Exhibit
10.1


 


SUBORDINATED
NOTE PURCHASE AGREEMENT


 


This
SUBORDINATED NOTE PURCHASE AGREEMENT (this “Agreement”) is dated as of May 27, 2021, and is made by and among
SB Financial Group, Inc., an Ohio corporation (“Company”), and the several purchasers of the Subordinated Notes named
on Schedule I hereto (each a “Purchaser” and collectively, the “Purchasers”).


 


RECITALS


 


WHEREAS,
Company has requested that the Purchasers purchase from Company up to $20 million in aggregate principal amount of Subordinated Notes
(as defined herein), which aggregate amount is intended to qualify as Tier 2 Capital (as defined herein).


 


WHEREAS,
Company has engaged Janney Montgomery Scott LLC as its exclusive placement agent (the “Placement Agent”) for the
offering of the Subordinated Notes.


 


WHEREAS,
each of the Purchasers is an “accredited investor” as such term is contemplated by Rule 501 of Regulation D (“Regulation
D”) promulgated under the Securities Act of 1933, as amended (the “Securities Act”) or a QIB (as defined
herein).


 


WHEREAS,
the offer and sale of the Subordinated Notes by Company is being made in reliance upon the exemptions from registration available
under Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D promulgated under the Securities Act.


 


WHEREAS,
each Purchaser is willing to purchase from Company a Subordinated Note in the principal amount set forth in Schedule I (the
“Subordinated Note Amount”) in accordance with the terms, subject to the conditions and in reliance on, the recitals,
representations, warranties, covenants and agreements set forth herein and in the Subordinated Notes.


 


NOW,
THEREFORE, in consideration of the mutual covenants, conditions and agreements herein contained and other good and valuable consideration,
the receipt of which is hereby acknowledged, the parties hereto hereby agree as follows:


 


AGREEMENT


 


1. DEFINITIONS.


 


1.1 Defined
Terms. The following capitalized terms generally used in this Agreement and in the Subordinated Notes have the meanings defined
or referenced below. Certain other capitalized terms used only in specific sections of this Agreement may be defined in such sections.


 


“Affiliate(s)”
means, with respect to any Person, such Person’s immediate family members, partners, members or parent and subsidiary corporations,
and any other Person directly or indirectly controlling, controlled by, or under common control with said Person and their respective
Affiliates.


 




     


     


    

  


“Agreement”
has the meaning set forth in the preamble hereto.


 


“Bank”
means The State Bank and Trust Company, an Ohio state chartered commercial bank and a wholly owned subsidiary of the Company.


 


“Business
Day” means any day other than a Saturday, Sunday, or any other day on which banking institutions in the State of Ohio are permitted
or required by any applicable law or executive order to close.


 


“Bylaws”
means the Amended and Restated Regulations of Company.


 


“Closing”
has the meaning set forth in Section 2.4.


 


“Closing
Date” means May 27, 2021.


 


“Company”
has the meaning set forth in the preamble hereto and shall include any successor to Company by merger or otherwise.


 


“Company’s
Liabilities” means Company’s obligations under the Transaction Documents.


 


“Company’s
Reports” means (a) audited financial statements of the Company included in the SEC Reports for the years ended December 31,
2020 and December 31, 2019; (b) unaudited financial statements of the Company included in the SEC Reports for the period ended March
31, 2021; and (c) the Company’s reports for the period ended June 30, 2020 and the year ended December 31, 2020 as filed with the
FRB as required by regulations of the FRB.


 


“Disbursement”
has the meaning set forth in Section 3.1.


 


“DTC”
has the meaning set forth in Section 5.8.


 


“Equity
Interest” means any and all shares, interests, participations or other equivalents (however designated) of capital stock of
a corporation, any and all equivalent ownership interests in a Person which is not a corporation, and any and all warrants, options or
other rights to purchase any of the foregoing.


 


“Event
of Default” has the meaning set forth in the Subordinated Notes.


 


“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and the regulations of the SEC, as incorporated into
regulations of the FRB and the FDIC, promulgated thereunder.


 


“FDIC”
means the Federal Deposit Insurance Corporation.


 


“FRB”
means the Board of Governors of the Federal Reserve System.


 


“GAAP”
means generally accepted accounting principles in effect from time to time in the United States of America.


 




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“Governmental
Agency(ies)” means, individually or collectively, any federal, state, county or local governmental department, commission,
board, regulatory authority or agency (including, without limitation, each applicable Regulatory Agency) with jurisdiction over Company
or any of its Subsidiaries.


 


“Governmental
Licenses” has the meaning set forth in Section 4.3.


 


“Hazardous
Materials” means flammable explosives, asbestos, urea formaldehyde insulation, polychlorinated biphenyls, radioactive materials,
hazardous wastes, toxic or contaminated substances or similar materials, including, without limitation, any substances which are “hazardous
substances,” “hazardous wastes,” “hazardous materials” or “toxic substances” under the Hazardous
Materials Laws and/or other applicable environmental laws, ordinances or regulations.


 


“Hazardous
Materials Laws” mean any laws, regulations, permits, licenses or requirements pertaining to the protection, preservation, conservation
or regulation of the environment which relates to real property, including: the Clean Air Act, as amended, 42 U.S.C. Section 7401 et
seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C. Section 1251 et seq.; the Resource Conservation and Recovery Act
of 1976, as amended, 42 U.S.C. Section 6901 et seq.; the Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended (including the Superfund Amendments and Reauthorization Act of 1986), 42 U.S.C. Section 9601 et seq.; the Toxic Substances
Control Act, as amended, 15 U.S.C. Section 2601 et seq.; the Occupational Safety and Health Act, as amended, 29 U.S.C. Section 651, the
Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. Section 11001 et seq.; the Mine Safety and Health Act of 1977,
as amended, 30 U.S.C. Section 801 et seq.; the Safe Drinking Water Act, 42 U.S.C. Section 300f et seq.; and all comparable state and
local laws, laws of other jurisdictions or orders and regulations.


 


“Indebtedness”
means and includes: (i) all items arising from the borrowing of money that, according to GAAP as in effect from time to time, would be
included in determining total liabilities as shown on the consolidated balance sheet of Company and its Subsidiaries; and (ii) all obligations
secured by any lien on property owned by Company or any Subsidiary whether or not such obligations shall have been assumed; provided,
however, Indebtedness shall not include deposits or other indebtedness created, incurred or maintained in the ordinary course
of the business of the Company or Bank (including, without limitation, federal funds purchased, advances from any Federal Home Loan Bank,
secured deposits of municipalities, letters of credit issued by Company or Bank and repurchase arrangements) and consistent with customary
banking practices and applicable laws and regulations.


 


“Leases”
means all leases, licenses or other documents providing for the use or occupancy of any portion of any Property, including all amendments,
extensions, renewals, supplements, modifications, sublets and assignments thereof and all separate letters or separate agreements relating
thereto.


 




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“Material
Adverse Effect” means, with respect to any Person, any change or effect that (i) is or would be reasonably likely to be material
and adverse to the financial position, results of operations or business of such Person, or (ii) would materially impair the ability
of any Person to perform its respective obligations under any of the Transaction Documents, or otherwise materially impede the consummation
of the transactions contemplated hereby; provided, however, that “Material Adverse Effect” shall not be deemed
to include the impact of (1) changes in banking and similar laws, rules or regulations of general applicability or interpretations thereof
by Governmental Agencies, (2) changes in GAAP or regulatory accounting requirements applicable to financial institutions and their holding
companies generally, (3) changes after the date of this Agreement in general economic or capital market conditions affecting financial
institutions or their market prices generally and not specifically related to Company, the Bank or Purchasers, (4) any acts of God, natural
disasters, terrorism, armed hostilities, sabotage, war, epidemic, pandemic or disease outbreak (including the COVID-19 virus) or any
escalation or worsening of any of the foregoing, (5) direct effects of compliance with this Agreement on the operating performance of
Company, the Bank or Purchasers, including expenses incurred by Company or Purchasers in consummating the transactions contemplated by
this Agreement, and (6) the effects of any action or omission taken by Company with the prior written consent of Purchasers, and vice
versa, or as otherwise contemplated by this Agreement and the Subordinated Notes.


