Carolina Trust BancShares, Inc. 8-K 



Exhibit 4.1


SUBORDINATED NOTE


CAROLINA TRUST BANCSHARES, INC.


6.900%
FIXED TO FLOATING Subordinated Note due 2026


THE INDEBTEDNESS EVIDENCED BY THIS SUBORDINATED
NOTE IS SUBORDINATED AND JUNIOR IN RIGHT OF PAYMENT TO SENIOR INDEBTEDNESS (AS DEFINED IN SECTION 3 OF THIS SUBORDINATED
NOTE) OF CAROLINA TRUST BANCSHARES, INC., A NORTH CAROLINA CORPORATION (THE “COMPANY”), INCLUDING OBLIGATIONS
OF THE COMPANY TO ITS GENERAL AND SECURED CREDITORS AND IS UNSECURED. IT IS INELIGIBLE AS COLLATERAL FOR ANY EXTENSION OF CREDIT
BY THE COMPANY OR ANY OF ITS SUBSIDIARIES. IN THE EVENT OF LIQUIDATION ALL HOLDERS OF SENIOR INDEBTEDNESS OF THE COMPANY 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 SUBORDINATED NOTE. AFTER PAYMENT IN FULL OF ALL SUMS OWING TO SUCH HOLDERS OF SENIOR INDEBTEDNESS, THE HOLDER
OF THIS SUBORDINATED NOTE, TOGETHER WITH THE HOLDERS OF ANY OBLIGATIONS OF THE COMPANY RANKING ON A PARITY WITH THE SUBORDINATED
NOTES, SHALL BE ENTITLED TO BE PAID FROM THE REMAINING ASSETS OF THE COMPANY THE UNPAID PRINCIPAL AMOUNT OF THIS SUBORDINATED NOTE
PLUS ACCRUED AND 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 in
the right of payment to the Subordinated Notes, (ii) any indebtedness between the Company and any of its subsidiaries or affiliates
or (iii) on account OF ANY SHARES OF CAPITAL STOCK OF THE COMPANY.


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


THIS SUBORDINATED 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 SUBORDINATED 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 SUBORDINATED NOTE FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED
TO, THE RECEIPT OF PAYMENTS ON THIS SUBORDINATED NOTE, AND SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER
IN THIS SUBORDINATED NOTE.




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THIS SUBORDINATED NOTE MAY BE SOLD ONLY
IN COMPLIANCE WITH APPLICABLE FEDERAL AND STATE SECURITIES LAWS. THIS SUBORDINATED 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 SUBORDINATED 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.


CERTAIN ERISA CONSIDERATIONS:


THE HOLDER OF THIS SUBORDINATED 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 SUBORDINATED 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 SUBORDINATED 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 SUBORDINATED 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 PLANS, OR ANY OTHER PERSON OR ENTITY USING THE “PLAN ASSETS” OF ANY SUCH EMPLOYEE BENEFIT PLAN OR PLANS
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 SUBORDINATED NOTE OR ANY INTEREST HEREIN SHOULD CONSULT WITH HIS OR HER LEGAL COUNSEL PRIOR TO ACQUIRING
THIS SUBORDINATED NOTE OR ANY INTEREST HEREIN.




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	No. 2026-[•]	CUSIP: [•]
	 	QIB CUSIP: [•]


 


CAROLINA TRUST BANCSHARES, INC.


6.900%
FIXED TO FLOATING Subordinated Note due 2026


1. 


Subordinated Notes.
This Subordinated Note is one of an issue of notes of Carolina Trust BancShares, Inc., a North Carolina corporation (the “Company”)
designated as the “6.900% Fixed to Floating Rate Subordinated Notes due 2026” (the “Subordinated Notes”).


2. 


Payment. The
Company, for value received, promises to pay to [•], or its registered assigns, the principal sum of [•] Dollars (U.S.)
($[•]), plus accrued but unpaid interest on October 15, 2026 (“Stated
Maturity”) and to pay interest thereon (i) from and including the original issue date of the Subordinated Notes to but
excluding October 15, 2021 or the earlier redemption date contemplated by Section 4 of this Subordinated Note, at the rate
of 6.900% per annum, computed on the basis of a 360-day year consisting of twelve
30-day months and payable semi-annually in arrears on April 15 and October 15 of
each year (each, a “Fixed Interest Payment Date”), beginning April 15, 2017, and (ii) from and including October
15, 2021 to but excluding the Stated Maturity or the earlier redemption date contemplated
by Section 4 of this Subordinated Note, at the rate per annum, reset quarterly, equal to LIBOR determined on the determination
date of the applicable interest period plus 571.8 basis points, computed on the
basis of a 360-day year and the actual number of days elapsed and payable quarterly in arrears on April 15, July 15, October 15
and January 15 of each year (each, a “Floating Interest Payment
Date”). An “Interest Payment Date” is either a Fixed Interest Payment Date or a Floating Interest Payment
Date, as applicable. “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 3-month USD LIBOR
is not displayed as of such time with respect to any applicable floating rate interest period, then the Company will request the
principal London offices of at least two banks to provide a quotation of their rates for deposits in U.S. dollars for a period
comparable to the applicable floating rate interest period and the 3-month USD LIBOR for such floating rate interest period shall
be the arithmetic mean of such quotations. A London banking day is a day on which commercial banks and foreign currency markets
settle payments and are open for general business in London.


