (b) certifying the current versions of the Certificate of Incorporation, as amended, and by-laws, as amended, of the Company and (c) certifying as to
the signatures and authority of persons signing the Transaction Documents and related documents on behalf of the Company; and 
 (vi) the Compliance Certificate referred to in Section 5.1(g). 
  

 6 

 (b) Each Purchaser shall deliver or cause to be delivered to the Company the following (the
“Purchaser Deliverables”): 
 (i) On or prior to the date hereof: 
 a) this Agreement, duly executed by such Purchaser; 
 b) the Registration Rights Agreement, duly executed by such Purchaser; and 
 c) a
fully completed and duly executed Accredited Investor Questionnaire, reasonably satisfactory to the Company, and Stock Certificate Questionnaire in the forms attached hereto as Exhibits C-1 and C-2, respectively. 
 (ii) On or prior to the Closing Date: 
 a) its Subscription Amount, in U.S. dollars and in immediately available funds, in the amount indicated below such Purchaser’s name on the applicable signature page hereto under the heading
“Aggregate Purchase Price (Subscription Amount)” by wire transfer in accordance with the Company’s written instructions; 
 ARTICLE 3: 
 REPRESENTATIONS AND WARRANTIES 
 3.1 Representations and Warranties of the Company. The Company hereby represents and warrants as of the date hereof and the Closing
Date (except for the representations and warranties that speak as of a specific date, which shall be made as of such date), to each of the Purchasers that: 
 (a) Subsidiaries. The Company has no direct or indirect Subsidiaries other than CSBC Statutory Trust, Citizens South Bank and Citizens South Financial Services. The Company owns, directly or
indirectly, all of the capital stock or comparable equity interests of each Subsidiary free and clear of any and all Liens, and all the issued and outstanding shares of capital stock or comparable equity interest of each Subsidiary are validly
issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities. 
 (b) Organization and Qualification. The Company and each of its “Significant Subsidiaries” (as defined in Rule 1-02 of Regulation S-X) is an entity duly incorporated or otherwise organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or organization (as applicable), with the requisite power and authority to own or lease and use its properties and assets and to carry on its business as currently conducted. Neither
the Company nor any Significant Subsidiary is in violation of any of the provisions of its respective articles or certificate of incorporation, bylaws or other organizational or charter documents. The Company and each of its Subsidiaries is duly
qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to
be so qualified or in good standing, as the case may be, would not in the reasonable judgment of the Company be expected to have a Material Adverse Effect. The Company is duly registered as a savings and loan holding company under the Home
Owners’ Loan Act of 1933, as amended

  

 7 

 
(“HOLA”). Each of the Company’s depository institution Subsidiaries’ deposit accounts are insured up to applicable limits by the Federal Deposit Insurance Corporation,
and all premiums and assessments required to be paid in connection therewith have been paid when due. The Company has conducted its business in compliance with all applicable federal, state and foreign laws, orders, judgments, decrees, rules,
regulations and applicable stock exchange requirements, including all laws and regulations restricting activities of bank holding companies and banking organizations, except for any noncompliance that, individually or in the aggregate, has not had
and would not be reasonably expected to have a Material Adverse Effect. 
 (c) Authorization; Enforcement; Validity. The
Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by each of the Transaction Documents to which it is a party and otherwise to carry out its obligations hereunder and thereunder,
including, without limitation, to issue the Shares in accordance with the terms hereof and, subject to Stockholder Approval, to issue the Underlying Shares in accordance with the Certificate of Designations. The Company’s execution and delivery
of each of the Transaction Documents to which it is a party and the consummation by it of the transactions contemplated hereby and thereby (including, but not limited to, the sale and delivery of the Shares and the Underlying Shares) have been duly
authorized by all necessary corporate action on the part of the Company, and no further corporate action is required by the Company, its Board of Directors or its stockholders in connection therewith other than in connection with the Required
Approvals. Each of the Transaction Documents to which it is a party has been (or upon delivery will have been) duly executed by the Company and is, or when delivered in accordance with the terms hereof, will constitute the legal, valid and binding
obligation of the Company enforceable against the Company in accordance with its terms, except (i) as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to,
or affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general application, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other
equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law. Except for Material Contracts, there are no stockholder agreements, voting agreements, or other similar arrangements with
respect to the Company’s capital stock to which the Company is a party or, to the Company’s Knowledge, between or among any of the Company’s stockholders. 
 (d) No Conflicts. The execution, delivery and performance by the Company of the Transaction Documents to which it is a party and the consummation by the Company of the transactions contemplated
hereby or thereby (including, without limitation, the issuance of the Shares and the Underlying Shares) do not and will not (i) conflict with or violate any provisions of the Company’s or any Subsidiary’s articles or certificate of
incorporation, bylaws or otherwise result in a violation of the organizational documents of the Company or any Subsidiary, (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would result in 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
Material Contract, or (iii) subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, 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, assuming the correctness of the representations and warranties made by the Purchasers herein, of any self-regulatory organization to which
the Company or its securities are subject, including all

  

 8 

 
applicable Trading Markets), 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) Filings, Consents and Approvals.
Neither the Company nor any of its Subsidiaries is required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental
authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents (including, without limitation, the issuance of the Shares and the Underlying Shares), other than (i) obtaining
Stockholder Approval to issue the Underlying Shares in accordance with the terms of the Certificate of Designations, (ii) the filing of the Certificate of Designations with the Delaware Secretary, (iii) the filing with the Commission of
one or more Registration Statements in accordance with the requirements of the Registration Rights Agreement, (iv) filings required by applicable state securities laws, (v) the filing of a Notice of Sale of Securities on Form D with
the Commission under Regulation D of the Securities Act, (vi) the filing of any requisite notices and/or application(s) to the Principal Trading Market for the issuance and sale of the Common Shares and the Underlying Shares and the
listing of the Common Shares and the Underlying Shares for trading or quotation, as the case may be, thereon in the time and manner required thereby, (vii) the filings required in accordance with Section 4.6 of this Agreement and
(viii) those that have been made or obtained prior to the date of this Agreement (collectively, the “Required Approvals”). 
 (f) Issuance of the Shares. The issuance of the Shares has been duly authorized and the Shares, when issued and paid for in accordance with the terms of the Transaction Documents, will be duly and
validly issued, fully paid and non-assessable and free and clear of all Liens, other than restrictions on transfer provided for in the Transaction Documents or imposed by applicable securities laws, and shall not be subject to preemptive or similar
rights. The issuance of the Underlying Shares has been duly authorized and the Underlying Shares, when issued in accordance with the terms of the Certificate of Designations, will be duly and validly issued, fully paid and non-assessable and free
and clear of all Liens, other than restrictions on transfer provided for in the Transaction Documents or imposed by applicable securities laws, and shall not be subject to preemptive or similar rights. Assuming the accuracy of the representations
and warranties of the Purchasers in this Agreement, the Securities will be issued in compliance with all applicable federal and state securities laws. 
 (g) Capitalization. The number of shares and type of all authorized, issued and outstanding capital stock, options and other securities of the Company (whether or not presently convertible into or
exercisable or exchangeable for shares of capital stock of the Company) has been set forth in the SEC Reports and has changed since the date of such SEC Reports only due to stock grants or other equity awards or stock option and warrant exercises
that do not, individually or in the aggregate, have a material effect on the issued and outstanding capital stock, options and other securities. All of the outstanding shares of capital stock of the Company are duly authorized, validly issued, 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 such outstanding shares was issued in violation of any preemptive rights or similar rights to
subscribe for or purchase any capital stock of the Company. Except as specified in the SEC Reports: (i) no shares of the Company’s outstanding capital stock are subject to preemptive rights or any other similar rights; (ii) there are
no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any shares of capital stock of the Company,
or contracts, commitments, understandings or arrangements by which the Company is or may become bound to issue additional shares of capital stock of the Company or options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever

  

 9 

 
relating to, or securities or rights convertible into, or exercisable or exchangeable for, any shares of capital stock of the Company, other than those issued or granted pursuant to Material
Contracts or equity or incentive plans or arrangements described in the SEC Reports; (iii) there are no material outstanding debt securities, notes, credit agreements, credit facilities or other agreements, documents or instruments evidencing
indebtedness of the Company or by which the Company is bound; (iv) except for the Registration Rights Agreement and the “Existing Contracts” referenced therein, there are no agreements or arrangements under which the Company is
obligated to register the sale of any of its securities under the Securities Act; (v) there are no outstanding securities or instruments of the Company that contain any redemption or similar provisions, and there are no contracts, commitments,
understandings or arrangements by which the Company is or may become bound to redeem a security of the Company; (vi) the Company does not have any stock appreciation rights or “phantom stock” plans or agreements or any similar plan or
agreement; and (vii) the Company has no liabilities or obligations required to be disclosed in the SEC Reports but not so disclosed in the SEC Reports, which, individually or in the aggregate, will have or would reasonably be expected to have a
Material Adverse Effect. There are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the Securities. 
 (h) SEC Reports; Disclosure Materials. The Company has filed all reports, schedules, forms, statements and other documents required to be filed by it under the Exchange Act, including pursuant to
Section 13(a) or 15(d) thereof, since January 1, 2009 (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “SEC Reports” and
together with this Agreement and the Schedules to this Agreement, the “Disclosure Materials”), on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of
any such extension. As of their respective filing dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations of the Commission promulgated thereunder, and
none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted 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. 
 (i) Financial Statements. The consolidated financial statements of the Company
included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have been prepared
in accordance with GAAP applied on a consistent basis during the periods involved, except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes
required by GAAP, and fairly present in all material respects the balance sheet of the Company and its consolidated subsidiaries taken as a whole as of and for the dates thereof and the results of 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. 
  

 10 

 (j) Tax Matters. The Company (i) has prepared and filed all foreign, federal and
state income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be
due on such returns, reports and declarations, except those being contested in good faith, with respect to which adequate reserves have been set aside on the books of the Company and (iii) has set aside on its books provisions reasonably
adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply, except, in the case of clauses (i) and (ii) above, where the failure to so pay or file any such tax,
assessment, charge or return would not have or reasonably be expected to have a Material Adverse Effect. 
 (k) Material
Changes. Since the date of the latest audited financial statements included within the SEC Reports, except as disclosed in subsequent SEC Reports filed prior to the date hereof or as furnished in the Company’s Current Report on Form 8-K
dated January 25, 2010, (i) there have been no events, occurrences or developments that have had or would reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect, (ii) the Company has not
incurred any material liabilities (contingent or otherwise) other than (A) trade payables, accrued expenses and other liabilities incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to
be reflected in the Company’s financial statements pursuant to GAAP or required to be disclosed in filings made with the Commission, (iii) the Company has not altered materially its method of accounting or the manner in which it keeps its
accounting books and records, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital
stock (other than in connection with repurchases of unvested stock issued to employees of the Company), (v) the Company has not issued any equity securities to any officer, director or Affiliate, except Common Stock issued pursuant to existing
Company stock option or stock purchase plans or executive and director arrangements disclosed in the SEC Reports and (vi) there has not been any material change or amendment to, or any waiver of any material right by the Company under, any
Material Contract under which the Company or any of its Subsidiaries is bound or subject. Except for the transactions contemplated by this Agreement, no event, liability or development has occurred or exists with respect to the Company or its
Subsidiaries or their respective business, properties, operations or financial condition that would be required to be disclosed by the Company under applicable securities laws at the time this representation is made that has not been publicly
disclosed at least one Trading Day prior to the date that this representation is made. 
 (l) Environmental Matters.
Neither the Company nor any of its Subsidiaries (i) is in violation of any statute, rule, regulation, decision or order of any governmental agency or body or any court, domestic or foreign, relating to the use, disposal or release of hazardous
or toxic substances or relating to the protection or restoration of the environment or human exposure to hazardous or toxic substances (collectively, “Environmental Laws”), (ii) owns or operates any real property contaminated
with any substance that is in violation of any Environmental Laws, (iii) is liable for any off-site disposal or contamination pursuant to any Environmental Laws, or (iv) is subject to any claim relating to any Environmental Laws; in each
case, which violation, contamination, liability or claim has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect; and, to the Company’s Knowledge, there is no pending or threatened
investigation that might lead to such a claim. 
  

 11 

 (m) Litigation. There is no Action which (i) adversely affects or challenges the
legality, validity or enforceability of any of the Transaction Documents or the issuance of the Shares or (ii) except as disclosed in the SEC Reports, is reasonably likely to have a Material Adverse Effect, individually or in the aggregate, if
there were an unfavorable decision. Neither the Company nor any Subsidiary, nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a
claim of breach of fiduciary duty. There has not been, and to the Company’s knowledge there is not pending or contemplated, any investigation by the Commission involving the Company or any current or former director or officer of the Company.
The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or any of its Subsidiaries under the Exchange Act or the Securities Act. 
 (n) Employment Matters. No material labor dispute exists or, to the Company’s Knowledge, is imminent with respect to any of the
employees of the Company which would have or reasonably be expected to have a Material Adverse Effect. None of the Company’s employees is a member of a union that relates to such employee’s relationship with the Company, and neither the
Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company and each Subsidiary believes that its relationship with its employees is good. To the Company’s Knowledge, no executive officer is, or is now
expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant in favor of a
third party, and to the Company’s Knowledge, the continued employment of each such executive officer does not subject the Company or any Subsidiary to any liability with respect to any of the foregoing matters. The Company is in compliance with
all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance would not have or reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect. 
 (o) Compliance. Neither the Company nor
any of its Subsidiaries (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any of its Subsidiaries under), nor
has the Company or any of its Subsidiaries received written notice of a claim that it is in default under or that it is in violation of, any Material Contract (whether or not such default or violation has been waived), (ii) is in violation of
any order of which the Company has been made aware in writing of any court, arbitrator or governmental body having jurisdiction over the Company or its properties or assets, or (iii) is in violation of, or in receipt of written notice that it
is in violation of, any statute, rule or regulation of any governmental authority applicable to the Company, or which would have the effect of revoking or limiting FDIC deposit insurance, except in each case as would not have or reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect. 
 (p) Regulatory Permits. The Company and
each of its Subsidiaries possess or have applied for all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as currently
conducted and as described in the SEC Reports, except where the failure to possess such permits, individually or in the aggregate, has not and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect
(“Material Permits”), and (i) neither the Company

  

 12 

 
nor any of its Subsidiaries has received any notice in writing of proceedings relating to the revocation or material adverse modification of any such Material Permits and (ii) the Company is
unaware of any facts or circumstances that would give rise to the revocation or material adverse modification of any Material Permits. 
 (q) Title to Assets. The Company and its Subsidiaries have good and marketable title to all real property and tangible personal property owned by them which is material to the business of the Company and its Subsidiaries, taken as a
whole, in each case free and clear of all Liens except such as do not materially affect the value of such property or do not interfere with the use made and proposed to be made of such property by the Company and any of its Subsidiaries. Any real
property and facilities held under lease by the Company and any of its Subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made and proposed to be
made of such property and buildings by the Company and its Subsidiaries. 
 (r) Patents and Trademarks. The Company and
its Subsidiaries own, possess, license or have other rights to use all foreign and domestic patents, patent applications, trade and service marks, trade and service mark registrations, trade names, copyrights, inventions, trade secrets, technology,
Internet domain names, know-how and other intellectual property (collectively, the “Intellectual Property”) necessary for the conduct of their respective businesses as now conducted or as proposed to be conducted in the SEC Reports
except where the failure to own, possess, license or have such rights would not have or reasonably be expected to have a Material Adverse Effect. Except as set forth in the SEC Reports and except where such violations or infringements would not have
or reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect, (a) there are no rights of third parties to any such Intellectual Property; (b) there is no infringement by third parties of any such
Intellectual Property; (c) there is no pending or threatened action, suit, proceeding or claim by others challenging the Company’s and its Subsidiaries’ rights in or to any such Intellectual Property; (d) there is no pending or
threatened action, suit, proceeding or claim by others challenging the validity or scope of any such Intellectual Property; and (e) there is no pending or threatened action, suit, proceeding or claim by others that the Company and/or any
Subsidiary infringes or otherwise violates any patent, trademark, copyright, trade secret or other proprietary rights of others. 
 (s) Insurance. The Company and each of the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as the Company believes to be prudent and customary in the
businesses and locations in which the Company and the Subsidiaries are engaged. Neither the Company nor any of its Subsidiaries has received any notice of cancellation of any such insurance, nor, to the Company’s Knowledge, will it or any
Subsidiary be unable to renew their respective existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not have a Material
Adverse Effect. 
 (t) Transactions With Affiliates and Employees. Except as set forth in the SEC Reports and other than
the grant of stock options or other equity awards that are not individually or in the aggregate material in amount, none of the officers or directors of the Company and, to the Company’s Knowledge, none of the employees of the Company, is
presently a party to any transaction with the Company or to a presently contemplated transaction (other than for services as