 


“Maturity
Date” means June 1, 2031.


 


“Noteholder”
has the meaning set forth in the Subordinated Notes.


 


“Person”
means an individual, a corporation (whether or not for profit), a partnership, a limited liability company, a joint venture, an association,
a trust, an unincorporated organization, a government or any department or agency thereof (including a Governmental Agency) or any other
entity or organization.


 


“Placement
Agent” has the meaning set forth in the Recitals.


 


“Property”
means any real property owned or leased by Company or any Affiliate or Subsidiary of Company.


 


“Purchasers”
has the meaning set forth in the preamble hereto.


 


“Regulation
D” has the meaning set forth in the Recitals.


 


“Regulatory
Agencies” means any federal or state agency charged with the supervision or regulation of depository institutions or holding
companies of depository institutions, or engaged in the insurance of depository institution deposits, or any court, administrative agency
or commission or other authority, body or agency having supervisory or regulatory authority with respect to Company, Bank or any of their
Subsidiaries.


 


“Secondary
Market Transaction” has the meaning set forth in Section 5.5.


 


“Securities
Act” has the meaning set forth in the Recitals.


 


“SEC”
means the Securities and Exchange Commission.


 




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“Subordinated
Note” means the Subordinated Note (or collectively, the “Subordinated Notes”) in the form attached as Exhibit
A hereto and issued pursuant to the terms of this Agreement, as amended, restated, supplemented or modified from time to time, and
each Subordinated Note delivered in substitution or exchange for such Subordinated Note.


 


“Subordinated
Note Amount” has the meaning set forth in the Recitals.


 


“Subsidiary”
means with respect to any Person, any corporation or entity in which a majority of the outstanding Equity Interest is directly or indirectly
owned by such Person.


 


“Tier
2 Capital” has the meaning given to the term “Tier 2 capital” in 12 C.F.R. Part 217 and 12 C.F.R. Part 250, as
amended, modified and supplemented and in effect from time to time or any replacement thereof.


 


“Transaction
Documents” has the meaning set forth in Section 3.2.1.


 


1.2 Interpretations.
The foregoing definitions are equally applicable to both the singular and plural forms of the terms defined. The words “hereof”,
“herein” and “hereunder” and words of like import when used in this Agreement shall refer to this Agreement as
a whole and not to any particular provision of this Agreement. The word “including” when used in this Agreement without the
phrase “without limitation,” shall mean “including, without limitation.” All references to time of day herein
are references to Eastern Time unless otherwise specifically provided. All references to the Agreement and Subordinated Notes shall be
deemed to be to such documents as amended, modified or restated from time to time. With respect to any reference in this Agreement to
any defined term, (i) if such defined term refers to a Person, then it shall also mean all heirs, legal representatives and permitted
successors and assigns of such Person, and (ii) if such defined term refers to a document, instrument or agreement, then it shall also
include any replacement, extension or other modification thereof.


 


1.3 Exhibits
Incorporated. All Exhibits attached are hereby incorporated into this Agreement.


 


2. SUBORDINATED
DEBT.


 


2.1 General
Matters.


 


2.1.1 Certain
Terms. Subject to the terms and conditions herein contained, Company proposes to issue and sell to the Purchasers, severally
and not jointly, Subordinated Notes in an aggregate principal amount equal to the aggregate of the Subordinated Note Amounts. Purchasers,
severally and not jointly, each agree to purchase the Subordinated Notes from the Company on the Closing Date in accordance with the
terms of, and subject to the conditions and provisions set forth in, this Agreement and the Subordinated Notes. The Subordinated Note
Amounts shall be disbursed in accordance with Section 3.1. The Subordinated Notes shall bear interest as set forth in the Subordinated
Notes. The unpaid principal balance of the Subordinated Notes plus all accrued but unpaid interest thereon shall be due and payable on
the Maturity Date, or such earlier date on which such amount shall become due and payable on account of (i) acceleration by Purchasers
in accordance with the terms of the Subordinated Notes and this Agreement or (ii) Company’s delivery of a notice of redemption
or repayment in accordance with the terms of the Subordinated Notes. In connection with any redemption of the Subordinated Notes, any
redemption shall be made on a pro rata basis, and, for purposes of a redemption processed through the Depository, on a “Pro Rata
Pass-Through Distribution of Principal” basis, among all of the Notes outstanding at the time thereof.


 




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2.1.2 Subordination.
The Subordinated Notes shall be subordinated in accordance with the subordination provisions set forth therein.


 


2.2 Maturity
Date. On the Maturity Date, all sums due and owing under the Subordinated Notes shall be repaid in full. Company acknowledges
and agrees that Purchasers have not made any commitments, either express or implied, to extend the terms of the Subordinated Notes past
their Maturity Date, and shall not extend such terms beyond the Maturity Date unless Company and Purchasers hereafter specifically otherwise
agree in writing.


 


2.3 Unsecured
Obligations; No Sinking Fund. The obligations of Company to Purchasers under the Subordinated Notes shall be unsecured. The Subordinated
Notes are not entitled to the benefit of any sinking fund.


 


2.4 The
Closing. The execution and delivery of the Transaction Documents (the “Closing”) shall occur at the offices
of Company at 10:00 a.m. (local time) on the Closing Date, or at such other place or time or on such other date as the parties hereto
may agree.


 


2.5 Payments.
Company agrees that matters concerning payments and application of payments shall be as set forth in this Agreement and in the Subordinated
Notes.


 


2.6 Right
of Offset. Each Purchaser hereby expressly waives any right of offset it may have against Company.


 


2.7 Use
of Proceeds. Company shall use the net proceeds from the sale of Subordinated Notes for general corporate purposes.


 


3. DISBURSEMENT.


 


3.1 Disbursement.
On the Closing Date, assuming all of the terms and conditions set forth in Section 3.2 have been satisfied by Company and Company
has executed and delivered to Purchasers each of the Agreement and the Subordinated Notes and any other related documents in form and
substance reasonably satisfactory to Purchasers, each Purchaser shall disburse the Subordinated Note Amount set forth next to its name
in Schedule I in immediately available funds to Company in exchange for a Subordinated Note with a principal amount equal to such
Subordinated Note Amount (the “Disbursement”). The Company will deliver to the respective Purchaser one or more certificates
representing the Subordinated Notes in definitive form (or provide evidence of the same with the original to be delivered by the Company
by overnight delivery on the next calendar day in accordance with the delivery instructions of Purchaser), registered in such names and
denominations as such Purchasers may request.


 


3.2 Conditions
Precedent to Disbursement. In conjunction with and as additional (but independent) supporting evidence for certain of the covenants,
representations and warranties made by Company herein, prior to and as a condition of each Purchaser’s obligation to consummate
the purchase of the Subordinated Note and to effect the Disbursement, Company shall deliver or cause to be delivered to Purchasers each
of the following (or Purchaser shall waive, in writing, such delivery, which written waiver shall be binding only on the Purchaser granting
such waiver):


 




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3.2.1 Transaction
Documents. This Agreement and the Subordinated Notes (collectively, the “Transaction Documents”), each duly
authorized and executed by Company.


 


3.2.2 Authority
Documents.


 


3.2.2.1 A
copy, certified by the Secretary or Assistant Secretary of Company, of the Articles of Incorporation of Company;


 


3.2.2.2 A
certificate of good standing of Company issued by the Secretary of State of the State of Ohio;


 


3.2.2.3 A
copy, certified by the Secretary or Assistant Secretary, of the Bylaws of Company;


 


3.2.2.4 A
copy, certified by the Secretary or Assistant Secretary of Company, of the resolutions of the board of directors of Company authorizing
the execution, delivery and performance of the Transaction Documents; and


 


3.2.2.5 An
incumbency certificate of the Secretary or Assistant Secretary of Company certifying the names of the officer or officers of Company
authorized to sign the Transaction Documents and the other documents provided for in this Agreement.