Any payment of principal
of or interest on this Subordinated 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 will 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 State of North Carolina
are generally authorized or required by law or executive order to be closed.




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3. 


Subordination.


(a) 


The indebtedness of
the Company evidenced by this Subordinated Note, including the principal and interest on this Subordinated Note, shall be subordinate
and junior in right of payment to the prior payment in full of all existing claims of creditors of the Company and depositors of
Carolina Trust Bank, a North Carolina-chartered commercial bank (the “Bank”) whether now outstanding or subsequently
created, assumed, guaranteed or incurred (collectively, “Senior Indebtedness”), which shall consist of principal
of (and premium, if any) and interest, if any, on: (i) all indebtedness and obligations of, or guaranteed or assumed by, the Company
for money borrowed, whether or not evidenced by bonds, debentures, securities, notes or other similar instruments, and including,
but not limited to, deposits of the Bank, and all obligations to the Company’s general and secured creditors; (ii) any deferred
obligations of the Company for the payment of the purchase price of property or assets acquired other than in the ordinary course
of business; (iii) all obligations, contingent or otherwise, of the Company in respect of any letters of credit, bankers’
acceptances, security purchase facilities and similar direct credit substitutes; (iv) any capital lease obligations of the Company;
(v) all obligations of the Company 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 or derivative
products; (vi) all obligations that are similar to those in clauses (i) through (v) of other persons for the payment of which the
Company is responsible or liable as obligor, guarantor or otherwise arising from an off-balance sheet guarantee; and (vii) all
obligations of the types referred to in clauses (i) through (vi) of other persons secured by a lien on any property or asset of
the Company, and (viii) in the case of (i) through (vii) above, all amendments, renewals, extensions, modifications and refunding’s
of such indebtedness and obligations; except “Senior Indebtedness” does not include (A) the Subordinated Notes,
(B) any obligation that by its terms expressly is junior to, or ranks equally in right of payment with, the Subordinated Notes,
or (C) any indebtedness between the Company and any of its subsidiaries or Affiliates. This Subordinated Note is not secured by
any assets of the Company. The term “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.


(b) 


In the event of liquidation
of the Company, holders of Senior Indebtedness of the Company 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 Subordinated Note. Additionally,
in the event of any insolvency, dissolution, assignment for the benefit of creditors or any liquidation or winding up of or relating
to the Company, 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 Subordinated 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 (each a “Noteholder” and, collectively, the “Noteholders”),
together with the holders of any obligations of the Company ranking on a parity with the Subordinated Notes, shall be entitled
to be paid from the remaining assets of the Company 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 in the right of payment to the Subordinated Notes, (ii) any indebtedness between the Company and any of
its subsidiaries or affiliates or (iii) on account of any capital stock.




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(c) 


If there shall have
occurred and be continuing (i) a default in any payment with respect to any Senior Indebtedness or (ii) 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 Company 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.


(d) 


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


4. 


Redemption.


(a) 


Redemption Prior
to Fifth Anniversary. This Subordinated Note shall not be redeemable by the Company in whole or in part prior to the fifth
anniversary of the date upon which this Subordinated Note was originally issued (the “Issue Date”), except in
the event of a: (i) Tier 2 Capital Event (as defined below); (ii) Tax Event (as defined below); or (iii) Investment Company Event
(as defined below). Upon the occurrence of a Tier 2 Capital Event, a Tax Event or an Investment Company Event, the Company may
redeem this Subordinated Note in whole or in part at any time, upon giving not less than 10 days’ notice to the holder of
this Subordinated Note at an amount equal to 100% of the outstanding principal amount being redeemed plus accrued but unpaid interest,
to but excluding the redemption date. “Tier 2 Capital Event” means the receipt by the Company of an opinion
of counsel to the Company to the effect that there is, or within 120 days after the receipt of such opinion there will be, a material
risk that this Subordinated Note no longer qualifies as “Tier 2” Capital (as defined by the Board of Governors of the
Federal Reserve System (the “Federal Reserve”)) (or its then equivalent) 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 Subordinated Note. “Tax Event” means the receipt by the Company of an opinion of counsel
to the Company 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 Company on the Subordinated Notes is not, or within 120 days after the
receipt of such opinion will not be, deductible by the Company, in whole or in part, for United States federal income tax purposes.
“Investment Company Event” means the receipt by the Company of an opinion of counsel to the Company to the effect
that there is a material risk that the Company is or, within 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.