  

 13 

 
employees, officers and directors) that would be required to be disclosed pursuant to Item 404 of Regulation S-K promulgated under the Securities Act. 
 (u) Internal Control Over Financial Reporting. Except as set forth in the SEC Reports, the Company maintains internal control over
financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles and such internal control over financial reporting was effective as of the date of the most recent SEC Report. 
 (v) Sarbanes-Oxley; Disclosure Controls. The Company is in compliance in all material respects with all of the provisions of the Sarbanes-Oxley Act of 2002 which are applicable to it. Except as
disclosed in the SEC Reports, the Company maintains disclosure controls and procedures (as such term is defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act), and such disclosure controls and procedures are effective. 
 (w) Certain Fees. No person or entity will have, as a result of the transactions contemplated by this Agreement, any valid right,
interest or claim against or upon the Company or a Purchaser for any commission, fee or other compensation pursuant to any agreement, arrangement or understanding entered into by or on behalf of the Company, other than the Placement Agent with
respect to the offer and sale of the Shares (which placement agent fees are being paid by the Company). The Company shall indemnify, pay, and hold each Purchaser harmless against, any liability, loss or expense (including, without limitation,
attorneys’ fees and out-of-pocket expenses) arising in connection with any such right, interest or claim. 
 (x) Private
Placement. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2 of this Agreement and the accuracy of the information disclosed in the Accredited Investor Questionnaires, no registration
under the Securities Act is required for the offer and sale of the Shares by the Company to the Purchasers under the Transaction Documents. The issuance and sale of the Shares hereunder does not contravene the rules and regulations of the Principal
Trading Market and, upon Stockholder Approval, the issuance of the Underlying Shares in accordance with the Certificate of Designations will not contravene the rules and regulations of the Principal Trading Market. 
 (y) Registration Rights. Other than each of the Purchasers, except as set forth on Schedule 3.1(y), no Person has any right to cause
the Company to effect the registration under the Securities Act of any securities of the Company other than those securities which are currently registered on an effective registration statement on file with the Commission. 
 (z) Listing and Maintenance Requirements. The Company’s Common Stock is registered pursuant to Section 12(b) of the
Exchange Act, and the Company has taken no action designed to terminate the registration of the Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating such registration. The
Company has not, in the 12 months preceding the date hereof, received written notice from any Trading Market on which the Common Stock is listed or quoted to the effect that the Company is not in compliance with the listing or maintenance
requirements of such Trading Market. The Company is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance in all material respects with the listing and maintenance requirements for continued trading
of the Common Stock on the Principal Trading Market. 
  

 14 

 (aa) Investment Company. Neither the Company nor any of its Subsidiaries is required
to be registered as, and is not an Affiliate of, and immediately following the Closing will not be required to register as, an “investment company” within the meaning of the Investment Company Act of 1940, as amended. 
 (bb) Questionable Payments. Neither the Company nor any of its Subsidiaries, nor to the Company’s Knowledge, any directors,
officers, employees, agents or other Persons acting at the direction of or on behalf of the Company or any of its Subsidiaries has, in the course of its actions for, or on behalf of, the Company: (a) directly or indirectly, used any corporate
funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to foreign or domestic political activity; (b) made any direct or indirect unlawful payments to any foreign or domestic governmental officials or
employees or to any foreign or domestic political parties or campaigns from corporate funds; (c) violated any provision of the Foreign Corrupt Practices Act of 1977, as amended, or (d) made any other unlawful bribe, rebate, payoff,
influence payment, kickback or other material unlawful payment to any foreign or domestic government official or employee. 
 (cc) Application of Takeover Protections; Rights Agreements. The Company has not adopted any stockholder rights plan or similar arrangement relating to accumulations of beneficial ownership of Common Stock or a change in control of
the Company. The Company and its board of directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or
other similar anti-takeover provision under the Company’s Certificate of Incorporation or other organizational documents or the laws of the jurisdiction of its incorporation or otherwise which is or could become applicable to any Purchaser
solely as a result of the transactions contemplated by this Agreement, including, without limitation, the Company’s issuance of the Securities and any Purchaser’s ownership of the Securities. 
 (dd) Disclosure. The Company confirms that neither it nor, to the Company’s Knowledge, any of its officers or directors nor any
other Person acting on its or their behalf has provided, and it has not authorized the Placement Agent to provide, any Purchaser or its respective agents or counsel with any information that it believes constitutes or could reasonably be expected to
constitute material, non-public information except insofar as the existence, provisions and terms of the Transaction Documents and the proposed transactions hereunder may constitute such information, all of which will be disclosed by the Company in
the Press Release as contemplated by Section 4.6 hereof. The Company understands and confirms that each of the Purchasers will rely on the representations in this Section 3.1(dd) in effecting transactions in securities of the Company. No
event or circumstance has occurred or information exists with respect to the Company or any of its Subsidiaries or its or their business, properties, operations or financial conditions, which, under applicable law, rule or regulation, requires
public disclosure or announcement by the Company but which has not been so publicly announced or disclosed, except for the announcement of this Agreement and related transactions and as may be disclosed on the Form 8-K filed pursuant to
Section 4.6. 
 (ee) Off Balance Sheet Arrangements. There is no transaction, arrangement, or other relationship
between the Company (or any Subsidiary) and an unconsolidated or other off balance sheet entity that is required to be disclosed by the Company in its Exchange Act filings and is not so disclosed and would have or reasonably be expected to have a
Material Adverse Effect. 
  

 15 

 (ff) Acknowledgment Regarding Purchasers’ Purchase of Shares. The Company
acknowledges and agrees that each of the Purchasers 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. The Company further
acknowledges that no Purchaser is acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby and any advice given by any Purchaser or any
of their respective representatives or agents in connection with the Transaction Documents and the transactions contemplated thereby is merely incidental to the Purchasers’ purchase of the Shares.
 (gg) Absence of Manipulation. The Company has not, and to the Company’s Knowledge no one acting on its behalf has, taken,
directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Securities. 
 (hh) OFAC. Neither the Company nor any Subsidiary nor, to the Company’s Knowledge, any director, officer, agent, employee,
Affiliate or Person acting on behalf of the Company or any Subsidiary is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”); and the Company will not
knowingly directly or indirectly use the proceeds of the sale of the Shares, or lend, contribute or otherwise make available such proceeds to any Subsidiary, joint venture partner or other Person or entity, towards any sales or operations in Cuba,
Iran, Syria, Sudan, Myanmar or any other country sanctioned by OFAC or for the purpose of financing the activities of any Person currently subject to any U.S. sanctions administered by OFAC. 
 (ii) Money Laundering Laws. The operations of each of the Company and any Subsidiary are and have been conducted at all times in
compliance with the money laundering statutes of applicable jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any applicable governmental agency
(collectively, the “Money Laundering Laws”) and to the Company’s Knowledge, no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company and/or any
Subsidiary with respect to the Money Laundering Laws is pending or threatened. 
 (jj) No Additional Agreements. The
Company does not have any agreement or understanding with any Purchaser with respect to the transactions contemplated by the Transaction Documents other than as specified in the Transaction Documents. 
 (kk) Reports, Registrations and Statements. Since December 31, 2008, the Company and each Subsidiary have filed all material
reports, registrations and statements, together with any required amendments thereto, that it was required to file with Office of Thrift Supervision (the “OTS”), FDIC, and any other applicable federal or state securities or banking
authorities, except where the failure to file any such report, registration or statement would not have or reasonably be expected to have a Material Adverse Effect. All such reports and statements filed with any such regulatory body or authority are
collectively referred to herein as the “Company Reports.” As of their respective dates, the Company Reports complied as to form in all material respects with all the rules and regulations promulgated by the OTS, the FDIC and any other
applicable foreign, federal or state securities or banking authorities, as the case may be. 
  

 16 

 (ll) Adequate Capitalization. As of December 31, 2009, the Company’s
Subsidiary insured depository institutions meet or exceed the standards necessary to be considered “adequately capitalized” under the Federal Deposit Insurance Company’s regulatory framework for prompt corrective action. 

(mm) Agreements with Regulatory Agencies; Compliance with Certain Banking Regulations. Neither the Company nor any Subsidiary is
subject to any cease-and-desist or other similar order or enforcement action issued by, or is a party to any written agreement, consent agreement or memorandum of understanding with, or is a party to any commitment letter or similar undertaking to,
or is subject to any capital directive by, or since December 31, 2007, has adopted any board resolutions at the request of, any governmental entity that currently restricts in any material respect the conduct of its business or that in any
material manner relates to its capital adequacy, its liquidity and funding policies and practices, its ability to pay dividends, its credit, risk management or compliance policies, its internal controls, its management or its operations or business
(each item in this sentence, a “Regulatory Agreement”), nor has the Company or any Subsidiary been advised since December 31, 2008 by any governmental entity that it is considering issuing, initiating, ordering, or requesting
any such Regulatory Agreement. 
 The Company has no knowledge of any facts and circumstances, and has no reason to believe that
any facts or circumstances exist, that would cause any of its Subsidiary banking institutions: (i) to be deemed not to be in satisfactory compliance with the Community Reinvestment Act and the regulations promulgated thereunder or to be
assigned a CRA rating by federal or state banking regulators of lower than “satisfactory”; (ii) to be deemed to be operating in violation, in any material respect, of the Bank Secrecy Act, the Patriot Act, any order issued with
respect to anti-money laundering by OFAC, or any other anti-money laundering statute, rule or regulation; or (iii) to be deemed not to be in satisfactory compliance, in any material respect, with all applicable privacy of customer information
requirements contained in any federal and state privacy laws and regulations as well as the provisions of all information security programs adopted by the Subsidiaries. 
 Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, each of the Company and each Subsidiary has properly administered all accounts for which it
acts as a fiduciary, including accounts for which it serves as a trustee, agent, custodian, personal representative, guardian, conservator or investment advisor, in accordance with the terms of the governing documents, applicable federal and state
law and regulation and common law. None of the Company, any Subsidiary or any director, officer or employee of the Company or any Subsidiary has committed any breach of trust or fiduciary duty with respect to any such fiduciary account that would
reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect and, except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, the accountings for each such fiduciary
account are true and correct and accurately reflect the assets of such fiduciary account. 
 (nn) No General Solicitation or
General Advertising. Neither the Company nor, to the Company’s Knowledge, any person acting on its behalf has engaged or will engage in any form of general solicitation or general advertising (within the meaning of Regulation D under the
Securities Act) in connection with any offer or sale of the Shares. 
  

 17 

 (oo) Mortgage Banking Business. Except as has not had and would not reasonably be
expected to have a Material Adverse Effect: 
 (i) The Company and each of its Subsidiaries has complied with, and all
documentation in connection with the origination, processing, underwriting and credit approval of any mortgage loan originated, purchased or serviced by the Company or any of its Subsidiaries satisfied, (A) all applicable federal, state and
local laws, rules and regulations with respect to the origination, insuring, purchase, sale, pooling, servicing, subservicing, or filing of claims in connection with mortgage loans, including all laws relating to real estate settlement procedures,
consumer credit protection, truth in lending laws, usury limitations, fair housing, transfers of servicing, collection practices, equal credit opportunity and adjustable rate mortgages, (B) the responsibilities and obligations relating to
mortgage loans set forth in any agreement between the Company or any of its Subsidiaries and any Agency, Loan Investor or Insurer, (C) the applicable rules, regulations, guidelines, handbooks and other requirements of any Agency, Loan Investor
or Insurer and (D) the terms and provisions of any mortgage or other collateral documents and other loan documents with respect to each mortgage loan; and 
 (ii) No Agency, Loan Investor or Insurer has (A) claimed in writing that the Company or any of its Subsidiaries has violated or has not complied with the applicable underwriting standards with
respect to mortgage loans sold by the Company or any of its Subsidiaries to a Loan Investor or Agency, or with respect to any sale of mortgage servicing rights to a Loan Investor, (B) imposed in writing restrictions on the activities (including
commitment authority) of the Company or any of its Subsidiaries or (C) indicated in writing to the Company or any of its Subsidiaries that it has terminated or intends to terminate its relationship with the Company or any of its Subsidiaries
for poor performance, poor loan quality or concern with respect to the Company’s or any of its Subsidiaries’ compliance with laws, 
 For purposes of this Section 3(oo): (A) “Agency” means the Federal Housing Administration, the Federal Home Loan Mortgage Corporation, the Farmers Home Administration (now known as
Rural Housing and Community Development Services), the Federal National Mortgage Association, the United States Department of Veterans’ Affairs, the Rural Housing Service of the U.S. Department of Agriculture or any other federal or state
agency with authority to (i) determine any investment, origination, lending or servicing requirements with regard to mortgage loans originated, purchased or serviced by the Company or any of its Subsidiaries or (ii) originate, purchase, or
service mortgage loans, or otherwise promote mortgage lending, including state and local housing finance authorities; (B) “Loan Investor” means any person (including an Agency) having a beneficial interest in any mortgage loan
originated, purchased or serviced by the Company or any of its Subsidiaries or a security backed by or representing an interest in any such mortgage loan; and (C) “Insurer” means a person who insures or guarantees for the benefit of
the mortgagee all or any portion of the risk of loss upon borrower default on any of the mortgage loans originated, purchased or serviced by the Company or any of its Subsidiaries, including the Federal Housing Administration, the United States
Department of Veterans’ Affairs, the Rural Housing Service of the U.S. Department of Agriculture and any private mortgage insurer, and providers of hazard, title or other insurance with respect to such mortgage loans or the related collateral.