 


3.2.3 Other
Requirements. Such other additional information regarding the Company, the Bank and any other Subsidiary of Company and their
respective assets, liabilities (including any liabilities arising from, or relating to, legal proceedings) and contracts as a Purchaser
may reasonably require.


 


3.2.4 Officer’s
Certificate. A certificate signed on behalf of Company by a senior executive officer certifying that the representations and
warranties of Company set forth in this Agreement are true and correct in all respects on and as of the date of this Agreement and on
and as of the Closing Date as though made on and as of the Closing Date, except where the failure to be true and correct (without regard
to any materiality or Material Adverse Effect qualifications contained therein), individually or in the aggregate, would not be reasonably
likely to have a Material Adverse Effect (and except that (i) representations and warranties made as of a specified date shall only be
required to be true and correct as of such date and (ii) the representations and warranties of Company set forth in Sections 4.2.1,
4.2.3 and 4.5 shall be true and correct in all respects).


 


3.2.5 Opinion
of Counsel. Purchasers and Placement Agent shall have received the opinion of Vorys, Sater, Seymour and Pease LLP, counsel for
the Company, dated the Closing Date, substantially in the form annexed hereto as Exhibit B.


 


3.2.6 Aggregate
Investments. Prior to, or contemporaneously with the Closing, each Purchaser shall have actually subscribed for the Subordinated
Note Amount set forth on such Purchaser’s signature page.


 




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3.2.7 Other
Documents. Such other certificates, affidavits, schedules, resolutions, notes and/or other documents which are provided for hereunder
or as a Purchaser may reasonably request.


 


4. REPRESENTATIONS
AND WARRANTIES OF COMPANY.


 


Company
hereby represents and warrants to each Purchaser as follows:


 


4.1 Organization
and Authority.


 


4.1.1 Organization
Matters of Company and Its Subsidiaries.


 


4.1.1.1 
Company has been duly organized and is validly existing as a corporation in good standing under the laws of the State of Ohio and
has all requisite corporate power and authority to conduct its business and activities as presently conducted, to own its properties,
and to perform its obligations under the Transaction Documents. Company is duly qualified as a foreign corporation to transact business
and is in good standing in each other jurisdiction in which such qualification is required, whether by reason of the ownership or leasing
of property or the conduct of business, except where the failure so to qualify or to be in good standing would not result in a Material
Adverse Effect. Schedule 4.1.1.1 lists each state where the Company is engaged in business as a foreign corporation. Company is
duly registered as a bank holding company under the Bank Holding Company Act of 1956, as amended.


 


4.1.1.2 Bank
is validly existing as an Ohio-chartered commercial bank and has all requisite corporate power and authority to conduct its business
and activities as presently conducted and to own its properties. Bank is duly qualified as a foreign corporation to transact business
and is in good standing in each other jurisdiction in which such qualification is required, whether by reason of the ownership or leasing
of property or the conduct of business, except where the failure so to qualify or to be in good standing would not result in a Material
Adverse Effect. Schedule 4.1.1.2 lists each state where the Bank is engaged in business as a foreign corporation. The deposit
accounts of Bank are insured by the FDIC up to applicable limits. Neither Company nor Bank has received any notice or other information
indicating that Bank is not an “insured depository institution” as defined in 12 U.S.C. Section 1813, nor has any event occurred
which could reasonably be expected to adversely affect the status of Bank as an FDIC-insured institution.


 


4.1.1.3 Schedule
4.1.1.3 lists each Subsidiary of Company (other than the Bank) or Bank, and each has been duly organized and is validly existing
as a corporation or limited liability company, in each case in good standing under the laws of the jurisdiction of its incorporation
or formation, has corporate power and authority to own, lease and operate its properties and to conduct its business and is duly qualified
as a foreign entity to transact business and is in good standing in each jurisdiction in which such qualification is required, whether
by reason of the ownership or leasing of property or the conduct of business, except where the failure so to qualify or to be in good
standing would not result in a Material Adverse Effect. All of the issued and outstanding shares of capital stock or other equity interests
in each Subsidiary have been duly authorized and validly issued, are fully paid and non-assessable and are owned by Company or Bank,
directly or through Subsidiaries, free and clear of any security interest, mortgage, pledge, lien, encumbrance or claim; none of the
outstanding shares of capital stock of, or other equity interests in, any Subsidiary were issued in violation of the preemptive or similar
rights of any security holder of such Subsidiary or any other entity.


 




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4.1.2 Capital
Stock and Related Matters. The Articles of Incorporation of Company authorize Company to issue 10,000,000 shares of common stock,
no par value and 200,000 shares of preferred stock, no par value. As of the date of this Agreement, there are 7,202,665 shares of the
Company’s common stock issued and outstanding and no shares of the Company’s preferred stock issued and outstanding. All
of the outstanding capital stock of Company has been duly authorized and validly issued and is fully paid and nonassessable. Except as
set forth on Schedule 4.1.2, there are, as of the date hereof, no outstanding options,
rights, warrants or other agreements or instruments obligating Company to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of the capital stock of Company or obligating Company to grant, extend or enter into any such agreement or commitment
to any Person except pursuant to Company’s equity incentive plans duly adopted by Company’s Board of Directors.


 


4.2 No
Impediment to Transactions.


 


4.2.1 Transaction
is Legal and Authorized. The issuance of the Subordinated Notes, the borrowing of the aggregate of the Subordinated Note Amounts,
the execution of the Transaction Documents and compliance by Company with all of the provisions of the Transaction Documents are within
the corporate and other powers of Company.


 


4.2.2 Agreement.
The Agreement has been duly authorized, executed and delivered by Company, and, assuming due authorization, execution and delivery by
the other parties thereto, constitutes the legal, valid and binding obligations of Company, enforceable against the Company in accordance
with its terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting creditors’ rights generally or by general equitable principles.


 


4.2.3 Subordinated
Notes. The Subordinated Notes have been duly authorized by Company and when executed by the Company, issued and delivered to
and paid for by the Purchasers in accordance with the terms of the Agreement, will have been duly executed, issued and delivered, and
will constitute legal, valid and binding obligations of Company enforceable in accordance with their terms, except as enforcement thereof
may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting creditors’
rights generally or by general equitable principles.


 




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4.2.4 No
Defaults or Restrictions. Neither the execution and delivery of the Transaction Documents nor compliance with their respective
terms and conditions will (i) violate, conflict with or result in a breach of, or constitute a default under: (1) the Articles of Incorporation
or Bylaws of Company; (2) any of the terms, obligations, covenants, conditions or provisions of any corporate restriction or of any contract,
agreement, indenture, mortgage, deed of trust, pledge, bank loan or credit agreement, or any other agreement or instrument to which Company
or Bank, as applicable, is now a party or by which it or any of its properties may be bound or affected; (3) any judgment, order, writ,
injunction, decree or demand of any court, arbitrator, grand jury, or Governmental Agency applicable to Company or Bank; or (4) any statute,
rule or regulation applicable to Company, except, in the case of item (2), for such violations and conflicts that would not reasonably
be expected to have, singularly or in the aggregate, a Material Adverse Effect on Company and its Subsidiaries taken as a whole, or (ii)
result in the creation or imposition of any lien, charge or encumbrance of any nature whatsoever upon any property or asset of Company.
Neither Company nor Bank is in default in the performance, observance or fulfillment of any of the terms, obligations, covenants, conditions
or provisions contained in any indenture or other agreement creating, evidencing or securing Indebtedness of any kind or pursuant to
which any such Indebtedness is issued, or any other agreement or instrument to which Company or Bank is a party or by which Company or
Bank or any of its properties may be bound or affected, except, in each case, only such defaults that would not reasonably be expected
to have, singularly or in the aggregate, a Material Adverse Effect on Company and its Subsidiaries taken as a whole.