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(b) 


Redemption on or
after Fifth Anniversary. On or after the fifth anniversary of the Issue Date, this Subordinated Note shall be redeemable at
the option of and by the Company, in whole or in part at any time and from time to time upon any Interest Payment Date, at an amount
equal to 100% of the outstanding principal amount being redeemed plus accrued but unpaid interest, to but excluding the redemption
date, but in all cases in a principal amount with integral multiples of $1,000. In addition, the Company may redeem all or a portion
of the Subordinated Notes, at any time upon the occurrence of a Tier 2 Capital Event, Tax Event or an Investment Company Event.


(c) 


Partial Redemption.
If less than the then outstanding principal amount of this Subordinated Note is redeemed, (i) a new Subordinated 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 Noteholders. For purposes of clarity, upon a partial redemption, a like percentage of the principal amount
of every Subordinated Note held by every Noteholder shall be redeemed.


(d) 


No Redemption at
Option of Noteholder. This Subordinated Note is not subject to redemption at the option of the holder of this Subordinated
Note.


(e) 


Effectiveness of
Redemption. If notice of redemption has been duly given and notwithstanding that this Subordinated 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 the portion of this Subordinated Note called for redemption, this Subordinated Note shall no longer be deemed outstanding
with respect to the portion called for redemption and all rights with respect to the portion of this Subordinated Note called for
redemption shall forthwith on such date fixed for redemption cease and terminate unless the 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.


(f) 


Regulatory Approvals.
Any such redemption shall be subject to receipt of any and all required federal and state regulatory approvals, including, but
not limited to, the consent of the Federal Reserve. In the case of any redemption of this Subordinated Note pursuant to paragraph
(b) of this Section 4, the Company will give the holder hereof notice of redemption, which notice shall indicate the aggregate
principal amount of Subordinated Notes to be redeemed, not less than 30 nor more than 60 calendar days prior to the redemption
date.


(g) 


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


5. 


Events of Default;
Acceleration; Compliance Certificate. Each of the following events shall constitute an “Event of Default”:


(a) 


the entry of a decree
or order for relief in respect of the Company 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 60 consecutive days;




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(b) 


the commencement by
the Company of a voluntary case under any applicable bankruptcy, insolvency or reorganization law, now or hereafter in effect of
the United States or any political subdivision thereof, or the consent by the Company to the entry of a decree or order for relief
in an involuntary case or proceeding under any such law;


(c) 


the Company (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;


(d) 


the failure of the
Company to pay any installment of interest on any of the Subordinated Notes as and when the same will become due and payable, and
the continuation of such failure for a period of 15 days;


(e) 


the failure of the
Company to pay all or any part of the principal of any of the Subordinated Notes as and when the same will become due and payable;


(f) 


the liquidation of
the Company (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 Company or any of its subsidiaries);


(g) 


the failure of the
Company to perform any other covenant or agreement on the part of the Company contained in this Subordinated Note, and the continuation
of such failure for a period of 30 days after the date on which notice specifying such failure, stating that such notice is a “Notice
of Default” hereunder and demanding that the Company remedy the same, will have been given, in the manner set forth in Section
21, to the Company by a Noteholder; or


(h) 


the default by the
Company under any bond, debenture, note or other evidence of indebtedness for money borrowed by the Company having an aggregate
principal amount outstanding of at least $5,000,000.00, whether such indebtedness now exists or is created or incurred in the future,
which default (i) constitutes a failure to pay any portion of the principal of such indebtedness when due and payable after the
expiration of any applicable grace period or (ii) results in such indebtedness becoming due or being declared due and payable prior
to the date on which it otherwise would have become due and payable without, in the case of clause (i), such indebtedness having
been discharged or, in the case of clause (ii), without such indebtedness having been discharged or such acceleration having been
rescinded or annulled.