 (pp) Risk Management Instruments. Except as has not had or would not reasonably be expected to have a Material Adverse
Effect, since January 1, 2009, all material derivative instruments, including, swaps, caps, floors and option agreements, whether entered into

  

 18 

 
for the Company’s own account, or for the account of one or more of the Company Subsidiaries, were entered into (1) only in the ordinary course of business, (2) in accordance with
prudent practices and in all material respects with all applicable laws, rules, regulations and regulatory policies and (3) with counterparties believed to be financially responsible at the time; and each of them constitutes the valid and
legally binding obligation of the Company or one of the Company Subsidiaries, enforceable in accordance with its terms. Neither the Company or the Company Subsidiaries, nor, to the knowledge of the Company, any other party thereto, is in breach of
any of its material obligations under any such agreement or arrangement. 
 (qq) ERISA. The Company is in compliance in
all material respects with all presently applicable provisions of the Employee Retirement Income Security Act of 1974, as amended, including the regulations and published interpretations thereunder (herein called “ERISA”); no
“reportable event” (as defined in ERISA) has occurred with respect to any “pension plan” (as defined in ERISA) for which the Company would have any liability; the Company has not incurred and does not expect to incur liability
under (i) Title IV of ERISA with respect to termination of, or withdrawal from, any “pension plan”; or (ii) Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended, including the regulations and published
interpretations thereunder (the “Code”); and each “Pension Plan” for which the Company would have liability that is intended to be qualified under Section 401(a) of the Code is so qualified in all material
respects and nothing has occurred, whether by action or by failure to act, which would cause the loss of such qualification. 
 (rr) Shell Company Status. The Company is not, and has never been, an issuer identified in Rule 144(i)(1). 
 (ss) Reservation of Underlying Shares. The Company has reserved, and will continue to reserve, free of any preemptive or similar rights of stockholders of the Company, a number of unissued shares of Common Stock, sufficient to issue
and deliver the Underlying Shares into which the Preferred Shares are convertible, assuming Stockholder Approval has been obtained. 
 3.2 Representations and Warranties of the Purchasers. Each Purchaser hereby, for itself and for no other Purchaser, represents and warrants as of the date hereof and as of the Closing Date to the Company as follows: 
 (a) Organization; Authority. If such Purchaser is an entity, it is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization with the requisite corporate or partnership power and authority to enter into and to consummate the transactions contemplated by the applicable Transaction Documents and otherwise to carry out its
obligations hereunder and thereunder. If such purchaser is an entity, the execution, delivery and performance by such Purchaser of the transactions contemplated by this Agreement have been duly authorized by all necessary corporate or, if such
Purchaser is not a corporation, such partnership, limited liability company or other applicable like action, on the part of such Purchaser. If such Purchaser is an entity, each of this Agreement and the Registration Rights Agreement has been duly
executed by such Purchaser, and when delivered by such Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of such Purchaser, enforceable against it in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or

  

 19 

 
affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general application. 
 (b) No Conflicts. The execution, delivery and performance by such Purchaser of this Agreement and the Registration Rights Agreement
and the consummation by such Purchaser of the transactions contemplated hereby and thereby will not (i) result in a violation of the organizational documents of such Purchaser (if such Purchaser is an entity), (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 such
Purchaser is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws) applicable to such Purchaser, 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 have a material adverse effect on the ability of such Purchaser to perform its obligations hereunder.

 (c) Investment Intent. Such Purchaser understands that the Shares are “restricted securities” and have not
been registered under the Securities Act or any applicable state securities law and is acquiring the Shares as principal for its own account and not with a view to, or for distributing or reselling such Shares or any part thereof in violation of the
Securities Act or any applicable state securities laws, provided, that by making the representations herein, other than as set forth herein, such Purchaser does not agree to hold any of the Shares for any minimum period of time and reserves the
right at all times to sell or otherwise dispose of all or any part of such Shares pursuant to an effective registration statement under the Securities Act or under an exemption from such registration and in compliance with applicable federal and
state securities laws. Such Purchaser is acquiring the Shares hereunder in the ordinary course of its business. Such Purchaser does not presently have any agreement, plan or understanding, directly or indirectly, with any Person to distribute or
effect any distribution of any of the Securities (or any securities which are derivatives thereof) to or through any person or entity. 
 (d) Purchaser Status. At the time such Purchaser was offered the Shares, it was, and at the date hereof it is, an “accredited investor” as defined in Rule 501(a) under the Securities Act. 
 (e) General Solicitation. Such Purchaser is not purchasing the Shares as a result of any advertisement, article, notice or other
communication regarding the 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. 
 (f) Experience of Such Purchaser. Such Purchaser, either alone or together with its representatives, has such knowledge,
sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Shares, and has so evaluated the merits and risks of such investment. Such Purchaser is able
to bear the economic risk of an investment in the Shares and, at the present time, is able to afford a complete loss of such investment. 
 (g) Access to Information. Such Purchaser acknowledges that it has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from,
representatives of the Company concerning the terms and conditions of the offering

  

 20 

 
of the Shares and the merits and risks of investing in the Shares; (ii) access to information about the Company and the Subsidiaries and their respective financial condition, results of
operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; (iii) the opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable effort or
expense that is necessary to make an informed investment decision with respect to the investment; and (iv) the opportunity to ask questions of management. Neither such inquiries nor any other investigation conducted by or on behalf of such
Purchaser or its representatives or counsel shall modify, amend or affect such Purchaser’s right to rely on the truth, accuracy and completeness of the Company’s representations and warranties contained in the Transaction Documents. Such
Purchaser has sought such accounting, legal and tax advice as it has considered necessary to make an informed decision with respect to its acquisition of the Shares. 
 (h) Brokers and Finders. Other than the Placement Agent with respect to the Company, 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 any Purchaser for any commission, fee or other compensation pursuant to any agreement, arrangement or understanding entered into by or on behalf of the Purchaser. Purchaser acknowledges that it is purchasing
the Shares directly from the Company and not from the Placement Agent. 
 (i) Independent Investment Decision. Such
Purchaser has independently evaluated the merits of its decision to purchase Shares pursuant to the Transaction Documents, and such Purchaser confirms that it has not relied on the advice of any other Purchaser’s business and/or legal counsel
in making such decision. Such Purchaser understands that nothing in this Agreement or any other materials presented by or on behalf of the Company to the Purchaser in connection with the purchase of the Shares constitutes legal, tax or investment
advice. Such Purchaser 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 Shares. Such Purchaser understands that the Placement Agent has
acted solely as the agent of the Company in this placement of the Shares and such Purchaser has not relied on the business or legal advice of the Placement Agent or any of its agents, counsel or Affiliates in making its investment decision
hereunder, and confirms that none of such Persons has made any representations or warranties to such Purchaser in connection with the transactions contemplated by the Transaction Documents. 
 (j) Reliance on Exemptions. Such Purchaser understands that the Shares being offered and sold to it in reliance on specific
exemptions from the registration requirements of U.S. federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and such Purchaser’s compliance with, the representations, warranties, agreements,
acknowledgements and understandings of such Purchaser set forth herein in order to determine the availability of such exemptions and the eligibility of such Purchaser to acquire the Shares. 
 (k) No Governmental Review. Such Purchaser understands that no U.S. federal or state agency or any other government or governmental
agency has passed on or made any recommendation or endorsement of the Shares or the fairness or suitability of the investment in the Shares nor have such authorities passed upon or endorsed the merits of the offering of the Shares. 
 (l) Residency. Such Purchaser’s residence (if an individual) or office in which its investment decision with respect to the
Shares was made (if an entity) are located at the address immediately below such Purchaser’s name on its signature page hereto. 
  

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 (m) Trading. Purchaser acknowledges that there is no trading market for the Preferred
Stock, and no such market is expected to develop. 
 (n) Knowledge as to Conditions. Purchaser does not know of any
reason why any regulatory approvals and, to the extent necessary, any other approvals, authorizations, filings, registrations, and notices required or otherwise a condition to the consummation by it of the transactions contemplated by this Agreement
will not be obtained. 
 The Company and each of the Purchasers acknowledge and agree that no party to this Agreement has made
or makes any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in this Article III and the Transaction Documents. 
 ARTICLE 4:  
 OTHER AGREEMENTS OF THE PARTIES

 4.1 Transfer Restrictions. 
 (a) Compliance with Laws. Notwithstanding any other provision of this Article IV, each Purchaser covenants that the Securities may be disposed of only pursuant to an effective registration
statement under, and in compliance with the requirements of, the Securities Act, or pursuant to an available exemption from, or in a transaction not subject to, the registration requirements of the Securities Act, and in compliance with any
applicable state, federal or foreign securities laws. In connection with any transfer of the Securities other than (i) pursuant to an effective registration statement, (ii) to the Company or (iii) pursuant to Rule 144 (provided that
the transferor provides the Company with reasonable assurances (in the form of seller and broker representation letters) that such securities may be sold pursuant to such rule), the Company may require the transferor thereof to provide to the
Company and the Transfer Agent, at the transferor’s expense, an opinion of counsel selected by the transferor and reasonably acceptable to the Company and the Transfer Agent, the form and substance of which opinion shall be reasonably
satisfactory to the Company and the Transfer Agent, to the effect that such transfer does not require registration of such transferred Securities under the Securities Act. As a condition of transfer (other than pursuant to clauses (i), (ii) or
(iii) of the preceding sentence), any such transferee shall agree in writing to be bound by the terms of this Agreement and shall have the rights of a Purchaser under this Agreement and the Registration Rights Agreement with respect to such
transferred Securities. 
 (b) Legends. Certificates evidencing the Securities shall bear any legend as required by the
“blue sky” laws of any state and a restrictive legend in substantially the following form (and, with respect to Securities held in book-entry form, the Transfer Agent will record such a legend on the share register), until such time as
they are not required under Section 4.1(c) or applicable law: 
 THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OR (B) AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,

  

 22 

 
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL REASONABLY SATISFACTORY TO
THE COMPANY AND ITS TRANSFER AGENT OR (II) UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT (PROVIDED THAT THE TRANSFEROR PROVIDES THE COMPANY WITH REASONABLE ASSURANCES (IN THE FORM OF SELLER AND BROKER REPRESENTATION LETTERS) THAT THE SECURITIES
MAY BE SOLD PURSUANT TO SUCH RULE). NO REPRESENTATION IS MADE BY THE ISSUER AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT FOR RESALES OF THESE SECURITIES. 
 (c) Removal of Legends. The restrictive legend set forth in Section 4.1(b) above shall be removed and the Company shall issue a
certificate without such restrictive legend or any other restrictive legend to the holder of the applicable Securities upon which it is stamped or issue to such holder by electronic delivery at the applicable balance account at DTC, if (i) such
Securities are registered for resale under the Securities Act, (ii) such Securities are sold or transferred pursuant to Rule 144 (if the transferor is not an Affiliate of the Company), or (iii) such 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.
Following the earlier of (i) the Effective Date or (ii) Rule 144 becoming available for the resale of Securities, without the requirement for the Company to be in compliance with the current public information required under 144(c)(1) (or
Rule 144(i)(2), if applicable) as to the Securities and without volume or manner-of-sale restrictions, the Company shall instruct the Transfer Agent to remove the legend from the Securities and shall cause its counsel to issue any legend removal
opinion required by the Transfer Agent. Any fees (with respect to the Transfer Agent, Company counsel or otherwise) associated with the issuance of such opinion or the removal of such legend shall be borne by the Company. If a legend is no longer
required pursuant to the foregoing, the Company will no later than three (3) Trading Days following the delivery by a Purchaser to the Company or the Transfer Agent (with notice to the Company) of a legended certificate or instrument
representing such Securities (endorsed or with stock powers attached, signatures guaranteed, and otherwise in form necessary to affect the reissuance and/or transfer) and a representation letter to the extent required by Section 4.1(a), (such
third Trading Day, the “Legend Removal Date”) deliver or cause to be delivered to such Purchaser a certificate or instrument (as the case may be) representing such Securities that is free from all restrictive legends. The Company
may not make any notation on its records or give instructions to the Transfer Agent that enlarge the restrictions on transfer set forth in this Section 4.1(c). Certificates for Securities free from all restrictive legends may be transmitted by
the Transfer Agent to the Purchasers by crediting the account of the Purchaser’s prime broker with DTC as directed by such Purchaser. 
 (d) Acknowledgement. Each Purchaser hereunder acknowledges its primary responsibilities under the Securities Act and accordingly will not sell or otherwise transfer the Securities or any interest
therein without complying with the requirements of the Securities Act and the rules and regulations promulgated thereunder. Except as otherwise provided below, while the above-

  

 23 

 
referenced registration statement remains effective, each Purchaser hereunder may sell the Securities in accordance with the plan of distribution contained in the registration statement and if it
does so it will comply therewith and with the related prospectus delivery requirements unless an exemption therefrom is available or unless the Securities are sold pursuant to Rule 144. Each Purchaser, severally and not jointly with the other
Purchasers, agrees that if it is notified by the Company in writing at any time that the registration statement registering the resale of the Securities is not effective or that the prospectus included in such registration statement no longer
complies with the requirements of Section 10 of the Securities Act, the Purchaser will refrain from selling such Securities until such time as the Purchaser is notified by the Company that such registration statement is effective or such
prospectus is compliant with Section 10 of the Exchange Act, unless such Purchaser is able to, and does, sell such Securities pursuant to an available exemption from the registration requirements of Section 5 of the Securities Act.

 4.2 Acknowledgment of Dilution. The Company acknowledges that the issuance of the Securities may result in
dilution of the outstanding shares of Common Stock. The Company further acknowledges that its obligations under the Transaction Documents, including without limitation its obligation to issue the Securities pursuant to the Transaction
Documents, are unconditional and absolute and not subject to any right of set off, counterclaim, delay or reduction, regardless of the effect of any such dilution or any claim the Company may have against any Purchaser and regardless of the dilutive
effect that such issuance may have on the ownership of the other stockholders of the Company. 
 4.3 Furnishing of
Information. In order to enable the Purchasers to sell the Securities under Rule 144 of the Securities Act, for a period of one year from the Closing, the Company shall maintain the registration of the Common Stock under Section 12(b) or
12(g) of the Exchange Act and to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act. During such one
year period, if the Company is not required to file reports pursuant to such laws, it will prepare and furnish to the Purchasers and make publicly available the information described in Rule 144(c)(2), if the provision of such information will allow
resales of the Securities pursuant to Rule 144. 
 4.4 Form D and Blue Sky. The Company agrees to timely file a
Form D with respect to the Shares as required under Regulation D. The Company, on or before the Closing Date, shall take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for or to qualify
the Shares for sale to the Purchasers at the Closing pursuant to this Agreement under applicable securities or “Blue Sky” laws of the states of the United States (or to obtain an exemption from such qualification). The Company shall make
all filings and reports relating to the offer and sale of the Shares required under applicable securities or “Blue Sky” laws of the states of the United States following the Closing Date. 
 4.5 No Integration. The Company shall not, and shall use its commercially reasonable efforts to ensure that no Affiliate of the
Company shall, sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that will be integrated with the offer or sale of the Shares in a manner that would
require the registration under the Securities Act of the sale of the Shares to the Purchasers. 
  