 


4.2.5 Governmental
Consent. No governmental orders, permissions, consents, approvals or authorizations are required to be obtained by Company that
have not been obtained, and no registrations or declarations are required to be filed by Company that have not been filed in connection
with, or, in contemplation of, the execution and delivery of, and performance under, the Transaction Documents, except for applicable
requirements if any, of the Securities Act, the Exchange Act, or under state securities laws or “blue sky” laws of the various
states and any applicable federal or state banking laws and regulations.


 


4.3 Possession
of Licenses and Permits. Each of Company, Bank and their respective Subsidiaries possess such permits, licenses, approvals, consents
and other authorizations (collectively, “Governmental Licenses”) issued by the appropriate Governmental Agencies necessary
to conduct the business now operated by it except where the failure to possess such Governmental Licenses would not, singularly or in
the aggregate, have a Material Adverse Effect on Company or such applicable Subsidiary of Company; Company and each Subsidiary of Company
is in compliance with the terms and conditions of all such Governmental Licenses, except where the failure so to comply would not, singly
or in the aggregate, have a Material Adverse Effect on Company or such applicable Subsidiary of Company; all of the Governmental Licenses
are valid and in full force and effect, except where the invalidity of such Governmental Licenses or the failure of such Governmental
Licenses to be in full force and effect would not have a Material Adverse Effect on Company or such applicable Subsidiary of Company;
and neither Company nor any Subsidiary of Company has received any notice of proceedings relating to the revocation or modification of
any such Governmental Licenses.


 








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4.4 Financial
Condition.


  


4.4.1 Financial
Statements. The financial statements included in Company’s Reports (including the related notes, where applicable), which
have been provided to Purchasers (i) have been prepared from, and are in accordance with, the books and records of Company and its Subsidiaries;
(ii) fairly present in all material respects the results of operations, changes in stockholders’ equity and financial position
of Company and its consolidated Subsidiaries, for the respective fiscal periods or as of the respective dates therein set forth (subject
in the case of unaudited statements to recurring year-end audit adjustments normal in nature and amount), as applicable; (iii) complied
as to form, as of their respective dates of filing in all material respects with applicable accounting and banking requirements as applicable,
with respect thereto; and (iv) have been prepared in accordance with GAAP consistently applied during the periods involved, except, in
each case, (w) as required by any regulatory accounting practices; (x) as indicated in such statements or in the notes thereto; (y) for
any statement therein or omission therefrom that was corrected, amended or supplemented or otherwise disclosed or updated in a subsequent
Company Report, and (z) to the extent that any unaudited interim financial statements do not contain the footnotes required by GAAP,
and were or are subject to normal and recurring year-end adjustments, which were not or are not expected to be material in amount, either
individually or in the aggregate. The books and records of Company and its Subsidiaries have been, and are being, maintained in all material
respects in accordance with GAAP and any other applicable legal and accounting requirements. Neither Company nor any Subsidiary of Company
has any material liability of any nature whatsoever (whether absolute, accrued, contingent or otherwise and whether due or to become
due), except for those liabilities that are reflected or reserved against on the consolidated balance sheet of Company contained in Company’s
Reports for the most recently completed quarterly or annual fiscal period, as applicable, and for liabilities incurred in the ordinary
course of business consistent with past practice or in connection with this Agreement and the transactions contemplated hereby.


 


4.4.2 Controls.
The records, systems, controls, data and information of Company and the Bank are recorded, stored, maintained and operated under
means (including any electronic, mechanical or photographic process, whether computerized or not) that are under the exclusive ownership
and direct control of it or its accountants including all means of access thereto and therefrom, except for any non-exclusive ownership
and non-direct control that would not reasonably be expected to have a Material Adverse Effect on the system of internal accounting controls
described in the following sentence. Company, on a consolidated basis, has devised and maintained a system of internal accounting controls
sufficient to provide reasonable assurances (i) that the assets of Company and the Bank are properly recorded and (ii) regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.


 


4.4.3 Absence
of Default. Since the date of the latest audited financial statements included in the Company Reports, no event has occurred
which either of itself or with the lapse of time or the giving of notice or both, would give any creditor of Company or Bank the right
to accelerate the maturity of any material Indebtedness of Company or Bank. Neither Company nor Bank is in default under any other Lease,
agreement or instrument, or any law, rule, regulation, order, writ, injunction, decree, determination or award, non-compliance with which
could reasonably be expected to result in a Material Adverse Effect on Company and its Subsidiaries taken as a whole.


 


4.4.4 Solvency.
After giving effect to the consummation of the transactions contemplated by this Agreement, Company has capital sufficient to carry on
its business and transactions and is solvent and able to pay its debts as they mature. No transfer of property is being made and no Indebtedness
is being incurred in connection with the transactions contemplated by this Agreement with the intent to hinder, delay or defraud either
present or future creditors of Company or any Subsidiary of Company.


 




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4.4.5 Ownership
of Property. Company and each of its Subsidiaries has good and marketable title as to all real property owned by it and good
title to all assets and properties owned by Company and such Subsidiary in the conduct of its businesses, whether such assets and properties
are real or personal, tangible or intangible, including assets and property reflected in the most recent balance sheet contained in Company’s
Reports or acquired subsequent thereto (except to the extent that such assets and properties have been disposed of in the ordinary course
of business, since the date of such balance sheet), subject to no encumbrances, liens, mortgages, security interests or pledges, except
(i) those items which secure liabilities for public or statutory obligations or any discount with, borrowing from or other obligations
to the Federal Home Loan Bank, inter-bank credit facilities, reverse repurchase agreements or any transaction by Bank acting in a fiduciary
capacity, (ii) statutory liens for amounts not yet delinquent or which are being contested in good faith and (iii) such as do not, singly
or in the aggregate, materially affect the value of such property and do not materially interfere with the use made and proposed to be
made of such property by Company or any of its Subsidiaries. Company and each of its Subsidiaries, as lessee, has the right under valid
and existing Leases of real and personal properties that are material to Company or such Subsidiary, as applicable, in the conduct of
its business to occupy or use all such properties as are presently occupied and used by it. Such existing Leases and commitments to lease
constitute or will constitute operating leases for both tax and financial accounting purposes except as otherwise disclosed in the Company’s
Reports and the lease expense and minimum rental commitments with respect to such Leases and lease commitments are as disclosed in all
material respects in Company’s Reports.


 


4.4.6 No
Material Adverse Change. Since the date of the latest audited financial statements included in Company’s Reports, there
has been no development or event which has had or could reasonably be expected to have a Material Adverse Effect on Company and its Subsidiaries
taken as a whole.


 


4.5 Legal
Matters.


 


4.5.1 Compliance
with Law. Company, Bank and each of their Subsidiaries (i) has complied with and (ii) to the Company’s knowledge is not
under investigation with respect to, and have not been threatened to be charged with or given any notice of any material violation of
any applicable statutes, rules, regulations, orders and restrictions of any domestic or foreign government, or any instrumentality or
agency thereof, having jurisdiction over the conduct of its business or the ownership of its properties, except where any such failure
to comply or violation would not reasonably be expected to have a Material Adverse Effect on Company or any of its Subsidiaries taken
as a whole. Company, Bank and each of their Subsidiaries (x) is, and at all times prior to the date hereof has been, in compliance with
all applicable statutes, rules, regulations, orders and restrictions of any domestic or foreign government, or any Governmental Agency,
and their own privacy policies and written commitments to their respective customers, consumers and employees, concerning data protection
and the privacy and security of personal data and the nonpublic personal information of their respective customers, consumers and employees,
except in each case where the failure to so comply would not result, individually or in the aggregate, in a Material Adverse Effect,
and (y) at no time during the two years prior to the date hereof has Company or Bank received any written notice asserting any such violations.


 




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4.5.2 Regulatory
Enforcement Actions. Company and its Subsidiaries are in compliance in all material respects with all laws administered by and
regulations of any Governmental Agency applicable to it or to them, the failure to comply with which would have a Material Adverse Effect.
None of Company, Company’s Subsidiaries nor any of their officers or directors is now operating under any restrictions, agreements,
memoranda, commitment letter, supervisory letter or similar regulatory correspondence, or other commitments (other than restrictions
of general application) imposed by any Governmental Agency, nor are, to Company’s knowledge, (a) any such restrictions threatened,
(b) any agreements, commitment letters, supervisory letters or similar regulatory correspondence, or other commitments being sought by
any Governmental Agency, or (c) any legal or regulatory violations previously identified by, or penalties or other remedial actions previously
imposed by, any Governmental Agency unresolved.