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If an Event of Default
described in Section 5(a) or Section 5(b) occurs, then the principal amount of all of the outstanding Subordinated
Notes, and accrued and unpaid interest, if any, on all outstanding Subordinated Notes will become and be immediately due and payable
without any declaration or other act on the part of any Noteholder, and the Company waives demand, presentment for payment, notice
of nonpayment, notice of protest, and all other notices. Notwithstanding the foregoing, because the Company will treat the Subordinated
Notes as Tier 2 Capital, upon the occurrence of an Event of Default other than an Event of Default described in Section 5(a)
or Section 5(b), no Noteholder may accelerate the Stated Maturity of the Subordinated Notes and make the principal
of, and any accrued and unpaid interest on, the Subordinated Notes, immediately due and payable. The Company, within 45
calendar days after the receipt of written notice from any Noteholder of the occurrence of an Event of Default with respect to
this Subordinated Note, shall mail to all Noteholders, at their addresses shown on the Security Register (as defined in Section
14 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 Company in writing.


6. 


Failure to Make
Payments. In the event of an Event of Default under Section 5(d) or Section 5(e) above, the Company will, upon
demand of the holder of this Subordinated Note, pay to the holder of this Subordinated Note the amount then due and payable on
this Subordinated Note for principal and interest (without acceleration of the Subordinated Note in any manner), with interest
on the overdue principal and interest at the rate borne by this Subordinated Note, to the extent permitted by applicable law. If
the Company fails to pay such amount upon such demand, the holder of this Subordinated Note 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 Company and collect the amounts adjudged or decreed to be payable in the manner provided by
law out of the property of the Company.


Upon the occurrence
of a failure by the Company to make any required payment of principal or interest on this Subordinated Note, or an Event of Default
until such Event of Default is cured by the Company, the Company 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 Company’s capital stock; (b) make
any payment of principal of or interest or premium, if any, on or repay, repurchase or redeem any indebtedness of the Company 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 the Company’s common stock; (ii) any declaration of a non-cash 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 Company’s capital
stock or the exchange or conversion of one class or series of the Company’s capital stock for another class or series of
the Company’s capital stock; (iv) the purchase of fractional interests in shares of the 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 the Company’s common stock related to the issuance of common stock or rights under any benefit plans for the
Company’s directors, officers or employees or any of the Company’s dividend reinvestment plans.




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7. 


Affirmative Covenants
of the Company.


(a) 


Notice of Certain
Events. To the extent permitted by applicable statute, rule or regulation, the Company shall provide written notice to the
Holder of the occurrence of any of the following events as soon as practicable, but in no event later than fifteen (15) Business
Days following the Company becoming aware of the occurrence of such event:


(i) 


The Company, or any
officer of the Company, becomes subject to any formal, written regulatory enforcement action (as defined by the applicable Regulatory
Agency);


(ii) 


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 Company; or


(iii) 


There is a change
in ownership of 25% or more of the outstanding securities of the Company entitled to vote for the election of directors.


(b) 


Payment of Principal
and Interest. The Company covenants and agrees for the benefit of the holder of this Subordinated Note that it will duly and
punctually pay the principal of, and interest on, this Subordinated Note, in accordance with the terms hereof.


(c) 


Maintenance of Office.
The Company will maintain an office or agency in the city of Lincolnton, North Carolina where Subordinated Notes may be surrendered
for registration of transfer or for exchange and where notices and demands to or upon the Company in respect of the Subordinated
Notes may be served. The Company may also from time to time designate one or more other offices or agencies where the Subordinated
Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided
that no such designation or rescission will in any manner relieve the Company of its obligation to maintain an office or agency
in the city of Lincolnton, North Carolina. The Company will give prompt written notice to the Noteholders of any such designation
or rescission and of any change in the location of any such other office or agency.


(d) 


Corporate Existence.
The Company will do or cause to be done all things necessary to preserve and keep in full force and effect: (i) the corporate existence
of the Company; (ii) the existence (corporate or other) of each subsidiary; and (iii) the rights (charter and statutory), licenses
and franchises of the Company and each of its subsidiaries; provided, however, that the Company will not be required to preserve
the existence (corporate or other) of any of its subsidiaries or any such right, license or franchise of the Company or any of
its subsidiaries if the Board of Directors of the Company determines that the preservation thereof is no longer desirable in the
conduct of the business of the Company and its subsidiaries taken as a whole and that the loss thereof will not be disadvantageous
in any material respect to the Noteholders.


(e) 


Maintenance of Properties.
The Company will, and will cause each subsidiary to, cause all its properties used or useful in the conduct of its business to
be maintained and kept in good condition, repair and working order, ordinary wear and tear excepted, and supplied with all necessary
equipment and will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as
in the judgment of the Company may be necessary so that the business carried on in connection therewith may be properly and advantageously
conducted at all times; provided, however, that nothing in this Section will prevent the Company or any subsidiary from discontinuing
the operation and maintenance of any of their respective properties if such discontinuance is, in the judgment of the Board of
Directors of the Company or of any subsidiary, as the case may be desirable in the conduct of its business.




