Exhibit 10.1


 


FORM OF SUBORDINATED NOTE PURCHASE AGREEMENT


 


This SUBORDINATED
NOTE PURCHASE AGREEMENT (this “Agreement”) is dated as of March 21, 2018, and is made by and among Village
Bank and Trust Financial Corp., a Virginia corporation (“Company”), and the several purchasers of the Subordinated
Notes named on Schedule I hereto (each a “Purchaser” and collectively, the “Purchasers”).


 


RECITALS


 


WHEREAS, Company
has requested that the Purchasers purchase from Company up to $5.7 million in aggregate principal amount of Subordinated Notes
(as defined herein), which aggregate amount is intended to qualify as Tier 2 Capital (as defined herein).


 


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


 


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


 


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


 


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


 


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


 


AGREEMENT


 


1.       DEFINITIONS.


 


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


 


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


 






     


     


    

  


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


 


“Bank”
means Village Bank, a Virginia state chartered commercial bank and a wholly owned subsidiary of the Company.


 


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


 


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


 


“Closing Date”
means March 21, 2018.


 


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


 


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


 


“Company’s
Reports” means (a) Company’s annual report on Form 10-K for the year ended December 31, 2016, as filed with the
SEC, (b) Company’s quarterly reports on Form 10-Q, as filed with the SEC since December 31, 2016, (c) any Current Report
on Form 8-K, as filed or finished by Company with the SEC since December 31, 2016, (d) the Consolidated Report of Condition and
Income on Form FFIEC 051 filed by the Bank for the period ended December 31, 2017 and (e) the Parent Company Only Financial Statements
on Form FR Y-9SP for the period ended December 31, 2017.


 


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


 


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


 


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


 


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


 


“FDIC”
means the Federal Deposit Insurance Corporation.


 


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


 


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


 


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


 






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


 


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


 


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


 


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


 


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


 


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


 


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


 






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“Maturity
Date” means March 31, 2028.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


“SEC”
means the Securities and Exchange Commission.


 


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


 






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


 


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


 


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


 


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


 


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


 


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


 


2.       SUBORDINATED
DEBT.


 


2.1       General
Matters.


 


2.1.1       Certain
Terms. Subject to the terms and conditions herein contained, Company proposes to issue and sell to the Purchasers, severally
and not jointly, Subordinated Notes in an aggregate principal amount equal to the aggregate of the Subordinated Note Amounts. Purchasers,
severally and not jointly, each agree to purchase the Subordinated Notes from the Company on the Closing Date in accordance with
the terms of, and subject to the conditions and provisions set forth in, this Agreement and the Subordinated Notes. The Subordinated
Note Amounts shall be disbursed in accordance with Section 3.1. The Subordinated Notes shall bear interest as set forth
in the Subordinated Notes. The unpaid principal balance of the Subordinated Notes plus all accrued but unpaid interest thereon
shall be due and payable on the Maturity Date, or such earlier date on which such amount shall become due and payable on account
of (i) acceleration by Purchasers in accordance with the terms of the Subordinated Notes and this Agreement or (ii) Company’s
delivery of a notice of redemption or repayment in accordance with the terms of the Subordinated Notes.


 






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


 


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


 


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


 


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


 


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


 


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


 


2.7       Use
of Proceeds. Company shall use the net proceeds from the sale of Subordinated Notes for (i) subject to approval by applicable
Regulatory Agencies, repayment of up to $5,027,000 aggregate liquidation value of its Fixed Rate Cumulative Perpetual Preferred
Stock, Series A, plus accrued dividends, and (ii) general corporate purposes, including for the provision of additional liquidity
and working capital.


 


3.       DISBURSEMENT.


 


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


 


3.2       Conditions
Precedent to Disbursement.


 


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


 






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


 


3.2.1.2       Authority
Documents.


 


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



 


		b)	A certificate of good standing of Company issued by the Virginia State Corporation Commission;



 


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



 


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



 


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



 


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


 


3.2.1.4       Officer’s
Certificate. A certificate signed on behalf of Company by a senior executive officer certifying that the representations
and warranties of Company set forth in this Agreement are true and correct in all respects on and as of the date of this Agreement
and on and as of the Closing Date as though made on and as of the Closing Date, except where the failure to be true and correct
(without regard to any materiality or Material Adverse Effect qualifications contained therein), individually or in the aggregate,
would not be reasonably likely to have a Material Adverse Effect on Company and its Subsidiaries taken as a whole (and except that
(i) representations and warranties made as of a specified date shall only be required to be true and correct as of such date and
(ii) the representations and warranties of Company set forth in Sections 4.2.1, 4.2.3 and 4.4.6 shall be true
and correct in all respects).


 


3.2.1.5       Opinion
of Counsel. Purchasers and Placement Agent shall have received the opinion of Williams Mullen, counsel for the Company,
dated the Closing Date, in the form annexed hereto as Exhibit B.


 






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


 


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


 


3.2.2       Conditions
to Company’s Obligations. With respect to a given Purchaser, the obligation of Company to consummate the sale of
the Subordinated Notes and to effect the Closing is subject to delivery by or at the direction of such Purchaser to Company each
of the following (or written waiver by Company prior to the Closing of such delivery):


 


3.2.2.1       Transaction
Documents. This Agreement, duly authorized and executed by such Purchaser.


 


3.2.2.2       Officer’s
Certificate. A certificate signed on behalf of such Purchaser by a senior executive officer or other duly authorized officer
certifying that the representations and warranties of such Purchaser set forth in this Agreement are true and correct in all respects
on and as of the date of this Agreement and on and as of the Closing Date as though made on and as of the Closing Date.


 


4.       REPRESENTATIONS
AND WARRANTIES OF COMPANY.


 


Company hereby represents
and warrants to each Purchaser as follows:


 


4.1       Organization
and Authority.


 


4.1.1       Organization
Matters of Company and Its Subsidiaries.


 


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


 


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


 






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


 


4.1.2       Capital
Stock and Related Matters. The Articles of Incorporation of Company authorize Company to issue 10,000,000 shares of common
stock, par value $4.00 per share. As of the date of this Agreement, there are 1,431,627 shares of the Company’s common stock
issued and outstanding. All of the outstanding capital stock of Company has been duly authorized and validly issued and is fully
paid and nonassessable. Except as set forth on Schedule 4.1.2, there are,
as of the date hereof, no outstanding options, rights, warrants or other agreements or instruments obligating Company to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares of the capital stock of Company or obligating Company
to grant, extend or enter into any such agreement or commitment to any Person except pursuant to Company’s equity incentive
plans duly adopted by Company’s Board of Directors.


 


4.2       No
Impediment to Transactions.


 


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


 


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


 


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


 






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


 


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


 


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


 






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4.4       Financial
Condition.