 


4.5.3 Pending
Litigation. There are no actions, suits, proceedings or written agreements pending, or, to Company’s knowledge, threatened
or proposed, against Company, Bank or any of its Subsidiaries at law or in equity or before or by any federal, state, municipal, or other
governmental department, commission, board, or other administrative agency, domestic or foreign, that, either separately or in the aggregate,
would reasonably be expected to have a Material Adverse Effect on Company or any of its Subsidiaries taken as a whole or affect issuance
or payment of the Subordinated Notes; and neither Company nor any of its Subsidiaries is a party to or named as subject to the provisions
of any order, writ, injunction, or decree of, or any written agreement with, any court, commission, board or agency, domestic or foreign,
that either separately or in the aggregate, will have a Material Adverse Effect on Company and any of its Subsidiaries taken as a whole.


 


4.5.4 Environmental.
No Property is or, to Company’s knowledge, has been a site for the use, generation, manufacture, storage, treatment, release, threatened
release, discharge, disposal, transportation or presence of any Hazardous Materials and neither Company nor Bank has engaged in such
activities. There are no claims or actions pending or, to Company’s knowledge, threatened against Company or Bank by any Governmental
Agency or by any other Person relating to any Hazardous Materials or pursuant to any Hazardous Materials Law.


 


4.5.5 Brokerage
Commissions. Other than with respect to the Placement Agent, neither Company nor any Affiliate of Company is obligated to pay
any brokerage commission or finder’s fee to any Person in connection with the transactions contemplated by this Agreement.


 


4.5.6 Investment
Company Act. Neither Company nor Bank is an “investment company” or a company “controlled” by an “investment
company,” within the meaning of the Investment Company Act of 1940, as amended


 


4.6 No
Misstatement. No information, exhibit, report, schedule or document, when viewed together as a whole, furnished by Company to
Purchasers in connection with the negotiation, execution or performance of this Agreement contains any untrue statement of a material
fact, or omits to state a material fact necessary to make the statements contained therein not misleading in light of the circumstances
when made or furnished to Purchasers and as of the Closing Date.


 




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4.7 Tax
Matters. Each of Company and Bank has (i) filed all material foreign, U.S. federal, state and local tax returns, information
returns and similar reports that are required to be filed, and all such tax returns are true, correct and complete in all material respects,
and (ii) paid all material taxes required to be paid by it and any other material assessment, fine or penalty levied against it other
than taxes (x) currently payable without penalty or interest, or (y) being contested in good faith by appropriate proceedings.


 


4.8 Offering
of Securities. Neither Company nor any Person acting on its behalf has taken any action which would subject the offering, issuance
or sale of the Subordinated Notes to the registration requirements of the Securities Act. Neither the Company nor 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)
in connection with any offer or sale of the Subordinated Notes pursuant to the transactions contemplated by the Transaction Documents.
Assuming the accuracy of Purchasers’ representations and warranties set forth in this Agreement, no registration under the Securities
Act is required for the offer and sale of the Subordinated Notes by the Company to Purchasers. No “bad actor” disqualifying
event described in Rule 506(d)(1)(i)-(viii) of the Securities Act (a “Disqualification Event”) is applicable to the Company
or, to the Company’s knowledge, any Person described in Rule 506(d)(1) (each, a “Company Covered Person”). To the Company’s
knowledge, no Company Covered Person is subject to a Disqualification Event. The Company has complied, to the extent applicable, with
its disclosure obligations under Rule 506(e).


 


4.9 Representations
and Warranties Generally. The representations and warranties of the Company set forth in this Agreement and in any certificate
signed by an officer and delivered to the Purchasers pursuant to or in connection with this Agreement (to the extent provided prior to
Closing) are true and correct as of the date hereof and will be true and correct as of the Closing Date and as otherwise specifically
provided herein or therein. None of the representations, warranties, covenants and agreements made in this Agreement or in any certificate
or other document delivered to Purchasers by or on behalf of Company pursuant to or in connection with this Agreement contains any untrue
statement of a material fact or omits to state a material fact or any fact necessary to make the statements contained therein not misleading
in light of the circumstances when made and as of the Closing Date.


 


5 GENERAL
COVENANTS, CONDITIONS AND AGREEMENTS.


 


Company
hereby further covenants and agrees with each Purchaser as follows:


 


5.1
 Compliance with Transaction Documents. Company shall, and shall cause the Bank to,
comply with, observe and timely perform each and every one of the covenants, agreements and obligations under the Transaction Documents.


 


5.2 Affiliate
Transactions. Company shall not itself, nor shall it cause, permit or allow any Subsidiary to, enter into any transaction, including,
the purchase, sale or exchange of property or the rendering of any service, with any Affiliate of Company except in the ordinary course
of business and pursuant to the reasonable requirements of Company’s or such Affiliate’s business and upon terms consistent
with applicable laws and regulations and reasonably found by the appropriate Company and/or Subsidiary personnel to be fair and reasonable
and no less favorable to Company or such Affiliate than would be obtained in a comparable arm’s length transaction with a Person
not an Affiliate.


 




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5.3       Compliance
with Laws.


 


5.3.1 Generally.
Company shall comply and cause each of its Subsidiaries to comply in all material respects with all applicable statutes, rules, regulations,
orders and restrictions in respect of the conduct of its business and the ownership of its properties, except, in each case, where such
noncompliance would not reasonably be expected to have a Material Adverse Effect on Company or any of its Subsidiaries taken as a whole.


 


5.3.2 Regulated
Activities. Company shall not itself, nor shall it cause, permit or allow Bank or any other Subsidiary to (i) engage in any business
or activity not permitted by all applicable laws and regulations, except where such business or activity would not reasonably be expected
to have a Material Adverse Effect on Company or any of its Subsidiaries taken as a whole or (ii) make any loan or advance secured by
the capital stock of another bank or depository institution, or acquire the capital stock, assets or obligations of or any interest in
another bank or depository institution, in each case other than in accordance with applicable laws and regulations and safe and sound
banking practices.


 


5.3.3 Taxes.
Company shall and shall cause Bank and any other Subsidiary to promptly pay and discharge all taxes, assessments and other governmental
charges imposed upon Company, Bank or any other Subsidiary or upon the income, profits, or property of Company or any Subsidiary and
all claims for labor, material or supplies which, if unpaid, might by law become a lien or charge upon the property of Company, Bank
or any other Subsidiary. Notwithstanding the foregoing, none of Company, Bank or any other Subsidiary shall be required to pay any such
tax, assessment, charge or claim, so long as the validity thereof shall be contested in good faith by appropriate proceedings, and appropriate
reserves therefor shall be maintained on the books of Company, Bank and such other Subsidiary.


 


5.3.4 Corporate
Existence. Company shall do or cause to be done all things reasonably necessary to maintain, preserve and renew its corporate
existence and that of Bank and their respective rights and franchises, and comply in all material respects with all related laws applicable
to Company, Bank or their Subsidiaries.


 


5.3.5 Dividends,
Payments, and Guarantees During Event of Default. During the continuance of an Event of Default and except as required by any
federal or state Governmental Agency, Company agrees not to (a) declare or pay any dividends on, or redeem, purchase, acquire or make
a liquidation payment with respect to, any of its capital stock; (b) make any payment of principal of, or interest or premium, if any,
on, or repay, repurchase or redeem any of Company’s Indebtedness that ranks equal with or junior to the Subordinated Notes; or
(c) make any payments under any guarantee that ranks equal with or junior to the Subordinated Notes, other than (i) any dividends or
distributions in shares of, or options, warrants or rights to subscribe for or purchase shares of, any class of Company’s common
stock; (ii) any declaration of a dividend in connection with the implementation of a shareholders’ rights plan, or the issuance
of stock under any such plan in the future, or the redemption or repurchase of any such rights pursuant thereto; (iii) as a result of
a reclassification of Company’s capital stock or the exchange or conversion of one class or series of Company’s capital stock
for another class or series of Company’s capital stock; (iv) the purchase of fractional interests in shares of Company’s
capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged; or
(v) purchases of any class of Company’s common stock related to the issuance of common stock or rights under any benefit plans
for Company’s directors, officers or employees or any of Company’s dividend reinvestment plans.


 




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5.3.6 Tier
2 Capital. If all or any portion of the Subordinated Notes ceases to qualify as Tier 2 Capital, other than due to the limitation
imposed on the capital treatment of subordinated debt during the five (5) years immediately preceding the Maturity Date of the Subordinated
Notes, Company will immediately notify the Noteholders thereof, and thereafter Company and the Noteholders will work together in good
faith to execute and deliver all agreements as reasonably necessary in order to restructure the applicable portions of the obligations
evidenced by the Subordinated Notes to qualify as Tier 2 Capital, if requested by Company; provided, however, that nothing contained
in this Agreement shall limit the Company’s right to redeem the Subordinated Notes if the Subordinated Notes cease to qualify as
Tier 2 Capital as described in the Subordinated Notes.


 


5.4 Absence
of Control. It is the intent of the parties to this Agreement that in no event shall Purchasers, by reason of any of the Transaction
Documents, be deemed to control, directly or indirectly, Company, and Purchasers shall not exercise, or be deemed to exercise, directly
or indirectly, a controlling influence over the management or policies of Company.


 


5.5 Secondary
Market Transactions. Each Noteholder shall have the right at any time and from time to time to securitize its Subordinated Note(s)
or any portion thereof in a single asset securitization or a pooled loan securitization of rated single or multi-class securities secured
by or evidencing ownership interests in the Subordinated Note(s) (each such securitization is referred to herein as a “Secondary
Market Transaction”). In connection with any such Secondary Market Transaction, the Company shall, at the Company’s expense,
reasonably cooperate in good faith with Noteholders and otherwise reasonably assist Noteholders in satisfying the market standards to
which Noteholders customarily adhere or which may be reasonably required in the marketplace or by applicable rating agencies in connection
with any such Secondary Market Transactions, but in no event shall the Company be required to incur more than $10,000 (without reimbursement)
in aggregate costs or expenses in connection therewith. Subject to any written confidentiality obligation, all information regarding
the Company may be furnished, without liability except in the case of gross negligence or willful misconduct, to any Noteholder and to
any Person reasonably deemed necessary by Noteholder in connection with such Secondary Market Transaction. Purchaser shall cause any
Person to whom Purchaser wishes to deliver confidential Company information related to the Secondary Market Transaction to execute and
deliver to Company a non-disclosure agreement reasonably acceptable to the Company unless such Person is a party to a commercially reasonable
non-disclosure agreement to which Company is a third party beneficiary. All documents, financial statements, appraisals and other data
relevant to Company or the Subordinated Notes may be retained by any such Person, subject to the terms of any applicable confidentiality
agreement.


 








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5.6 Information
Available to Facilitate Resales.


 


5.6.1       Current
Public Information. At the written request by Purchaser or Noteholder, with a view to making available to Purchaser or Noteholder
the benefits of certain SEC rules and regulations permitting the sale of the Subordinated Notes without registration as soon as allowed,
the Company shall, at all times from the date of this Agreement through the date that the restrictive legend is removed, use its commercially
reasonable efforts to make and keep available adequate current public information with respect to the Company, as those terms are understood
and defined in Rule 144(c) or any similar or analogous rules promulgated under the Securities Act, and, upon written request by Purchaser
or Noteholder, Company shall provide a written statement that Company has complied with such requirements.


 


5.6.2       144A
Information. While any Note meets the definition of “restricted securities” under the Securities Act, the Company
will make available, upon request by Purchaser or Noteholder, to any seller of such Note the information specified in Rule 144A(d)(4)
under the Securities Act, unless the Company is then subject to Section 13 or 15(d) of the Exchange Act.


 


5.7 CUSIP
Number. Prior to the Closing Date, the Company shall cause a CUSIP number to be obtained for the Subordinated Notes and printed
on the Subordinated Notes pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, and
promptly following the Closing Date, the Company will use its commercially reasonable efforts to cause the Subordinated Notes to be quoted
on Bloomberg.


 


5.8 DTC
Eligibility. The Company shall use commercially reasonable efforts to provide that the Subordinated Notes owned by Noteholders
that are either (a) a Qualified Institutional Buyer, as defined in Rule 144A under the Securities Act (each, a “QIB”),
or (b) an institutional “accredited investor,” as defined in Rule 501(a)(1), (2), (3), (7), (8), (12), or (13) under the
Securities Act, shall be issued in the form of one or more Global Subordinated Notes (as defined in the Subordinated Note) registered
in the name of Cede & Co. as nominee of The Depository Trust Company (“DTC”) or a nominee of DTC.


 


6. REPRESENTATIONS,
WARRANTIES AND COVENANTS OF PURCHASERS.


 


Each
Purchaser hereby represents and warrants to Company, and covenants with Company, severally and not jointly, as follows:


 


6.1 Legal
Power and Authority. It has all necessary power and authority to execute, deliver and perform its obligations under this Agreement
and to consummate the transactions contemplated hereby. It is an entity duly organized, validly existing and in good standing under the
laws its jurisdiction of organization.


 


6.2 Authorization
and Execution. The execution, delivery and performance of this Agreement has been duly authorized by all necessary action on
the part of such Purchaser, and this Agreement, assuming due authorization, execution and delivery by the Company, is a legal, valid
and binding obligation of such Purchaser, enforceable against such Purchaser in accordance with its terms, except as enforcement thereof
may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting creditors’
rights generally or by general equitable principles.


 


6.3 No
Conflicts. Neither the execution, delivery or performance of the Transaction Documents nor the consummation of any of the transactions
contemplated thereby will conflict with, violate, constitute a breach of or a default (whether with or without the giving of notice or
the passage of time or otherwise) under (i) its organizational documents, (ii) any agreement to which it is party, (iii) any law applicable
to it or (iv) any order, writ, judgment, injunction, decree, determination or award binding upon or affecting it.


 




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6.4 Purchase
for Investment. It is purchasing the Subordinated Note for its own account and not with a view to distribution and with no present
intention of reselling, distributing or otherwise disposing of the same. It has no present or contemplated agreement, undertaking, arrangement,
obligation, indebtedness or commitment providing for, or which is likely to compel, a disposition of the Subordinated Notes in any manner.


 


6.5 
Accredited Investor. It is and will be on the Closing Date an “accredited investor” as such term is defined in
Rule 501(a) of Regulation D and as contemplated by subsections (1), (2), (3) and (7) of Rule 501(a) of Regulation D, and has no less
than $5,000,000 in total assets.


 


6.6 Financial
and Business Sophistication. It has such knowledge and experience in financial and business matters that it is capable of evaluating
the merits and risks of the prospective investment in the Subordinated Notes. It has relied solely upon its own knowledge of, and/or
the advice of its own legal, financial or other advisors with regard to, the legal, financial, tax and other considerations involved
in deciding to invest in the Subordinated Notes.


 


6.7 Ability
to Bear Economic Risk of Investment. It recognizes that an investment in the Subordinated Notes involves substantial risk. It
has the ability to bear the economic risk of the prospective investment in the Subordinated Notes, including the ability to hold the
Subordinated Notes indefinitely, and further including the ability to bear a complete loss of all of its investment in Company.


 


6.8       Information.
It acknowledges that: (i) it is not being provided with the disclosures that would be required if the offer and sale of the Subordinated
Notes were registered under the Securities Act, nor is it being provided with any offering circular or prospectus prepared in connection
with the offer and sale of the Subordinated Notes; (ii) it has conducted its own examination of Company and the terms of the Subordinated
Notes to the extent it deems necessary to make its decision to invest in the Subordinated Notes; and (iii) it has availed itself of publicly
available financial and other information concerning Company to the extent it deems necessary to make its decision to purchase the Subordinated
Notes. It has reviewed the information set forth in Company’s Reports and the exhibits and schedules hereto.


 


6.9 Access
to Information. It acknowledges that it and its advisors have been furnished with all materials relating to the business, finances
and operations of Company that have been requested of it or its advisors and have been given the opportunity to ask questions of, and
to receive answers from, persons acting on behalf of Company concerning terms and conditions of the transactions contemplated by this
Agreement in order to make an informed and voluntary decision to enter into this Agreement.


 




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6.10       Investment
Decision. It has made its own investment decision based upon its own judgment, due diligence and advice from such advisors as
it has deemed necessary and not upon any view expressed by any other person or entity, including the Placement Agent. Neither such inquiries
nor any other due diligence investigations conducted by it or its advisors or representatives, if any, shall modify, amend or affect
its right to rely on Company’s representations and warranties contained herein. It is not relying upon, and has not relied upon,
any advice, statement, representation or warranty made by any Person by or on behalf of Company, including the Placement Agent, except
for the express statements, representations and warranties of Company made or contained in this Agreement. Furthermore, it acknowledges
that nothing in this Agreement or any other materials presented by or on behalf of Company to it in connection with the purchase of the
Subordinated Notes constitutes legal, tax or investment advice.


 


6.11 Private
Placement; No Registration; Restricted Legends. It understands and acknowledges that the Subordinated Notes are being sold by
Company without registration under the Securities Act in reliance on the exemption from federal and state registration set forth in,
respectively, Rule 506(b) of Regulation D under Section 4(a)(2) of the Securities Act and Section 18 of the Securities Act, or any state
securities laws, and accordingly, may be resold, pledged or otherwise transferred only if exemptions from the Securities Act and applicable
state securities laws are available to it. It is not subscribing for the Subordinated Notes as a result of or subsequent to any advertisement,
article, notice or other communication published in any newspaper, magazine or similar media or broadcast over television or radio, or
presented at any seminar or meeting. It further acknowledges and agrees that all certificates or other instruments representing the Subordinated
Notes will bear the restrictive legend set forth in the form of Subordinated Note. It further acknowledges its primary responsibilities
under the Securities Act and, accordingly, will not sell or otherwise transfer the Subordinated Notes or any interest therein without
complying with the requirements of the Securities Act and the rules and regulations promulgated thereunder and the requirements set forth
in this Agreement.


 


6.12 Placement
Agent. Purchaser will purchase the Subordinated Note directly from Company and not from the Placement Agent and understands that
neither the Placement Agent nor any other broker or dealer has any obligation to make a market in the Subordinated Notes.


 


6.13 Tier
2 Capital. If all or any portion of the Subordinated Notes ceases to qualify as Tier 2 Capital, other than due to the limitation
imposed on the capital treatment of subordinated debt during the five (5) years immediately preceding the Maturity Date of the Subordinated
Notes, Company will promptly notify the Purchasers, and thereafter Company and the Purchasers will work together in good faith to execute
and deliver all agreements as reasonably necessary in order to restructure the applicable portions of the obligations evidenced by the
Subordinated Notes to qualify as Tier 2 Capital, if requested by Company; provided, however, that nothing contained in this Agreement
shall limit the Company’s right to redeem the Subordinated Notes if the Subordinated Notes cease to qualify as Tier 2 Capital as
described in the Subordinated Notes.


 


6.14 Accuracy
of Representations. It understands that Company will rely upon the truth and accuracy of the foregoing representations, acknowledgements
and agreements in connection with the transactions contemplated by this Agreement, and agrees that if any of the representations or acknowledgements
made by it are no longer accurate as of the Closing Date, or if any of the agreements made by it are breached on or prior to the Closing
Date, it shall promptly notify the Company.


 




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6.15       Representations
and Warranties Generally. The representations and warranties of Purchaser set forth in this Agreement are true and correct as
of the date hereof and will be true and correct as of the Closing Date and as otherwise specifically provided herein. Any certificate
signed by a duly authorized representative of Purchaser and delivered to the Company or to counsel for Company shall be deemed to be
a representation and warranty by Purchaser to Company as to the matters set forth therein.


 


7 TERMINATION.


 


7.1 Termination.
This Agreement may be terminated, with respect to any Purchaser, prior to the Closing:


 


7.1.1 By
mutual written agreement of the Company and such Purchaser; or


 


7.1.2       By
the Company or such Purchaser, upon written notice to the other parties, in the event that the Closing does not occur within five (5)
business days of the date of this Agreement; provided, that the right to terminate this Agreement pursuant to this Section 7.1.2 shall
not be available to any party whose failure to fulfill any obligation under this Agreement shall have been the cause of, or shall have
resulted in, the failure of the Closing to occur on or prior to such date.


 


7.2 Effect
of Termination. In the event of any termination of this Agreement as provided in Section 7.1, this Agreement (other than
Section 8, which shall remain in full force and effect) shall forthwith become wholly void and of no further force and effect.


 


8 MISCELLANEOUS.


 


8.1 Prohibition
on Assignment by Company. Except as described in Section 4 (Merger and Sale of Assets) of the Subordinated Notes, Company
may not assign, transfer or delegate any of its rights or obligations under this Agreement or the Subordinated Notes without the prior
written consent of Purchasers. In addition, in accordance with the terms of the Subordinated Notes, any transfer of such Subordinated
Notes must be made in accordance with the Assignment Form attached thereto and the requirements and restrictions thereof.


 


8.2 Time
of the Essence. Time is of the essence of this Agreement.


 


8.3 Waiver
or Amendment. No waiver or amendment of any term, provision, condition, covenant or agreement herein or in the Subordinated Notes
shall be effective except with the consent of the Noteholders of in excess of fifty percent (50%) in aggregate principal amount (excluding
any Subordinated Notes held by Company or any of its Affiliates) of the Subordinated Notes at the time outstanding; provided,
however, that without the consent of each Noteholder of an affected Subordinated Note, no such amendment or waiver may: (i) reduce
the principal amount of the Subordinated Note; (ii) reduce the rate of or change the time for payment of interest on any Subordinated
Note; (iii) extend the maturity of any Subordinated Note, (iv) change the currency in which payment of the obligations of Company under
this Agreement and the Subordinated Notes are to be made; (v) lower the percentage of aggregate principal amount of outstanding Subordinated
Notes required to approve any amendment of this Agreement or the Subordinated Notes, (vi) make any changes to Section 4 (Merger
and Sale of Assets), Section 5 (Events of Default; Acceleration; Compliance Certificate), Section 6 (Affirmative Covenants
of the Issuer), Section 7 (Negative Covenants of the Issuer), Section 8 (Failure to Make Payment), or Section 19 (Waiver
and Consent) of the Subordinated Notes that adversely affects the rights of any Noteholder of a Subordinated Note; or (vii) disproportionately
affect any of the Noteholders of the then outstanding Subordinated Notes. Notwithstanding the foregoing, Company may amend or supplement
the Subordinated Notes without the consent of the Noteholder of the Subordinated Notes to cure any ambiguity, defect or inconsistency
or to provide for uncertificated Subordinated Notes in addition to or in place of certificated Subordinated Notes, or to make any change
that does not adversely affect the rights of any Noteholder of any of the Subordinated Notes. No failure to exercise or delay in exercising,
by a Purchaser or any Noteholder of the Subordinated Notes, of any right, power or privilege hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise of any right, power or privilege preclude any other or further exercise thereof, or the exercise
of any other right or remedy provided by law. The rights and remedies provided in this Agreement are cumulative and not exclusive of
any right or remedy provided by law or equity. No notice or demand on Company in any case shall, in itself, entitle Company to any other
or further notice or demand in similar or other circumstances or constitute a waiver of the rights of Purchasers to any other or further
action in any circumstances without notice or demand. No consent or waiver, expressed or implied, by Purchasers to or of any breach or
default by Company in the performance of its obligations hereunder shall be deemed or construed to be a consent or waiver to or of any
other breach or default in the performance of the same or any other obligations of Company hereunder. Failure on the part of Purchasers
to complain of any acts or failure to act or to declare an Event of Default, irrespective of how long such failure continues, shall not
constitute a waiver by Purchasers of their rights hereunder or impair any rights, powers or remedies on account of any breach or default
by Company.


 








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8.4 Severability.
Any provision of this Agreement which is unenforceable or invalid or contrary to law, or the inclusion of which would adversely affect
the validity, legality or enforcement of this Agreement, shall be of no effect and, in such case, all the remaining terms and provisions
of this Agreement shall subsist and be fully effective according to the tenor of this Agreement the same as though any such invalid portion
had never been included herein. Notwithstanding any of the foregoing to the contrary, if any provisions of this Agreement or the application
thereof are held invalid or unenforceable only as to particular persons or situations, the remainder of this Agreement, and the application
of such provision to persons or situations other than those to which it shall have been held invalid or unenforceable, shall not be affected
thereby, but shall continue valid and enforceable to the fullest extent permitted by law.


 


8.5 Notices.
Any notice which any party hereto may be required or may desire to give hereunder shall be deemed to have been given if in writing and
if delivered personally, or if mailed, postage prepaid, by United States registered or certified mail, return receipt requested, or if
delivered by a responsible overnight commercial courier promising next Business Day delivery, addressed:


 


	 	

    if
    to Company:
	SB
                                            Financial Group, Inc.

    401
    Clinton Street

    Defiance,
    Ohio 43512

    Attention:
Anthony V. Cosentino 

	 	 	 
	 	with
    a copy to:	Vorys,
                                            Sater, Seymour and Pease LLP

    52
    East Gay Street

    Columbus,
    Ohio 43215

    Attention:
Anthony D. Weis 

	 	 	 
	 	if
    to Purchasers:	To
    the addresses indicated on Schedule I.


 


or
to such other address or addresses as the party to be given notice may have furnished in writing to the party seeking or desiring to
give notice, as a place for the giving of notice; provided that no change in address shall be effective until five (5) Business Days
after being given to the other party in the manner provided for above. Any notice given in accordance with the foregoing shall
be deemed given when delivered personally or, if mailed, three (3) Business Days after it shall have been deposited in the United States
mails as aforesaid or, if sent by overnight courier, the Business Day following the date of delivery to such courier (provided next Business
Day delivery was requested).


 


8.6 Successors
and Assigns. This Agreement shall inure to the benefit of the parties and their respective heirs, legal representatives, successors
and assigns; except that, unless a Purchaser consents in writing, no assignment made by Company in violation of this Agreement shall
be effective or confer any rights on any purported assignee of Company. The term “successors and assigns” will include any
Noteholder who purchased a Subordinated Note from a Purchaser (or its successor or assign) if such assignment complied with the assignment
procedures in the Subordinated Note.


 


8.7 No
Joint Venture. Nothing contained herein or in any document executed pursuant hereto and no action or inaction whatsoever on the
part of a Purchaser, shall be deemed to make a Purchaser a partner or joint venturer with Company.


 


8.8 Documentation.
All documents and other matters required by any of the provisions of this Agreement to be submitted or furnished to a Purchaser shall
be in form and substance satisfactory to such Purchaser.


 


8.9 Entire
Agreement. This Agreement and the Subordinated Notes along with the Exhibits thereto constitute the entire agreement between
the parties hereto with respect to the subject matter hereof and may not be modified or amended in any manner other than by supplemental
written agreement executed by the parties hereto. No party, in entering into this Agreement, has relied upon any representation, warranty,
covenant, condition or other term that is not set forth in this Agreement or in the Subordinated Notes.


 


8.10 Choice
of Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Ohio without giving effect
to its laws or principles of conflict of laws. Nothing herein shall be deemed to limit any rights, powers or privileges which a Purchaser
may have pursuant to any law of the United States of America or any rule, regulation or order of any department or agency thereof and
nothing herein shall be deemed to make unlawful any transaction or conduct by a Purchaser which is lawful pursuant to, or which is permitted
by, any of the foregoing.


 




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8.11 No
Third Party Beneficiary. This Agreement is made for the sole benefit of Company and the Purchasers, and no other person shall
be deemed to have any privity of contract hereunder nor any right to rely hereon to any extent or for any purpose whatsoever, nor shall
any other person have any right of action of any kind hereon or be deemed to be a third party beneficiary hereunder, except that Placement
Agent has the right to rely on the representations and warranties of Company set forth in Section 4 of this Agreement.


 


8.12 Legal
Tender of United States. All payments hereunder shall be made in coin or currency which at the time of payment is legal tender
in the United States of America for public and private debts.


 


8.13 Captions;
Counterparts. Captions contained in this Agreement in no way define, limit or extend the scope or intent of their respective
provisions. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and
the same instrument. 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.


 


8.14 Knowledge;
Discretion. All references herein to Purchaser’s or Company’s knowledge shall be deemed to mean the knowledge of
such party based on the actual knowledge of such party’s Chief Executive Officer and Chief Financial Officer or such other persons
holding equivalent offices. Unless specified to the contrary herein, all references herein to an exercise of discretion or judgment by
a Purchaser, to the making of a determination or designation by a Purchaser, to the application of a Purchaser’s discretion or
opinion, to the granting or withholding of a Purchaser’s consent or approval, to the consideration of whether a matter or thing
is satisfactory or acceptable to a Purchaser, or otherwise involving the decision making of a Purchaser, shall be deemed to mean that
such Purchaser shall decide using the reasonable discretion or judgment of a prudent lender.


 


8.15 Waiver
Of Right To Jury Trial. TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, COMPANY AND PURCHASERS HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHT THAT EITHER MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION ARISING IN ANY WAY IN CONNECTION WITH ANY OF
THE TRANSACTION DOCUMENTS, OR ANY OTHER STATEMENTS OR ACTIONS OF COMPANY OR PURCHASERS. COMPANY AND PURCHASERS EACH ACKNOWLEDGE THAT
IT HAS BEEN REPRESENTED IN THE SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL SELECTED OF ITS
OWN FREE WILL. COMPANY AND PURCHASERS EACH FURTHER ACKNOWLEDGE THAT (i) IT HAS READ AND UNDERSTANDS THE MEANING AND RAMIFICATIONS OF
THIS WAIVER, (ii) THIS WAIVER HAS BEEN REVIEWED BY EACH OF THEM AND THEIR COUNSEL AND IS A MATERIAL INDUCEMENT FOR EACH PARTY HERETO
TO ENTER INTO THIS AGREEMENT AND THE SUBORDINATED NOTES AND (iii) THIS WAIVER SHALL BE EFFECTIVE AS TO EACH OF SUCH TRANSACTION DOCUMENTS
AS IF FULLY INCORPORATED THEREIN.


 




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8.16 Expenses.
Except as otherwise provided in this Agreement, each of the parties will bear and pay all other costs and expenses incurred by it or
on its behalf in connection with the transactions contemplated pursuant to this Agreement.


 


8.17 Survival.
Each of the representations and warranties set forth in this Agreement shall survive the consummation of the transactions contemplated
hereby for a period of one year after the date hereof. Except as otherwise provided herein, all covenants and agreements contained herein
shall survive until, by their respective terms, they are no longer operative.


 


[Signature
Pages Follow]


 




    23


     


    

 


IN
WITNESS WHEREOF, Company has caused this Subordinated Note Purchase Agreement to be executed by its duly authorized representative
as of the date first above written.


 


	 	SB
    FINANCIAL GROUP, INC.
	 	 
	 	By:	/s/ Mark A. Klein
	 	 	Name: 	Mark A. Klein
	 	 	Title:	Chairman, President and CEO


 




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IN
WITNESS WHEREOF, the Purchaser has caused this Subordinated Note Purchase Agreement to be executed by its duly authorized representative
as of the date first above written.


 


	 	PURCHASER:
	 	 	 
	 	Name:
	 	 	 
	 	By:	       
	 	Its:	 


  


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