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(f) 


Waiver of Certain
Covenants. The Company may omit in any particular instance to comply with any term, provision or condition set forth in Section
7(b), Section 7(c), Section 7(d) or Section 7(e) above, with respect to this Subordinated Note if before
the time for such compliance the Noteholders of at least a majority in principal amount of the outstanding Subordinated Notes,
by act of such Noteholders, either will waive such compliance in such instance or generally will have waived compliance with such
term, provision or condition, but no such waiver will extend to or affect such term, provision or condition except to the extent
so expressly waived, and, until such waiver will become effective, the obligations of the Company in respect of any such term,
provision or condition will remain in full force and effect.


(g) 


Company Statement
as to Compliance. The Company will deliver to the Noteholders, within 120 days after the end of each fiscal year, an Officer’s
Certificate covering the preceding calendar year, stating whether or not, to the best of his or her knowledge, the Company is in
default in the performance and observance of any of the terms, provisions and conditions of this Subordinated Note (without regard
to notice requirements or periods of grace) and if the Company will be in default, specifying all such defaults and the nature
and status thereof of which he or she may have knowledge.


(h) 


Tier 2 Capital.
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 years immediately preceding the Stated Maturity of the Subordinated
Notes, the Company will immediately notify the Noteholders and thereafter the Company and the Noteholders will work together in
good faith to execute and deliver all agreements as reasonably necessary in order to restructure the applicable portions of the
obligations evidenced by the Subordinated Notes to qualify as Tier 2 Capital; provided, however, that nothing contained
in this Section 7(h) shall limit the Company’s right to redeem the Subordinated Notes upon the occurrence of a Tier
2 Capital Event pursuant to Section 4(a) or Section 4(b).


(i) 


Compliance with
Laws. The Company 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 Company, whether or not arising in the ordinary course of business, or (ii)
on the ability of the Company to perform its obligations under this Subordinated Note.


(j) 


Taxes and Assessments.
The Company shall punctually pay and discharge all material 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 Company.




    	A-10 



    	 



    

 


8. 


Negative Covenants
of the Company.


(a) 


Limitation on Dividends.
The Company shall not declare or pay any dividend or make any distribution on capital stock or other equity securities of any kind
of the Company if the Company 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 Company.


(b) 


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


(i) 


the continuing entity
into which the Company is merged or the person which acquires by conveyance or transfer or which leases substantially all of the
properties and assets of the Company 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 Company to be performed or observed; and


(ii) 


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


9. 


Global Subordinated
Notes.


(a) 


Provided that applicable
depository eligibility requirements are met, upon the written election of any Noteholder that is a Qualified Institutional Buyer,
as defined in Rule 144A under the Securities Act, the Company shall use its commercially reasonable efforts to provide that the
Subordinated Notes owned by Noteholders that are Qualified Institutional Buyers shall be issued in the form of one or more Global
Subordinated Notes (each a “Global Subordinated Note”) registered in the name of The Depository Trust Company
or another organization registered as a clearing agency under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), and designated as Depositary by the Company or any successor thereto (the “Depositary”) or
a nominee thereof and delivered to such Depositary or a nominee thereof.


(b) 


Notwithstanding any
other provision herein, no Global Subordinated Note may be exchanged in whole or in part for Subordinated Notes registered, and
no transfer of a Global Subordinated Note in whole or in part may be registered, in the name of any person other than the Depositary
for such Global Subordinated Note or a nominee thereof unless (i) such Depositary advises the Company in writing that such Depositary
is no longer willing or able to properly discharge its responsibilities as Depositary with respect to such Global Subordinated
Note, and no qualified successor is appointed by the Company within 90 days of receipt by the Company of such notice, (ii) such
Depositary ceases to be a clearing agency registered under the Exchange Act and no successor is appointed by the Company within
90 days after obtaining knowledge of such event, (iii) the Company elects to terminate the book-entry system through the Depositary
or (iv) an Event of Default shall have occurred and be continuing. Upon the occurrence of any event specified in clause (i), (ii),
(iii) or (iv) of this Section 9(b) above, the Company or its agent shall notify the Depositary and instruct the Depositary
to notify all owners of beneficial interests in such Global Subordinated Note of the occurrence of such event and of the availability
of Subordinated Notes to such owners of beneficial interests requesting the same.