 24 

 4.6 Securities Laws Disclosure; Publicity. By 9:00 a.m., New York City time, on the
Closing Date, the Company shall issue one or more press releases (collectively, the “Press Release”) reasonably acceptable to the Purchasers disclosing all material terms of the transactions contemplated hereby and any other
material, nonpublic information that the Company may have provided any Purchaser at any time prior to the filing of the Press Release. On or before 5:30 p.m., New York City time, on the fourth Trading Day immediately following the Closing Date, the
Company will file a Current Report on Form 8-K with the Commission describing the terms of the Transaction Documents (and including as exhibits to such Current Report on Form 8-K the material Transaction Documents (including, without limitation,
this Agreement, the Registration Rights Agreement and the Certificate of Designations)). Notwithstanding the foregoing, the Company shall not publicly disclose the name of any Purchaser or any Affiliate or investment adviser of any Purchaser, or
include the name of any Purchaser or any Affiliate or investment adviser of any Purchaser in any press release or filing with the Commission (other than the Registration Statement) or Trading Market, without the prior written consent of such
Purchaser, except (i) as required by federal securities law in connection with (A) any registration statement contemplated by the Registration Rights Agreement and (B) the filing of final Transaction Documents with the Commission,
(ii) to the extent such disclosure is required by law, at the request of the Staff of the Commission or Trading Market regulations, in which case the Company shall provide the Purchasers with prior written notice of such disclosure permitted
under this subclause (ii) and (iii) to the FDIC and the OTS in connection with its bid for the Failed Bank. From and after the issuance of the Press Release, no Purchaser shall be in possession of any material, non-public information
received from the Company, any Subsidiary or any of their respective officers, directors or employees, that is not disclosed in the Press Release. Each Purchaser, severally and not jointly with the other Purchasers, covenants that until such time as
the transactions contemplated by this Agreement are publicly disclosed by the Company as described in this Section 4.6, such Purchaser will maintain the confidentiality of all disclosures made to it in connection with this transaction
(including the existence and terms of this transaction). 
 4.7 Non-Public Information. Except with the express written
consent of such Purchaser and unless prior thereto such Purchaser shall have executed a written agreement regarding the confidentiality and use of such information, the Company shall not, and shall cause each Subsidiary and each of their respective
officers, directors, employees and agents, not to, and each Purchaser shall not directly solicit the Company, any of its Subsidiaries or any of their respective officers, directors, employees or agents to provide any Purchaser with any material,
non-public information regarding the Company or any of its Subsidiaries from and after the filing of the Press Release. 
 4.8
Indemnification. 
 (a) Indemnification of Purchasers. In addition to the indemnity provided in the Registration
Rights Agreement, the Company will indemnify and hold each Purchaser and its directors, officers, stockholders, members, partners, employees and agents (and any other Persons with a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title), each Person who controls such Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, stockholders,
agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title) of such controlling person (each, a “Purchaser
Party”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts

  

 25 

 
paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser Party may suffer or incur as a result of (i) any breach of any of the
representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction Documents or (ii) any action instituted against a Purchaser Party in any capacity, or any of them or their respective
affiliates, by any stockholder of the Company who is not an affiliate of such Purchaser Party, with respect to any of the transactions contemplated by this Agreement. The Company will not be liable to any Purchaser Party under this Agreement to
the extent, but only to the extent that a loss, claim, damage or liability is attributable to any Purchaser Party’s breach of any of the representations, warranties, covenants or agreements made by such Purchaser Party in this Agreement or in
the other Transaction Documents or attributable to the gross negligence or willful misconduct on the part of such Purchaser Party. 
 (b) Conduct of Indemnification Proceedings. Promptly after receipt by any Person (the “Indemnified Person”) of notice of any demand, claim or circumstances which would or might give rise to a claim or the
commencement of any action, proceeding or investigation in respect of which indemnity may be sought pursuant to Section 4.8(a), such Indemnified Person shall promptly notify the Company in writing and the Company shall assume the defense
thereof, including the employment of counsel reasonably satisfactory to such Indemnified Person, and shall assume the payment of all fees and expenses; provided, that the failure of any Indemnified Person so to notify the Company shall not
relieve the Company of its obligations hereunder except to the extent that the Company is actually and materially and adversely prejudiced by such failure to notify. In any such proceeding, any Indemnified Person shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Person unless: (i) the Company and the Indemnified Person shall have mutually agreed to the retention of such counsel; (ii) the Company
shall have failed promptly to assume the defense of such proceeding and to employ counsel reasonably satisfactory to such Indemnified Person in such proceeding; or (iii) in the reasonable judgment of counsel to such Indemnified Person,
representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them; 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 Company shall not be liable for any settlement of any proceeding effected without its written consent, which consent shall not be unreasonably withheld, delayed or conditioned.
Without the prior written consent of the Indemnified Person, which consent shall not be unreasonably withheld, delayed or conditioned, the Company shall not effect any settlement of any pending or threatened proceeding in respect of which any
Indemnified Person is or could have been a party and indemnity could have been sought hereunder by such Indemnified Party, unless such settlement includes an unconditional release of such Indemnified Person from all liability arising out of such
proceeding. 
 4.9 Listing of Common Stock. The Company will use its reasonable best efforts to list the Underlying
Shares for quotation on the NASDAQ Global Market and maintain the listing of the Common Stock on the NASDAQ Global Market. 
 4.10 Use of Proceeds. The Company intends to use the net proceeds from the sale of the Shares hereunder for the purpose of increasing its capital and for general corporate purposes. 
 4.11 Stockholders Meeting. The Company shall call a special meeting of its stockholders or present the proposal at its next annual
meeting of stockholders, as promptly as practicable

  

 26 

 
following the Closing, but in no event later than 75 days after the Closing, to vote on a proposal (the “Stockholder Proposal”) to approve the conversion of the Preferred Shares
into Common Stock for purposes of Rule 5635 of the NASDAQ Listing Rules (such approval of the Stockholder Proposal, “Stockholder Approval”). The Board of Directors of the Company shall recommend to the Company’s shareholders
that such shareholders vote in favor of the Stockholder Proposal. In connection with such meeting, the Company shall promptly prepare and file (but in no event more than 15 Business Days after the Closing Date) with the Commission a preliminary
proxy statement, shall use its reasonable best efforts to respond to any comments of the Commission or its staff and to cause a definitive proxy statement related to such shareholders’ meeting to be mailed to the Company’s shareholders not
more than 10 Business Days after clearance thereof by the Commission, and shall use its reasonable best efforts to solicit proxies for such Stockholder Approval. The Company shall notify Purchaser promptly of the receipt of any comments from the SEC
or its staff with respect to the proxy statement and of any request by the SEC or its staff for amendments or supplements to such proxy statement or for additional information (but the Company shall not provide any Purchaser with any material,
nonpublic information, unless requested by such Purchaser and pursuant to a written agreement regarding the confidentiality and use of such information). If at any time prior to such shareholders’ meeting there shall occur any event that is
required to be set forth in an amendment or supplement to the proxy statement, the Company shall as promptly as practicable prepare and mail to its shareholders such an amendment or supplement. In the event that Stockholder Approval is not obtained
at such special shareholders meeting, the Company shall include a proposal to approve (and the Board of Directors shall recommend approval of) such proposal at a meeting of its shareholders to be held no less than once in each subsequent six-month
period beginning on the date of such special shareholders meeting until such approval is obtained. The Company and each Purchaser agree to use commercially reasonable efforts to ensure that the Common Shares purchased hereby are not counted as votes
cast in favor of the Stockholder Proposal at the first meeting of stockholders of the Company where the Stockholder Proposal is presented to stockholders for approval. 
 4.12 Limitation on Beneficial Ownership. No Purchaser (and its Affiliates or any other Persons with which it is acting in concert) will be entitled to purchase a number of Shares that would result
in such Purchaser becoming, directly or indirectly, the beneficial owner (as determined under Rule 13d-3 under the Exchange Act) of more than 9.9% of the number of shares of Common Stock issued and outstanding. 
 4.13 Rule 155(c) of the Securities Act. The Company hereby discloses to Purchaser and Purchaser hereby acknowledges that: 

(a) The Securities sold under this Agreement have not been registered under the Securities Act; 
 (b) The Securities will be “restricted securities” (as that term is defined in Rule 144(a)(3) of the Securities Act) and may not
be resold unless they are registered under the Securities Act or an exemption from registration is available; 
 (c) An Investor
does not have the protection of Section 11 of the Securities Act with respect to its purchase of Securities hereunder; and 
  

 27 

 (d) On October 15, 2009, the Company filed a Registration Statement on Form S-1 with
the SEC (No. 333-162517). The Company subsequently filed a request to withdraw the Registration Statement with the SEC on October 28, 2009. 
 ARTICLE 5:  
 CONDITIONS PRECEDENT TO CLOSING 
 5.1 Conditions Precedent to the Obligations of the Purchasers to Purchase Shares. The obligation of each Purchaser to acquire Shares
at the Closing is subject to the fulfillment to such Purchaser’s satisfaction, on or prior to the Closing Date, of each of the following conditions, any of which may be waived by such Purchaser (as to itself only): 
 (a) Representations and Warranties. The representations and warranties of the Company contained herein shall be true and correct as
of the date hereof and as of the Closing Date, as though made on and as of such date, except for such representations and warranties that speak as of a specific date. 
 (b) Performance. The Company shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by the Transaction Documents to be
performed, satisfied or complied with by it at or prior to the Closing. 
 (c) No Injunction. No statute, rule,
regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction that prohibits the consummation of any of the transactions
contemplated by the Transaction Documents. 
 (d) Consents. The Company shall have obtained in a timely fashion any and
all consents, permits, approvals, registrations and waivers necessary for consummation of the purchase and sale of the Shares (including all Required Approvals), all of which shall be and remain so long as necessary in full force and effect.

 (e) Company Deliverables. The Company shall have delivered the Company Deliverables in accordance with
Section 2.2(a). 
 (f) Compliance Certificate. The Company shall have delivered to each Purchaser a certificate,
dated as of the Closing Date and signed by its Chief Executive Officer or its Chief Financial Officer, dated as of the Closing Date, certifying to the fulfillment of the conditions specified in Sections 5.1(a) and (b) in the form attached
hereto as Exhibit F. 
 (g) Certificate of Designations. The Company shall have filed the Certificate of
Designations with the Delaware Secretary. 
 (h) Termination. This Agreement shall not have been terminated as to such
Purchaser in accordance with Sections 6.16 or 6.17 herein. 
 5.2 Conditions Precedent to the Obligations of the Company
to sell Shares. The Company’s obligation to sell and issue the Shares at the Closing is subject to the fulfillment to the satisfaction of the Company on or prior to the Closing Date of the following conditions, any of which may be waived by
the Company: 
  

 28 

 (a) Representations and Warranties. The representations and warranties made by the
Purchaser in Section 3.2 hereof shall be true and correct as of the date hereof and as of the Closing Date as though made on and as of such date, except for representations and warranties that speak as of a specific date. 
 (b) Performance. Such Purchaser shall have performed, satisfied and complied in all material respects with all covenants, agreements
and conditions required by the Transaction Documents to be performed, satisfied or complied with by such Purchaser at or prior to the Closing Date. 
 (c) No Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of
competent jurisdiction that prohibits the consummation of any of the transactions contemplated by the Transaction Documents. 
 (d) Consents. The Company shall have obtained in a timely fashion any and all consents, permits, approvals, registrations and waivers necessary for consummation of the purchase and sale of the Shares, all of which shall be and remain
so long as necessary in full force and effect. 
 (e) Purchasers Deliverables. Such Purchaser shall have delivered its
Purchaser Deliverables in accordance with Section 2.2(b). 
 (f) Termination. This Agreement shall not have been
terminated as to such Purchaser in accordance with Sections 6.16 or 6.17 herein. 
 ARTICLE 6:  
 MISCELLANEOUS 
 6.1
Fees and Expenses. The Company shall pay the reasonable legal fees and expenses of Greenberg Traurig LLP, counsel to certain Purchasers, incurred by such Purchasers in connection with the transactions contemplated by the Transaction
Documents, up to a maximum amount of $25,000, which amount shall be paid directly by the Company at the Closing or paid by the Company upon termination of this Agreement so long as such termination did not occur as a result of a material breach by
any such Purchaser of any of its obligations hereunder (as the case may be). Except as set forth above or elsewhere in the Transaction Documents, the parties hereto shall be responsible for the payment of all expenses incurred by them in connection
with the preparation and negotiation of the Transaction Documents and the consummation of the transactions contemplated hereby. The Company shall pay all amounts owed to the Placement Agent relating to or arising out of the transactions contemplated
hereby. The Company shall pay all Transfer Agent fees, stamp taxes and other taxes and duties levied in connection with the sale and issuance of the Securities to the Purchasers. 
 6.2 Entire Agreement. The Transaction Documents, together with the Exhibits and Schedules thereto, contain the entire understanding
of the parties with respect to the subject matter hereof and supersede all prior agreements, understandings, discussions and representations, oral or written, with respect to such matters, which the parties acknowledge have been merged into such
documents, exhibits and schedules. At or after the Closing, and without further consideration, the Company and the Purchasers will execute and deliver to the other such further documents as may be

  

 29 

 
reasonably requested in order to give practical effect to the intention of the parties under the Transaction Documents. 
 6.3 Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in
writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via facsimile (provided the sender receives a machine-generated confirmation of successful
transmission) at the facsimile number specified in this Section prior to 5:00 p.m., New York City time, on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified in this Section on a day that is not a Trading Day or later than 5:00 p.m., New York City time, on any Trading Day, (c) the Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight
courier service with next day delivery specified, or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as follows: 
  

			
	 If to the Company:
	  	Citizens South Banking Corporation
		  	519 South New Hope Road
		  	Gastonia, North Carolina 28054-4040
		  	Attention: Kim S. Price, President and CEO
		  	Telephone: 704-868-5200
		  	Fax: 704-852-5440
		
	 With a copy to:
	  	Luse Gorman Pomerenk & Schick, P.C.
		  	5335 Wisconsin Avenue, N.W.
		  	Suite 780
		  	Washington, D.C. 20015
		  	Attention: John J. Gorman
		  	Telephone: (202) 274-2001
		  	Fax: (202) 362-2902
		
	 If to a Purchaser:
	  	To the address set forth under such Purchaser’s name on the signature page hereof;

 or such other address as may be designated in writing hereafter, in the same manner, by such Person. 
 6.4 Amendments; Waivers; No Additional Consideration. No provision of this Agreement may be waived or amended except in a written
instrument signed, in the case of an amendment, by the Company and each of the Purchasers holding or having the right to acquire at least a majority of the Shares at the time of such amendment or, in the case of a waiver, by the party against whom
enforcement of any such waiver is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of
any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right. No consideration shall be offered or paid to any Purchaser to
amend or consent to a waiver or modification of any provision of any Transaction Document unless the same consideration is also offered to all Purchasers who then hold Shares. 
  

 30 

 6.5 Construction. The headings herein are for convenience only, do not constitute a
part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. 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. This Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions
of this Agreement or any of the Transaction Documents. 
 6.6 Successors and Assigns. The provisions of this Agreement
shall inure to the benefit of and be binding upon the parties and their successors and permitted assigns. This Agreement, or any rights or obligations hereunder, may not be assigned by the Company without the prior written consent of the Purchasers.
Any Purchaser may assign its rights hereunder in whole or in part to any Person to whom such Purchaser assigns or transfers any Securities in compliance with the Transaction Documents and applicable law, provided such transferee shall agree in
writing to be bound, with respect to the transferred Securities, by the terms and conditions of this Agreement that apply to the “Purchasers”. 
 6.7 No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person, other than, solely with respect to the provisions of Section 4.8, the Indemnified Persons. 
 6.8 Governing Law. This Agreement will be governed by and construed in accordance with the laws of the State of Delaware applicable to contracts made and to be performed entirely within such State.
Each party agrees that all Proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective
Affiliates, employees or agents) may be commenced on a non-exclusive basis in the North Carolina Courts. Each party hereto hereby irrevocably submits to the non-exclusive jurisdiction of the North Carolina Courts for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any
Proceeding, any claim that it is not personally subject to the jurisdiction of any such North Carolina Court, or that such Proceeding has been commenced in an improper or inconvenient forum. Each party hereto hereby irrevocably waives personal
service of process and consents to process being served in any such Proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for 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.
EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 6.9 Survival. Subject to applicable statute of limitations, the representations, warranties, agreements and covenants
contained herein shall survive the Closing and the delivery of the Shares;

  

 31 

 
provided that the representations and warranties of the Company shall survive the Closing and the delivery of Shares for a period of one year. 
 6.10 Execution. This Agreement may be executed in two or more counterparts, all of which when taken together 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, 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 signature page were an original thereof. 
 6.11 Severability. If any provision of this
Agreement is held to be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt to agree upon
a valid and enforceable provision that is a reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Agreement. 
 6.12 Replacement of Shares. If any certificate or instrument evidencing any Shares is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation thereof, or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company and the Transfer Agent of such loss, theft or
destruction and the execution by the holder thereof of a customary lost certificate affidavit of that fact and an agreement to indemnify and hold harmless the Company and the Transfer Agent for any losses in connection therewith or, if required by
the Transfer Agent, a bond in such form and amount as is required by the Transfer Agent. The applicants for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs associated with the issuance of such
replacement Shares. If a replacement certificate or instrument evidencing any Shares is requested due to a mutilation thereof, the Company may require delivery of such mutilated certificate or instrument as a condition precedent to any issuance of a
replacement. 
 6.13 Remedies. In addition to being entitled to exercise all rights provided herein or granted by law,
including recovery of damages, each of the Purchasers and the Company may be entitled to specific performance under the Transaction Documents. The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason
of any breach of obligations described in the foregoing sentence and hereby agree to waive in any action for specific performance of any such obligation (other than in connection with any action for a temporary restraining order) the defense that a
remedy at law would be adequate. 
 6.14 Payment Set Aside. To the extent that the Company makes a payment or payments to
any Purchaser pursuant to any Transaction Document or a Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to
be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other person under any law (including, without limitation, any bankruptcy
law, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived

  

 32 

 
and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred. 
 6.15 Independent Nature of Purchasers’ Obligations and Rights. The obligations of each Purchaser under any Transaction Document
are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance of the obligations of any other Purchaser under any Transaction Document. The decision of each Purchaser to
purchase Shares pursuant to the Transaction Documents has been made by such Purchaser independently of any other Purchaser and independently of any information, materials, statements or opinions as to the business, affairs, operations, assets,
properties, liabilities, results of operations, condition (financial or otherwise) or prospects of the Company or any Subsidiary which may have been made or given by any other Purchaser or by any agent or employee of any other Purchaser, and no
Purchaser and any of its agents or employees shall have any liability to any other Purchaser (or any other Person) relating to or arising from any such information, materials, statement or opinions. Nothing contained herein or in any Transaction
Document, and no action taken by any Purchaser pursuant 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 or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents. Each Purchaser acknowledges that no other Purchaser has acted as agent for such Purchaser in connection with making its
investment hereunder and that no Purchaser will be acting as agent of such Purchaser in connection with monitoring its investment in the Shares or enforcing its rights under the Transaction Documents. Each Purchaser shall be entitled to
independently protect and enforce its rights, including without limitation the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser to be joined as an additional party
in any proceeding for such purpose. 
 6.16 Effectiveness. Sections 6.1 through 6.8, Sections 6.10 through 6.12 and this
Section 6.16 shall be effective upon the execution of this Agreement by the parties hereto. All other provisions of this Agreement shall become automatically effective, without further action of the parties, upon the later of the date (such
date, the “Effectiveness Date”) (i) that is two business days prior to the date (the “Scheduled Date”) on which the FDIC is scheduled to be appointed receiver for the Failed Bank and will enter into the P&A
Agreement with the Bank relating to the Bank’s purchase of certain assets and assumption of deposits (and certain other specified liabilities) of Failed Bank or (ii) that the Company notifies the Purchasers of the Scheduled Date. The
Company will provide notification to each Purchaser of (i) the Scheduled Date upon the notification to the Company by the FDIC that the Bank is the winning bidder for the Failed Bank and (ii) any changes to the Scheduled Date by the FDIC
following the initial determination of the Scheduled Date by the FDIC. If (i) the consummation of the transfer of assets and liabilities of the Failed Bank to the Bank has not occurred by April 10, 2010, or such other date as the parties
mutually agree, (ii) the FDIC has notified the Company that the scheduled due date for bids with respect to the Failed Bank has been modified, changed or set to a date later than April 10, 2010, or such other date as the parties mutually
agree, or that the FDIC intends not to schedule or re-schedule a bid date for the Failed Bank on or before April 10, 2010, or such other date as the parties mutually agree, (iii) the Bank fails to submit a bid for the Failed Bank, or
(iv) the FDIC has notified the Company that the Bank is not the winning bidder for the Failed Bank, this Agreement shall terminate, other than Sections 6.1 through 6.8, Sections 6.10 through 6.12 and this Section 6.16, which shall survive
such termination. The Company shall promptly notify Purchaser upon receipt of any notification

  

 33 

 
described in the two preceding sentences from the FDIC. Prior to such termination, neither party may revoke its acceptance of this Agreement. 
 6.17 Termination, Rescission. 
 (a) In the event that, following the Effectiveness Date, the Purchase and Assumption Agreement with the FDIC relating to the purchase by Citizens South Bank (the “Bank”), a wholly owned
Subsidiary of the Company, of certain assets, and the assumption by the Bank of deposits (and certain other specified liabilities), of Bank of Hiawassee (“Failed Bank”) (the “P&A Agreement”) is not
entered into, or the transactions contemplated thereby have not been consummated (the “P&A Closing”), on or before April 10, 2010, or such other date as the parties mutually agree, then either the Company, upon written
notice to the Purchasers, or any Purchaser, solely with respect to itself and not with respect to any other Purchaser, upon written notice to the Company, may terminate this Agreement. 
 (b) In the event that following the Closing, the P&A Agreement is not entered into by the Bank with the FDIC on the Closing Date or the
P&A Closing is not consummated on the Closing Date, then the Company shall promptly notify Purchaser of either such event and either (i) the Company, upon written notice to the Purchasers, may terminate this Agreement and rescind the
purchase of the Securities hereunder or (ii) any Purchaser, solely with respect to itself and not with respect to any other Purchaser, upon written notice to the Company, may terminate this Agreement and rescind the purchase hereunder by such
Purchaser of the Securities specified on such Purchaser’s signature page hereto. Promptly following such termination, (i) the Company and Purchaser shall provide written notice to the Transfer Agent notifying the Transfer Agent that this
Agreement has been terminated and such purchase rescinded and that the share issuance instructions with respect to Purchaser shall be null and void (unless Purchaser is a Certificate Purchaser, in which case Purchaser shall return to the Company for
cancellation the certificates for its Securities concurrently with the Company returning Purchaser’s Subscription Amount pursuant to the following clause (ii)) and (ii) the Company shall promptly return to Purchaser by wire transfer of
immediately available funds to a bank account designated by Purchaser, its Subscription Amount. 
 (c) In the case of any
termination and/or rescission pursuant to this Section 6.17, the parties agree to treat the transactions contemplated by this Agreement as disregarded for United States federal, state, local and foreign income tax purposes in accordance with
Internal Revenue Service Revenue Ruling 80-58, except as otherwise required by applicable law. 
 (d) Notwithstanding anything
to the contrary contained in (and without limiting any similar provisions of) the Transaction Documents, whenever any Purchaser exercises a right, election, demand or option under a Transaction Document and the Company does not timely perform its
related obligations within the periods therein provided, then such Purchaser may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election in whole or in part without
prejudice to its future actions and rights. 
 6.18 Allocation of Shares. All Purchasers shall receive the same
proportion of Common Shares, as compared to Preferred Shares, at the Closing, excluding differences that are not material as a result of rounding. 
  

 34 

 IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be
duly executed by their respective authorized signatories as of the date first indicated above. 
  

			
	 CITIZENS SOUTH BANKING CORPORATION

		
	 By:
	 	  

		 	Name:
		 	Title:

 [REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK] 
 [SIGNATURE PAGES FOR PURCHASERS FOLLOW] 

			
	PURCHASER:	 	  

  

			
	By:	 	  

	Name:	 	  

	Title:	 	  

	
	 Aggregate Purchase Price (Subscription Amount):

	$            

  

			
	Number of Shares to be Acquired:	 	  

  

			
	Tax ID No.:	 	  

  

			
	Address for Notice:	 	
	
	  

	  

	  

  

			
	Telephone No.:	 	  

  

			
	Facsimile No.:	 	  

  

			
	E-mail Address:	 	  

  

			
	Attention:	 	  

  

	
	 Delivery Instructions:

	 (if different than above)

  

			
	c/o	 	  

  

			
	 Street:
	 	  

  

			
	 City/State/Zip:
	 	  

  

			
	 Attention:
	 	  

  

			
	 Telephone No.:
	 	  

 [Signature Page to Stock Purchase Agreement] 

 EXHIBITS 
  

			
	A:	  	Form of Certificate of Designations
	B:	  	Form of Registration Rights Agreement
	C-1:	  	Accredited Investor Questionnaire
	C-2:	  	Stock Certificate Questionnaire
	D:	  	Form of Opinion of Company Counsel
	E:	  	Form of Secretary’s Certificate
	F:	  	Form of Officer’s Certificate

 EXHIBIT A 
 Form of Certificate of Designations 
 [Omitted]

 Exhibit B 
 REGISTRATION RIGHTS AGREEMENT 
 This Registration Rights Agreement (this
“Agreement”) is made and entered into as of March 10, 2010, by and among Citizens South Banking Corporation, a Delaware corporation (the “Company”), and the several purchasers signatory hereto (each a
“Purchaser” and collectively, the “Purchasers”). 
 This Agreement is made pursuant to the
Securities Purchase Agreement, dated as of the date hereof between the Company and each Purchaser (the “Purchase Agreement”). 
 NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company
and each of the Purchasers agree as follows: 
 1. Definitions. Capitalized terms used and not otherwise defined herein
that are defined in the Purchase Agreement shall have the meanings given such terms in the Purchase Agreement. As used in this Agreement, the following terms shall have the following meanings: 
 “Advice” shall have the meaning set forth in Section 6(d). 
 “Affiliate” means, with respect to any person, any other person which directly or indirectly controls, is controlled by, or
is under common control with, such person. 
 “Agreement” shall have the meaning set forth in the Preamble.

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

 “Closing Date” has the meaning set forth in the Purchase Agreement. 
 “Commission” means the Securities and Exchange Commission. 
 “Common Stock” means the common stock of the Company, $0.01 par value per share, and any securities into which such shares
of common stock may hereinafter be reclassified. 
 “Company” shall have the meaning set forth in the Preamble.

 “Contractual Securities” means collectively, (i) securities of the Company which are subject to an
Existing Contract and (ii) Registrable Securities. 
 “Contractual Securityholder” means all Persons that
hold Contractual Securities. 
 “Effective Date” means the date that the Registration Statement filed pursuant
to Section 2(a) is first declared effective by the Commission. 
 “Effectiveness
Deadline” means, with respect to the Initial Registration Statement or the New Registration Statement, the earlier of (i) the 90th calendar day following the Closing Date (or the 135th calendar day following the Closing Date in the
event that such registration statement is subject to review by the Commission) and (ii) the 5th Trading Day after the date the Company is notified (orally or

 
in writing, whichever is earlier) by the Commission that such Registration Statement will not be “reviewed” or will not be subject to further review; provided, that if the
Effectiveness Deadline falls on a Saturday, Sunday or other day that the Commission is closed for business, the Effectiveness Deadline shall be extended to the next Business Day on which the Commission is open for business. 
 “Effectiveness Period” shall have the meaning set forth in Section 2(b). 
 “Event” shall have the meaning set forth in Section 2(c). 
 “Event Date” shall have the meaning set forth in Section 2(c). 
 “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 “Existing Contract” means that certain contract to which the Company is a party under which the Company may
be required to register securities issued to the U.S. Treasury Department on December 12, 2008 in connection with the TARP Capital Purchase Program. 
 “Filing Deadline” means, with respect to the Initial Registration Statement required to be filed pursuant to Section 2(a), the 60th 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. 
 “Liquidated Damages” shall have the meaning set forth in Section 2(c). 
 “Losses” shall have the meaning set forth in Section 5(a). 
 “New Registration Statement” shall have the meaning set forth in Section 2(a). 
 “Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture,
limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind. 
 “Principal Market” means the Trading Market on which the Common Stock is primarily listed on and quoted for trading, which, as of the Closing Date, shall be the NASDAQ Global Select Market. 
 “Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an investigation or
partial proceeding, such as a deposition), whether commenced or threatened. 
  

 2 

 “Prospectus” means the prospectus included in a Registration Statement
(including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by a Registration Statement, and all other amendments and supplements to the Prospectus, including
post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus. 
 “Purchase Agreement” shall have the meaning set forth in the Recitals. 
 “Purchaser”
or “Purchasers” shall have the meaning set forth in the Preamble. 
 “Registrable Securities”
means all of the Shares and the Underlying Shares and any securities issued or issuable upon any stock split, dividend or other distribution, recapitalization or similar event with respect to the Shares and the Underlying Shares, provided,
that the Holder has completed and delivered to the Company a Selling Stockholder Questionnaire; and provided, further, that Shares or 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 Shares or
Underlying Shares have ceased to be outstanding; or (D) if such Shares or 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. 
  

 3 

 “Selling Stockholder Questionnaire” means a questionnaire in the form
attached as Annex B hereto, or such other form of questionnaire as may reasonably be adopted by the Company from time to time. 
 “Trading Day” means (i) a day on which the Common Stock is listed or quoted and traded on its Principal Market (other than the OTC Bulletin Board), or (ii) if the Common Stock is not listed on a Trading Market
(other than the OTC Bulletin Board), a day on which the Common Stock is traded in the over-the-counter market, as reported by the OTC Bulletin Board, or (iii) if the Common Stock is not quoted on any Trading Market, a day on which the Common
Stock is quoted in the over-the-counter market as reported in the “pink sheets” by Pink Sheets LLC (or any similar organization or agency succeeding to its functions of reporting prices); provided, that in the event that the Common
Stock is not listed or quoted as set forth in (i), (ii) and (iii) hereof, then Trading Day shall mean a Business Day. 
 “Trading Market” means whichever of the New York Stock Exchange, the NYSE Amex, the NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital Market or OTC Bulletin Board on which the Common Stock is listed
or quoted for trading on the date in question. 
 2. Registration. 
 (a) On or prior to the Filing Deadline, the Company shall prepare and file with the Commission a Registration Statement covering the resale
of all of the Registrable Securities not already covered by an existing and effective Registration Statement for an offering to be made on a continuous basis pursuant to Rule 415 or, if Rule 415 is not available for offers and sales of the
Registrable Securities, by such other means of distribution of Registrable Securities as the Company may reasonably determine (the “Initial Registration Statement”). The Initial Registration Statement shall be on Form S-3 (except if
the Company is then ineligible to register for resale of the Registrable Securities on Form S-3, in which case such registration shall be on such other form available to the Company to register for resale of the Registrable Securities as a secondary
offering) subject to the provisions of Section 2(f) and shall contain (except if otherwise required pursuant to written comments received from the Commission upon a review of such Registration Statement) the “Plan of Distribution”
section substantially in the form attached hereto as Annex A. Notwithstanding the registration obligations set forth in this Section 2, in the event the Commission informs the Company that all of the Registrable Securities cannot, as a
result of the application of Rule 415, be registered for resale as a secondary offering on a single registration statement, the Company agrees to promptly (i) inform each of the Holders thereof and use its commercially reasonable efforts to
file amendments to the Initial Registration Statement as required by the Commission and/or (ii) withdraw the Initial Registration Statement and file a new registration statement (a “New Registration Statement”), in either case
covering the maximum number of Registrable Securities permitted to be registered by the Commission, on Form S-3 or such other form available to the Company to register for resale the Registrable Securities as a secondary offering; provided,
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 and subject to the payment of Liquidated Damages in Section 2(c), if any SEC Guidance sets
forth a limitation of the number of Registrable Securities or other shares of Common Stock permitted to be registered on a particular Registration Statement as a secondary offering (and notwithstanding that the Company used diligent efforts to
advocate with the Commission for the registration of all or a greater 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

  

 4 

 
clauses (i) or (ii) above, the Company will use its commercially reasonable efforts to file with the Commission, as promptly as allowed by Commission or SEC Guidance provided to the
Company or to registrants of securities in general, one or more registration statements on Form S-3 or such other form available to the Company to register for resale those Registrable Securities that were not registered for resale on the Initial
Registration Statement, as amended, or the New Registration Statement (the “Remainder Registration Statements”). No Holder shall be named as an “underwriter” in any Registration Statement without such Holder’s prior
written consent. 
 (b) The Company shall use its commercially reasonable efforts to cause each Registration Statement to be
declared effective by the Commission as soon as practicable and, with respect to the Initial Registration Statement or the New Registration Statement, as applicable, no later than the Effectiveness Deadline, and shall use its commercially reasonable
efforts to keep each Registration Statement continuously effective under the Securities Act until the earlier of (i) such time as all of the Registrable Securities covered by such Registration Statement have been publicly sold by the Holders or
(ii) the date that all Registrable Securities covered by such Registration Statement may be sold by non-affiliates 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 effected Holders (the “Effectiveness Period”). The Company shall request effectiveness of a Registration Statement as of 5:00 p.m. New York City time on a Trading Day. The Company shall promptly
notify the Holders via facsimile or electronic mail of a “.pdf” format data file of the effectiveness of a Registration Statement within one (1) Business Day of the Effective Date. The Company shall, by 9:30 a.m. New York City time on
the first Trading Day after the Effective Date, file a final Prospectus with the Commission, as required by Rule 424(b). 
 (c)
If: (i) the Initial Registration Statement is not filed with the Commission on or prior to the Filing Deadline, (ii) the Initial Registration Statement or the New Registration Statement, as applicable, is not declared effective by the
Commission (or otherwise does not become effective) for any reason on or prior to the Effectiveness Deadline, other than as a result of any open issues arising out of any routine Commission review of Exchange Act filings in effect as of the date
hereof, or (iii) after its Effective Date, (A) such Registration Statement ceases for any reason (including without limitation by reason of a stop order, or the Company’s failure to update the Registration Statement), to remain
continuously effective as to all Registrable Securities for which it is required to be effective or (B) the Holders are not permitted to utilize the Prospectus therein to resell such Registrable Securities, in the case of (A) and
(B) (other than during an Allowable Grace Period (as defined in Section 2(e) of this Agreement)), (iv) a Grace Period (as defined in Section 2(e) of this Agreement) exceeds the length of an Allowable Grace Period, or
(v) after the date six months following the Closing Date, and only in the event a Registration Statement is not effective or available to sell all Registrable Securities, the Company fails to file with the SEC any required reports under
Section 13 or 15(d) of the 1934 Act such that it is not in compliance with Rule 144(c)(1) (or Rule 144(i)(2), if applicable), as a result of which the Holders who are not affiliates are unable to sell Registrable Securities without restriction
under Rule 144 (or any successor thereto) (any such failure or breach in clauses (i) through (v) above being referred to as an “Event,” and, for purposes of clauses (i), (ii), (iii) or (v), the date on which such
Event occurs, or for purposes of clause (iv) the date on which such Allowable Grace Period is exceeded, being referred to as an “Event Date”), then in addition to any other rights the Holders may have hereunder or under
applicable law, on each such Event Date and on each monthly anniversary of each such Event Date (if the applicable Event shall not have been cured by such date) until the applicable Event is cured, the Company shall pay to each Holder an amount in
cash, as liquidated damages and not as a penalty (“Liquidated Damages”), equal to 0.5% of the aggregate purchase price paid by such Holder pursuant to the Purchase Agreement for any Registrable Securities held by such Holder on the
Event Date. The parties agree that

  

 5 

 
notwithstanding anything to the contrary herein or in the Purchase Agreement, no Liquidated Damages shall be payable (i) if as of the relevant Event Date, the Registrable Securities may be
sold by non-affiliates without volume or manner of sale restrictions under Rule 144 and the Company is in compliance with the current public information requirements under Rule 144(c)(1) (or Rule 144(i)(2), if applicable), as determined by counsel
to the Company pursuant to a written opinion letter to such effect, addressed and reasonably acceptable to the Company’s transfer agent and (ii) with respect to any period after the expiration of the Effectiveness Period (it being
understood that this sentence shall not relieve the Company of any Liquidated Damages accruing prior to the Effectiveness Period). If the Company fails to pay any Liquidated Damages pursuant to this Section 2(c) in full within five
(5) Business Days after the date payable, the Company will pay interest thereon at a rate of 1.0% per month (or such lesser maximum amount that is permitted to be paid by applicable law) to the Holder, accruing daily from the date such
Liquidated Damages are due until such amounts, plus all such interest thereon, are paid in full. The Liquidated Damages pursuant to the terms hereof shall apply on a daily pro-rata basis for any portion of a month prior to the cure of an Event,
except in the case of the first Event Date. The Effectiveness Deadline for a Registration Statement shall be extended without default or Liquidated Damages hereunder in the event that the Company’s failure to obtain the effectiveness of the
Registration Statement on a timely basis results from the failure of a Purchaser to timely provide the Company with information requested by the Company and necessary to complete the Registration Statement in accordance with the requirements of
the Securities Act (in which case the Effectiveness Deadline would be extended with respect to Registrable Securities held by such Purchaser). 
 (d) Each Holder agrees to furnish to the Company a completed Selling Stockholder Questionnaire not more than ten (10) Trading Days following the date of this Agreement. At least five (5) Trading
Days prior to the first anticipated filing date of a Registration Statement for any registration under this Agreement, the Company will notify each Holder of the information the Company requires from that Holder other than the information contained
in the Selling Stockholder Questionnaire, if any, which shall be completed and delivered to the Company promptly upon request and, in any event, within two (2) Trading Days prior to the applicable anticipated filing date. Each Holder further
agrees that it shall not be entitled to be named as a selling securityholder in the Registration Statement or use the Prospectus for offers and resales of Registrable Securities at any time, unless such Holder has returned to the Company a completed
and signed Selling Stockholder Questionnaire and a response to any requests for further information as described in the previous sentence. If a Holder of Registrable Securities returns a Selling Stockholder Questionnaire or a request for further
information, in either case, after its respective deadline, the Company shall use its commercially reasonable efforts at the expense of the Holder who failed to return the Selling Stockholder Questionnaire or to respond for further information to
take such actions as are required to name such Holder as a selling security holder in the Registration Statement or any pre-effective or post-effective amendment thereto and to include (to the extent not theretofore included) in the Registration
Statement the Registrable Securities identified in such late Selling Stockholder Questionnaire or request for further information. Each Holder acknowledges and agrees that the information in the Selling Stockholder Questionnaire or request for
further information as described in this Section 2(d) will be used by the Company in the preparation of the Registration Statement and hereby consents to the inclusion of such information in the Registration Statement. 
 (e) Notwithstanding anything to the contrary herein, at any time after the Registration Statement has been declared effective by the
Commission, the Company may delay the disclosure of material non-public information concerning the Company if the disclosure of such information at the time is not, in the good faith judgment of the Company, in the best interests of the Company (a
“Grace Period”); provided, 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

  

 6 

 
begin, (ii) use reasonable best efforts to terminate a Grace Period as promptly as practicable and (iii) notify the Holders in writing of the date on which the Grace Period ends;
provided, further, that no single Grace Period shall exceed thirty (30) consecutive days, and during any three hundred sixty-five (365) day period, the aggregate of all Grace Periods shall not exceed an aggregate of sixty
(60) days (each Grace Period complying with this provision being an “Allowable Grace Period”). For purposes of determining the length of a Grace Period, the Grace Period shall be deemed to begin on and include the date the
Holders receive the notice referred to in clause (i) above and shall end on and include the later of the date the Holders receive the notice referred to in clause (iii) above and the date referred to in such notice; provided, that
no Grace Period shall be longer than an Allowable Grace Period. Notwithstanding anything to the contrary, the Company shall cause the Transfer Agent to deliver unlegended Common Stock to a transferee of a Holder in accordance with the terms of the
Purchase Agreement in connection with any sale of Registrable Securities with respect to which a Holder has entered into a contract for sale prior to the Holder’s receipt of the notice of a Grace Period and for which the Holder has not yet
settled. 
 (f) In the event that Form S-3 is not available for the registration of the resale of Registrable Securities
hereunder, the Company shall (i) register the resale of the Registrable Securities on another appropriate form and (ii) undertake to register the Registrable Securities on Form S-3 promptly after such form is available, provided
that the Company shall maintain the effectiveness of the Registration Statement then in effect until such time as a Registration Statement on Form S-3 covering the Registrable Securities has been declared effective by the Commission. 
 3. Registration Procedures 
 In connection with the Company’s registration obligations hereunder: 
 (a)
the Company shall not less than three (3) Trading Days prior to the filing of a Registration Statement and not less than one (1) Trading Day prior to the filing of any related Prospectus or any amendment or supplement thereto (except for
Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K and any similar or successor reports), the Company shall, furnish to the Holder copies of such Registration Statement, Prospectus or amendment or supplement
thereto, as proposed to be filed, which documents will be subject to the review of such Holder (it being acknowledged and agreed that if a Holder does not object to or comment on the aforementioned documents within such three (3) Trading Day or
one (1) Trading Day period, as the case may be, then the Holder shall be deemed to have consented to and approved the use of such documents). The Company shall not file any Registration Statement or amendment or supplement thereto in a form to
which a Holder reasonably objects in good faith, provided that, the Company is notified of such objection in writing within the three (3) Trading Day or one (1) Trading Day period described above, as applicable. 
 (b) (i) the Company shall prepare and file with the Commission such amendments (including post-effective amendments) and supplements, to
each Registration Statement and the Prospectus used in connection therewith as may be necessary to keep such Registration Statement continuously effective as to the applicable Registrable Securities for its Effectiveness Period (except during an
Allowable Grace Period); (ii) the Company shall cause the related Prospectus to be amended or supplemented by any required Prospectus supplement (subject to the terms of this Agreement), and, as so supplemented or amended, to be filed pursuant
to Rule 424 (except during an Allowable Grace Period); (iii) the Company shall respond as promptly as reasonably practicable to any comments received from the Commission with respect to each Registration Statement or any amendment thereto and,
as promptly as reasonably possible, provide the Holders true and complete copies of all correspondence from and to the Commission relating to such Registration Statement that pertains to the Holders as “Selling Stockholders” but not any
comments that would result in the disclosure to the Holders of material and non-public information concerning the Company; and (iv) the Company shall comply with the provisions of the

  

 7 

 
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 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) as promptly as reasonably
practicable (and, in the case of (i)(A) below, not less than two Trading Days prior to such filing, in the case of (iii) and (iv) below, not more than one Trading Day after such issuance or receipt, and in the case of (v) below, not
more than one Trading Day after the occurrence or existence of such development) and (if requested by any such Person) confirm such notice in writing no later than one Trading Day following the day (i)(A) when a Prospectus or any Prospectus
supplement or post-effective amendment to a Registration Statement is proposed to be filed; (B) when the Commission notifies the Company whether there will be a “review” of such Registration Statement and whenever the Commission
comments in writing on any Registration Statement (in which case the Company shall provide to each of the Holders true and complete copies of all comments that pertain to the Holders as a “Selling Stockholder” or to the “Plan of
Distribution” and all written responses thereto, but not information that the Company believes would constitute material and non-public information); and (C) with respect to each Registration Statement or any post-effective amendment, when
the same has become effective; (ii) of any request by the Commission or any other Federal or state governmental authority for amendments or supplements to a Registration Statement or Prospectus or for additional information that pertains to the
Holders as “Selling Stockholders” or the “Plan of Distribution”; (iii) of the issuance by the Commission or any other federal or state governmental authority of any stop order suspending the effectiveness of a Registration
Statement covering any or all of the Registrable Securities or the initiation of any Proceedings for that purpose; (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from
qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any Proceeding for such purpose; and (v) of the occurrence of any event or passage of time that makes the financial statements
included in a Registration Statement ineligible for inclusion therein or any statement made in 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

  

 8 

 
Statement, or (ii) any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, as soon as practicable.

 (e) the Company shall, if requested by a Holder, furnish to such Holder, without charge, at least one conformed copy of each
Registration Statement and each amendment thereto and all exhibits to the extent requested by such Person (including those previously furnished or incorporated by reference) promptly after the filing of such documents with the Commission;
provided, that the Company shall have no obligation to provide any document pursuant to this clause that is available on the Commission’s EDGAR system. 
 (f) the Company shall, prior to any resale of Registrable Securities by a Holder, use its commercially reasonable efforts to register or qualify or cooperate with the selling Holders in connection with
the registration or qualification (or exemption from the registration or qualification) of such Registrable Securities for the resale by the Holder under the securities or Blue Sky laws of such jurisdictions within the United States as any Holder
reasonably requests in writing, to keep each registration or qualification (or exemption therefrom) effective during the Effectiveness Period and to do any and all other acts or things reasonably necessary to enable the disposition in such
jurisdictions of the Registrable Securities covered by each Registration Statement; provided, that the Company shall not be required to qualify generally to do business in any jurisdiction where it is not then so qualified, subject the
Company to any material tax in any such jurisdiction where it is not then so subject or file a general consent to service of process in any such jurisdiction. 
 (g) the Company shall, cooperate with the Holders to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be delivered to a transferee pursuant to the
Registration Statement, which certificates shall be free, to the extent permitted by the Purchase Agreement and under law, of all restrictive legends, and to enable such Registrable Securities to be in such denominations and registered in such names
as any such Holders may reasonably request. Certificates for Registrable Securities free from all restrictive legends may be transmitted by the transfer agent to a Holder by crediting the account of such Holder’s prime broker with DTC as
directed by such Holder. 
 (h) the Company shall following the occurrence of any event contemplated by
Section 3(c)(iii)-(v), as promptly as reasonably practicable (taking into account the Company’s good faith assessment of any adverse consequences to the Company and its stockholders of the premature disclosure of such event), prepare and
file a supplement or amendment, including a post-effective amendment, to the affected Registration Statements or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, and file any
other required document so that, as thereafter delivered, no Registration Statement nor any Prospectus will contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the
statements therein (in the case of any Prospectus, form of prospectus or supplement thereto, in light of the circumstances under which they were made), not misleading. 
 (i) the Company may require each selling Holder to furnish to the Company a certified statement as to (i) the number of shares of Common Stock beneficially owned by such Holder and any Affiliate
thereof, (ii) any Financial Industry Regulatory Authority (“FINRA”) affiliations, (iii) any natural persons who have the power to vote or dispose of the Common Stock and (iv) any other information as may be requested
by the Commission, FINRA or any state securities commission. During any periods that the Company is unable to meet its obligations hereunder with respect to the registration of Registrable Securities because any Holder fails to furnish such
information within three Trading Days of the Company’s request, any Liquidated Damages that are accruing at such time as to such Holder only

  

 9 

 
shall be tolled and any Event that may otherwise occur solely because of such delay shall be suspended as to such Holder only, until such information is delivered to the Company. 
 (j) the Company shall cooperate with any registered broker through which a Holder proposes to resell its Registrable Securities in effecting
a filing with FINRA pursuant to NASD Rule 2710 as requested by any such Holder and the Company shall pay the filing fee required for the first such filing within two (2) Business Days of the request therefore. 
 (k) the Company shall use its commercially reasonable efforts to maintain eligibility for use of Form S-3 (or any successor form thereto)
for the registration of the resale of Registrable Securities. 
 (l) if requested by a Holder, the Company shall
(i) promptly incorporate in a Prospectus supplement or post-effective amendment to the Registration Statement such information as the Company reasonably agrees should be included therein and (ii) make all required filings of such
Prospectus supplement or such post-effective amendment as soon as reasonably practicable after the Company has received notification of the matters to be incorporated in such Prospectus supplement or post-effective amendment. 
 (m) the Company shall otherwise use commercially reasonable efforts to comply with all applicable rules and regulations of the Commission
under the Securities Act and the Exchange Act, including Rule 172, notify the Holders promptly if the Company no longer satisfies the conditions of Rule 172 and take such other actions as may be reasonably necessary to facilitate the registration of
the Registrable Securities hereunder; and make available to its security holders, as soon as reasonably practicable, but not later than the Availability Date (as defined below), an earnings statement covering a period of at least twelve
(12) months, beginning after the effective date of each Registration Statement, which earning statement shall satisfy the provisions of Section 11(a) of the Securities Act, including Rule 158 promulgated thereunder (for the purpose of this
Section 3, “Availability Date” means the 45th day following the end of the fourth fiscal quarter that includes the effective date of such Registration Statement, except that, if such fourth fiscal quarter is the last quarter of the
Company’s fiscal year, “Availability Date” means the 90th day after the end of such fourth fiscal quarter), in each case subject to extensions permissible under applicable law. 
 4. Registration Expenses. All fees and expenses incident to the Company’s performance of or compliance with its obligations
under this Agreement (excluding any underwriting discounts and selling commissions and all legal fees and expenses of legal counsel for any Holder) shall be borne by the Company whether or not any Registrable Securities are sold pursuant to a
Registration Statement. The fees and expenses referred to in the foregoing sentence shall include, without limitation, (i) all registration and filing fees (including, without limitation, fees and expenses (A) with respect to filings
required to be made with any Trading Market on which the Common Stock is then listed for trading, (B) with respect to compliance with applicable state securities or Blue Sky laws (including, without limitation, fees and 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

  

 10 

 
the Registration Statement), (iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of counsel for the Company, (v) Securities Act liability insurance, if
the Company so desires such insurance, and (vi) fees and expenses of all other Persons retained by the Company in connection with the consummation of the transactions contemplated by this Agreement. In addition, the Company shall be responsible
for all of its internal expenses incurred in connection with the consummation of the transactions contemplated by this Agreement (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting
duties), the expense of any annual audit and the fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange as required hereunder. In no event shall the Company be responsible for any
underwriting, broker or similar fees or commissions of any Holder or, except to the extent provided for in the Transaction Documents, any legal fees or other costs of the Holders. 
 5. Indemnification. 
 (a) Indemnification by the Company. The Company shall, notwithstanding any termination of this Agreement, indemnify, defend and hold harmless each Holder, the officers, directors, agents, general
partners, managing members, managers, Affiliates and employees of each of them, each Person who controls any such Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers,
directors, general partners, managing members, managers, agents and employees of each such controlling Person, to the fullest extent permitted by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including,
without limitation, reasonable costs of preparation and investigation and reasonable attorneys’ fees) and expenses (collectively, “Losses”), as incurred, that arise out of 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 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, except to the extent, but only to the extent, that (A) such untrue statements, alleged untrue statements, omissions or alleged omissions are based solely upon information regarding such Holder furnished in writing to the Company by
such Holder expressly for use therein, or to the extent that such information relates to such Holder or such Holder’s proposed method of distribution of Registrable Securities and was reviewed and approved by such Holder expressly for use in
the Registration Statement, such Prospectus or such form of Prospectus or in any amendment or supplement thereto (it being understood that each Holder has approved Annex A hereto for this purpose), or (B) in the case of an occurrence of
an event of the type specified in Section 3(c)(iii)-(v), related to the use by a Holder of an outdated or defective Prospectus after the Company has notified such Holder in writing that the Prospectus is outdated or defective and prior to the
receipt by such Holder of the Advice contemplated and defined in Section 6(d) below, but only if and to the extent that following the receipt of the Advice the misstatement or omission giving rise to such Loss would have been corrected. The
Company shall notify the Holders promptly of the institution, threat or assertion of any Proceeding arising from or in connection with the transactions contemplated by this Agreement of which the Company is aware. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of an Indemnified Party (as defined in Section 5(c)) and shall survive the transfer of the Registrable Securities by the Holders. 
 (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,

  

 11 

 
any Prospectus, or any form of prospectus, or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus, or any form of prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading
(i) to the extent, but only to the extent, that such untrue statements or omissions are based solely upon information regarding such Holder furnished in writing to the Company by such Holder expressly for use therein or (ii) to the extent,
but only to the extent, that such information relates to such Holder or such Holder’s proposed method of distribution of Registrable Securities and was reviewed and approved by such Holder expressly for use in a Registration Statement (it being
understood that the Holder has approved Annex A hereto for this purpose), such Prospectus or such form of Prospectus or in any amendment or supplement thereto or (iii) in the case of an occurrence of an event of the type specified in
Section 3(c)(iii)-(v), to the extent, but only to the extent, related to the use by such Holder of an outdated or defective Prospectus after the Company has notified such Holder in writing that the Prospectus is outdated or defective and prior
to the receipt by such Holder of the Advice contemplated in Section 6(d), but only if and to the extent that following the receipt of the Advice the misstatement or omission giving rise to such Loss would have been corrected. In no event shall
the liability of any selling Holder hereunder be greater in amount than the dollar amount of the net proceeds received by such Holder upon the sale of the Registrable Securities giving rise to such indemnification obligation. 
 (c) Conduct of Indemnification Proceedings. If any Proceeding shall be brought or asserted against any Person entitled to indemnity
hereunder (an “Indemnified Party”), such Indemnified Party shall promptly notify the Person from whom indemnity is sought (the “Indemnifying Party”) in writing, and the Indemnifying Party shall have the right to
assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all reasonable fees and expenses incurred in connection with defense thereof; provided, that the failure of
any Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that it shall be finally determined by a court of competent jurisdiction
(which determination is not subject to appeal or further review) that such failure shall have materially and adversely prejudiced the Indemnifying Party. 
 An Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in writing to pay such fees and expenses; (2) the Indemnifying Party shall have failed promptly to assume the defense of such Proceeding and to employ counsel
reasonably satisfactory to such Indemnified Party in 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 twenty Trading Days of written notice thereof to the

  

 12 

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

 13 

 (b) No Piggyback on Registrations; Prohibition on Filing Other Registration
Statements. Neither the Company nor any of its security holders (other than the Contractual Securityholders) may include securities of the Company in a Registration Statement hereunder other than the Contractual Securities and the Company shall
not prior to the Effective Date enter into any agreement providing any such right to any of its security holders. The Company shall not, from the date hereof until the date that is 30 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 or (iii) 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 stockholders of the Company under the Securities Act pursuant to the terms of
registration rights held by such stockholder or from filing amendments to registration statements filed prior to the date of this Agreement. 
 (c) Compliance. Each Holder covenants and agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable to it (unless an exemption therefrom is available)
in connection with sales of Registrable Securities pursuant to the Registration Statement and shall sell the Registrable Securities only in accordance with a method of distribution described in the Registration Statement 
 (d) Discontinued Disposition. By its acquisition of Registrable Securities, each Holder agrees that, upon receipt of a notice from
the Company of the occurrence of any 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. 
  

 14 

 (g) Notices. Any and all notices or other communications or deliveries required or
permitted to be provided hereunder shall be delivered as set forth in the Purchase Agreement; provided that the Company may deliver to each Holder the documents required to be delivered to such Holder under Section 3(a) of this Agreement by
e-mail to the e-mail addresses provided by such Holder to the Company solely for such specific purpose. 
 (h) Successors and
Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the parties and shall inure to the benefit of each Holder. Nothing in this Agreement, express or implied, is intended to
confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. The Company may
not assign its rights (except by merger or in connection with another entity acquiring all or substantially all of the Company’s assets) or obligations hereunder without the prior written consent of all the Holders of the then outstanding
Registrable Securities. Each Holder may assign its respective rights hereunder in the manner and to the Persons as permitted under the Purchase Agreement. 
 (i) Execution and Counterparts. This Agreement may be executed in two or more counterparts, each of which when so executed shall be deemed to be an original and, all of which taken together shall
constitute one and the same Agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any
signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the
same force and effect as if such facsimile or “.pdf” signature were the original thereof. 
 (j) Governing Law.
All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be determined in accordance with the provisions of the Purchase Agreement. 
 (k) Cumulative Remedies. Except as provided in Section 2(c) with respect to Liquidated Damages, the remedies provided herein are
cumulative and not exclusive of any other remedies provided by law. 
 (l) Severability. If any term, provision, covenant
or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect
and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their good faith reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable. 
 (m) Headings. The headings in this Agreement are for
convenience only and shall not limit or otherwise affect the meaning hereof. 
 (n) Independent Nature of Purchasers’
Obligations and Rights. The obligations of each Purchaser under this Agreement are several and not joint with the obligations of any other Purchaser hereunder, and no Purchaser shall be responsible in any way for the performance of the
obligations of any other Purchaser hereunder. The decision of each Purchaser to purchase the Preferred Shares pursuant to the Transaction Documents has been made independently of any other Purchaser. Nothing contained

  

 15 

 
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 Preferred 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. 
  

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

			
	CITIZENS SOUTH BANKING CORPORATION
		
	By:	 	  

		 	Name:
		 	Title:

 [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 stockholder 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 stockholders of the Securities.
We will bear all fees and expenses incident to our obligation to register the Securities. 
 The selling stockholders 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
stockholders 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 stockholders 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 stockholders 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 stockholders also may resell all or a portion of the Securities in open market transactions in reliance upon Rule 144 under the Securities Act, as permitted by that rule, or Section 4(1)
under the Securities Act, if available, rather than under this prospectus, provided that they meet the criteria and conform to the requirements of those provisions. 
 Broker-dealers engaged by the selling stockholders may arrange for other broker-dealers to participate in sales. If the selling stockholders 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 stockholders or
commissions from purchasers of the Securities for whom they may act as agent or to whom they may sell as principal. Such commissions will be in amounts to be negotiated, but, except as set forth in a supplement to this Prospectus, in the case of an
agency transaction will not be in excess of a customary brokerage commission in compliance with NASD Rule 2440; and in the case of a principal transaction a markup or markdown in compliance with NASD IM-2440. 
 In connection with sales of the Securities or otherwise, the selling stockholders may enter into hedging transactions with broker-dealers or
other financial institutions, which may in turn engage in short sales of the Securities in the course of hedging in positions they assume. The selling stockholders 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 stockholders 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 stockholders 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 stockholders may also enter into option or other transactions with broker-dealers or
other financial institutions or the creation of one or more derivative securities which require the delivery to such broker-dealer or other financial institution of shares offered by this prospectus, which shares such broker-dealer or other
financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction). Notwithstanding the foregoing, the selling stockholders have been advised that they may not use shares registered on this
registration statement to cover short sales of our 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 stockholders 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 stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus. The selling
stockholders also may transfer and donate the 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 stockholders 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 Stockholders who are “underwriters” within the meaning of Section 2(11) of the Securities Act will
be subject to the applicable prospectus delivery requirements of the Securities Act and may be subject to certain statutory liabilities of, including but not limited to, Sections 11, 12 and 17 of the Securities Act and Rule 10b-5 under the
Securities Exchange Act of 1934, as amended, or the Exchange Act. 
 Each selling stockholder has informed the Company that it
is not a registered broker-dealer and does not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute the Securities. Upon the Company being notified in writing by a selling stockholder that any
material arrangement has been entered into with a broker-dealer for the sale of 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 stockholder 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 Common Stock may be sold in such states only through registered or licensed brokers or dealers. In addition, in some states the Common Stock may not be sold unless such shares have been registered or qualified for
sale in such state or an exemption from registration or qualification is available and is complied with. 
 There can be no
assurance that any selling stockholder will sell any or all of the Securities registered pursuant to the shelf registration statement, of which this prospectus forms a part. 
 Each selling stockholder and any other person participating in such distribution will be subject to applicable provisions of the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder, including, without limitation, to the extent applicable, Regulation M of the Exchange Act, which may limit the timing of purchases and sales of any of the Securities by the
selling stockholder and any other participating person. To the extent applicable, Regulation M may also restrict the ability of any person engaged in the distribution of the 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 stockholder will pay all underwriting discounts and selling commissions, if any and any
related legal expenses incurred by it. We will indemnify the selling stockholders against certain liabilities, including some liabilities under the Securities Act, in accordance with the registration rights agreement, or the selling stockholders
will be entitled to contribution. We may be indemnified by the selling stockholders against civil liabilities, including liabilities under the Securities Act, that may arise from any written information furnished to us by the selling stockholders
specifically for use in this prospectus, in accordance with the related registration rights agreements, or we may be entitled to contribution. 

 Annex B 
 CITIZENS SOUTH BANKING CORPORATION 
 SELLING STOCKHOLDER NOTICE AND
QUESTIONNAIRE 
 The undersigned holder of securities of Citizens South Banking Corporation, a Delaware corporation (the
“Company”), issued pursuant to a certain Investment Agreement by and among the Company and the Purchasers named therein, dated as of March     , 2010, understands that the Company intends to file with the
Securities and Exchange Commission a registration statement on Form S-3 (the “Resale Registration Statement”) for the registration and the resale under Rule 415 of the Securities Act of 1933, as amended (the “Securities
Act”), of the Registrable Securities in accordance with the terms of a certain Registration Rights Agreement by and among the Company and the Purchasers named therein, dated as of March     , 2010 (the
“Agreement”). All capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Agreement. 
 In order to sell or otherwise dispose of any Registrable Securities pursuant to the Resale Registration Statement, a holder of Registrable Securities generally will be required to be named as a selling
stockholder in the related prospectus or a supplement thereto (as so supplemented, the “Prospectus”), deliver the Prospectus to purchasers of Registrable Securities (including pursuant to Rule 172 under the Securities Act) and be
bound by the provisions of the Agreement (including certain indemnification provisions, as described below). Holders must complete and deliver this Notice and Questionnaire in order to be named as selling stockholders in the Prospectus. Holders
of Registrable Securities who do not complete, execute and return this Notice and Questionnaire within ten (10) Trading Days following the date of the Agreement (1) will not be named as selling stockholders in the Resale Registration
Statement or the Prospectus and (2) may not use the Prospectus for resales of Registrable Securities.  
 Certain legal
consequences arise from being named as a selling stockholder in the Resale Registration Statement and the Prospectus. Holders of Registrable Securities are advised to consult their own securities law counsel regarding the consequences of being named
or not named as a selling stockholder in the Resale Registration Statement and the Prospectus. 
 NOTICE 
 The undersigned holder (the “Selling Stockholder”) of Registrable Securities hereby gives notice to the Company of its
intention to sell or otherwise dispose of Registrable Securities owned by it and listed below in Item (3), unless otherwise specified in Item (3), pursuant to the Resale Registration Statement. The undersigned, by signing and returning this Notice
and Questionnaire, understands and agrees that it will be bound by the terms and conditions of this Notice and Questionnaire and the Agreement. 
 The undersigned hereby provides the following information to the Company and represents and warrants that such information is accurate and complete: 
 QUESTIONNAIRE 
 1. Name.

  

	 	(a)	Full Legal Name of Selling Stockholder: 

  

	
	  

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

  

	
	  

  

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

  

	
	  

 2. Address for Notices to Selling Stockholder: 
  

			
	  

	  

	  

	Telephone:	 	  

			
	Fax:	 	  

			
	Contact Person:	 	  

					
	E-mail address of Contact Person:  	 	  
	 	

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

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

  

	
	  

	  

	  

  

	 	(b)	Number of 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 Stockholder. 
 Except as set forth below in this Item 5, the undersigned is not the beneficial or registered owner of any securities of the Company
other than the Registrable Securities listed above in Item 3. 
 Type and amount of other securities beneficially owned:

  

	
	  

	
	  

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

	
	  

	  

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

	
	  

	  

 *********** 
 By signing below, the undersigned consents to the disclosure of the information
contained herein in its answers to Items (1) through (7) above and the inclusion of such information in the Resale Registration Statement and the Prospectus. The undersigned understands that such information will be relied upon by the
Company in connection with the preparation or amendment of any such Registration Statement and the Prospectus. 
 By signing below, the
undersigned acknowledges that it understands its obligation to comply, and agrees that it will comply, with the provisions of the Exchange Act and the rules and regulations thereunder, particularly Regulation M in connection with any offering of
Registrable Securities pursuant to the Resale Registration Statement. The undersigned also acknowledges that it understands that the answers to this Questionnaire are furnished for use in connection with Registration Statements filed pursuant to the
Registration Rights Agreement and any amendments or supplements thereto filed with the Commission pursuant to the Securities Act. 
 I confirm
that, to the best of my knowledge and belief, the foregoing statements (including without limitation the answers to this Questionnaire) are correct. 
 IN WITNESS WHEREOF the undersigned, by authority duly given, has caused this Questionnaire to be executed and delivered either in person or by its duly authorized agent. 
  

											
	Dated:	 	  
	 		 	Beneficial Owner:	 	  

					
		 		 		 	By:	 	  

		 		 		 		 	Name:	 	
		 		 		 		 	Title:	 	

 EXHIBIT C-1 
 ACCREDITED INVESTOR QUESTIONNAIRE 
 (ALL INFORMATION
WILL BE TREATED CONFIDENTIALLY) 
 To: Citizens South Banking Corporation 
 This Investor Questionnaire (“Questionnaire”) must be completed by each potential investor in connection with the offer and sale of shares of mandatorily convertible cumulative non-voting
perpetual preferred stock, $1,000 liquidation preference per share (the “Preferred Shares”), and shares of common stock (the “Common Shares” and together with the Preferred Shares, the “Shares”), of
Citizens South Banking Corporation, a Delaware corporation (the “Corporation”). The Shares are being offered and sold by the Corporation without registration under the Securities Act of 1933, as amended (the “Act”),
and the securities laws of certain states, in reliance on the exemptions contained in Section 4(2) of the Act and on Regulation D promulgated thereunder and in reliance on similar exemptions under applicable state laws. The Corporation must
determine that a potential investor meets certain suitability requirements before offering or selling Shares to such investor. The purpose of this Questionnaire is to assure the Corporation that each investor will meet the applicable suitability
requirements. The information supplied by you will be used in determining whether you meet such criteria, and reliance upon the private offering exemptions from registration is based in part on the information herein supplied. 
 This Questionnaire does not constitute an offer to sell or a solicitation of an offer to buy any security. Your answers will be kept strictly confidential.
However, by signing this Questionnaire, you will be authorizing the Corporation to provide a completed copy of this Questionnaire to such parties as the Corporation deems appropriate in order to ensure that the offer and sale of the Shares will not
result in a violation of the Act or the securities laws of any state and that you otherwise satisfy the suitability standards applicable to purchasers of the Shares. All potential investors must answer all applicable questions and complete, date and
sign this Questionnaire. Please print or type your responses and attach additional sheets of paper if necessary to complete your answers to any item. 
 PART A. BACKGROUND INFORMATION 
  

					
	Name of Beneficial Owner of the Shares:	  	  

					
		
	Business Address:  	 	  

		 	 (Number and Street)
	  	
	
	  

	(City)	 	 (State)
	  	(Zip Code)

					
		
	Telephone Number: (    )	 	  

 If a corporation, partnership, limited liability company, trust or other entity: 
  

			
	Type of entity:	  	  

 Were you formed for the purpose of investing in the securities being offered? 
 Yes                  No       
 If an individual: 
  

					
		
	Residence Address:  	 	  

		 	 (Number and Street)
	  	
	
	  

	(City)	 	 (State)
	  	(Zip Code)

					
		
	Telephone Number: (        )	 	  

															
								
	Age:	 	  
	 		  	Citizenship:	  	  
	  		  	Where registered to vote:	  	  

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

 Are you a director or executive officer of the Corporation? 
 Yes                  No       
  

			
	Social Security or Taxpayer Identification No.	 	  

 PART B. ACCREDITED INVESTOR QUESTIONNAIRE 
 In order for the Company to
offer and sell the Shares 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 Purchaser of Shares. 

 

					
	  
 —
	 	(1)	 	A bank as defined in Section 3(a)(2) of the Securities Act, or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities 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 Securities 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 private 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 Shares, 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 Shares, 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)	 	A natural person whose individual net worth, or joint net worth with that person’s spouse, at the time of his purchase exceeds $1,000,000;
			
	  
 —
	 	(12)	 	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;
			
	  
 —
	 	(13)	 	An executive officer or director of the Corporation;

					
	  
 —
	 	(14)	 	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.

 A. FOR EXECUTION BY AN INDIVIDUAL:

  

									
	  
	 		 	By	 	  

	Date	 		 		 		  	
		 		 	Print Name:	  	  

 B. FOR EXECUTION BY AN ENTITY: 
  

									
		 	Entity Name:	 	  

				
	  
	 		 	By	 	  

	Date	 		 		 		  	
		 		 	Print Name:	  	  

		 		 	Title:	  	  

 C. ADDITIONAL SIGNATURES (if required by partnership, corporation or trust document): 
  

									
		 	Entity Name:	 	  

				
	  
	 		 	By	 	  

	Date	 		 		 		  	
		 		 	Print Name:	  	  

		 		 	Title:	  	  

			
		 	Entity Name:	 	  

				
	  
	 		 	By	 	  

	Date	 		 		 		  	
		 		 	Print Name:	  	  

		 		 	Title:	  	  

 EXHIBIT C-2 
 Stock Certificate Questionnaire 
 Pursuant to Section 2.2(b) of the
Agreement, please provide us with the following information: 
  

					
			
	1.	 	The exact name that the Shares are to be registered in (this is the name that will appear on the stock certificate(s) and warrant(s)). You may use a nominee name if appropriate:
	 	  

			
	2.	 	The relationship between the Purchaser of the Shares and the Registered Holder listed in response to Item 1 above:	 	  

			
	3.	 	The mailing address, telephone and telecopy number of the Registered Holder listed in response to Item 1 above:	 	  

		 		 	  

		 		 	  

		 		 	  

		 		 	  

		 		 	  

			
	4.	 	The Tax Identification Number (or, if an individual, the Social Security Number) of the Registered Holder listed in response to Item 1 above:	 	  

 EXHIBIT D 
 Form of Opinion of Company Counsel* 
  

	1.	The Company is validly existing as a corporation in good standing under the laws of the State of Delaware. 

  

	2.	The Company has the corporate power and authority to execute and deliver and to perform its obligations under the Transaction Documents, including, without limitation,
to issue the Shares and the Underlying Shares. 

  

	3.	The Company is a registered savings and loan holding company under the Home Owners’ Loan Act of 1933, as amended. 

  

	4.	The deposit accounts of the Bank are insured by the Federal Deposit Insurance Corporation under the provisions of the Federal Deposit Insurance Act.

  

	5.	Each of the Transaction Documents has been duly authorized, executed and delivered by the Company and, assuming due authorization, execution and delivery by the
Purchasers (to the extent they are a party), each of the Transaction Documents constitutes a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms. 

  

	6.	The execution and delivery by the Company of each of the Transaction Documents and the performance by the Company of its obligations under such agreements, including
its issuance and sale of the Preferred Shares and the Underlying Shares, do not and will not: (a) require any consent, approval, license or exemption by, order or authorization of, or filing, recording or registration by the Company with any
federal or state governmental authority, except (1) as may be required by federal securities laws with respect to the Company’s obligations under the Registration Rights Agreement, (2) the filing of Form D pursuant to Securities and
Exchange Commission Regulation D, and (3) the filings required in accordance with Section 4.6 of the Securities Purchase Agreement, (b) violate any federal or state statute, rule or regulation, or any rule or regulation of the NASDAQ
Global Select Market, or any court order, judgment or decree, if any, listed in Exhibit A hereto, which Exhibit lists all court orders, judgments and decrees that the Company has certified to us are applicable to it, (c) result in any
violation of the Certificate of Incorporation or Bylaws of the Company or (d) result in a breach of, or constitute a default under, any Material Contract. 

  

	7.	Assuming the accuracy of the representations, warranties and compliance with the covenants and agreements of the Purchasers and the Company contained in the Securities
Purchase Agreement, it is not necessary, in connection with the offer, sale and delivery of the Shares to the Purchasers to register the Shares under the Securities Act. 

  

	8.	 The Shares being delivered to the Purchasers pursuant to the Securities Purchase Agreement have been duly and validly authorized and, when issued,
delivered and paid for as contemplated in the Securities Purchase Agreement, will be duly and validly issued, fully paid and non-assessable, and free of any preemptive right or similar rights contained in the Company’s Certificate of
Incorporation or By-laws. The Underlying Shares, when issued in accordance with the Certificate of Designations, will be duly and

	 	 
validly issued, fully paid and non-assessable, and free of any preemptive right or similar rights contained in the Company’s Certificate of Incorporation or By-laws.

 * The opinion letter of Company Counsel will be subject to customary limitations and carveouts. 

 EXHIBIT E 
 Form of Secretary’s Certificate 
 The undersigned hereby certifies that
he is the duly elected, qualified and acting Secretary of Citizens South Banking Corporation, a Delaware corporation (the “Company”), and that as such he is authorized to execute and deliver this certificate in the name and on
behalf of the Company and in connection with the Securities Purchase Agreement, dated as of March 10, 2010, by and among the Company and the investors party thereto (the “Securities Purchase Agreement”), and further certifies
in his official capacity, in the name and on behalf of the Company, the items set forth below. Capitalized terms used but not otherwise defined herein shall have the meaning set forth in the Securities Purchase Agreement. 
  

	1.	Attached hereto as Exhibit A is a true, correct and complete copy of the resolutions duly adopted by the Board of Directors of the Company at a meeting held on
[            ], 2010. Such resolutions have not in any way been amended, modified, revoked or rescinded, have been in full force and effect since their adoption to and including the date
hereof and are now in full force and effect. 

  

	2.	The Company’s Restated Certificate of Incorporation were filed as an Exhibit to the Form 10-Q for the quarterly period ended [•]; its Amended and Restated
Bylaws were filed as an exhibit to the Form 8-K filed with the SEC on [•], and an amendment to such Bylaws was filed as an Exhibit to the Form 8-K filed with the SEC on [•]. Such Restated Certificate of Incorporation and Bylaws, as
amended, constitute true, correct and complete copies of the Restated Certificate of Incorporation and Bylaws as in effect on the date hereof. 

  

	3.	Each person listed below has been duly elected or appointed to the position(s) indicated opposite his name and is duly authorized to sign the Securities Purchase
Agreement and each of the Transaction Documents on behalf of the Company, and the signature appearing opposite such person’s name below is such person’s genuine signature. 

  

					
	 Name
	  	 Position
	  	 Signature

			
		  		  	  

			
		  		  	  

 IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of this      day of
March, 2010. 
  

	
	  

	[                    ]
	Secretary
	

 I, [            ], [Chief Financial Officer],
hereby certify that [            ] is the duly elected, qualified and acting Secretary of the Company and that the signature set forth above is his true signature. 
  

	
	  

	[                    ]
	[Chief Financial Officer]

 EXHIBIT F 
 Form of Officer’s Certificate 
 The undersigned, the [Chief Financial
Officer] [Chief Executive Officer] of Citizens South Banking Corporation, a Delaware corporation (the “Company”), pursuant to Section 5.1(g) of the Securities Purchase Agreement, dated as of March 10, 2010 by and among the
Company and the investors signatory thereto (the “Securities Purchase Agreement”), hereby represents, warrants and certifies as follows (capitalized terms used but not otherwise defined herein shall have the meaning set forth in the
Securities Purchase Agreement): 
  

	 	1.	The representations and warranties of the Company contained in the Securities Purchase Agreement are true and correct as of the date when made and as of the Closing
Date, as though made on and as of such date, except for such representations and warranties that speak as of a specific date. 

  

	 	2.	The Company has performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by the Transaction Documents to be
performed, satisfied or complied with by it at or prior to the Closing. 

 IN WITNESS WHEREOF, the
undersigned has executed this certificate this      day of December, 2010. 

	
	  

	[                    ]
	 [Chief Financial Officer] [Chief Executive Officer]

 Amendment to Securities Purchase Agreement 
 March 17, 2010 
 This
Amendment is to that certain Securities Purchase Agreement dated as of March 10, 2010, by and among Citizens South Banking Corporation (the “Company”), and the Purchasers (as defined therein) (the “Securities
Purchase Agreement”). Capitalized terms used herein and not otherwise defined have the meaning ascribed to them in the Securities Purchase Agreement. The Securities Purchase Agreement is hereby amended as follows: 
 1. Notwithstanding anything to the contrary set forth in the Purchase Agreement, the “Closing Date” for purposes of the Purchase Agreement shall
be March 17, 2010. 
 2. Notwithstanding anything to the contrary in the Purchase Agreement, all securities for the Preferred Shares shall
be issued in certificated form. 
 3. Section 6.17(b) of the Securities Purchase Agreement is deleted in its entirety and replaced with the
following: 
 “In the event that following the Closing, the P&A Agreement is not entered into by the Bank with the FDIC on or before
March 19, 2010 or the P&A Closing is not consummated on or before March 19, 2010, then the Company shall promptly notify Purchaser of either such event and either (i) the Company, upon written notice to the Purchasers, may
terminate this Agreement and rescind the purchase of the Securities hereunder or (ii) any Purchaser, solely with respect to itself and not with respect to any other Purchaser, upon written notice to the Company, may terminate this Agreement and
rescind the purchase hereunder by such Purchaser of the Securities specified on such Purchaser’s signature page hereto. Promptly following such termination, (i) the Company and Purchaser shall provide written notice to the Transfer Agent
notifying the Transfer Agent that this Agreement has been terminated and such purchase rescinded and that the share issuance instructions with respect to Purchaser shall be null and void (unless Purchaser is a Certificate Purchaser, in which case
Purchaser shall return to the Company for cancellation the certificates for its Securities concurrently with the Company returning Purchaser’s Subscription Amount pursuant to the following clause (ii)) and (ii) the Company shall promptly
return to Purchaser by wire transfer of immediately available funds to a bank account designated by Purchaser, its Subscription Amount.” 
 4. The following Section 6.19 shall be added: 
 “The Company hereby covenants and agrees that it will not transfer funds
received pursuant to the Securities Agreement to any of its subsidiaries or affiliates or any other Person other than contemporaneously with (or after) the P&A Closing.” 
 4. 
 Other than as set forth herein, the Purchase Agreement shall remain in full force and effect.

 IN WITNESS WHEREOF, the parties hereto have caused this amendment to be duly executed by
their respective authorized signatories as of the date first indicated above. 
  

			
	CITIZENS SOUTH BANKING CORPORATION
		
	By:	 	  

		 	Name:
		 	Title:

 [REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK] 
 [SIGNATURE PAGES FOR PURCHASERS FOLLOW] 

			
	PURCHASER:	 	  

			
		
	By:	 	  

	Name:	 	  

	Title:	 	  

 [Signature Page to Amendment to Securities Purchase Agreement]

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