Exhibit 10.1


 





SECURITIES PURCHASE AGREEMENT


 


This Securities Purchase
Agreement (this “Agreement”) is dated as of March 31, 2015, by and among Carolina Bank Holdings, Inc., a North
Carolina 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 are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded
by Section 4(a)(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,
that aggregate number of shares of the Company’s Series B Non-Voting Convertible Preferred Stock, $975 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 shall be 15,500 shares of Preferred Stock (collectively referred to herein
as the “Preferred Shares”)). When purchased, the Preferred Stock will have the terms set forth in a Certificate
of Designation of Preferences, Limitations and Relative Rights incorporated into Articles of Amendment for the Preferred Stock
in the form attached as Exhibit A hereto (the “Articles of Amendment”) and made a part of the Company’s
Articles of Incorporation by the filing of the Articles of Amendment with the North Carolina Secretary of State (the “Secretary
of State”). The Preferred Stock will be convertible into shares (the “Underlying Shares” and, together
with the Preferred Shares, the “Securities”) of the common stock, par value $1.00 per share, of the Company
(the “Common Stock”), subject to and in accordance with the terms and conditions of the Articles of Amendment.


 


C.The Company has
engaged FIG Partners LLC as its exclusive placement agent (the “Placement Agent”) for the offering of the Preferred
Shares.


 


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 Underlying Shares 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 I

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.


 






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“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.


 


“Agency”
has the meaning set forth in Section 3.1(qq).


 


“Agreement”
shall have the meaning ascribed to such term in the Preamble.


 


“Articles
of Amendment” has the meaning set forth in the Recitals.


 


“Articles
of Incorporation” means the Articles of Incorporation of the Company and all amendments thereto, as the same may be amended
from time to time.


 


“Bank”
means Carolina Bank, a North Carolina-chartered commercial bank and wholly-owned subsidiary of the Company.


 


“BHC Act Control”
has the meaning set forth in Section 3.1(yy).


 


“BHCA”
has the meaning set forth in Section 3.1(b).


 


"Burdensome
Condition" has the meaning set forth in Section 5.1(l).


 


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


 


“Buy-In”
has the meaning set forth in Section 4.1(e).


 


“Buy-In Price”
has the meaning set forth in Section 4.1(e).


 


“Bylaws”
means the Bylaws of the Company and all amendments thereto, as the same may be amended from time to time.


 


“CIBCA”
means the Change in Bank Control Act.


 


“Closing”
means the closing of the purchase and sale of the Preferred 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 waived, as the case may be, or such
other date as the parties may agree.


 


“Code”
means the Internal Revenue Code of 1986, as amended, including the regulations and published interpretations thereunder.


 


“Commission”
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”
has the meaning set forth in the Preamble.


 


“Company Counsel”
means Wyrick Robbins Yates & Ponton LLP.


 


“Company Deliverables”
has the meaning set forth in Section 2.2(a).


 


“Company Reports”
has the meaning set forth in Section 3.1(mm).


 






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“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.


 


“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.


 


“Covered Person”
has the meaning set forth in Section 3.1(vv).


 


“Disclosure
Materials” has the meaning set forth in Section 3.1(h).


 


“Disqualification
Event” has the meaning set forth in Section 3.1(vv).


 


“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).


 


“ERISA”
has the meaning set forth in Section 3.1(ss).


 


“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.


 


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


 


“GAAP”
means U.S. generally accepted accounting principles, as applied by the Company.


 


“Governmental
Entity” means any court, administrative agency or commission or other governmental authority or instrumentality, whether
federal, state, local or foreign, and any applicable industry self-regulatory organization or securities exchange.


 


“Indemnified
Person” has the meaning set forth in Section 4.8(a).


 


“Insurer”
has the meaning set forth in Section 3.1(qq).


 


“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) or prospects 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, however,
that “Material Adverse Effect” shall not include the impact of (A) changes in banking and similar laws of general applicability
or interpretations thereof by any applicable governmental authority, (B) changes in GAAP or regulatory accounting requirements
applicable to banks and their holding companies generally, (C) changes in general economic conditions, including interest rates,
affecting banks generally, or (D) the effects of any action or omission taken by the Company or the Bank with the prior written
consent of the Purchasers, except, with respect to clauses (A), (B) and (C), to the extent that the effect of such changes has
a disproportionate impact on the Company and the Subsidiaries, taken as a whole, relative to other similarly situated banks and
their holding companies generally.


 






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“Material
Contract” means any contract of the Company that was, or was required to be, filed as an exhibit to the SEC Reports pursuant
to Item 601 of Regulation S-K as promulgated by the Commission.


 


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


 


“Money Laundering
Laws” has the meaning set forth in Section 3.1(kk). 


 


“NCCOB”
means the Office of the North Carolina Commissioner of Banks.


 


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


 


“OFAC”
has the meaning set forth in Section 3.1(jj).


 


“Outside Date”
means fifteen (15) days following the date of this Agreement; provided that if such day is not a Business Day, the first day following
such day that is a Business Day.


 


“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 or 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 $975 per Preferred Share.


 


“Purchaser
Deliverables” has the meaning set forth in Section 2.2(b).


 


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


 


“Regulatory
Agreement” has the meaning set forth in Section 3.1(oo).


 


“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.


 


“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.


 






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“Subscription
Amount” means with respect to each Purchaser, the aggregate amount to be paid for the Preferred 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 a day on which the Common Stock is listed or quoted and traded on its Principal Trading Market; provided, that in
the event that the Common Stock is not listed or quoted as set forth herein, then Trading Day shall mean a Business Day.


 


“Trading Market”
means whichever of the New York Stock Exchange, the NYSE MKT, the Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq
Capital Market, the OTC Bulletin Board, the OTCQX, the OTCQB, or the OTC Pink on which the Common Stock is listed or quoted for
trading on the date in question.


 


“Transaction
Documents” means this Agreement, the Exhibits attached hereto, the Registration Rights Agreement, the Articles of Amendment
and any other documents or agreements executed in connection with the transactions contemplated hereunder.


 


“Transfer
Agent” means Computershare, or any successor transfer agent for the Company.


 


“Underlying
Shares” has the meaning set forth in the Recitals.


 


“U.S. Sanctions
Laws” has the meaning set forth in Section 3.2(q).


 


ARTICLE II

PURCHASE AND SALE


 


2.1.Closing.


 


(a)Purchase of
Preferred 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 Preferred
Shares set forth below such Purchaser’s name on the signature page of this Agreement at a per Preferred Share price equal
to the Purchase Price.


 


(b)Closing.
The Closing of the purchase and sale of the Preferred Shares shall take place at the offices of Wyrick Robbins Yates & Ponton
LLP, 4101 Lake Boone Trail, Suite 300, Raleigh, North Carolina 27607 on the Closing Date or at such other location or remotely
by facsimile transmission or other electronic means as the parties may mutually agree.


 


(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 deliver
to each Purchaser (or its designated custodian per its delivery instructions) one or more stock certificates (if physical certificates
are required by the Purchaser to be held immediately prior to Closing, as indicated on such Purchaser’s signature page hereto;
if not, then facsimile or “.pdf” copies of such certificates shall suffice for purposes of Closing with the original
stock certificates to be delivered within two Business Days of the Closing Date), evidencing the number of Preferred Shares set
forth on such Purchaser’s signature page to this Agreement (or as otherwise set forth on the Stock Certificate Questionnaire
included as Exhibit C-2 hereto) and (2) upon receipt thereof, 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.


 






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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)the Registration
Rights Agreement, duly executed by the Company (which shall be delivered on the date hereof);


 


(iii)one or more
stock certificates (if physical certificates are required by the Purchaser to be held immediately prior to Closing, as indicated
on such Purchaser’s signature page hereto; if not, then facsimile or “.pdf” copies of such certificates shall
suffice for purposes of Closing with the original stock certificates to be delivered within two Business Days of the Closing Date),
evidencing the Preferred Shares subscribed for by Purchaser hereunder, registered in the name of such Purchaser or as otherwise
set forth on such Purchaser’s Stock Certificate Questionnaire (the “Stock Certificates”) (or as otherwise
set forth on the Stock Certificate Questionnaire);


 


(iv)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;


 


(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 Articles of Incorporation and Bylaws 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(f).


 


(b)On or prior to
the Closing, each Purchaser shall deliver or cause to be delivered to the Company the following (the “Purchaser Deliverables”):


 


(i)this Agreement,
duly executed by such Purchaser;


 


(ii)the Registration
Rights Agreement, duly executed by such Purchaser;


 


(iii)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; and


 


(iv)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.


 






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ARTICLE III

REPRESENTATIONS AND WARRANTIES


 


3.1.Representations
and Warranties of the Company. The Company hereby represents and warrants as of the date hereof and as of 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 except as set forth in Exhibit 21 to the Company’s Annual Report on Form
10-K for the year ended December 31, 2014, as filed with the Commission on March 26, 2015. 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. No equity security of any Subsidiary
is or may be required to be issued by reason of any option, warrant, scrip, preemptive right, right to subscribe to, gross-up right,
call or commitment of any character whatsoever relating to, or security or right convertible into, shares of any capital stock
of such Subsidiary, and there are no contracts, commitments, understandings or arrangements by which any Subsidiary is bound to
issue additional shares of its capital stock, or any option, warrant or right to purchase or acquire any additional shares of its
capital stock. Except in respect of the Subsidiaries, the Company does not beneficially own, directly or indirectly, more than
5% of any class of equity securities or similar interests of any corporation, bank, business trust, association or similar organization,
and is not, directly or indirectly, a partner in any partnership or party to any joint venture. The Company beneficially owns all
of the outstanding capital securities and has sole Control of the Bank.


 


(b)Organization
and Qualification. The Company and each of its Subsidiaries 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 Subsidiary is in violation of any of the provisions of its respective certificate or articles 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 bank holding company under the Bank Holding Company Act of 1956, as amended (the “BHCA”).
The Bank is the Company’s only Subsidiary banking institution. The Bank’s deposit accounts are insured up to applicable
limits by the FDIC, and all premiums and assessments required to be paid in connection therewith have been paid when due. The Company
and each of its Subsidiaries have conducted their respective businesses 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 Preferred Shares in accordance with the terms hereof and to issue the Underlying
Shares in accordance with the Articles of Amendment. 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 Preferred 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 shareholders
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. There are no shareholder 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
shareholders.


 






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(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 Preferred
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 certificate or articles 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 any Subsidiary 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
thereunder, assuming, without investigation, 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 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, self-regulatory organization (including the Principal Trading Market) 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 Preferred
Shares and the Underlying Shares), other than (i) the filing of the Articles of Amendment with the Secretary of State, (ii) filings
required by applicable state securities laws, (iii) the filing of a Notice of Exempt Offering of Securities on Form D
with the Commission under Regulation D of the Securities Act, (iv) the filing of any requisite notices and/or application(s)
to the Principal Trading Market for the issuance and sale of the Underlying Shares and the listing of the Underlying Shares for
trading or quotation, as the case may be, thereon in the time and manner required thereby, (v) the filings required in accordance
with Section 4.6 of this Agreement, (v) the filing with the Commission of one or more Registration Statements in accordance with
the Registration Rights Agreement, (vi) the filings required in accordance with Section 4.16 of this Agreement (shareholder
approval for issuance of Underlying Shares), and (vii) those that have been made or obtained prior to the date of this Agreement
(collectively, the “Required Approvals”). The Company is unaware of any facts or circumstances relating to the
Company or its Subsidiaries which would be likely to prevent the Company from obtaining or effecting any of the foregoing.


 


(f)Issuance of
the Preferred Shares. The issuance of the Preferred Shares has been duly authorized and the Preferred 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 Articles of Amendment, 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. No shares of the Company’s outstanding capital stock are subject
to preemptive rights or any other similar rights. Except as specified in the SEC Reports: (i) 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 a Subsidiary, or contracts,
commitments, understandings or arrangements by which the Company or a Subsidiary is or may become bound to issue additional shares
of capital stock of the Company or a Subsidiary or 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 a Subsidiary, other than those issued or granted pursuant to Material Contracts or equity or incentive
plans or arrangements described in the SEC Reports; (ii) there are no material outstanding debt securities, notes, credit
agreements, credit facilities or other agreements, documents or instruments evidencing indebtedness of the Company or a Subsidiary
or by which the Company or a Subsidiary is bound; (iii) except for the Registration Rights Agreement, there are no agreements
or arrangements under which the Company or a Subsidiary is obligated to register the sale of any of its securities under the Securities
Act; (iv) there are no outstanding securities or instruments of the Company or a Subsidiary that contain any mandatory redemption
or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Company or a Subsidiary
is or may become bound to redeem a security of the Company or a Subsidiary; and (v) neither the Company nor any Subsidiary
has any stock appreciation rights or “phantom stock” plans or agreements or any similar plan or agreement. Neither
the Company nor any Subsidiary has 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 of the Company containing anti-dilution or similar provisions that will be triggered
by the issuance of the Securities.


 






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(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, for the twelve months preceding the date hereof
(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 Exhibits to this Agreement, and any
other factual information concerning by the Company furnished in connection with the offering of the Preferred Shares, 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. The SEC Reports, including the documents incorporated by reference in each of them, each contained substantially
all of the information required to be included in it. No executive officer of the Company has failed in any respect to make the
certifications required of him or her under Section 302 or 906 of the Sarbanes-Oxley Act of 2002.


 


(i)Financial Statements.
The financial statements of the Company and its Subsidiaries 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.


 


(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, (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 shareholders or purchased, redeemed
or made any agreements to purchase or redeem any shares of its capital stock, (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 equity based plans 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. Moreover, since
the date(s) the Company afforded Purchaser (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 of the Preferred Shares and the
merits and risks of investing in the Preferred Shares; and (ii) access to information about the Company and the Subsidiaries and
their respective financial condition, results of operations, business, properties, management, prospects and any potential transactions
sufficient to enable it to evaluate its investment, there have been no events, occurrences or developments that have materially
affected or would reasonably be expected to materially affect, either individually or in the aggregate, the information as presented
to the Purchasers in connection with the offering of the Preferred Shares.


 






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(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.


 


(m)Litigation.
There is no Action which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction
Documents, the issuance of the Preferred Shares, or the conversion of the Preferred Shares into the applicable Underlying 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. There are no outstanding orders, judgments, injunctions,
awards or decrees of any court, arbitrator or governmental or regulatory body against the Company or any executive officers or
directors of the Company in their capacities as such, which individually or in the aggregate, would reasonably be expected to have
a Material Adverse Effect.


 


(n)Employment
Matters. No labor dispute exists or, to the Company’s Knowledge, is imminent or threatened with respect to any of the
employees of the Company or any Subsidiary which would have or reasonably be expected to have a Material Adverse Effect. None of
the Company’s or any Subsidiary’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 and each of its
Subsidiaries 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.


 






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(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 Subsidiaries or their respective properties or assets, or (iii) is in violation of, or in receipt
of written notice that it is in violation of, any statute, rule, regulation, policy or guideline of any governmental authority
or self-regulatory organization (including the Principal Trading Market) applicable to the Company or any of its Subsidiaries,
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 all certificates, authorizations, consents 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 certificates, authorizations, consents
or permits, individually or in the aggregate, has not had and would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect (“Material Permits”), and (i) neither the Company 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 facilities 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 as
disclosed 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.


 






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(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 and where
the Company and the Subsidiaries are engaged. All premiums due and payable under all such policies and bonds have been timely paid,
and the Company and its Subsidiaries are in material compliance with the terms of such policies and bonds. 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 be materially
higher than their existing insurance coverage.


 


(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 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) and 15d-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 GAAP and such internal control over financial reporting is effective.


 


(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, to the Company’s Knowledge, 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 Preferred Shares, which placement agent fees are being paid by the Company and have been disclosed
to the Purchasers.


 


(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 Preferred Shares by the Company to the Purchasers under the Transaction Documents. The issuance
and sale of the Preferred Shares hereunder does not and the issuance of the Underlying Shares in accordance with the Articles of
Amendment will not contravene the rules and regulations of the Principal Trading Market.


 


(y)No Registration
Rights. Other than the Purchasers, 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)No Integrated
Offering. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2, none
of the Company, its Subsidiaries nor, to the Company’s Knowledge, any of its Affiliates or any Person acting on its behalf
has, directly or indirectly, at any time within the past six months, made any offers or sales of any Company security or solicited
any offers to buy any security under circumstances that would eliminate the availability of the exemption from registration under
Regulation D under the Securities Act in connection with the offer and sale by the Company of the Preferred Shares as contemplated
hereby.


 


(aa)Listing and
Maintenance Requirements. The Company’s Common Stock is registered pursuant to Section 12(g) 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 written 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 or quotation of the Common Stock on the Principal
Trading Market.


 






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(bb)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.


 


(cc)Unlawful 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 or any of its Subsidiaries: (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.


 


(dd)Application
of Takeover Protections; Rights Agreements. The Company has not adopted any shareholder 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
Articles 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.


 


(ee)No
Undisclosed Liabilities. There are no liabilities or obligations of the Company or any of the Subsidiaries of any kind whatsoever,
whether accrued, contingent, absolute, determined, determinable or otherwise, except for (i) liabilities or obligations appropriately
reflected or reserved against in accordance with GAAP in the Company’s audited balance sheet for the year ended December
31, 2014, or disclosed in the notes thereto; (ii) liabilities or obligations that have arisen in the ordinary and usual course
of business and consistent with past practice since December 31, 2014, and (iii) liabilities or obligations that have not had,
and would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect.


 


(ff)Disclosure.
The Company confirms that neither it nor 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 foregoing representations 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 the transactions contemplated hereby.


 


(gg)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.


 






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(hh)Acknowledgment
Regarding Purchasers’ Purchase of Preferred 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 Preferred Shares.


 


(ii)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.


 


(jj)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 use the
proceeds of the sale of the Preferred Shares 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.


 


(kk)Money Laundering
Laws. The operations of each of the Company and any Subsidiary are, and have been conducted, in compliance in all material
respects 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.


 


(ll)No Additional
Agreements. The Company does not have any agreement or understanding (including, without limitation, side letters that have
not otherwise been disclosed to the Purchasers) with any Purchaser or other Person to purchase shares of Preferred Stock on terms
more favorable to such Person than as set forth herein. 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.


 


(mm)Reports, Registrations
and Statements. Since January 1, 2013, 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 the Federal Reserve, the FDIC, the NCCOB, and
any other applicable federal or state securities or banking authorities. All such reports and statements were filed on a timely
basis or the Company or the applicable Subsidiary, as applicable, received a valid extension of such time of filing and has filed
any such Company Reports prior to the expiration of any such extension. 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 in all material respects with all the rules and regulations promulgated by the Federal Reserve, the
FDIC, the NCCOB and any other applicable foreign, federal or state securities or banking authorities, as the case may be.


 


(nn)Regulatory
Capitalization. As of December 31, 2014, the Bank met or exceeded the standards necessary to be considered “well capitalized”
under the FDIC’s regulatory framework for prompt corrective action.


 


(oo)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 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 in writing by any Governmental Entity that it intends to issue, initiate, order, or request any such
Regulatory Agreement.


 






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To the Company’s
Knowledge, there are no facts and circumstances, and the Company has no reason to believe that any facts or circumstances exist,
that would cause the Bank: (i) to be deemed not to be in satisfactory compliance with the Community Reinvestment Act (the “CRA”)
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 or
customer information requirements contained in any applicable federal and state privacy laws and regulations as well as the provisions
of all information security programs adopted by the Bank.


 


(pp)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 Preferred Shares.


 


(qq)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 3.1(qq): (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.


 






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(rr)Risk
Management Instruments. The Company and the Subsidiaries have in place risk management policies and procedures that the Company
reasonably believes are sufficient in scope and operation to protect against risks of the type and in amounts reasonably expected
to be incurred by companies of similar size and in similar lines of business as the Company and the Subsidiaries. Except as has
not had or would not reasonably be expected to have a Material Adverse Effect, since January 1, 2013, all derivative instruments,
including, swaps, caps, floors and option agreements, whether entered into for the Company’s own account, or for the account
of one or more of the 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 Subsidiaries, enforceable in accordance with its terms. Neither the Company nor any of its Subsidiaries,
nor, to the Company’s Knowledge, any other party thereto, is in breach of any of its material obligations under any such
agreement or arrangement.


  


(ss)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 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.


 


(tt)Shell
Company Status. The Company is not, and has never been, an issuer identified in Rule 144(i)(1) under the Securities Act.


 


(uu)Reservation
of Underlying Shares. The Company has reserved, and will continue to reserve, free of any preemptive or similar rights of shareholders
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.


 


(vv)No “Bad
Actor” Disqualification. The Company has exercised reasonable care, in accordance with Commission rules and guidance,
and has conducted a factual inquiry including the procurement of relevant questionnaires from each Covered Person (as defined below)
or other means, the nature and scope of which reflect reasonable care under the relevant facts and circumstances, to determine
whether any Covered Person (as defined below) is subject to any of the “bad actor” disqualifications described in Rule
506(d)(1)(i) to (viii) under the Securities Act (“Disqualification Events”). To the Company’s Knowledge,
after conducting such sufficiently diligent factual inquiries, no Covered Person is subject to a Disqualification Event, except
for a Disqualification Event covered by Rule 506(d)(2) or (d)(3) under the Securities Act. The Company has complied, to the extent
applicable, with any disclosure obligations under Rule 506(e) under the Securities Act. “Covered Persons” are
those persons specified in Rule 506(d)(1) under the Securities Act, including the Company; any predecessor or affiliate of the
Company; any director, executive officer, other officer participating in the offering, general partner or managing member of the
Company; any beneficial owner of 20% or more of the Company’s outstanding voting equity securities, calculated on the basis
of voting power; any promoter (as defined in Rule 405 under the Securities Act) connected with the Company in any capacity at the
time of the sale of the Securities; and any person that has been or will be paid (directly or indirectly) remuneration for solicitation
of purchasers in connection with the sale of the Preferred Shares (a “Solicitor”), any general partner or managing
member of any Solicitor, and any director, executive officer or other officer participating in the offering of any Solicitor or
general partner or managing member of any Solicitor.


 






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(ww)Nonperforming
Assets. The Company believes that the amount of reserves and allowances for loan and lease losses and other nonperforming assets
established on the Company’s and Bank’s financial statements is adequate and such belief is reasonable under all the
facts and circumstances known to the Company and Bank.


 


(xx)Change in
Control. Neither the issuance of the Preferred Shares to the Purchasers as contemplated by this Agreement nor the issuance
of the Underlying Shares, will trigger any rights under any “change of control” provision in any of the agreements
to which the Company or any of its Subsidiaries is a party, including any employment, “change in control,” severance
or other compensatory agreements and any benefit plan, which results in payments to the counterparty or the acceleration of vesting
of benefits.


 


(yy)Common Control.
The Company is not and, after giving effect to the offering and sale of the Preferred Shares and the Underlying Shares, assuming
the accuracy of the representations and warranties of the Purchasers, will not be under the control (as defined in the BHCA and
the Federal Reserve’s Regulation Y (12 CFR Part 225) (“BHC Act Control”) of any company (as defined in
the BHCA and the Federal Reserve’s Regulation Y). The Company is not in BHC Act Control of any federally insured depository
institution other than the Bank. The Bank is not under the BHC Act Control of any company (as defined in the BHC Act and the Federal
Reserve’s Regulation Y) other than Company. Neither the Company nor the Bank controls, in the aggregate, more than five percent
of the outstanding voting class, directly or indirectly, of any federally insured depository institution. The Bank is not subject
to the liability of any commonly controlled depository institution pursuant to Section 5(e) of the Federal Deposit Insurance Act
(12 U.S.C. § 1815(e)).


 


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, partnership, limited liability company or other applicable similar
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, this 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 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 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 Preferred Shares are “restricted securities” and have not been registered
under the Securities Act or any applicable state securities law and is acquiring the Preferred Shares as principal for its own
account and not with a view to, or for distributing or reselling such Preferred Shares or any part thereof in violation of the
Securities Act or any applicable state securities laws, provided, however, that by making the representations herein, such
Purchaser does not agree to hold any of the Preferred 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 Preferred 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 Preferred 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 Preferred Shares (or any securities which are derivatives thereof) to or through any person or entity.


 






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(d)Purchaser Status.
At the time such Purchaser was offered the Preferred Shares, it was, and at the date hereof it is, an “accredited investor”
as defined in Rule 501(a) under the Securities Act. Such Purchaser has provided the information in the Accredited Investor Questionnaire
attached hereto as Exhibit C-1.


 


(e)Reliance.
The Company will be entitled to rely upon this Agreement and are irrevocably authorized to produce this Agreement or a copy hereof
to (A) any regulatory authority having jurisdiction over the Company and its Affiliates and (B) any interested party in any administrative
or legal proceeding or official inquiry with respect to the matters covered hereby, in each case, to the extent required by any
court or governmental authority to which the Company is subject, provided that the Company provides the Purchaser with prior written
notice of such disclosure to the extent practicable and allowed by applicable law.


 


(f)No General
Solicitation. Such Purchaser is not purchasing the Preferred Shares as a result of any advertisement, article, notice or other
communication regarding the Preferred 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.


 


(g)Direct Purchase.
Purchaser is purchasing the Preferred Shares directly from the Company and not from the Placement Agent. The Placement Agent did
not make any representations or warranties to Purchaser, express or implied, regarding the Preferred Shares, the Company or the
Company’s offering of the Preferred Shares (and Purchaser has not relied on any representations or warranties other than
those made by the Company herein).


 


(h)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 Preferred 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 Preferred Shares and, at the present time, is able to afford a complete loss of such investment. Further,
Purchaser understands that no representation is being made as to the future trading value or trading volume of the Preferred Shares.


 


(i)Access to Information.
Such Purchaser acknowledges that it has had the opportunity to review the Disclosure Materials and 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 of the Preferred Shares and the merits and risks of investing in the Preferred Shares
and any such questions have been answered to such Purchaser’s reasonable satisfaction; (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 and any such questions have been
answered to such Purchaser’s reasonable satisfaction. The Purchaser has received all information it deems appropriate for
assessing the risk of an investment in the Preferred Shares. 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 Disclosure Materials and the Company’s representations and warranties contained
in the Transaction Documents. Such Purchaser has sought such independent accounting, legal and tax advice as it has considered
necessary to make an informed decision with respect to its acquisition of the Preferred Shares. Purchaser acknowledges that neither
the Company nor the Placement Agent has made any representation, express or implied, with respect to the accuracy, completeness
or adequacy of any available information except that the Company has made the express representations and warranties contained
in Section 3.1.


 






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(j)Brokers and
Finders. Other than the Placement Agent with respect to the Company (which fees are to be paid by 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.


 


(k)Independent
Investment Decision. Such Purchaser has independently evaluated the merits of its decision to purchase Preferred Shares pursuant
to the Transaction Documents, and such Purchaser confirms that it has not relied on the advice of the Company or the Placement
Agent (or any of their respective agents, counsel or Affiliates) or any other Purchaser or 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 (including, without limitation, by the Placement Agent) to the Purchaser in connection with the purchase
of the Preferred Shares constitutes legal, tax or investment advice. Such Purchaser has consulted such independent legal, tax and
investment advisors as it, in its sole discretion, has deemed necessary or appropriate in connection with its purchase of the Preferred
Shares. Such Purchaser understands that the Placement Agent has acted solely as the agent of the Company in this placement of the
Preferred 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 (and Purchaser has not relied on any representations or warranties other than those made by the
Company herein) in connection with the transactions contemplated by the Transaction Documents or has performed any due diligence
review on behalf of such Purchaser.


 


(l)Reliance on
Exemptions. Such Purchaser understands that the Preferred Shares are 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 Preferred Shares.


 


(m)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 Preferred Shares or the fairness or suitability of the investment in
the Preferred Shares nor have such authorities passed upon or endorsed the merits of the offering of the Preferred Shares.


 


(n)Residency.
Such Purchaser’s residence (if an individual) or office in which its investment decision with respect to the Preferred Shares
was made (if an entity) are located at the address immediately below such Purchaser’s name on its signature page hereto.


 


(o)Antitrust
and Other Consents, Filings, Etc. Assuming the accuracy of the Company’s representations and warranties regarding its
capitalization, no approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental
Entity or authority or any other person or entity in respect of any law or regulation, including but not limited to the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the rules and regulations thereunder, or the Bank Holding Company Act of 1956,
as amended, and the rules and regulations thereunder, is necessary or required to be obtained or made by such Purchaser, and no
lapse of a waiting period under law applicable to such Purchaser is necessary or required, in each case in connection with the
execution, delivery or performance by such Purchaser of this Agreement or the purchase of the Preferred Shares contemplated hereby,
other than passivity or anti-association commitments or other documentation that may be required by the Federal Reserve or other
federal or state banking authority.


 


(p)Trading.
Purchaser acknowledges that there is no trading market for the Preferred Stock, and no such market is expected to develop.


 






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(q)OFAC and Anti-Money
Laundering. The Purchaser understands, acknowledges, represents and agrees that (i) the Purchaser is not the target of any
sanction, regulation, or law promulgated by the Office of Foreign Assets Control, the Financial Crimes Enforcement Network or any
other U.S. governmental entity (“U.S. Sanctions Laws”); (ii) the Purchaser is not owned by, controlled by, under common
control with, or acting on behalf of any person that is the target of U.S. Sanctions Laws; (iii) the Purchaser is not a “foreign
shell bank” and is not acting on behalf of a “foreign shell bank” under applicable anti-money laundering laws
and regulations; (iv) the Purchaser’s entry into this Agreement or consummation of the transactions contemplated hereby will
not contravene U.S. Sanctions Laws or applicable anti-money laundering laws or regulations; (v) to the extent permitted under applicable
law, the Purchaser will promptly provide to any regulatory or law enforcement authority such information or documentation as may
be required to comply with U.S. Sanctions Laws or applicable anti-money laundering laws or regulations; and (vi) the Company may
provide to any regulatory or law enforcement authority information or documentation regarding, or provided by, the Purchaser for
the purposes of complying with U.S. Sanctions Laws or applicable anti-money laundering laws or regulations.


 


(r)No Discussions.
Purchaser has not discussed the offering of the Preferred Shares with any other party or potential investors (other than the Company,
any other Purchaser, and Purchaser’s authorized representatives or other potential investors who are subject to a similar
duty of confidentiality with the Company), except as expressly permitted under the terms of this Agreement.


 


(s)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.


 


(t)Bank
Holding Company Status. Purchaser has not or is not acting in concert with any other Person in connection with the transactions
contemplated by this Agreement, other than Affiliates of the Purchaser identified by the Purchaser to the Company as Affiliates.
Assuming the accuracy of the representations and warranties of the Company contained herein, the Purchaser, either acting alone
or together with any other Person will not, directly or indirectly, own, control or have the power to vote, immediately after giving
effect to the conversion of the Preferred Stock into the Underlying Shares subject to and in accordance with the terms and conditions
of the Articles of Amendment, in excess of 9.9% of the outstanding shares of the Company’s voting stock of any class or series.
Without limiting the foregoing, assuming the accuracy of the representations and warranties of the Company contained herein, the
Purchaser represents and warrants that it does not and will not as a result of its purchase or holding of the purchased Underlying
Shares or any other securities of the Company have “control” of the Company or the Bank, and has no present intention
of acquiring “control” of the Company or the Bank, for purposes of the BHCA or the CIBC Act.


 


3.3The 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 IV

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 a seller representation letter and, if applicable,
a broker representation letter) 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.


 






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(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, 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 A SELLER REPRESENTATION LETTER
AND, IF APPLICABLE, A BROKER REPRESENTATION LETTER 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,
if (i) such Securities are registered for resale under the Securities Act, (ii) such Securities are sold or transferred pursuant
to Rule 144, 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) Securities being registered for resale under the Securities
Act 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).


 






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(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.


 


(e)Buy-In.
If the Company shall fail for any reason or for no reason to issue to a Purchaser unlegended certificates by the Legend Removal
Date, then, in addition to all other remedies available to such Purchaser, if on or after the Trading Day immediately following
the Legend Removal Date, such Purchaser purchases (in an open market transaction or otherwise) Securities (or a broker or trading
counterparty through which the Purchaser has agreed to sell shares makes such purchase) to deliver in satisfaction of a sale by
the holder of Securities that such Purchaser anticipated receiving from the Company without any restrictive legend (a “Buy-In”),
then the Company shall, within three (3) Trading Days after such Purchaser’s request and in such Purchaser’s sole
discretion, either (i) pay cash to the Purchaser in an amount equal to such Purchaser’s total purchase price (including
brokerage commissions, if any) for the Securities so purchased (the “Buy-In Price”), at which point the Company’s
obligation to deliver such certificate (and to issue such Securities) shall terminate, or (ii) promptly honor its obligation
to deliver to such Purchaser a certificate or certificates representing such Securities and pay cash to the Purchaser in an amount
equal to the excess (if any) of the Buy-In Price over the product of (a) such number of Securities, times (b) the closing
bid price of such security on the Legend Removal Date.


 


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 shareholders 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 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 Preferred Shares as required under Regulation D.
Purchaser agrees to timely provide Company with any and all needed information in connection with Company’s preparation and
filing of a Form 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 Preferred 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 Preferred
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 Preferred Shares in a manner that would require the registration
under the Securities Act of the sale of the Preferred Shares to the Purchasers.


 






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4.6.Securities
Laws Disclosure; Publicity. On or before 9:00 a.m., Eastern time, on the first Trading Day immediately following the date of
this Agreement, 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
9:00 a.m., Eastern time, on the fourth Trading Day immediately following the execution of this Agreement, 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, a form of this Agreement, the
Registration Rights Agreement and the Articles of Amendment)). If, following public disclosure of the transactions contemplated
hereby, this Agreement terminates prior to Closing, the Company shall issue a press release disclosing such termination by 9:00
a.m., Eastern time, on the first Business Day following the date of such termination. 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 or
any regulatory agency 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 filed pursuant to the Registration Rights Agreement and (B) the
filing of final Transaction Documents with the Commission and (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). From and after the issuance of the Press Release,
no Purchaser shall be in possession of any material, nonpublic information received from the Company, and Subsidiary or any of
their respective officers, directors or employees of the Placement Agent. 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,
such Purchaser will maintain the confidentiality of the existence and terms of the transaction contemplated herein.


 


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, shareholders, members, partners, employees, agents and investment advisers (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, shareholders, agents, members, partners, employees, agents or investment advisers
(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, an “Indemnified Person”) harmless from any and all losses,
liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements,
court costs and reasonable attorneys’ fees and costs of investigation that any such Indemnified Person 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 an Indemnified Person in any capacity, or any of them
or their respective Affiliates, by any shareholder of the Company who is not an Affiliate of such Indemnified Person, with respect
to any of the transactions contemplated by this Agreement.  The Company will not be liable to any Indemnified Person under
this Agreement to the extent, but only to the extent that a loss, claim, damage or liability is attributable to any Indemnified
Person’s breach of any of the representations, warranties, covenants or agreements made by such Indemnified Person in this
Agreement or in the other Transaction Documents.


 






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(b)Conduct of
Indemnification Proceedings. Promptly after receipt by any 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, however, 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 (as determined by a court of competent jurisdiction, which determination is
not subject to appeal or further review). 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. 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, 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.


 


(c)Limitation
on Amount of Company’s Indemnification Liability


 


(i)Deductible.
Except as provided otherwise in Section 4.8(c)(iii), the Company will not be liable for losses that otherwise are indemnifiable
under Section 4.8(a) until the total of all losses under Section 4.8(a) incurred by all Purchasers exceeds $50,000, at which point
the full amount of all losses shall be recoverable.


 


(ii)Maximum. Except
as provided otherwise in Section 4.8(c)(iii), the maximum aggregate liability of the Company for all losses under Section 4.8(a)
is the aggregate Subscription Amount by all Purchasers, provided however, that the maximum aggregate liability of the Company for
all losses under Section 4.8(a) as to any individual Purchaser is the aggregate Subscription Amount of such individual Purchaser.


 


(iii)Exceptions.
The provisions of Section 4.8(c)(i) and (ii) do not apply to (A) claims due to the inaccuracy of any of the representations or
breach of any of the warranties of the Company in Sections 3.1(a), 3.1(b), 3.1(c), 3.1(e), 3.1(f), 3.1(g), 3.1(i) or 3.1(j) or
(B) indemnification claims involving fraud or knowing and intentional misconduct by the Company.


 


4.9.Use of Proceeds.
The Company intends to use the net proceeds from the sale of the Preferred Shares hereunder to redeem its outstanding Series A
Preferred Stock and for general corporate purposes and any remaining proceeds will be invested in the Bank or retained by the Company.
The Company will use any funds it retains for general corporate purposes. The Bank may use any proceeds it receives from the Company
to augment its capital position, support its operations, or for general corporate purposes.


 


4.10.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 Preferred Shares that, upon conversion into the Underlying Shares, 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 the Company’s voting securities issued and outstanding.


 


4.11.Conduct
of Business. From the date hereof until the earlier of the Closing Date or the termination of this Agreement in accordance
with its terms, except as contemplated by this Agreement, the Company will, and will cause its Subsidiaries to, operate their business
in the ordinary course consistent with past practice, preserve intact the current business organization of the Company, use commercially
reasonable efforts to retain the services of their employees, consultants and agents, preserve the current relationships of the
Company and its Subsidiaries with material customers and other Persons with whom the Company and its Subsidiaries have and intend
to maintain significant relations, maintain all of its operating assets in their current condition (normal wear and tear excepted)
and will not take or omit to take any action that would constitute a breach of Section 3.1(k).


 






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4.12.Avoidance
of Control. Notwithstanding anything to the contrary in this Agreement, neither the Company nor any Subsidiary shall take any
action (including, without limitation, any redemption, repurchase, rescission or recapitalization of Common Stock, or securities
or rights, options or warrants to purchase Common Stock, or securities of any type whatsoever that are, or may become, convertible
into or exchangeable into or exercisable for Common Stock in each case, where each Purchaser is not given the right to participate
in such redemption, repurchase, rescission or recapitalization to the extent of such Purchaser’s pro rata proportion), that
would cause (a) such Purchaser’s equity of the Company (together with equity owned by such Purchaser’s Affiliates (as
such term is used under the BHCA)) to exceed 33.3% of the Company’s total equity (provided that there is no ownership or
control in excess of 9.9% of any class of voting securities of the Company by such Purchaser, together with such Purchaser’s
Affiliates) or (b) such Purchaser’s ownership of any class of voting securities of the Company (together with the ownership
by such Purchaser’s Affiliates (as such term is used under the BHCA) of voting securities of the Company) to exceed 9.9%,
in each case without the prior written consent of such Purchaser, or to increase to an amount that would constitute “control”
under the BHCA, the CIBCA or any rules or regulations promulgated thereunder (or any successor provisions) or otherwise cause such
Purchaser to “control” the Company under and for purposes of the BHCA, the CIBCA or any rules or regulations promulgated
thereunder (or any successor provisions). Notwithstanding anything to the contrary in this Agreement, no Purchaser (together with
its Affiliates (as such term is used under the BHCA)) shall have the ability to purchase more than 33.3% of the Company’s
total equity or exercise any voting rights of any class of securities in excess of 9.9% of the total outstanding voting securities
of the Company. In the event either the Company or a Purchaser breaches its obligations under this Section 4.12 or believes that
it is reasonably likely to breach such an obligation, it shall promptly notify the other parties hereto and shall cooperate in
good faith with such parties to modify ownership or make other arrangements or take any other action, in each case, as is necessary
to cure or avoid such breach.


 


4.13.Most Favored
Nation. During the period from the date of this Agreement through the Closing Date, neither the Company nor its Subsidiaries
shall enter into any additional, or modify any existing, agreements with any existing or future investors in the Company or any
of its Subsidiaries that have the effect of establishing rights or otherwise benefiting such investor in a manner more favorable
in any material respect to such investor than the rights and benefits established in favor of the Purchasers by this Agreement,
unless, in any such case, the Purchasers have been provided with such rights and benefits.


 


4.14.No Change
of Control. The Company shall use reasonable best efforts to obtain all necessary irrevocable waivers, adopt any required amendments
and make all appropriate determinations so that the issuance of the Preferred Shares to the Purchasers and the issuance of the
shares of Preferred Stock pursuant to the Subscription Agreements will not trigger a “change of control” or other similar
provision in any of the agreements to which the Company or any of its Subsidiaries is a party, including without limitation any
employment, “change in control,” severance or other agreements and any benefit plan, which results in payments to the
counterparty or the acceleration of vesting of benefits.


 


4.15.FDIC Final
Statement of Policy on Qualifications for Failed Bank Acquisitions. So long as a Purchaser holds any Securities, the Company
will not, without the consent of such Purchaser, take any action, directly or indirectly, through its subsidiaries or otherwise,
that the Board of Directors of the Company believes in good faith would reasonably be expected to cause such Purchaser to be subject
to transfer restrictions or other covenants of the FDIC Final Statement of Policy on Qualifications for Failed Bank Acquisitions
as in effect at the time of taking such action.


 


4.16.Shareholder
Approval. The Company shall use its best efforts to obtain the approval of its shareholders, in accordance with NASDAQ Listing
Rule 5635(d), of the issuance of the Underlying Shares (the “Shareholder Approval” and a proposal related thereto,
the “Shareholder Proposal”). The Board of Directors of the Company shall recommend to the Company’s shareholders
that such shareholders vote in favor of the Shareholder Proposal. In connection with the meeting of shareholders at which the Shareholder
Proposal will be presented, the Company shall promptly prepare and file with the Commission a preliminary proxy statement, shall
use its commercially reasonable efforts to respond to any comments of the Commission or its staff and shall cause a definitive
proxy statement related to such shareholders’ meeting to be mailed to the Company’s shareholders not more than 15 Business
Days after clearance thereof by the Commission, and shall use its commercially reasonable efforts to solicit proxies for such Shareholder
Approval. 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 Shareholder Approval is not obtained at such shareholders meeting, the Company
shall include a Shareholder Proposal (and the Board of Directors shall recommend approval of such Shareholder 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 prior shareholders
meeting until such Shareholder Approval is obtained.


 






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4.17.Listing
of Common Stock. Subject to receipt of Shareholder Approval, 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.


 


4.18.Preemptive
Rights.


 


(a)For a period of
one (1) year following the Closing Date and provided that a Purchaser, together with its Affiliates and Persons who share a common
discretionary investment adviser with such Purchaser, owns 2.0% of the Company’s then outstanding Common Stock (provided
that, in making such calculation, all shares of Common Stock into or for which shares of any securities owned by a Purchaser are
directly or indirectly convertible or exercisable, which, for the avoidance of doubt, shall include those shares of Common Stock
issuable upon the conversion of shares of the Series B Preferred Stock to be issued hereunder shall be included in both the numerator
and denominator), if the Company at any time or from time to time offers to sell Covered Securities (as defined below) in a public
or private offering of Covered Securities for cash (a “Qualified Offering”), such Purchaser shall be afforded
the opportunity to acquire from the Company, for the same price and on the same terms as such Covered Securities are offered, in
the aggregate up to the amount of Covered Securities required to enable it to maintain its Qualified Purchaser Percentage Interest
(measured immediately prior to such offering). “Qualified Purchaser Percentage Interest” means, as of any date
of determination, the percentage equal to (i) the number of shares of Common Stock then held by such Purchaser as of the date of
determination, divided by (ii) the total number of outstanding shares of Common Stock as of such date. “Covered Securities”
means Common Stock and any rights, options or warrants to purchase or securities convertible into or exercisable or exchangeable
for Common Stock, other than securities that are (A) issuable upon the exercise or conversion of any securities of the Company
issued and outstanding as of the date hereof; or (B) issued by the Company pursuant to any employment contract, employee incentive
or benefit plan, stock purchase plan, stock ownership plan, stock option or equity compensation plan or other similar plan approved
by the Company’s board of directors where stock is being issued or offered to a trust, other entity to or for the benefit
of any employees, consultants, officers or directors of the Company.


 


(b)Prior to making
any Qualified Offering of Covered Securities, the Company shall give each such Purchaser written notice of its intention to make
such an offering, describing, to the extent then known, the anticipated amount of securities, and other material terms then known
to the Company upon which the Company proposes to offer the same (such notice, a “Qualified Offering Notice”).
The Company shall deliver such notice only to the individuals identified on such Purchaser’s signature page hereto, and shall
not communicate the information to anyone else acting on behalf of such Purchaser without the consent of one of the designated
individuals. Each such Purchaser shall then have 10 days after receipt of the Qualified Offering Notice (the “Offer Period”)
to notify the Company in writing that it intends to exercise such preemptive right and as to the amount of Covered Securities such
Purchaser desires to purchase, up to the maximum amount calculated pursuant to Section 4.18(a) (the “Designated Securities”).
Such notice constitutes a non-binding indication of interest of such Purchaser to purchase the amount of Designated Securities
specified by such Purchaser (or a proportionately lesser amount if the amount of Covered Securities to be offered in such Qualified
Offering is subsequently reduced) at the price (or range of prices) established in the Qualified Offering and other terms set forth
in the Company’s notice to it. The failure to respond during the Offer Period constitutes a waiver of such Purchaser’s
preemptive right in respect of such offering. The sale of the Covered Securities in the Qualified Offering, including any Designated
Securities, shall be closed not later than 30 days after the end of the Offer Period. The Covered Securities to be sold to other
investors in such Qualified Offering shall be sold at a price not less than, and upon terms no more favorable to such other investors
than, those specified in the Qualified Offering Notice. If the Company does not consummate the sale of Covered Securities to other
investors within such 30-day period, the right provided hereunder shall be revived and such securities shall not be offered unless
first reoffered to the eligible Purchasers in accordance herewith. Notwithstanding anything to the contrary set forth herein and
unless otherwise agreed by the eligible Purchasers, by not later than the end of such 30-day period, the Company shall either confirm
in writing to the eligible Purchasers that the Qualified Offering has been abandoned or shall publicly disclose its intention to
issue the Covered Securities in the Qualified Offering, in either case in such a manner that the Purchasers will not be in possession
of any material, non-public information thereafter.


 






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(c)If a Purchaser
exercises its preemptive right provided in this Section 4.18 with respect to a Qualified Offering, the Company shall offer and
sell such Purchaser, if any such offering is consummated, the Designated Securities (as adjusted, upward to reflect the actual
size of such offering when priced) at the same price as the Covered Securities are offered to third persons (not including the
underwriters or the initial purchasers in a Rule 144A offering that is being reoffered by the initial purchasers) in such offering
and shall provide written notice of such price upon the determination of such price.


 


(d)In addition to
the pricing provision of Section 4.18(c), the Company will offer and sell the Designated Securities to each eligible Purchaser
upon terms and conditions not less favorable than the most favorable terms and conditions offered to other persons or entities
in a Qualified Offering.


 


(e)Notwithstanding
anything to the contrary contained in the Transaction Documents, the provisions of this Section 4.18, including any and all preemptive
rights afforded Purchasers hereunder, shall expire and be of no further effect as of the first anniversary of the Closing Date.


 


ARTICLE V

CONDITIONS PRECEDENT TO CLOSING


 


5.1.Conditions
Precedent to the Obligations of the Purchasers to Purchase Preferred Shares. The obligation of each Purchaser to acquire Preferred
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, nor shall there have been any regulatory communication, 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 Preferred 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)Articles of
Amendment. The Company shall have filed the Articles of Amendment with the Secretary of State.


 


(h)Termination.
This Agreement shall not have been terminated as to such Purchaser in accordance with Section 6.16 herein.


 






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(i)No Suspensions
of Trading in Common Stock; Listing. The Common Stock (i) shall be designated for listing and quotation on the Nasdaq
Global Market and (ii) shall not have been suspended, as of the Closing Date, by the Commission or Nasdaq from trading on
the Nasdaq Global Market nor shall suspension by the Commission or Nasdaq have been threatened, as of the Closing Date.


 


(j)Gross Proceeds.
The Company shall receive at the Closing aggregate gross proceeds from the sale of Preferred Shares hereunder of $15,112,500, at
a price per share equal to the Purchase Price, and shall simultaneously issue and deliver at the Closing to the Purchasers hereunder
an aggregate number of Preferred Shares equal to such gross proceeds divided by the Purchase Price.


 


(k)Absence of
Bank Regulatory Issues. The purchase of Preferred Shares by each Purchaser shall not (i) cause such Purchaser or any of its
affiliates to violate any banking regulation, (ii) require such Purchaser or any of its affiliates to file a prior notice under
the CIBCA, or otherwise seek prior approval of any banking regulator, (iii) require such Purchaser or any of its affiliates to
become a bank holding company or otherwise serve as a source of strength for the Company or any Subsidiary or (iv) cause such Purchaser,
together with any other person whose Company securities would be aggregated with such Purchaser’s Company securities for
purposes of any banking regulation or law, to collectively be 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 by the Purchaser and such other Persons) would
represent more than 33.3% of the Company’s total equity or than 9.9% of any class of voting securities of the Company outstanding
at such time.


 


(l)No Burdensome
Condition. Since the date hereof, there shall not be any action taken, or any law, rule or regulation enacted, entered, enforced
or deemed applicable to the Company or its Subsidiaries, such Purchaser (or its Affiliates) or the transactions contemplated by
this Agreement, by any bank regulatory authority which imposes any restriction or condition on the Company or its Subsidiaries
or such Purchaser or any of its Affiliates (other than such restrictions as are described in any passivity or anti-association
commitments, as may be amended from time to time, entered into by such Purchaser) which such Purchaser determines, in its reasonable
good faith judgment, is materially and unreasonably burdensome on the Company’s business following the Closing or on such
Purchaser (or any of its Affiliates) or would reduce the economic benefits of the transactions contemplated by this Agreement to
such Purchaser to such a degree that such Purchaser would not have entered into this Agreement had such condition or restriction
been known to it on the date hereof (any such condition or restriction, a “Burdensome Condition”), and, for
the avoidance of doubt, any requirements to disclose the identities of limited partners, shareholders or non-managing members of
such Purchaser or its Affiliates or its investment advisers shall be deemed a Burdensome Condition unless otherwise determined
by such Purchaser in its sole discretion.


 


(m)Material Adverse
Effect. No Material Adverse Effect shall have occurred since the date of this Agreement.


 


5.2.Conditions
Precedent to the Obligations of the Company to sell Preferred Shares. The Company’s obligation to sell and issue the
Preferred Shares to each Purchaser 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:


 


(a)Representations
and Warranties. The representations and warranties made by such 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, nor shall there have been any regulatory communication, that
prohibits the consummation of any of the transactions contemplated by the Transaction Documents.


 






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(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 Preferred Shares (including all Required Approvals), all of which shall be and
remain so long as necessary in full force and effect.


 


(e)Purchaser 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 Section 6.16 herein.


 


ARTICLE VI

MISCELLANEOUS


 


6.1.Fees and
Expenses. The Company shall pay the reasonable legal fees and expenses of Greenberg Traurig, LLP, counsel to certain Purchasers,
not to exceed $15,000 in the aggregate, incurred by such Purchasers in connection with the transactions contemplated by the Transaction
Documents, which amount shall be paid directly by the Company to Greenberg Traurig, LLP at the Closing or paid by the Company to
Greenberg Traurig, LLP upon termination of this Agreement so long as such termination did not occur as a result of a material breach
by such Purchasers of any of their 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 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 or e-mail (provided the sender receives a machine-generated confirmation of successful facsimile transmission or
e-mail notification or confirmation of receipt of an e-mail transmission) at the facsimile number or e-mail address specified in
this Section prior to 5:00 p.m., Eastern 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., Eastern time, on any Trading Day, (c) if sent by U.S. nationally recognized overnight courier service
with next day delivery specified (receipt requested) the Trading Day following delivery to such courier service, 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:	
        Carolina Bank Holdings, Inc.

        101 North Spring Street

        Greensboro, North Carolina 27401

        Attention: Robert T. Braswell

        Telephone: (336) 288-1898

        Facsimile: (336) 387-4359

        Email: b.braswell@carolinabank.com

	 	 
	With a copy to:	
        Wyrick Robbins Yates & Ponton LLP

        4101 Lake Boone Trail, Suite 300

        Raleigh, North Carolina 27607

        Attention: Todd H. Eveson

        Telephone: (919) 781-4000

        Facsimile: (919) 781-4865

        Email: teveson@wyrick.com

	 	 
	If to a Purchaser:	Only 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.


 


or such other address as may be designated
in writing hereafter, in the same manner, by such Person.


 






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6.4.Amendments;
Waivers; No Additional Consideration. No amendment or waiver of any provision of this Agreement will be effective with respect
to any party unless made in writing and signed by an officer or a duly authorized representative of such party. 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 Preferred Shares.


 


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 Indemnified Persons.


 


6.8.Governing
Law. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed
by and construed and enforced in accordance with the internal laws of the State of North Carolina, without regard to the principles
of conflicts of law thereof. 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.


 






    	30



    	 



    

 


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 Preferred Shares.


 


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 the 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 Preferred Shares. If any certificate or instrument evidencing any Preferred 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 Preferred Shares. If a replacement certificate or instrument evidencing any Preferred 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 will 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
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 Preferred
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 or 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 Preferred 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. It is expressly understood and agreed that each provision contained
in this Agreement is between the Company and a Purchaser, solely, and not between the Company and the Purchasers collectively and
not between and among the Purchasers.


 






    	31



    	 



    

 


6.16.Termination.
This Agreement may be terminated and the sale and purchase of the Preferred Shares abandoned at any time prior to the Closing by
either the Company or any Purchaser (with respect to itself only) upon written notice to the other, if the Closing has not been
consummated on or prior to 5:00 p.m., Eastern time, on the Outside Date; provided, however, that the right to terminate this Agreement
under this Section 6.16 shall not be available to any Person whose failure to comply with its obligations under this Agreement
has been the cause of or resulted in the failure of the Closing to occur on or before such time. Nothing in this Section 6.16
shall be deemed to release any party from any liability for any breach by such party of the terms and provisions of this Agreement
or the other Transaction Documents or to impair the right of any party to compel specific performance by any other party of its
obligations under this Agreement or the other Transaction Documents. In the event of a termination pursuant to this Section, the
Company shall promptly notify all non-terminating Purchasers. Upon a termination in accordance with this Section, the Company and
the terminating Purchaser(s) shall not have any further obligation or liability (including arising from such termination) to the
other, and no Purchaser will have any liability to any other Purchaser under the Transaction Documents as a result therefrom.


 


6.17.Rescission
and Withdrawal Right. 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.


 


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.


 


 


 


[Signatures on following
page]


 






    	32



    	 



    

 





	 	CAROLINA BANK HOLDINGS, INC.	 
	 	 	 	 
	 	 	 	 
	 	By:	 	 
	 	 	Robert T. Braswell	 
	 	 	President and Chief Executive Officer	 
	 	 	 	 
	 	 	 	 
	 	NAME OF PURCHASER:




	 
	 	 	 	 
	 	 	 
	 	 	 	 
	 	By:	 	 
	 	Name:	 	 
	 	Title:	 	 







 





	 	Aggregate Purchase Price	 
	 	(Subscription Amount): $	 	 







 


	 	Number of Preferred Shares



	 	to be Acquired:



	 	 



 


	 	Tax ID No:	 	 



 





	 	Address for Notice:	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 







 









	 	Telephone:	 	 
	 	Facsimile:	 	 
	 	Email:	 	 
	 	 	 	 
	 	Attention:	 	 







 





	Delivery Instructions:	 
	(if different than above)	 
	 	 
	 	 
	 	 
	 	 
	 	 







 





Physical Certificates Required:


 


YES o
         NO o







 


 


 


[Signature Page to Securities Purchase
Agreement]







 






    	 



    	 



    

 


EXHIBITS


  


	A	−	Form of Articles of Amendment
	 	 	 
	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 Articles of Amendment


 




    	 



    	 



    

 


EXHIBIT B


 


Form of Registration Rights Agreement


 




    	 



    	 



    

 


EXHIBIT C-1


 


ACCREDITED INVESTOR QUESTIONNAIRE


 


(ALL INFORMATION WILL BE TREATED CONFIDENTIALLY)


 


 


To:Carolina Bank Holdings, Inc.


 


This Accredited Investor Questionnaire
(“Questionnaire”) must be completed by each potential investor in connection with the offer and sale of shares
of Series B Non-Voting Convertible Preferred Stock (the “Preferred Shares”), of Carolina Bank Holdings, Inc.,
a North Carolina corporation (the “Company”). The Preferred Shares are being offered and sold by the Company
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(a)(2) of the Act and on Regulation D promulgated thereunder and in
reliance on similar exemptions under applicable state laws. The Company must determine that a potential investor meets certain
suitability requirements before offering or selling Preferred Shares to such investor. The purpose of this Questionnaire is to
assure the Company 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 Company to provide a completed copy of this Questionnaire to such parties
as the Company deems appropriate in order to ensure that the offer and sale of the Preferred 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 Preferred 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 Preferred 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:


 








	Resident Address:	 	 
	 	(Number and Street)



 


	 	 	 
	(City)	(State)	(Zip Code)



 


	Telephone Number: (___) 	 
	 	 	 







 


Age:__________                    Citizenship: ____________                  Where
registered to vote: _______________


 


If an individual, set forth in the space
provided below the state(s) in the United States in which you maintained your residence during the past two years and the dates
you resided in each state:


 


If an entity, set forth in the space provided
below the state in the United States in which you made your investment decision:


 


Are you a director
or executive officer of the Company?


 


 


Yes ____        No ____


 


Social Security or Taxpayer Identification
No._______________________________________________________________________________________


 


 


PART B.ACCREDITED INVESTOR QUESTIONNAIRE


 


In order for the Company to offer and sell
the Preferred 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 Preferred 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(a)(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, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the Preferred 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 Preferred 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 or her purchase exceeds $1,000,000 (see Note 11 below);
	 	 	 
		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 Company; and
	 	 	 
		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.


 






    	 



    	 



    

 


	Note 11.	 	For purposes of calculating net worth under paragraph (11):
	(A)	 	The person’s primary residence shall not be included as an asset;
	(B)	 	Indebtedness that is secured by the person’s primary residence, up to the estimated fair market value of the primary residence at the time of the sale of securities, shall not be included as a liability (except that if the amount of such indebtedness outstanding at the time of sale of securities exceeds the amount outstanding 60 days before such time, other than as a result of the acquisition of the primary residence, the amount of such excess shall be included as a liability); and
	(C)	 	Indebtedness that is secured by the person’s primary residence in excess of the estimated fair market value of the primary residence at the time of the sale of securities shall be included as a liability.


 


 


A.FOR EXECUTION BY AN INDIVIDUAL:


 





	Date:	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	By:	 	 
	 	 	 	 	Print Name:	 







 


B.FOR EXECUTION BY AN ENTITY:


 


		Entity Name:	 	 



 









	Date:	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	By:	 	 
	 	 	 	 	Print Name:	 
	 	 	 	 	Title:	 


  


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



 





		Entity Name:	 	 


 








	Date:	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	By:	 	 
	 	 	 	 	Print Name:	 
	 	 	 	 	Title:	 


 





		Entity Name:	 	 


 








	Date:	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	By:	 	 
	 	 	 	 	Print Name:	 
	 	 	 	 	Title:	 


  




    	 



    	 



    

 


EXHIBIT C-2


 


Stock
Certificate Questionnaire


 


Please provide the Company with the following
information:


 


	1.	
        The exact name that the shares
of Preferred Stock are to be registered in. You may use a nominee name if appropriate: 
	 	 
	 	 	 	 
	2.	
        The relationship between the Purchaser
of the shares of Preferred Stock and the registered holder listed in response to Item 1 above: 
	 	 
	 	 	 	 
	3.	The mailing address, telephone number and e-mail address 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


 


[Company Counsel to add Preamble
and Carveouts]


 


		1.	The Company validly exists as a corporation in good standing under the laws of the State of North
Carolina.



 


		2.	The Bank validly exists as a corporation in good standing under the laws of the State of North
Carolina.



 


		3.	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 Preferred Shares and the Underlying Shares.



 


		4.	The Company is a registered bank holding company under the Bank Holding Company Act of 1956, as
amended.



 


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



 


		6.	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.



 


		7.	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 4.4, 4.6
4.16 of the Securities Purchase Agreement], (b) violate any federal or state statute, rule or regulation, or any rule or regulation
of the Nasdaq Stock Market LLC, 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 Articles of Incorporation or Bylaws of the Company or (d) result in a breach of, or constitute a default under, any Material
Contract.



 


		8.	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 Preferred Shares to the Purchasers to register the Preferred Shares under the Securities
Act.



 


		9.	The Preferred 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 Articles of Incorporation or Bylaws. The Underlying Shares, when issued in accordance with the Articles of
Amendment following approval by the Company’s shareholders, 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 Articles of Incorporation or Bylaws.



 




    	 



    	 



    

 


EXHIBIT E


 


Form of Secretary’s Certificate


 


The undersigned hereby certifies
that [he/she] is the duly elected, qualified and acting Secretary of Carolina Bank Holdings, Inc., a North Carolina
corporation (the "Company "), and that as such [he/she] is authorized to execute and deliver this
certificate in the name and on behalf of the Company in connection with the Securities Purchase Agreement, dated as of
______________, 2015, 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 Appendix 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 ______________, 2015. 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.	Attached hereto as Appendix B is a copy of the Company’s Articles of Incorporation,
as amended. Such Articles of Incorporation, as amended constitute true, correct and complete copies of the Articles of Incorporation,
as amended of the Company, certified by the North Carolina Secretary of State as true, complete, and correct. No action for any
amendment thereto has been taken or is pending. [the amendment will be part of the articles at the time this is signed]



 


		3..	Attached hereto as Appendix C is a copy of the Company’s bylaws. Such bylaws constitute
true, correct and complete copies of the bylaws of the Company as in effect on the date hereof. No action for any amendment thereto
has been taken or is pending.



 


		4.	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/her] hand as of this ___ day of _________, 2015.


 


 


	 	
        _____________________________________________

        [____________________]

        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/her] true signature.


 


 


	 	
        _____________________________________________

        [____________________]

        Chief Financial Officer






  




    	 



    	 



    

 


Appendix A


 


Resolutions


 




    	 



    	 



    

 


Appendix B


 


Articles of Incorporation


  




    	 



    	 



    

 


Appendix C


  


Bylaws


 




    	 



    	 



    

 


EXHIBIT F


 


Form of Officer’s Certificate


 


The undersigned, the [Chief Executive Officer]
[Chief Financial Officer] of Carolina Bank Holdings, Inc., a North Carolina corporation (the “Company”), pursuant
to Section 5.1(f) of the Securities Purchase Agreement, dated as of ________________, 2015, 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 _________, 2015.


 


	 	
        ____________________________________

        [______________________]

        [______________________]