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(c) 


If any Global Subordinated
Note is to be exchanged for other Subordinated Notes or canceled in part, or if another Subordinated Note is to be exchanged in
whole or in part for a beneficial interest in any Global Subordinated Note, then either (i) such Global Subordinated Note shall
be so surrendered for exchange or cancellation as provided in this Section 9 or (ii) the principal amount thereof shall
be reduced or increased by an amount equal to the portion thereof to be so exchanged or canceled, or equal to the principal amount
of such other Subordinated Note to be so exchanged for a beneficial interest therein, as the case may be, by means of an appropriate
adjustment made on the records of the Company or, if applicable, the Company’s registrar and transfer agent (“Registrar”),
whereupon the Company or, if applicable, the Registrar, in accordance with the applicable rules and procedures of the Depositary
(“Applicable Depositary Procedures”), shall instruct the Depositary or its authorized representative to make
a corresponding adjustment to its records. Upon any such surrender or adjustment of a Global Subordinated Note by the Depositary,
accompanied by registration instructions, the Company shall execute and deliver any Subordinated Notes issuable in exchange for
such Global Subordinated Note (or any portion thereof) in accordance with the instructions of the Depositary.


(d) 


Every Subordinated
Note executed and delivered upon registration of transfer of, or in exchange for or in lieu of, a Global Subordinated Note or any
portion thereof shall be executed and delivered in the form of, and shall be, a Global Subordinated Note, unless such Subordinated
Note is registered in the name of a person other than the Depositary for such Global Subordinated Note or a nominee thereof.


(e) 


The Depositary or its
nominee, as the registered owner of a Global Subordinated Note, shall be the holder of such Global Subordinated Note for all purposes
under this Subordinated Note, and owners of beneficial interests in a Global Subordinated Note shall hold such interests pursuant
to Applicable Depositary Procedures. Accordingly, any such owner’s beneficial interest in a Global Subordinated Note shall
be shown only on, and the transfer of such interest shall be effected only through, records maintained by the Depositary or its
nominee or its Depositary participants. If applicable, the Registrar shall be entitled to deal with the Depositary for all purposes
relating to a Global Subordinated Note (including the payment of principal and interest thereon and the giving of instructions
or directions by owners of beneficial interests therein and the giving of notices) as the sole holder of the Subordinated Note
and shall have no obligations to the owners of beneficial interests therein. The Registrar shall have no liability in respect of
any transfers affected by the Depositary.


(f) 


The rights of owners
of beneficial interests in a Global Subordinated Note shall be exercised only through the Depositary and shall be limited to those
established by law and agreements between such owners and the Depositary and/or its participants.




    	A-12 



    	 



    

 


(g) 


No holder of any beneficial
interest in any Global Subordinated Note held on its behalf by a Depositary shall have any rights with respect to such Global Subordinated
Note, and such Depositary may be treated by the Company and any agent of the Company as the owner of such Global Subordinated Note
for all purposes whatsoever. Neither the Company nor any agent of the Company will have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial ownership interests of a Global Subordinated Note or
maintaining, supervising or reviewing any records relating to such beneficial ownership interests. Notwithstanding the foregoing,
nothing herein shall prevent the Company or any agent of the Company from giving effect to any written certification, proxy or
other authorization furnished by a Depositary or impair, as between a Depositary and such holders of beneficial interests, the
operation of customary practices governing the exercise of the rights of the Depositary (or its nominee) as holder of any Subordinated
Note.


(h) 


Company, within 30 calendar
days after the receipt of written notice from the Noteholder or any other holder of the Subordinated Notes of the occurrence of
an Event of Default with respect to this Note, shall mail to all the Noteholders, at their addresses shown on the Security Register
(as defined in Section 14 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 Company in writing.


10. 


Denominations.
The Subordinated Notes are issuable only in registered form without interest coupons in minimum denominations of $1,000 and integral
multiples of $1,000 in excess thereof.


11. 


Charges and Transfer
Taxes. No service charge will be made for any registration of transfer or exchange of this Subordinated Note, or any redemption
or repayment of this Subordinated Note, or any conversion or exchange of this Subordinated Note for other types of securities or
property, but the Company may require payment of a sum sufficient to pay all taxes, assessments or other governmental charges that
may be imposed in connection with the transfer or exchange of this Subordinated Note from the Noteholder requesting such transfer
or exchange.


12. 