 


4.4.1       Financial
Statements. The financial statements of Company or Bank, as applicable, included in Company’s Reports (including
the related notes, where applicable), which have been provided to Purchasers (i) have been prepared from, and are in accordance
with, the books and records of Company or Bank, as applicable; (ii) fairly present in all material respects the results of operations,
changes in stockholders’ equity and financial condition of Company or Bank, as applicable, and, where applicable, its consolidated
Subsidiaries, for the respective fiscal periods or as of the respective dates therein set forth (subject in the case of unaudited
statements to recurring year-end audit adjustments normal in nature and amount), as applicable; (iii) complied as to form, as of
their respective dates of filing in all material respects with applicable accounting and banking requirements as applicable, with
respect thereto; and (iv) have been prepared in accordance with GAAP consistently applied during the periods involved, except,
in each case, as required by any regulatory accounting practices. The books and records of Company and Bank have been, and are
being, maintained in all material respects in accordance with GAAP and any other applicable legal and accounting requirements.
Neither Company nor Bank has any material liability of any nature whatsoever (whether absolute, accrued, contingent or otherwise
and whether due or to become due), except for those liabilities that are reflected or reserved against on the consolidated balance
sheet of Company and Bank contained in Company’s Reports for the most recently completed quarterly or annual fiscal period,
as applicable, and for liabilities incurred in the ordinary course of business consistent with past practice or in connection with
this Agreement and the transactions contemplated hereby.


 


4.4.2       Controls.
Company, Bank and their respective Subsidiaries have established and maintain a system of internal control over financial reporting
that pertain to the maintenance of records that accurately and fairly reflect the transactions and dispositions of the Company’s
assets (on a consolidated basis), provide reasonable assurance that transactions are recorded as necessary to permit preparation
of financial statements in accordance with GAAP, and that Company’s and Bank’s receipts and expenditures and receipts
and expenditures of each of the Company’s other Subsidiaries are being made only in accordance with authorizations of Company
management and Board of Directors, and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition,
use or disposition of assets of the Company on a consolidated basis that could have a material effect on the financial statements.
The Company believes such internal control over financial reporting is effective to provide reasonable assurance regarding the
reliability of the Company’s financial reporting and the preparation of the Company’s financial statements for external
purposes in accordance with GAAP. Since the conclusion of the Company’s last completed fiscal year, to the Company’s
knowledge there has not been and there currently is not (i) any significant deficiencies or material weaknesses in the design or
operation of its internal control over financial reporting which are reasonably likely to adversely affect its ability to record,
process, summarize and report financial information, or (ii) any fraud, whether or not material, that involves management or other
employees who have a role in the Company’s or Bank’s internal control over financial reporting and the internal control
over financial reporting of each other applicable Subsidiary of the Company. The Company (A) has implemented and maintains disclosure
controls and procedures it believes are reasonably designed and maintained to ensure that material information relating to the
Company is made known to the Chief Executive Officer and the Chief Financial Officer of the Company by others within the Company
and (B) has disclosed, based on its most recent evaluation prior to the date hereof, to the Company’s outside auditors and
the audit committee of the Company’s Board of Directors any significant deficiencies and material weaknesses in the design
or operation of internal controls over financial reporting which are reasonably likely to adversely affect the Company’s
internal controls over financial reporting and of which the Company has knowledge. Such disclosure controls and procedures are
effective for the purposes for which they were established.


 






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


 


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


 


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


 


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


 






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4.5       Legal
Matters.


 


4.5.1       Compliance
with Law. Except as disclosed in the Company’s Reports and as previously disclosed to the Purchaser, Company, Bank
and each of their Subsidiaries (i) has complied with and (ii) is not under investigation with respect to, and have not been threatened
to be charged with or given any notice of any material violation of any applicable statutes, rules, regulations, orders and restrictions
of any domestic or foreign government, or any instrumentality or agency thereof, having jurisdiction over the conduct of its business
or the ownership of its properties, except where any such failure to comply or violation would not reasonably be expected to have
a Material Adverse Effect on Company and its Subsidiaries taken as a whole. Company, Bank and each of their Subsidiaries is compliant
with all applicable statutes, rules, regulations, orders and restrictions of any domestic or foreign government, or any Governmental
Agency, and their own privacy policies and written commitments to their respective customers, consumers and employees, concerning
data protection and the privacy and security of personal data and the nonpublic personal information of their respective customers,
consumers and employees, except in each case where the failure to so comply would not result, individually or in the aggregate,
in a Material Adverse Effect on Company and its Subsidiaries taken as a whole, and (y) at no time during the two (2) years prior
to the date hereof has received any notice asserting any such violations.


 


4.5.2       Regulatory
Enforcement Actions. Company and its Subsidiaries are in compliance in all material respects with all laws administered
by and regulations of any Governmental Agency applicable to it or to them, the failure to comply with which would have a Material
Adverse Effect on Company and its Subsidiaries taken as a whole. None of Company, Company’s Subsidiaries nor any of their
officers or directors is now operating under any restrictions, agreements, memoranda, commitment letter, supervisory letter or
similar regulatory correspondence, or other commitments (other than restrictions of general application) imposed by any Governmental
Agency that, either separately or in the aggregate, would reasonably be expected to have a Material Adverse Effect on Company and
its Subsidiaries taken as a whole, nor are, to Company’s knowledge, (a) any such restrictions threatened, or (b) any agreements,
commitment letters, supervisory letters or similar regulatory correspondence, or other commitments being sought by any Governmental
Agency.


 


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


 






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


 


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


 


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


 


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


 


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


 


4.8       Offering
of Securities. Neither Company nor any Person acting on its behalf has taken any action which would subject the offering,
issuance or sale of the Subordinated Notes to the registration requirements of the Securities Act. Neither the Company nor any
Person acting on its behalf has engaged or will engage in any form of general solicitation or general advertising (within the meaning
of Regulation D) in connection with any offer or sale of the Subordinated Notes pursuant to the transactions contemplated by the
Transaction Documents. Assuming the accuracy of Purchasers’ representations and warranties set forth in this Agreement, no
registration under the Securities Act is required for the offer and sale of the Subordinated Notes by the Company to Purchasers.


 


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


 






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5.       GENERAL
COVENANTS, CONDITIONS AND AGREEMENTS.


 


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


 


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


 


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


 


5.3       Compliance
with Laws.


 


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


 


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


 


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


 






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


 


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


 


5.3.6       Tier
2 Capital. If all or any portion of the Subordinated Notes ceases to qualify as Tier 2 Capital, other than due to the limitation
imposed on the capital treatment of subordinated debt during the five (5) years immediately preceding the Maturity Date of the
Subordinated Notes, Company will immediately notify the Holders thereof, and thereafter Company and the Holders will work together
in good faith to execute and deliver all agreements as reasonably necessary in order to restructure the applicable portions of
the obligations evidenced by the Subordinated Notes to qualify as Tier 2 Capital, if requested by Company.


 


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


 


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


 






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5.6       Rule
144A Information. While any Subordinated Notes remain “restricted securities” within the meaning of the Securities
Act, Company will make available, upon request, to any seller of such Subordinated Notes the information specified in Rule 144A(d)(4)
under the Securities Act, unless the Company is then subject to Section 13 or 15(d) of the Exchange Act.


 


6.       REPRESENTATIONS,
WARRANTIES AND COVENANTS OF PURCHASERS.


 


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


 


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


 


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


 


6.3       No
Conflicts. Neither the execution, delivery or performance of the Transaction Documents nor the consummation of any of the
transactions contemplated thereby will conflict with, violate, constitute a breach of or a default (whether with or without the
giving of notice or the passage of time or otherwise) under (i) its organizational documents, (ii) any agreement to which it is
party, (iii) any law applicable to it or (iv) any order, writ, judgment, injunction, decree, determination or award binding upon
or affecting it, except, in the case of items (ii), (iii) or (iv), for such violations and conflicts that would not reasonably
be expected to have, singularly or in the aggregate, a Material Adverse Effect on Purchaser.


 


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


 


6.5       Accredited
Investor. It is and will be on the Closing Date an “accredited investor” as such term is defined in Rule 501(a)
of Regulation D and (i) as contemplated by subsections (1), (2), (3) and (7) of Rule 501(a) of Regulation D, and has no less than
$5,000,000 in total assets, or (ii) as contemplated by subsections (5) and (6) of Rule 501(a) of Regulation D, and has a current
net worth, exclusive of Purchaser’s primary residence, of over $1,000,000 and income of over $200,000 in each of the two
most recent years, and a reasonable expectation of reaching the same income level in the current year.


 






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


 


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


 


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


 


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


 


6.10       Investment
Decision. It has made its own investment decision based upon its own judgment, due diligence and advice from such advisors
as it has deemed necessary and not upon any view expressed by any other person or entity, including the Placement Agent. Neither
such inquiries nor any other due diligence investigations conducted by it or its advisors or representatives, if any, shall modify,
amend or affect its right to rely on Company’s representations and warranties contained herein. It is not relying upon, and
has not relied upon, any advice, statement, representation or warranty made by any Person by or on behalf of Company, including,
without limitation, the Placement Agent, except for the express statements, representations and warranties of Company made or contained
in this Agreement. Furthermore, it acknowledges that (i) the Placement Agent has not performed any due diligence review on behalf
of it or provided it with any legal, tax or investment advice and (ii) nothing in this Agreement or any other materials presented
by or on behalf of Company to it in connection with the purchase of the Subordinated Notes constitutes legal, tax or investment
advice.


 






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


 


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


 


6.13       Tier
2 Capital. If all or any portion of the Subordinated Notes ceases to qualify as Tier 2 Capital, other than due to the limitation
imposed on the capital treatment of subordinated debt during the five (5) years immediately preceding the Maturity Date of the
Subordinated Notes, Company will immediately notify the Purchasers, and thereafter Company and the Purchasers will work together
in good faith to execute and deliver all agreements as reasonably necessary in order to restructure the applicable portions of
the obligations evidenced by the Subordinated Notes to qualify as Tier 2 Capital, if requested by Company.


 


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


 


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


 


7.       TERMINATION.
Purchasers may terminate this Agreement (i) at any time prior to the Closing Date by written notice signed by all Purchasers to
Company if Purchasers shall decline to purchase the Subordinated Notes for any reason permitted by this Agreement or (ii) on the
Closing Date if any condition described in Section 3.2 is not fulfilled by the Company or waived in writing by the Purchasers
on or prior to the Closing Date. Any termination pursuant to this Section shall be without liability on the part of (i) Company
to Purchasers or (ii) Purchasers to Company.


 






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8.       MISCELLANEOUS.


 


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


 


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


 


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


 






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


 


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


 


	if to Company:	
        Village Bank and Trust Financial Corp.

        13319 Midlothian Turnpike

        Midlothian, Virginia 23113

         

	with a copy to:	
        Williams Mullen

        200 S. 10th Street, Suite 1600

        Richmond, Virginia 23219

        Attn: Benjamin A. McCall, Esq.

         

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


 


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


 


8.6       Successors
and Assigns. This Agreement shall inure to the benefit of the parties and their respective heirs, legal representatives,
successors and assigns; except that, unless a Purchaser consents in writing, no assignment made by Company in violation of this
Agreement shall be effective or confer any rights on any purported assignee of Company. The term “successors and assigns”
will not include a purchaser of any of the Subordinated Notes from any Purchaser merely because of such purchase.


 


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


 






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


 


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


 


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


 


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


 


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


 


8.13       Captions;
Counterparts. Captions contained in this Agreement in no way define, limit or extend the scope or intent of their respective
provisions. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute
but one and the same instrument. In the event that any signature is delivered by facsimile transmission, or by e-mail delivery
of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or
on whose behalf such signature is executed) with the same force and effect as if such facsimile signature page were an original
thereof.


 


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


 






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


 


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


 


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


 


 


[Signature Pages Follow]


 




    23 


     


    

 


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


 





	 	COMPANY:
	 	 
	 	Village
bank and Trust fINANCIAL cORP.
	 	 
	 	By: 	 
	 	 	
        Name:William
        G. Foster, Jr.

        Title:President and Chief Executive Officer

















 






    24 


     


    

  


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


 


	 	
        PURCHASER:

	 	 
	 	By:	 
	 	 
	 	Its:	 	 


 




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EXHIBIT A


 


FORM OF SUBORDINATED NOTE


 


6.50% Fixed to Floating Rate Subordinated
Note due March 31, 2028


 


 


 


THIS OBLIGATION (THIS “NOTE”)
IS NOT A DEPOSIT AND IS NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION (THE “FDIC”) OR ANY OTHER GOVERNMENT
AGENCY OR FUND.


 


THE INDEBTEDNESS EVIDENCED BY THIS NOTE
IS SUBORDINATED AND JUNIOR IN RIGHT OF PAYMENT TO THE CLAIMS OF CREDITORS (OTHER THAN CREDITORS OF EXISTING OR FUTURE SUBORDINATED
DEBT) OF VILLAGE BANK AND TRUST FINANCIAL CORP. (THE “ISSUER”), INCLUDING OBLIGATIONS OF THE ISSUER TO ITS GENERAL
AND SECURED CREDITORS AND IS UNSECURED. IT IS INELIGIBLE AS COLLATERAL FOR ANY EXTENSION OF CREDIT BY THE ISSUER OR ANY OF ITS
SUBSIDIARIES. IN THE EVENT OF LIQUIDATION ALL CREDITORS OF THE ISSUER (OTHER THAN CREDITORS OF EXISTING AND FUTURE SUBORDINATED
INDEBTEDNESS OF THE ISSUER) SHALL BE ENTITLED TO BE PAID IN FULL WITH SUCH INTEREST AS MAY BE PROVIDED BY LAW BEFORE ANY PAYMENT
SHALL BE MADE ON ACCOUNT OF PRINCIPAL OF OR INTEREST ON THIS NOTE. AFTER PAYMENT IN FULL OF ALL SUMS OWING TO SUCH CREDITORS, THE
HOLDER OF THIS NOTE AND THE HOLDERS OF OTHER OBLIGATIONS RANKING PARI PASSU WITH THIS NOTE SHALL BE ENTITLED TO BE PAID FROM THE
REMAINING ASSETS OF THE ISSUER THE UNPAID PRINCIPAL AMOUNT OF THIS NOTE PLUS ACCRUED AND UNPAID INTEREST THEREON BEFORE ANY PAYMENT
OR OTHER DISTRIBUTION, WHETHER IN CASH, PROPERTY OR OTHERWISE, SHALL BE MADE ON ACCOUNT OF ANY SHARES OF CAPITAL STOCK OF THE ISSUER.


 


THIS NOTE WILL BE ISSUED AND MAY BE TRANSFERRED
ONLY IN MINIMUM DENOMINATIONS OF $1,000 AND MULTIPLES OF $1,000 IN EXCESS THEREOF. ANY ATTEMPTED TRANSFER OF THIS NOTE IN A DENOMINATION
OF LESS THAN $1,000 SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. ANY SUCH PURPORTED TRANSFEREE SHALL BE DEEMED
NOT TO BE THE HOLDER OF THIS NOTE FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF PAYMENTS ON THIS NOTE, AND SUCH
PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN THIS NOTE.


 


THIS NOTE MAY BE SOLD ONLY IN COMPLIANCE
WITH APPLICABLE FEDERAL AND STATE SECURITIES LAWS. THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAWS. NEITHER
THIS NOTE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT.


 




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CERTAIN ERISA CONSIDERATIONS:


 


THE HOLDER OF THIS NOTE, OR ANY INTEREST
HEREIN, BY ITS ACCEPTANCE HEREOF OR THEREOF AGREES, REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT PLAN, INDIVIDUAL
RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
(“ERISA”), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”)
(EACH A “PLAN”), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE “PLAN ASSETS” BY REASON OF ANY PLAN’S
INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING “PLAN ASSETS” OF ANY PLAN MAY ACQUIRE OR HOLD THIS NOTE OR ANY INTEREST
HEREIN, UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE UNDER U.S. DEPARTMENT OF LABOR PROHIBITED
TRANSACTION CLASS EXEMPTION 96-23, 95-60, 91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION OR ITS PURCHASE AND HOLDING OF THIS
NOTE, OR ANY INTEREST HEREIN, ARE NOT PROHIBITED BY SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE WITH RESPECT TO SUCH PURCHASE
AND HOLDING. ANY PURCHASER OR HOLDER OF THIS NOTE OR ANY INTEREST HEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND
HOLDING THEREOF THAT EITHER: (i) IT IS NOT AN EMPLOYEE BENEFIT PLAN OR OTHER PLAN TO WHICH TITLE I OF ERISA OR SECTION 4975 OF
THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF ANY SUCH EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON
OR ENTITY USING THE “PLAN ASSETS” OF ANY SUCH EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE OR (ii) SUCH PURCHASE
OR HOLDING WILL NOT RESULT IN A PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE FOR WHICH FULL EXEMPTIVE
RELIEF IS NOT AVAILABLE UNDER APPLICABLE STATUTORY OR ADMINISTRATIVE EXEMPTION.


 


ANY FIDUCIARY OF ANY PLAN WHO IS CONSIDERING
THE ACQUISITION OF THIS NOTE OR ANY INTEREST HEREIN SHOULD CONSULT WITH HIS OR HER LEGAL COUNSEL PRIOR TO ACQUIRING THIS NOTE OR
ANY INTEREST HEREIN. 


 


 




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	Date:March 21, 2018	Principal	 
	 	Amount:	$[●],000,000
	 	 	 
	Cert. No. [●]	CUSIP:	[●]


 


 


VILLAGE BANK AND TRUST FINANCIAL CORP.

6.50% Fixed-to-Floating Rate Subordinated Note due March 31, 2028


 


 


 


1.       Payment.


 


(a)       Village
Bank and Trust Financial Corp., a Virginia corporation (the “Issuer”), for value received, hereby promises to
pay to the order of [●] or its registered assigns (the “Holder”) the principal sum of [●] Million
Dollars (U.S.) ($[●],000,000) plus accrued but unpaid interest on March 31, 2028 (the “Maturity Date”)
and to pay interest in arrears on such principal amount at the initial rate of 6.50% per annum (computed on the basis of a 360-day
year of twelve 30-day months) from March 21, 2018 until March 21, 2023, on February 15, May 15, August 15 and November 15 of each
year (each, a “Fixed Interest Payment Date”). Thereafter, the Issuer will pay interest in arrears on the principal
amount of this Note at a variable rate equal to three month LIBOR plus 373 basis points (computed on the basis of a 360-day year
and the actual number of days elapsed in each month) payable each February 15, May 15, August 15 and November 15 (each a “Floating
Interest Payment Date”). “Interest Payment Date” shall mean any Fixed Interest Payment Date or Floating
Interest Payment Date. The interest rate applicable to each quarterly Floating Interest Payment Date shall be the rate as determined
pursuant to the preceding sentence on each January 15, April 15, July 15 and October 15. If any payment of interest or principal
is not paid in full when the same becomes due and payable, then interest will be compounded quarterly.


 


“LIBOR” means
the 3-month USD LIBOR, which will be the offered rate for 3-month deposits in U.S. dollars, as that rate appears on the Reuters
Screen LIBOR01 Page (or any successor page thereto) as of 11:00 a.m., London time, as observed two London banking days prior to
the first day of the applicable floating rate interest period. If at any time while any Notes are outstanding LIBOR ceases to exist
or be reported on the Reuters Screen, the Issuer shall select (with notice to each Holder) an alternative rate, including any spread
adjustments thereto (the “Alternative Rate”). Issuer shall use its commercially reasonable judgment in determining
the Alternative Rate based on that rate determined by the U.K Financial Conduct Authority (the “FCA”) and generally
being used as the successor to 3-month USD LIBOR; if no such successor rate has been determined by the FCA, Issuer shall use its
commercially reasonable judgment in determining the Alternative Rate generally being used as the successor to 3-month USD LIBOR;
provided, however, that, in either case, if the Issuer is notified by holders of a majority of the Subordinated Notes within five
(5) Business Days after the receipt by all holders of notice of such Alternative Rate selection that such holders reasonably believe
that such Alternative Rate is not consistent with the successor for LIBOR, including any spread adjustments, generally used in
quarterly pay floating rate obligations, then the Alternative Rate shall be the rate selected by the holders of a majority of the
Subordinated Notes, each using their commercially reasonable judgment in identifying an alternative rate that is consistent with
the successor for LIBOR, including any spread adjustments, generally used in quarterly pay floating rate obligations. In the event
the holders of a majority of the Subordinated Notes cannot reach agreement on such Alternative Rate within fifteen (15) business
days of the Issuer’s notification of its proposed Alternative Rate under this Section, the Alternative Rate shall be the
rate identified by the holder of the largest principal amount of Notes, selected based on such holder’s commercially reasonable
judgment as to the an alternative rate that is consistent with the successor for LIBOR, including any spread adjustments, generally
used in quarterly pay floating rate obligations. All references herein to “LIBOR” will mean such Alternative Rate.


 






    3 


     


    

 





(b)       Any
payment of principal of or interest on this 6.50% Fixed to Floating Rate Subordinated Note (this “Note”) that
would otherwise become due and payable on a day which is not a Business Day shall become due and payable on the next succeeding
Business Day, with the same force and effect as if made on the date for payment of such principal or interest, and no interest
shall accrue in respect of such payment for the period after such day. The term “Business Day” means any day
that is not a Saturday or Sunday and that is not a day on which banks in the Commonwealth of Virginia are generally authorized
or required by law or executive order to be closed.


 


2.       Subordinated
Notes. This Note is one of a duly authorized issue of notes of the Issuer designated as 6.50% Fixed to Floating Subordinated
Notes due March 31, 2028 (herein called the “Subordinated Notes”), limited in aggregate principal amount to
$5,700,000.


 


3.       Subordination.
The indebtedness of the Issuer evidenced by the Subordinated Notes, including the principal and interest on this Note, shall be
subordinate and junior in right of payment to the prior payment in full of all existing claims of creditors of the Issuer, whether
now outstanding or subsequently created, assumed or incurred (collectively, “Senior Indebtedness”), which shall
consist of principal of (and premium, if any) and interest, if any, on: (a) all indebtedness of the Issuer for money borrowed,
whether or not evidenced by bonds, debentures, securities, notes or other written instruments, and all obligations to the Issuer’s
general and secured creditors; (b) any deferred obligations of the Issuer for the payment of the purchase price of property or
assets acquired (other than such obligations to trade creditors related to property or assets acquired in the ordinary course of
business); (c) all obligations, contingent or otherwise, of the Issuer in respect of any letters of credit, bankers’ acceptances,
security purchase facilities and similar credit transactions; (d) any capital lease obligations of the Issuer; (e) all obligations
of the Issuer in respect of interest rate swap, cap or other agreements, interest rate future or option contracts, currency swap
agreements, currency future or option contracts, commodity contracts and other similar arrangements; (f) any obligation of the
Company to its general creditors, as defined for purposes of the capital adequacy regulations of the FRB applicable to Company,
as the same may be amended or modified from time to time; (g) all obligations of the type referred to in clauses (a) through (f)
of other persons for the payment of which the Issuer is responsible or liable as obligor, guarantor or otherwise; and (h) all obligations
of the types referred to in clauses (a) through (g) of other persons secured by a lien on any property or asset of the Issuer;
except “Senior Indebtedness” does not include (i) the Subordinated Notes, (ii) any obligation that by its terms expressly
is junior to, or ranks equally in right of payment with, the Subordinated Notes, or (iii) any indebtedness between the Issuer and
any of its subsidiaries or Affiliates. This Note is not secured by any assets of the Issuer. “Affiliate” means,
with respect to any Person, such Person’s immediate family members, partners, members or parent and subsidiary corporations,
and any other Person directly or indirectly controlling, controlled by, or under common control with said Person and their respective
Affiliates. “Person” means an individual, a corporation (whether or not for profit), a partnership, a limited
liability company, a joint venture, an association, a trust, an unincorporated organization, a government or any department or
agency thereof (including a governmental agency) or any other entity or organization.


 






    4 


     


    

  


In the event of any
bankruptcy, insolvency, dissolution, assignment for the benefit of creditors or any liquidation or winding up of or relating to
the Issuer, whether voluntary or involuntary, holders of Senior Indebtedness shall be entitled to be paid in full before any payment
shall be made on account of the principal of or interest on the Subordinated Notes, including this Note. In the event of any such
proceeding, after payment in full of all sums owing with respect to the Senior Indebtedness, the registered holders of the Subordinated
Notes from time to time, together with the holders of any obligations of the Issuer ranking on a parity with the Subordinated Notes,
shall be entitled to be paid from the remaining assets of the Issuer the unpaid principal thereof, and the unpaid interest thereon
before any payment or other distribution, whether in cash, property or otherwise, shall be made (i) with respect to any obligation
that by its terms expressly is junior to, or ranks equally in right of payment with, the Subordinated Notes, or any indebtedness
between the Issuer and any of its subsidiaries or Affiliates or (ii) on account of any capital stock.


 


If there shall have
occurred and be continuing (a) a default in any payment with respect to any Senior Indebtedness or (b) an event of default with
respect to any Senior Indebtedness as a result of which the maturity thereof is accelerated, unless and until such payment default
or event of default shall have been cured or waived or shall have ceased to exist, no payments shall be made by the Issuer with
respect to the Subordinated Notes. The provisions of this paragraph shall not apply to any payment with respect to which the immediately
preceding paragraph of this Section 3 would be applicable.


 


Nothing herein shall
act to prohibit, limit or impede the Issuer from issuing additional debt of the Issuer having the same rank as the Subordinated
Notes or which may be junior or senior in rank to the Subordinated Notes.


 


4.       Merger
and Sale of Assets. The Issuer shall not merge into another entity or convey, transfer or lease substantially all of its properties
and assets to any person, unless:


 


(a)       the
continuing entity into which the Issuer is merged or the person which acquires by conveyance or transfer or which leases substantially
all of the properties and assets of the Issuer shall be a corporation, association or other legal entity organized and existing
under the laws of the United States of America, any State thereof or the District of Columbia and expressly assumes the due and
punctual payment of the principal of and any premium and interest on the Subordinated Notes according to their terms, and the due
and punctual performance of all covenants and conditions hereof on the part of the Issuer to be performed or observed; and


 


(b)       immediately
after giving effect to such transaction, no Event of Default (as defined below), and no event which, after notice or lapse of time
or both, would become an Event of Default, shall have happened and be continuing.


 




    5 


     


    

 


5.       Events
of Default; Acceleration; Compliance Certificate. Notwithstanding any cure periods provided for below, the Issuer shall promptly
notify Holder in writing when Issuer becomes aware of the happening of any event described below. Regardless of whether Issuer
has provided the forgoing notice, each of the following events shall constitute an “Event of Default”:


 


(a)       the
issuer fails to pay any principal or installment of interest on this Note within fifteen (15) days of its due date;


 


(b)       the
Issuer materially fails to keep or perform any of its material agreements, undertakings, obligations, covenants or conditions under
the Subordinated Note Purchase Agreement (the “Purchase Agreement”) or this Subordinated Note (other than as provided
for under paragraph (a) above) and such failure continues for a period of thirty (30) days after the Issuer has received written
notice thereof from the Holder;


 


(c)       any
certification made to the Holder pursuant to the Purchase Agreement by the Issuer or otherwise made in writing to Holder in connection
with or as contemplated by the Purchase Agreement or this Subordinated Note by the Issuer shall be materially incorrect or false
as of the delivery date of such certification, or any representation to Holder by the Issuer as to the financial condition or credit
standing of the Issuer is or proves to be materially false or misleading;


 


(d)       the
entry of a decree or order for relief in respect of the Issuer by a court having jurisdiction in the premises in an involuntary
case or proceeding under any applicable bankruptcy, insolvency, or reorganization law, now or hereafter in effect of the United
States or any political subdivision thereof, and such decree or order will have continued unstayed and in effect for a period of
sixty (60) consecutive days; or


 


(e)       the
Issuer (i) becomes insolvent or is unable to pay its debts as they mature, (ii) makes an assignment for the benefit of creditors,
(iii) admits in writing its inability to pay its debts as they mature, or (iv) ceases to be a bank holding company or financial
holding company under the Bank Holding Company Act of 1956, as amended; and


 


(f)       the
liquidation of the Issuer (for avoidance of doubt, “liquidation” does not include any merger, consolidation, sale of
equity or assets or reorganization (exclusive of a reorganization in bankruptcy) of the Issuer or any of its subsidiaries).


 


Unless the principal
of this Note already shall have become due and payable, if an Event of Default set forth in subsection (d) or (f) above shall have
occurred and be continuing, the Holder of this Note, by notice in writing to the Issuer, may declare the principal amount of this
Note to be due and payable immediately and, upon any such declaration the same shall become and shall be immediately due and payable.
EXCEPT AS DESCRIBED IN THE PRECEDING SENTENCE, THERE IS NO RIGHT OF ACCELERATION IN THE CASE OF A DEFAULT IN THE PAYMENT OF THE
PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON THIS NOTE OR IN THE PERFORMANCE OF ANY OTHER OBLIGATION OF THE ISSUER HEREUNDER.


 


The Issuer waives demand,
presentment for payment, notice of nonpayment, notice of protest, and all other notices. The Issuer, within forty-five (45) calendar
days after the receipt of written notice from any Holder of the occurrence of an Event of Default with respect to this Note, shall
mail to all Holders, at their addresses shown on the Security Register (as defined in Section 12 below), such written notice
of Event of Default, unless such Event of Default shall have been cured or waived before the giving of such notice as certified
by the Issuer in writing.


 






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6.       Affirmative
Covenants of the Issuer.


 


(a)       Notice
of Certain Events. The Issuer shall provide written notice to the Holder of the occurrence of any of the following events within
thirty calendar days of the Issuer becoming aware of the occurrence of such event:


 


(i)       The
total risk-based capital ratio, Tier 1 risk-based capital ratio, common equity Tier 1 risk-based capital ratio or leverage ratio
of the Issuer and the Bank is less than ten percent (10.0%), eight percent (8.0%), six and one half percent (6.5%) or five percent
(5.0%), respectively, as of the end of any calendar quarter;


 


(ii)       The
Issuer, the Bank or any officer of the Issuer or the Bank, becomes subject to any formal, written regulatory enforcement action;


 


(iii)       The
ratio of (A) non-accrual loans and any other loans that are ninety (90) days or more past due plus other real estate owned (excluding
any such loans that are guaranteed or covered by any governmental agency or government-sponsored entity) to (B) total assets of
the Issuer becomes greater than four percent (4.0%), as of the end of any calendar quarter;


 


(iv)       The
appointment, resignation, removal or termination of the chief executive officer, president, chief operating officer, chief financial
officer, chief credit officer, chief lending officer or any director of the Issuer;


 


(v)       There
is a change in ownership of 25% or more of the outstanding securities of the Issuer entitled to vote for the election of directors;
or


 


(vi)       The
Issuer undertakes the issuance of any additional Indebtedness.


 


If the information described in this Section
6(a) is disclosed by the Issuer in filings the Issuer makes with the SEC, the Issuer will be deemed to have furnished written notice
to the Holder in compliance with the requirements of this Section 6(a). The Issuer may condition providing written notice under
this Section 6(a) on the receipt of a confidentiality agreement executed by the Holder in a form reasonably acceptable to the Issuer.


 


(b)       Compliance
with Laws. The Issuer and each Subsidiary shall comply with the requirements of all laws, regulations, orders and decrees applicable
to it or its properties, except for such noncompliance that would not reasonably be expected to result in a material adverse effect
(i) in the condition (financial or otherwise), or in the earnings of the Issuer, whether or not arising in the ordinary course
of business, or (ii) on the ability of the Issuer to perform its obligations under this Subordinated Note.


 


(c)       Taxes
and Assessments. The Issuer shall punctually pay and discharge all taxes, assessments, and other governmental charges or levies
imposed upon it or upon its income or upon any of its properties; provided, that no such taxes, assessments or other governmental
charges need be paid if they are being contested in good faith by the Issuer.


 






    7 


     


    

  


(d)       Compliance
Certificate. Not later than ninety (90) days following the end of each fiscal year, the Issuer shall provide each Holder with
a certificate (the “Compliance Certificate”), executed by the principal executive officer and principal financial
officer of the Issuer in their capacities as such, stating whether (i) the Issuer has complied with all notice provisions and covenants
contained in this Note; (ii) an Event of Default has occurred; (iii) an event of default has occurred under any other indebtedness
of the Issuer; and (iv) any event or events have occurred that in the reasonable judgment of the management of the Issuer would
have a material adverse effect on the ability of the Issuer to perform its obligations under this Subordinated Note.


 


7.       Limitation
on Dividends. The Issuer shall not declare or pay any dividend or make any distribution on capital stock or other equity securities
of any kind of the Issuer if either of the Issuer or the Bank is not “well capitalized” for regulatory purposes immediately
prior to the declaration of such dividend or distribution, except for dividends payable solely in shares of common stock of the
Issuer.


 


8.       Failure
to Make Payment. In the event of failure by the Issuer to make any required payment of principal or interest on this Note (and,
in the case of payment of interest, such failure to pay shall have continued for thirty (30) calendar days), the Issuer will, upon
demand of the Holder, pay to the Holder the amount then due and payable on this Note for principal and interest (without acceleration
of the Note in any manner), with interest on the overdue principal and interest at the rate borne by this Note, to the extent permitted
by applicable law. If the Issuer fails to pay such amount upon such demand, the Holder may, among other things, institute a judicial
proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may
enforce the same against the Issuer and collect the amounts adjudged or decreed to be payable in the manner provided by law out
of the property of the Issuer.


 


Upon the occurrence
of a failure by the Issuer to make any required payment of principal or interest on the Note, or an Event of Default until such
Event of Default is cured by the Issuer, the Issuer shall not (a) declare or pay any dividends or distributions on, or redeem,
purchase, acquire, or make a liquidation payment with respect to, any of the Issuer’s capital stock, (b) make any payment
of principal or interest or premium, if any, on or repay, repurchase or redeem any debt securities of the Issuer that rank equal
with or junior to the Subordinated Notes, or (c) make any payments under any guarantee that ranks equal with or junior to the Subordinated
Notes, other than (i) any dividends or distributions in shares of, or options, warrants or rights to subscribe for or purchase
shares of, any class of the Issuer’s common stock; (ii) any declaration of a dividend in connection with the implementation
of a shareholders’ rights plan, or the issuance of stock under any such plan in the future, or the redemption or repurchase
of any such rights pursuant thereto; (iii) as a result of a reclassification of the Issuer’s capital stock or the exchange
or conversion of one class or series of the Issuer’s capital stock for another class or series of the Issuer’s capital
stock; (iv) the purchase of fractional interests in shares of the Issuer’s capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged; or (v) purchases of any class of the Issuer’s
common stock related to the issuance of common stock or rights under any benefit plans for the Issuer’s directors, officers
or employees or any of the Issuer’s dividend reinvestment plans. The limitations imposed by the provisions of this Section
8 shall apply whether or not the Holder has notified the Issuer of an Event of Default.


 






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9.       Redemption.


 


(a)       Redemption
Prior to Fifth Anniversary. Subject to Section 9(f) hereof, this Note shall not be redeemable by the Issuer prior to the fifth
anniversary of the date upon which this Note was originally issued to Holder (the “Issue Date”), except that
in the event (i) this Note no longer qualifies as “Tier 2” capital (as defined by the FRB) as a result of
a change in interpretation or application of law or regulation by any judicial, legislative or regulatory authority that becomes
effective after the date of issuance of this Note, (ii) of a Tax Event (as defined below) or (iii) the Issuer receives an
opinion of counsel to Issuer that there is a material risk that the Issuer is or, within one hundred twenty (120) days after the
receipt of such opinion will be, required to register as an investment company pursuant to the Investment Company Act of 1940,
as amended, the Issuer may redeem this Note in whole at any time, or in part from time to time at an amount equal to 100% of the
principal amount outstanding plus accrued but unpaid interest and any late fee, if applicable, to but excluding the redemption
date. “Tax Event” means the receipt by the Issuer of an opinion of counsel to the Issuer that as a result of
any amendment to, or change (including any final and adopted (or enacted) prospective change) in, the laws (or any regulations
thereunder) of the United States or any political subdivision or taxing authority thereof or therein, or as a result of any official
administrative pronouncement or judicial decision interpreting or applying such laws or regulations, there exists a material risk
that interest payable by the Issuer on the Subordinated Notes is not, or within one hundred twenty (120) days after the receipt
of such opinion will not be, deductible by the Issuer, in whole or in part, for United States federal income tax purposes.


 


(b)       Redemption
on or after Fifth Anniversary. On or after the fifth anniversary of the Issue Date, subject to Section 9(f) hereof, this Note
shall be redeemable by the Issuer, in whole at any time, or in part from time to time, at a redemption price equal to 100% of the
outstanding principal amount to be redeemed, plus accrued but unpaid interest thereon to but excluding the redemption date.


 


(c)       Partial
Redemption. If less than the then outstanding principal amount of this Note is redeemed, (i) a new Note shall be issued representing
the unredeemed portion without charge to the Holder thereof and (ii) such redemption shall be effected on a pro rata basis as to
the holders of the Subordinated Notes. For purposes of clarity, upon a partial redemption, a like percentage of the principal amount
of every Subordinated Note held by every holder thereof shall be redeemed.


 


(d)       No
Redemption at Option of Holder. This Note is not subject to redemption at the option of the Holder of this Note.


 


(e)       Effectiveness
of Redemption. If notice of redemption has been duly given and notwithstanding that this Note has been called for redemption
but has not yet been surrendered for cancellation, on and after the date fixed for redemption, interest shall cease to accrue on
this Note, this Note shall no longer be deemed outstanding and all rights with respect to this Note shall forthwith on such date
fixed for redemption cease and terminate unless Company shall default in the payment of the redemption price, except only the right
of the Holder hereof to receive the amount payable on such redemption, without interest.


 






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(f)       Regulatory
Approvals. Any redemption or prepayment of this Note shall be subject to receipt of any and all required federal and state
regulatory approvals, including, but not limited to, the consent of the FRB (or any successor Federal bank regulatory agency having
supervisory authority over the Issuer). In the case of any redemption or prepayment of this Note, the Issuer will give the Holder
notice not less than thirty (30) nor more than forty-five (45) calendar days prior to the redemption or prepayment date as to the
aggregate principal amount to be redeemed or prepaid.


 


(g)       Purchase
and Resale of the Subordinated Notes. Subject to any required federal and state regulatory approvals and the provisions of
this Note, the Issuer shall have the right to purchase any of the Subordinated Notes at any time in the open market, private transactions
or otherwise. If the Issuer purchases any Subordinated Notes, it may, in its discretion, hold, resell or cancel any of the purchased
Subordinated Notes.


 


10.       Payment
Procedures. Payment of the principal and interest payable on the Maturity Date will be made by check, or by wire transfer in
immediately available funds to a bank account in the United States designated by the registered Holder of this Note if such Holder
shall have previously provided wire instructions to the Issuer, upon presentation and surrender of this Note at the Payment Office
(as defined in Section 15 below) or at such other place or places as the Issuer shall designate by notice to the registered
Holders as the Payment Office, provided that this Note is presented to the Issuer in time for the Issuer to make such payments
in such funds in accordance with its normal procedures. Payments of interest (other than interest payable on the Maturity Date)
shall be made by wire transfer in immediately available funds or check mailed to the registered Holder, as such person’s
address appears on the Security Register. Interest payable on any Interest Payment Date shall be payable to the Holder in whose
name this Note is registered at the close of business on January 15, April 15, July 15 or October 15, as the case may be (whether
or not a Business Day), next preceding such Interest Payment Date (such date being referred to herein as the “Regular
Record Date”) for such Interest Payment Date, except that interest not paid on the Interest Payment Date, if any, will
be paid to the Holder in whose name this Note is registered at the close of business on a special record date fixed by the Issuer
(a “Special Record Date”), notice of which shall be given to the Holder not less than ten (10) calendar days
prior to such Special Record Date (The Regular Record Date and Special Record Date are referred to herein collectively as the “Record
Dates”). To the extent permitted by applicable law, interest shall accrue, at the rate at which interest accrues on the
principal of this Note, on any amount of principal or interest on this Note not paid when due. All payments on this Note shall
be applied first against costs and expenses of the Holder hereunder; then against interest due hereunder; and then against principal
due hereunder. Holder acknowledges and agrees that the payment of all or any portion of the outstanding principal amount of this
Note and all interest hereon shall be pari passu in right of payment and in all other respects to the other Subordinated
Notes. In the event Holder receives payments in excess of its pro rata share of the Issuer’s payments to the holders of all
of the Subordinated Notes, then Holder shall hold in trust all such excess payments for the benefit of the holders of the other
Subordinated Notes and shall pay such amounts held in trust to such other holders upon demand by such holders.


 






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11.       Form
of Payment. Payments of principal and interest on this Note shall be made in such coin or currency of the United States of
America as at the time of payment shall be legal tender for the payment of public and private debts.


 


12.       Registration
of Transfer, Security Register. Except as otherwise provided herein, this Note is transferable in whole or in part, and may
be exchanged for a like aggregate principal amount of Subordinated Notes of other authorized denominations, by the Holder in person,
or by his attorney duly authorized in writing, at the Payment Office. The Issuer shall maintain a register providing for the registration
of the Subordinated Notes and any exchange or transfer thereof (the “Security Register”). Upon surrender or
presentation of this Note for exchange or registration of transfer, the Issuer shall execute and deliver in exchange therefor a
Subordinated Note or Subordinated Notes of like aggregate principal amount, each in a minimum denomination of $1,000 or any amount
in excess thereof which is an integral multiple of $1,000 (and, in the absence of an opinion of counsel satisfactory to the Issuer
to the contrary, bearing the restrictive legend(s) set forth hereinabove) and that is or are registered in such name or names requested
by the Holder. Any Subordinated Note presented or surrendered for registration of transfer or for exchange shall be duly endorsed
and accompanied by a written instrument of transfer in such form as is attached hereto and incorporated herein, duly executed by
the Holder or his attorney duly authorized in writing, with such tax identification number or other information for each person
in whose name a Subordinated Note is to be issued, and accompanied by evidence of compliance with any restrictive legend(s) appearing
on such Subordinated Note or Subordinated Notes as the Issuer may reasonably request to comply with applicable law. No exchange
or registration of transfer of this Note shall be made on or after the fifteenth (15th) day immediately preceding the
Maturity Date.


 


13.       Charges
and Transfer Taxes. No service charge (other than any cost of delivery) shall be imposed for any exchange or registration of
transfer of this Note, but the Issuer may require the payment of a sum sufficient to cover any stamp or other tax or governmental
fee or charge that may be imposed in connection therewith (or presentation of evidence that such tax, charge or fee has been paid).


 


14.       Ownership.
Prior to due presentment of this Note for registration of transfer, the Issuer may treat the Holder in whose name this Note is
registered in the Security Register as the absolute owner of this Note for receiving payments of principal and interest on this
Note and for all other purposes whatsoever, whether or not this Note be overdue, and the Issuer shall not be affected by any notice
to the contrary.


 


15.       Notices.
All notices to the Issuer under this Note shall be in writing and addressed to the Issuer at Village Bank and Trust Financial Corp.,
13319 Midlothian Turnpike, Midlothian, Virginia 23113, Attention: President and Chief Executive Officer, or to such other address
as the Issuer may notify to the Holder (the “Payment Office”). All notices to the Holders shall be in writing
and sent by first-class mail to each such Holder at his or its address as set forth in the Security Register.


 


16.       Denominations.
The Subordinated Notes are issuable only as fully registered notes without interest coupons in minimum denominations of $1,000
or any amount in excess thereof which is an integral multiple of $1,000.


 






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17.       Absolute
and Unconditional Obligation of the Issuer. No provisions of this Note shall alter or impair the obligation of the Issuer,
which is absolute and unconditional, to pay the principal and interest on this Note at the times, places and rate, and in the coin
or currency, herein prescribed.


 


18.       Waiver
and Consent. Any consent or waiver given by the Holder of this Note shall be conclusive and binding upon such Holder and upon
all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange therefor or in lieu
hereof, whether or not notation of such consent or waiver is made upon this Note. This Note may be also amended or waived pursuant
to, and in accordance with, the provisions of Section 8.3 of the Purchase Agreement. If all or any portion of the Subordinated
Notes ceases to be deemed to be Tier 2 Capital, other than due to the limitation imposed on the capital treatment of subordinated
debt during the five (5) years immediately preceding the Maturity Date of the Subordinated Notes, the Issuer will immediately notify
the Holder, and thereafter the Issuer and the Holder will work together in good faith to execute and deliver all agreements as
reasonably necessary in order to restructure the applicable portions of the obligations evidenced by this Note to qualify as Tier
2 Capital, if requested by the Issuer.


 


(a)       No
delay or omission of the Holder to exercise any right or remedy accruing upon any Event of Default shall impair such right or remedy
or constitute a waiver of any such Event of Default or an acquiescence therein.


 


(b)       Any
insured depository institution which shall be a Holder of this Note or which otherwise shall have any beneficial ownership interest
in this Note shall, by its acceptance of such Note (or beneficial interest therein), be deemed to have waived any right of offset
with respect to the indebtedness evidenced thereby.


 


19.       Further
Issues. The Issuer may, without the consent of the holders of the Subordinated Notes, create and issue additional notes having
the same terms and conditions of the Subordinated Notes (except for the Issue Date and issue price) so that such further notes
shall be consolidated and form a single series with the Subordinated Notes.


 


20.       Governing
Law; Interpretation. This Note shall be governed by and construed in accordance with applicable federal law and the laws of
the Commonwealth of Virginia, without regard to conflict of laws principles of said state. This Note is intended to meet the criteria
for qualification of the outstanding principal as Tier 2 capital under the regulatory guidelines of the FRB, and the terms hereof
shall be interpreted in a manner to satisfy such intent.


 


21.       Priority.
The Subordinated Notes rank pari passu among themselves and pari passu, in the event of any insolvency proceeding, dissolution,
assignment for the benefit of creditors, reorganization, restructuring of debt, marshaling of assets and liabilities or similar
proceeding or any liquidation or winding up of the Issuer, with all other present or future unsecured subordinated debt obligations
of the Issuer, except any unsecured subordinated debt that, pursuant to its express terms, is senior or subordinate in right of
payment to the Subordinated Notes.


 






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22.       Status
as Collateral. The obligation evidenced by this Note is ineligible as collateral for a loan by the Issuer or any subsidiary
of the Issuer.


 


23.       Defined
Terms. Any capitalized term used herein and not otherwise defined shall have the meaning ascribed to it in the Purchase Agreement.


 


 


 


[Signature Page Follows]







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IN WITNESS WHEREOF,
the undersigned has caused this Note to be duly executed and attested and its corporate seal to be hereunto affixed.


 


 


	 	
        [COMPANY NAME] 

        

	 	 	 	 
	 	By:	 
	 	 	Name:	[●]
	 	 	Title:	[●]


 


 


	ATTEST:	
        

	 	 
	 	 
	Name: [●]	 
	Title:   [●]	 


 




    [Signature Page to Subordinated Note]


     


    

 


ASSIGNMENT FORM


  


To assign this Note, fill in
the form below:



I or we assign and transfer this Note to:


 


	 
	(Print or type assignee’s name, address and zip code)
	 
	 
	 
	(Insert assignee’s social security or tax I.D. No.)
	 


and irrevocably appoint _______________________________
agent to transfer this Note on the books of Village Bank and Trust Financial Corp. (the “Issuer”). The agent
may substitute another to act for him.


 


	Date:	Your Signature:	 
	
         

        Signature Guarantee:
	 
	 	 	 	 


(Signature must be guaranteed)


 


	 
	Sign exactly as your name appears on the other side of this Note.


The signature(s) should be guaranteed by
an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved
signature guarantee medallion program), pursuant to Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”).


 


The signatory hereto hereby certifies that
it  ̈ is /  ̈ is not an Affiliate of the Issuer and that, to its knowledge, the proposed transferee  ̈ is /  ̈
is not an Affiliate of the Issuer.


 






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In connection with any transfer or exchange
of any of the Note(s) evidenced by this certificate occurring prior to the date that is one year after the later of the date of
original issuance of such Notes and the last date, if any, on which such Notes were owned by the Issuer or any Affiliate of the
Issuer, the undersigned confirms that such Notes are being:


 


	(1)	  ̈	acquired for the undersigned’s own account, without transfer; or
	(2)	  ̈	transferred to the Issuer; or
	(3)	  ̈	
        transferred pursuant to and in
compliance with Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”); or

	(4)	  ̈	transferred pursuant to an effective registration statement under the Securities Act; or
	(5)	  ̈	transferred pursuant to and in compliance with Regulation S under the Securities Act; or
	(6)	  ̈	transferred to an institutional “accredited investor” (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) or an “accredited investor” (as defined in Rule 501(a)(4) under the Securities Act), that has furnished a signed letter containing certain representations and agreements; or
	(7)	  ̈	transferred pursuant to another available exemption from the registration requirements of the Securities Act of 1933, as amended.


 


Unless one of the boxes is checked, the
Issuer will refuse to register any of the Notes evidenced by this certificate in the name of any person other than the registered
holder thereof; provided, however, that if box (5), (6) or (7) is checked, the Issuer may require, prior to registering
any such transfer of the Notes, in its sole discretion, such legal opinions, certifications and other information as the Issuer
may reasonably request to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject
to, the registration requirements of the Securities Act of 1933, as amended, such as the exemption provided by Rule 144 under such
Act.


 


	 	 	 
	 	 	Signature
	Signature Guarantee:	 	 
	 	 	 
	 	 	 
	Signature (must be guaranteed)	 	Signature



  


The signature(s) should be guaranteed by
an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved
signature guarantee medallion program), pursuant to Exchange Act Rule 17Ad-15.


 






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TO BE COMPLETED BY PURCHASER IF BOX (1) OR (3) ABOVE IS CHECKED.


 


The undersigned represents
and warrants that it is purchasing this Note for its own account or an account with respect to which it exercises sole investment
discretion and that it and any such account is a “qualified institutional buyer” within the meaning of Rule 144A under
the Securities Act of 1933, as amended, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges
that it has received such information regarding the Issuer as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is relying upon the undersigned’s foregoing representations
in order to claim the exemption from registration provided by Rule 144A.


 


	 	 
	 	Signature 
	 	Date:



  






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