Payment Procedures.
Payment of the principal and interest payable on the Stated Maturity will be made by check, or by wire transfer in immediately
available funds to a bank account in the United States designated by the Noteholder of this Subordinated Note if such Noteholder
shall have previously provided wire instructions to the Company, upon presentation and surrender of this Subordinated Note at the
Payment Office (as defined in Section 21 below) or at such other place or places as the Company shall designate by notice
to the Noteholders as the Payment Office, provided that this Subordinated Note is presented to the Company in time for the Company
to make such payments in such funds in accordance with its normal procedures. Payments of interest (other than interest payable
on the Stated Maturity) shall be made by wire transfer in immediately available funds or check mailed to the registered Noteholder
of this Subordinated Note, as such person’s address appears on the Security Register (as defined below). Interest payable
on any Interest Payment Date shall be payable to the Noteholder in whose name this Subordinated Note is registered at the close
of business on the fifteenth calendar day prior to the applicable Interest Payment Date, without regard to whether such date is
a Business Day (such date being referred to herein as the “Regular Record Date”), except that interest not paid
on the Interest Payment Date, if any, will be paid to the Noteholder in whose name this Subordinated Note is registered at the
close of business on a special record date fixed by the Company (a “Special Record Date”), notice of which shall
be given to the Noteholder of this Subordinated Note not less than 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 Subordinated
Note, on any amount of principal or interest on this Subordinated Note not paid when due. All payments on this Subordinated Note
shall be applied first against interest due hereunder; and then against principal due hereunder. The Noteholder of this Subordinated
Note acknowledges and agrees that the payment of all or any portion of the outstanding principal amount of this Subordinated 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 that the Noteholder of this Subordinated Note receives payments in excess of its pro rata share of the Company’s
payments to the Noteholders of all of the Subordinated Notes, then the Noteholder of this Subordinated Note shall hold in trust
all such excess payments for the benefit of the Noteholders of the other Subordinated Notes and shall pay such amounts held in
trust to such other Noteholders upon demand by such Noteholders.




    	A-13 



    	 



    

 


13. 


Form of Payment.
Payments of principal and interest on this Subordinated 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.


14. 


Registration of
Transfer, Security Register. Except as otherwise provided herein, this Subordinated 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
of this Subordinated Note in person, or by his attorney duly authorized in writing, at the Payment Office. The Company 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 Subordinated Note for exchange or registration of transfer, the Company
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 Company 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 Noteholder. 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 of this Subordinated Note 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 Company may reasonably request to comply with applicable law. No exchange or registration of transfer
of this Subordinated Note shall be made on or after (i) the fifteenth day immediately preceding the Stated Maturity or (ii) the
due delivery of notice of redemption.


15. 


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 Company, with all other present or future unsecured subordinated debt obligations
of the Company, except any unsecured subordinated debt that, pursuant to its express terms, is senior or subordinate in right of
payment to the Subordinated Notes.




    	A-14 



    	 



    

 


16. 


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


17. 


Waiver and Consent.


(a) 


Any consent or waiver
given by the Noteholder of this Subordinated Note shall be conclusive and binding upon such Noteholder and upon all future Noteholders
of this Subordinated Note and of any Subordinated 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 Subordinated Note. No delay or omission
of the holder of this Subordinated Note 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. Any insured depository institution which
shall be a holder of this Subordinated Note or which otherwise shall have any beneficial ownership interest in this Subordinated
Note shall, by its acceptance of such Subordinated Note (or beneficial interest therein), be deemed to have waived any right of
offset with respect to the indebtedness evidenced thereby.


(b) 


No waiver or amendment
of any term, provision, condition, covenant or agreement in the Subordinated Notes shall be effective except with the consent of
the holders of more 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 Noteholder of an affected Subordinated Note, no such amendment or waiver may: (i) reduce the principal amount of any 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 the Subordinated Notes are
to be made; (v) lower the percentage of aggregate principal amount of outstanding Subordinated Notes required to approve any amendment
of the Subordinated Notes, (vi) make any changes to Section 6 (Failure to Make Payments) of the Subordinated Notes
that adversely affects the rights of any Noteholder; or (vii) disproportionately affect any of the Noteholders of the then outstanding
Subordinated Notes. Notwithstanding the foregoing, Company may amend or supplement the Subordinated Notes without the consent of
the Noteholders of the Subordinated Notes to cure any ambiguity, defect or inconsistency or to provide for uncertificated Subordinated
Notes in addition to or in place of certificated Subordinated Notes, or to make any change that does not adversely affect the rights
of any Noteholder of any of the Subordinated Notes. No failure to exercise or delay in exercising, by any Noteholder of the Subordinated
Notes, of any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power or privilege preclude any other or further exercise thereof, or the exercise of any other right or remedy provided
by law. The rights and remedies provided in this Subordinated Note 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 Noteholders to any other or further action in
any circumstances without notice or demand. No consent or waiver, expressed or implied, by Noteholders 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 the
Noteholders 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 the Noteholders of their rights hereunder or impair any rights, powers or remedies
on account of any breach or default by Company.




    	A-15 



    	 



    

 


18. 


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


19. 


No Sinking Fund;
Convertibility. This Subordinated Note is not entitled to the benefit of any sinking fund. This Subordinated Note is not convertible
into or exchangeable for any of the equity securities, other securities or assets of the Company or any subsidiary.


20. 


No Recourse Against
Others. No recourse under or upon any obligation, covenant or agreement contained in this Subordinated Note, or for any claim
based thereon or otherwise in respect thereof, will be had against any past, present or future shareholder, employee, officer,
or director, as such, of the Company or of any predecessor or successor, either directly or through the Company or any predecessor
or successor, under any rule of law, statute or constitutional provision or by the enforcement of any assessment or by any legal
or equitable proceeding or otherwise, all such liability being expressly waived and released by the acceptance of this Subordinated
Note by the holder of this Subordinated Note and as part of the consideration for the issuance of this Subordinated Note.


21. 


Notices. All
notices to the Company under this Subordinated Note shall be in writing and addressed to the Company at Carolina Trust BancShares,
Inc., 901 East Main Street, Lincolnton, North Carolina 28092, Attention: Jerry L. Ocheltree, President, or to such other address
as the Company may notify to the Holder (the “Payment Office”). All notices to the Noteholders shall be in writing
and sent by first-class mail to each Noteholder at his or its address as set forth in the Security Register.


22. 


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




    	A-16 



    	 



    

 


23. 


Governing Law; Interpretation.
THIS SUBORDINATED NOTE WILL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK AND WILL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES THEREOF (EXCEPT SECTIONS
5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW). THIS SUBORDINATED NOTE IS INTENDED TO MEET THE CRITERIA FOR QUALIFICATION
OF THE OUTSTANDING PRINCIPAL AS TIER 2 CAPITAL UNDER THE REGULATORY GUIDELINES OF THE FEDERAL RESERVE, AND THE TERMS HEREOF SHALL
BE INTERPRETED IN A MANNER TO SATISFY SUCH INTENT.


[Signature Page Follows]




    	A-17 



    	 



    

 


IN WITNESS WHEREOF,
the undersigned has caused this Subordinated Note to be duly executed and attested.


	 	CAROLINA
    TRUST BANCSHARES, INC.
	 	 	 	 
	 	By:	 
	 	 	Name:	Jerry L. Ocheltree
	 	 	Title:	President & Chief
    Executive Officer 


 


	ATTEST:	 
	 	 
	 	 
	Name: Sue S. Stamey	 
	Title:   Corporate
    Secretary	 


 




    	[Signature Page to Subordinated Note]



    	 



    

 


ASSIGNMENT FORM


To assign this Subordinated Note, fill
in the form below: (I) or (we) assign and transfer this Subordinated 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 Subordinated Note on the books of the Company. The agent may substitute another to act for him.


	Date:	 	 	Your signature:	 
	 	 	 	 	 
	 	 	 	(Sign
    exactly as your name appears on the face of this Subordinated Note)
	 	 	 	 
	 	 	 	Tax Identification
    No:  	 


 


	Signature
    Guarantee:  	 


(Signatures must 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 of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)).


The undersigned
certifies that it [is / is not] an Affiliate of the Company and that, to its knowledge, the proposed transferee [is / is not] an
Affiliate of the Company.


In connection
with any transfer or exchange of this Subordinated Note occurring prior to the date that is one year after the later of the date
of original issuance of this Subordinated Note and the last date, if any, on which this Subordinated Note was owned by the Company
or any Affiliate of the Company, the undersigned confirms that this Subordinated Note is being:


CHECK ONE BOX BELOW:


	☐	(1)	acquired for the undersigned’s own account,
    without transfer;
	 	 	 
	☐	(2)	transferred to the Company;
	 	 	 
	☐	(3)	transferred in accordance and in compliance with Rule 144A under
    the Securities Act of 1933, as amended (the “Securities Act”);
	 	 	 
	☐	(4)	transferred under an effective registration statement under
    the Securities Act;
	 	 	 
	☐	(5)	transferred in accordance with and in compliance with Regulation
    S under the Securities Act;
	 	 	 




    	 



    	 



    

 


	☐	(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 in accordance with another available exemption from
    the registration requirements of the Securities Act.


Unless one of the boxes is checked, the
Company will refuse to register this Subordinated Note in the name of any person other than the registered holder thereof; provided,
however, that if box (5), (6) or (7) is checked, the Company may require, prior to registering any such transfer of this Subordinated
Note, in its sole discretion, such legal opinions, certifications and other information as the Company 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 such as the exemption provided by Rule 144 under such Act.


	 	Signature:  	 


 


	Signature Guarantee:  	 


(Signatures must 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-l5).


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


The undersigned
represents and warrants that it is purchasing this Subordinated 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 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 Company 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.


	Date:	 	 	Signature: