Exhibit 10.1


 


SUBORDINATED NOTE PURCHASE AGREEMENT


 


This SUBORDINATED NOTE
PURCHASE AGREEMENT (this “Agreement”) is dated as of June 25, 2020, and is made by and among Delmar Bancorp,
a Maryland corporation (“Company”), and the purchaser of the Subordinated Note identified on the signature
page hereto (the “Purchaser”).


 


RECITALS


 


WHEREAS, Company
has requested that the Purchaser purchase from Company a Subordinated Note (as defined herein) in the principal amount set forth
on Purchaser’s signature page (the “Subordinated Note Amount”), which amount is intended to meet
the qualifications for inclusion as Tier 2 Capital (as defined herein);


 


WHEREAS, the
Purchaser is an “accredited investor” as such term is defined by Rule 501 of Regulation D promulgated under the Securities
Act of 1933, as amended, and the rules and regulations promulgated thereunder (the “Securities Act”),
as well as a “qualified institutional buyer” as such term is defined in Rule 144A promulgated under the Securities
Act (“QIB”);


 


WHEREAS, the
offer and sale of the Subordinated Note by Company is being made pursuant to one or more available exemptions from the registration
requirements of the Securities Act, including Section 4(a)(2) of the Securities Act and the provisions of Rule 506(b) of Regulation
D promulgated thereunder; and


 


WHEREAS, Purchaser
is willing to purchase from Company a Subordinated Note in 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 Note.


 


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
Note 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.


 


“Articles” has
the meaning set forth in Section 3.2.1.2.


 


“Bank”
refers either to The Bank of Delmarva, a Delaware-chartered non-member bank with its principal place of business located in Seaford,
Delaware (“Delmarva”),or Virginia Partners Bank, a Virginia-chartered state member bank with its principal
place of business located in Fredericksburg, Virginia, (“Virginia Partners”), as applicable; “Banks”
refers to Delmarva and Virginia Partners collectively.


 


“Bank Holding
Company Act” has the meaning set forth in Section 3.2.1.6.


 


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


 


“Bylaws”
has the meaning set forth in Section 3.2.1.2.


 


“Closing”
has the meaning set forth in Section 2.5.


 


“Closing
Date” means June 25, 2020.


 


“Common
Stock” means the Company’s common stock, $0.01 par value per share.


 


“Company”
has the meaning set forth in the preamble hereto and shall include any successors to Company.


 


“Company’s
Reports” means (i) audited consolidated financial statements of Company and the Banks, as applicable, as of and for
the year ended December 31, 2019; (ii) the unaudited consolidated financial statements of Company and the Banks, as applicable,
for the quarter ended March 31, 2020, (iii) Company’s Parent Company Only Financial Statements for Small Holding Companies
(FR Y-9SP) as of and for the year ended December 31, 2019 filed with the FRB, and (iv) each of the Banks’ consolidated reports
of condition and income (or call report) as of and for the year ended December 31, 2019 filed with the Federal Financial Institutions
Examination Council’s Central Data Repository.


 


“Condition
or Release” means any presence, use, storage, transportation, discharge, disposal, release or threatened release
of any Hazardous Materials.


 


“Control”
(including the terms “controlling,” “controlled by,” and “under common control with”) means
the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract, or otherwise.


 


“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.


 






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


 


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


 


“FDIC”
means the Federal Deposit Insurance Corporation.


 


“Financial
Advisor” means Piper Sandler & Co., independent financial advisor to Company in connection with this Agreement.


 


“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 each applicable Regulatory Agency) with jurisdiction over Company, either Bank
or any of their Subsidiaries.


 


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


 


“Hazardous
Materials” means oil, flammable explosives, asbestos, urea formaldehyde insulation, polychlorinated biphenyls, radioactive
materials, hazardous wastes, toxic or contaminated substances or similar materials, including 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.


 






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“Indebtedness”
means: (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 or any Subsidiary of Company; and (ii) all
obligations secured by any lien on property owned by Company or any Subsidiary whether or not such obligations shall have been
assumed; provided, however, Indebtedness shall not include deposits or other indebtedness created, incurred or maintained
in the ordinary course of Company’s or the Banks’ business (including without limitation federal funds purchased, advances
from any Federal Home Loan Bank, secured deposits of municipalities, letters of credit issued by Company or the Banks, repurchase
arrangements, interest rate swaps and financing through the Paycheck Protection Program Liquidity Facility) 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 any change or effect that (i) is or would be reasonably likely to be material and adverse to
the financial condition, results of operations, business or assets of the Company, either Bank and/or their respective Subsidiaries,
or (ii) would materially impair the ability of the Company, either Bank and/or their respective Subsidiaries to perform its respective
obligations under any of the Transaction Documents, or otherwise materially impede the consummation of the transactions contemplated
hereby or thereby; 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, Bank, or Purchaser, (4) pandemics,
epidemics, disease outbreaks, and other public health emergencies, including the Coronavirus disease (COVID-19), (5) direct effects
of compliance with this Agreement on the operating performance of Company, the Banks, or Purchaser, including expenses incurred
by Company, the Banks, or Purchaser in consummating the transactions contemplated by this Agreement, and (6) the effects of any
action or omission taken by Company or the Banks with the prior written consent of Purchaser, and vice versa, or as otherwise contemplated
by this Agreement and the Subordinated Note.


 


“Maturity
Date” means July 1, 2030.


 


“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.


 


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


 


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


 


“QIB”
has the meaning set forth in the Recitals.


 






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“Regulation
D” means Regulation D promulgated under the Securities Act.


 


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


 


“Regulatory Approval”
has the meaning set forth in Section 3.2.1.6.


 


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


 


“State
Regulator” has the meaning set forth in Section 3.2.1.6.


 


“Subordinated
Note” means the Subordinated Note in the form attached as Exhibit A hereto, as amended, restated, supplemented
or modified from time to time, and each Subordinated Note delivered in substitution or exchange for such Subordinated Note (any
one or more Subordinated Notes into which this Subordinated Note may be subdivided, exchanged, or substituted in the future referred
to, collectively, with this Subordinated Note, as the “Subordinated Notes”).


 


“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, 12 C.F.R. Part 225,
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.


 


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 this Agreement and the Subordinated
Note 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 amendment, replacement, extension or other modification thereof.


 


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


 






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2.           
SUBORDINATED DEBT.


 


2.1             
Certain Terms. Subject to the terms and conditions herein contained, Company proposes to issue
and sell to the Purchaser a Subordinated Note in an amount equal to the Subordinated Note Amount. Purchaser agrees to purchase
the Subordinated Note from 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 Note. The Subordinated Note Amount shall be disbursed in accordance with Section
3.1. The Subordinated Note shall bear interest per annum as set forth in the Subordinated Note. The unpaid principal balance
of the Subordinated Note 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 Purchaser in accordance with the terms
of the Subordinated Note and this Agreement or (ii) Company’s delivery of a notice of redemption or repayment in accordance
with the terms of the Subordinated Note.


 


2.2             
Subordination. The Subordinated Note shall be subordinated in accordance with the subordination
provisions set forth therein.


 


2.3             
Maturity Date. On the Maturity Date, all sums due and owing under this Agreement and the Subordinated
Note shall be repaid in full. Company acknowledges and agrees that Purchaser has not made any commitments, either express or implied,
to extend the terms of the Subordinated Note past its Maturity Date, and shall not extend such terms beyond the Maturity Date unless
Company and Purchaser hereafter specifically otherwise agree in writing.


 


2.4             
Unsecured Obligations. The obligations of Company to Purchaser under the Subordinated Note shall
be unsecured and not covered by a guarantee of the Company or any Affiliate of the Company.


 


2.5             
The Closing. The execution and delivery of the Transaction Documents (the “Closing”)
shall occur on the Closing Date at such place or time or on such other date as the parties hereto may agree.


 


2.6             
Payments. Company agrees that matters concerning payments and application of payments shall be
as set forth in this Agreement and in the Subordinated Note.


 


2.7             
Right of Offset. Purchaser hereby expressly waives any right of offset Purchaser may have against
Company or any of its Subsidiaries.


 


2.8             
Use of Proceeds. Company shall use the net proceeds from the sale of the Subordinated Note for
general corporate purposes, which may include, without limitation, investments in the Banks as regulatory capital, repayment or
redemption of outstanding Indebtedness, providing capital to support organic growth or growth through strategic acquisitions, and
capital expenditures.


 






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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 or waived by the Purchaser and Company has executed and delivered to Purchaser this Agreement
and such Purchaser’s Subordinated Note and any other related documents in form and substance reasonably satisfactory to Purchaser,
Purchaser shall disburse the Subordinated Note Amount, which is set forth on Purchaser’s signature page, in immediately available
funds to Company in exchange for a Subordinated Note with a principal amount equal to such Subordinated Note Amount (the “Disbursement”).
Company will deliver to the Purchaser one or more certificates representing the Subordinated Note in definitive form (or provide
evidence of the same with the original to be delivered by Company by overnight delivery on the next business day in accordance
with the delivery instructions of Purchaser), registered in such names and denominations as Purchaser may request.


 


3.2        
Conditions Precedent to Disbursement.


 


3.2.1         
Conditions to the Purchaser’s Obligation. The obligation of Purchaser to consummate the purchase
of the Subordinated Note to be purchased by it at Closing and to effect the Disbursement is subject to the fulfillment of or delivery
by or at the direction of Company to such Purchaser, on or prior to the Closing Date, of each of the following (or written waiver
by such Purchaser prior to the Closing of such delivery):


 


3.2.1.1      
Transaction Documents. This Agreement and the Subordinated Note (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 and all amendments thereto as in effect as of the Closing Date (the “Articles”);



 


		(b)	A certificate of status of Company issued by the Maryland State Department of Assessments and Taxation;



 


		(c)	A copy, certified by the Secretary or Assistant Secretary, of the bylaws of Company and all amendments
thereto as in effect as of the Closing Date (the “Bylaws”);



 


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



 


		(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; and



 






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		(f)	The opinion of Troutman Sanders LLP, counsel to Company, dated as of the Closing Date, substantially
in the form set forth at Exhibit B attached hereto addressed to the Purchaser.



 


3.2.1.3      
Representations and Warranties. The representations and warranties of Company set forth in Section
4 of this Agreement that do not contain a “Material Adverse Effect” qualification or other express materiality
or similar qualification shall have been true and correct as of the date hereof and shall be true and correct as of the Closing
Date, except where the failure of such representations and warranties to be so true and correct does not have a Material Adverse
Effect; provided, however, that representations and warranties made as of a specified date need only be true and correct
as of such date. The representations and warranties of Company set forth in Section 4 of this Agreement that contain a “Material
Adverse Effect” qualification or any other express materiality or similar qualification shall have been true and correct
as of the date hereof and shall be true and correct as of the Closing Date; provided, however, that representations and
warranties made as of a specified date need only be true and correct as of such date.


 


3.2.1.4      
Covenants. All covenants, agreements and conditions contained in this Agreement to be performed
by Company on or prior to the Closing Date shall have been performed or complied with in all material respects.


 


3.2.1.5      
Other Requirements. Such other additional information regarding Company, the Banks and any other
Subsidiary of Company or the Banks and their respective assets, liabilities (including any liabilities arising from, or relating
to, legal proceedings) and contracts as a Purchaser may reasonably require.


 


3.2.1.6      
Consents and Approvals. The Company shall file any required applications, filings and notices required
in connection with this Agreement, as applicable, with (i) the FRB (under the Bank Holding Company Act of 1956, as amended (“Bank
Holding Company Act”)), and (ii) the Office of the Commissioner of Financial Regulation of the Maryland State Department
of Labor, Licensing and Regulation (the “State Regulator”), and receive approval of, or consent or nonobjection
to, the foregoing applications, filings and notices (“Regulatory Approval”).


 


3.2.2        
Conditions to Company’s Obligation. The obligation of Company to consummate the sale of the
Subordinated Note and to effect the Closing is subject to delivery by Purchaser to the Company of this Agreement, duly authorized
and executed by such Purchaser, and the purchase price from the Purchaser in an amount equal to the stated principal amount of
the Subordinated Note.


 






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4.           
REPRESENTATIONS AND WARRANTIES OF COMPANY.


 


Company hereby represents
and warrants to Purchaser as follows:


 


4.1         
Organization and Authority.


 


4.1.1         
Organization Matters of Company and Its Subsidiaries.


 


4.1.1.1       
Company is a bank holding company registered with the FRB under the Bank Holding Company Act of 1956, as amended.
Company is a business corporation validly existing and in good standing under the laws of the State of Maryland 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.


 


4.1.1.2       
The entities listed on Schedule 4.1.1.2 are the only direct or indirect Subsidiaries of the Company. Each
Subsidiary of the Company and the Banks either has been duly organized and is validly existing as a corporation or limited liability
company, or, in the case of the Banks, has been duly chartered and is validly existing, in the case of Delmarva as a Delaware chartered
bank, and in the case of Virginia Partners, as a Virginia-chartered bank, in each case in good standing under the laws of the jurisdiction
of its incorporation or formation, has corporate or limited liability company power and authority to own, lease and operate its
properties and to conduct its business and is duly qualified as a foreign entity to transact business and is in good standing in
each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct
of business, except where the failure so to qualify or to be in good standing would not result in a Material Adverse Effect. All
of the issued and outstanding shares of capital stock or other equity interests in each Subsidiary of the Company have been duly
authorized and validly issued, are fully paid and non-assessable and are owned by the Company, directly or through Subsidiaries
of the Company, 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 of the Company were issued in violation of the preemptive
or similar rights of any security holder of such Subsidiary of the Company or any other Person.


 


4.1.1.3       
The deposit accounts of the Banks are insured by the FDIC up to applicable limits. Neither Company nor Bank has
received any notice or other information indicating that either 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 either Bank as an FDIC-insured institution. Company and its Subsidiaries have made payment of all franchise and similar taxes
in all of the respective jurisdictions in which they are incorporated, chartered or qualified, except for any such taxes (i) where
the failure to pay such taxes will not have a Material Adverse Effect, (ii) the validity of which is being contested in good faith
or (iii) for which proper reserves have been set aside on the books of Company or any applicable Subsidiary of Company, as the
case may be.


 






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4.1.2         
Capital Stock and Related Matters. The Articles of Company authorize Company to issue 40,000,000
shares of capital stock, all of which shares are initially classified as Common Stock; the Board of Directors of Company may classify
and reclassify any unissued shares of capital stock, including as shares of preferred stock, by setting or changing in any one
or more respects the preferences, conversion or other rights, voting powers, restrictions, limitations as to distributions and
dividends, qualifications or terms or conditions of redemption of such shares of stock. As of the date of this Agreement, there
are 17,809,185 shares of Common Stock issued and outstanding and zero shares of the Company’s preferred stock issued and
outstanding. All of the outstanding capital stock of the Banks is owned beneficially and of record by Company and has been duly
authorized and validly issued and is fully paid and non-assessable. All of the outstanding capital stock of Company has been duly
authorized and validly issued and is fully paid and non-assessable. 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 other than Company 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 Note, the borrowing of the
Subordinated Note Amount, 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. This Agreement has been duly authorized, executed and delivered, and, assuming due authorization,
execution and delivery by the Purchaser, constitutes the legal, valid and binding obligation 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 Note. The Subordinated Note has been duly authorized by Company and when executed
by Company and issued, delivered to and paid for by the Purchaser 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.


 


4.2.4         
Exemption from Registration. Neither the Company, nor any of its Subsidiaries or Affiliates, nor
any Person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning
of Regulation D) in connection with the offer or sale of the Subordinated Note. Assuming the accuracy of the representations and
warranties of Purchaser set forth in this Agreement, the Subordinated Note will be issued in a transaction exempt from the registration
requirements of the Securities Act.


 






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4.2.5             
No Defaults or Restrictions. Neither the execution and delivery of the Transaction Documents nor
compliance with their respective terms and conditions will (whether with or without the giving of notice or lapse of time or both)
(i) violate, conflict with or result in a breach of, or constitute a default under: (1) the Articles 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 either Bank, as applicable, is now a party or by which it or any of its properties may be bound or affected; (3) any judgment,
order, writ, injunction, decree or demand of any court, arbitrator, grand jury, or Governmental Agency applicable to Company or
either Bank; 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,
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, either Bank or any of their Subsidiaries. Neither Company, either of the Banks nor any of their Subsidiaries are 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, either Bank or any of their Subsidiaries, as applicable, is a
party or by which Company, either Bank or any of their Subsidiaries, as applicable, or any of their 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.


 


4.2.6             
Governmental Consent. Except as contemplated under Section 3.2.1.6. above, no governmental
orders, permissions, consents, approvals or authorizations are required to be obtained by Company that have not been obtained,
and no registrations or declarations are required to be filed by Company that have not been filed in connection with, or, in contemplation
of, the execution and delivery of, and performance under, the Transaction Documents, except for applicable requirements, if any,
of the Securities Act, the Exchange Act or state securities laws or “blue sky” laws of the various states and any applicable
federal or state banking laws and regulations. The Company and Bank have received from the Regulatory Agencies any required approval
of, or consent or nonobjection to, the issuance and sale of the Subordinated Note contemplated by this Agreement.


 


4.3        
Possession of Licenses and Permits. Each of Company, the Banks and their 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 them except where the failure
to possess such Governmental Licenses would not, singularly or in the aggregate, have a Material Adverse Effect; Company and each
Subsidiary of Company are in compliance with the terms and conditions of all such Governmental Licenses, except where the failure
so to comply would not, individually or in the aggregate, have a Material Adverse Effect; 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; 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.


 






    	 	11	 



     


    

 


4.4        
Financial Condition.


 


4.4.1             
Company Financial Statements. The financial statements of Company included in Company’s Reports
(including the related notes, where applicable), which have been provided to or are publicly available to Purchaser (i) have been
prepared from, and are in accordance with, the books and records of Company or the Banks, as applicable; (ii) fairly present in
all material respects the results of operations, cash flows, changes in stockholders’ equity and financial position of Company
and its consolidated Subsidiaries, for the respective fiscal periods or as of the respective dates therein set forth (subject in
the case of unaudited statements to recurring year-end audit adjustments normal in nature and amount), as applicable; (iii) complied
as to form, as of their respective dates of filing in all material respects with applicable accounting and banking requirements
as applicable, with respect thereto; and (iv) have been prepared in accordance with GAAP consistently applied during the periods
involved, except, in each case, as indicated in such statements or in the notes thereto. The books and records of Company and the
Banks 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 (or notes thereto) of Company contained in Company’s Reports for Company’s 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             
Absence of Default. Since December  31, 2019, 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 the right to accelerate the maturity
of any material Indebtedness of Company. Company is not 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.


 


4.4.3             
Solvency. After giving effect to the consummation of the transactions contemplated by this Agreement,
Company has capital sufficient to carry on its business 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.


 


4.4.4             
Ownership of Property. Company, the Banks and each of their Subsidiaries have good and marketable
title as to all real property owned by such entity 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 consolidated balance sheet of the Company 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 consolidated balance sheet), subject to no encumbrances, liens, mortgages, security interests or pledges,
except (i) those items which secure liabilities for public deposits or statutory obligations or any discount with, borrowing from
or other obligations to the Federal Home Loan Bank or FRB, inter-bank credit facilities, reverse repurchase agreements or any transaction
by the Banks acting in a fiduciary capacity, (ii) statutory liens for amounts not yet due or delinquent or that are being contested
in good faith and (iii) such liens that do not, individually 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, either Bank or any of their
Subsidiaries. Company, the Banks and each of their 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 presently occupied and used by it. Such existing Leases and commitments to Lease constitute or will
constitute operating Leases for both tax and financial accounting purposes except as otherwise disclosed in the Company’s
Reports and the Lease expense and minimum rental commitments with respect to such Leases and Lease commitments are as disclosed
in all material respects in the Company’s Reports.


 






    	 	12	 



     


    

 


4.5       
No Material Adverse Change. Since December 31, 2019, there has been no development or event
which has had or could reasonably be expected to have a Material Adverse Effect.


 


4.6        
Legal Matters.


 


4.6.1             
Compliance with Law. Company, the Banks and each of their Subsidiaries (i) have complied with and
(ii) are not under investigation with respect to, and, to Company’s knowledge, 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. Company, the Banks and each of their Subsidiaries are in compliance with, and at all times prior to the date hereof have
been in compliance with, (x) all statutes, rules, regulations, orders and restrictions of any domestic or foreign government, or
any Governmental Agency, applicable to it, and (y) their own privacy policies and written commitments to their respective customers,
consumers and employees, concerning data protection, the privacy and security of personal data, and the nonpublic personal information
of their respective customers, consumers and employees, in each case except where any such failure to comply, would not result,
individually or in the aggregate, in a Material Adverse Effect. At no time during the two years prior to the date hereof has the
Company, either Bank or any of their Subsidiaries received any notice asserting any violations of any of the foregoing, except
for any violations that (A) have been resolved or (B) that have not had, and are not reasonably expected to have, a Material Adverse
Effect.


 


4.6.2             
Regulatory Enforcement Actions. Company and its Subsidiaries are in compliance in all material
respects with all laws administered by and regulations of any Governmental Agency applicable to it or to them, the failure to comply
with which would have a Material Adverse Effect. None of Company, its Subsidiaries, nor any of their respective officers or directors
is now operating under any restrictions, agreements, memoranda, commitment letter, supervisory letter or similar regulatory correspondence,
or other commitments (other than restrictions of general application) imposed by any Governmental Agency, nor are, to Company’s
knowledge, (i) any such restrictions threatened, (ii) any agreements, memoranda, commitment letters, supervisory letters or similar
regulatory correspondence, or other commitments being sought by any Governmental Agency, or (iii) any legal or regulatory violations
previously identified by, or penalties or other remedial action previously imposed by, any Governmental Agency that remain unresolved.


 






    	 	13	 



     


    

 


4.6.3             
Pending Litigation. There are no actions, suits, proceedings or written agreements pending, or,
to Company’s knowledge, threatened or proposed, against Company, either Bank or any of their 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
or affect issuance or payment of the Subordinated Note; and neither Company, either Bank nor any of their 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.


 


4.6.4             
Environmental. No Property is or, to the 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, either Bank nor any of their Subsidiaries have engaged in such activities. There are
no claims or actions pending or, to Company’s knowledge, threatened against Company, either Bank or any of their Subsidiaries
by any Governmental Agency or by any other Person relating to any Hazardous Materials or pursuant to any Hazardous Materials Law.


 


4.6.5             
Brokerage Commissions. Except for fees payable to its Financial Advisor, 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.


 


4.6.6             
Investment Company Act. Neither Company, either Bank nor any of their Subsidiaries is an “investment
company” or a company “controlled” by an “investment company,” within the meaning of the Investment
Company Act of 1940, as amended.


 


4.7        
No Material Misstatement or Omission. None of the representations, warranties, covenants and agreements
contained in this Agreement or in any certificate or other document delivered to Purchaser by or on behalf of Company, either Bank
or any of their Subsidiaries 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 or furnished to Purchaser.


 






    	 	14	 



     


    

 


4.8        
Internal Accounting Controls. Each of Company and the Banks has established and maintains a system
of internal control over financial reporting that pertains to the maintenance of records that accurately and fairly reflect the
transactions and dispositions of Company’s assets (on a consolidated basis), provides reasonable assurance that transactions
are recorded as necessary to permit preparation of financial statements in accordance with GAAP and that Company’s and the
Banks’ receipts and expenditures are being made only in accordance with authorizations of Company management and Board of
Directors, and provides reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition
of assets of Company on a consolidated basis that could have a Material Adverse Effect. Such internal control over financial reporting
is effective to provide reasonable assurance regarding the reliability of Company’s financial reporting and the preparation
of Company’s financial statements for external purposes in accordance with GAAP. Since the conclusion of Company’s
last completed fiscal year there has not been and there currently is not (i) any significant deficiency or material weakness
in the design or operation of its internal control over financial reporting which is 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 Company’s or the Banks’ internal control over financial reporting.
Company (A) has implemented and maintains disclosure controls and procedures reasonably designed and maintained to ensure
that material information relating to Company is made known to the Chief Executive Officer and the Chief Financial Officer of Company
by others within Company and (B) has disclosed, based on its most recent evaluation prior to the date hereof, to Company’s
outside auditors and the audit committee of 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 Company’s
internal controls over financial reporting. Such disclosure controls and procedures are effective for the purposes for which they
were established.


 


4.9        
Tax Matters. Company and each Bank have (i) filed all material foreign, U.S. federal, state and
local tax returns, information returns and similar reports that they are required to file (taking into account extensions) with
governmental tax agencies, 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 them (taking into account extensions) and any other material tax assessment, fine or penalty
levied against them other than taxes (x) currently payable without penalty or interest, or (y) being contested in good faith by
appropriate proceedings.


 


4.10      
Exempt Offering. Assuming the accuracy of the Purchaser’s representations and warranties
set forth in this Agreement, no registration under the Securities Act is required for the offer and sale of the Subordinated Note
by the Company to the Purchaser.


 


4.11      
Representations and Warranties Generally. The representations and warranties of Company set forth
in this Agreement and in any certificate or other document delivered to Purchaser by or on behalf of Company, either Bank or any
of their Subsidiaries pursuant to or in connection with this Agreement that do not contain a “Material Adverse Effect”
qualification or other express materiality or similar qualification are true and correct as of the date hereof and as of the Closing
Date, except where the failure of such representations and warranties to be so true and correct does not have a Material Adverse
Effect; provided, however, that any such representations and warranties made as of a specified date need only be true and
correct as of such date. The representations and warranties of Company set forth in this Agreement and in any certificate or other
document delivered to Purchaser by or on behalf of Company, either Bank or any of their Subsidiaries pursuant to or in connection
with this Agreement that contain a “Material Adverse Effect” qualification or any other express materiality or similar
qualification are true and correct as of the date hereof and as of the Closing Date; provided, however, that any such representations
and warranties made as of a specified date need only be true and correct as of such date.


 






    	 	15	 



     


    

 


5.           
GENERAL COVENANTS, CONDITIONS AND AGREEMENTS.


 


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


 


5.1        
Compliance with Transaction Documents. Company shall 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 of its
Subsidiaries 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 Bank and each of their other 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.


 


5.3.2             
Regulated Activities. Company shall not itself, nor shall it cause, permit or allow either Bank
or any of their Subsidiaries 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 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 each Bank and any of their Subsidiaries to, promptly pay
and discharge (i) all taxes, assessments and other governmental charges imposed upon Company, either Bank or any of their Subsidiaries
or upon the income, profits, or property of Company, either Bank or any of their Subsidiaries and (ii) all claims for labor, material
or supplies that, if unpaid, might by law become a lien or charge upon the property of Company, either Bank or any of their Subsidiaries.
Notwithstanding the foregoing, none of Company, either Bank or any of their Subsidiaries shall be required to pay any such tax,
assessment, charge or claim, so long as the validity thereof is being contested in good faith by appropriate proceedings, and appropriate
reserves therefor shall be maintained on the books of Company, each Bank and such other Subsidiary.


 






    	 	16	 



     


    

 


5.3.4             
Corporate Existence. 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
of the Company and the Banks; and (iii) the rights (constituent governing documents and statutory), licenses and franchises of
the Company and each subsidiary of the Company and the Banks; provided, however, that the Company will not be required to
preserve the existence (corporate or other) of any of its subsidiaries (other than the Banks) or any such right, license or franchise
of the Company or any of its subsidiaries (other than the Banks) 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; provided further that the Company may
in its discretion merge the Banks into one another.


 


5.3.5             
Dividends, Payments, and Guarantees During Event of Default. Upon the occurrence of an Event of
Default (as defined under the Subordinated Note), until such Event of Default is cured by the Company or waived by the Purchaser
in accordance with Section 17 of the Subordinated Notes, Company shall not, except as may be required by any federal or state Governmental
Agency, (a) declare or pay any dividends or distributions 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 Note, 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 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 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 (including any repurchases or acquisitions in connection with the forfeiture of any stock award, cashless or net exercise
of any option, or acceptance of Common Stock in lieu of an award recipient’s tax obligations under any equity award).


 


5.3.6             
Tier 2 Capital. If all or any portion of the Subordinated Note ceases to qualify for inclusion
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 Note, Company will immediately notify the Purchaser, and thereafter,
the Company and the Purchaser 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 Note to qualify as Tier 2 Capital.


 






    	 	17	 



     


    

 


5.3.7             
Environmental Matters. Except as would not, singly or in the aggregate, reasonably be expected
to result in a Material Adverse Effect, Company shall: (a) exercise, and cause each Bank and each of their Subsidiaries to exercise,
due diligence in order to comply in all material respects with all Hazardous Materials Laws; and (b) promptly take any and all
necessary remedial action in connection with any Condition or Release or threatened Condition or Release on, under or about any
Property in order to comply in all material respects with all applicable Hazardous Materials Laws; provided, however, that
Company shall not be deemed to be in breach of the foregoing covenant if and to the extent it has not taken such remedial actions
due to (x) its diligent pursuit of an available statutory or administrative exemption from compliance with the relevant Hazardous
Materials Law from the appropriate Governmental Agency (and no penalties for non-compliance with the relevant Hazardous Materials
Law(s) shall accrue as a result of such non-compliance, without rebate or waiver if such exemption or waiver is granted), or (y)
is actively and diligently contesting in good faith any Governmental Agency’s order, determination or decree with respect
to the applicability or interpretation of any such relevant Hazardous Materials Law and/or the actions required under such laws
or regulations in respect of such Condition or Release. In the event Company, either Bank or any other Subsidiary of Company or
the Banks undertakes any remedial action with respect to such Hazardous Material on, under or about any Property, Company, each
Bank or such other Subsidiary shall conduct and complete such remedial action in compliance with all applicable Hazardous Materials
Laws and in accordance with the policies, orders and directives of all Governmental Agencies.


 


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


 


5.5        
Rule 144A Information. While the Subordinated Note remains a “restricted security”
within the meaning of the Securities Act, Company will make available, upon request, to any seller of such Subordinated Note the
information specified in Rule 144A(d)(4) under the Securities Act, unless Company is then subject to Section 13 or 15(d) of
the Exchange Act.


 


6.           
REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER.


 


Purchaser hereby represents
and warrants to Company, and covenants with Company, as follows:


 


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


 


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 has been duly authorized, executed and
delivered, and, assuming due authorization, execution and delivery by the other parties hereto, 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 lapse of time or both) under (i) Purchaser’s organizational documents, (ii) any agreement
to which Purchaser is party, (iii) any law applicable to Purchaser or (iv) any order, writ, judgment, injunction, decree, determination
or award binding upon or affecting Purchaser.


 






    	 	18	 



     


    

 


6.4        
Purchase for Investment. Purchaser is purchasing the Subordinated Note for Purchaser’s own
account and not with a view to distribution and with no present intention of reselling, distributing or otherwise disposing of
the same. Purchaser 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 Note in any manner.


 


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


 


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


 


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


 


6.8          Information. Purchaser acknowledges that: (i) Purchaser is not being provided with the disclosures
that would be required if the offer and sale of the Subordinated Note were registered under the Securities Act, nor is Purchaser
being provided with any offering circular or prospectus prepared in connection with the offer and sale of the Subordinated Note;
(ii) Purchaser has conducted Purchaser’s own examination of Company and the terms of the Subordinated Note to the extent
Purchaser deems necessary to make Purchaser’s decision to invest in the Subordinated Note; (iii) Purchaser has availed itself
of publicly available financial and other information concerning Company to the extent Purchaser deems necessary to make Purchaser’s
decision to purchase the Subordinated Note; and (iv) Purchaser has not received or relied on any form of general solicitation or
general advertising (within the meaning of Regulation D) from Company or any party acting on Company’s behalf in connection
with the offer and purchase of the Subordinated Note.


 


6.9    
      Access to Information. Purchaser acknowledges that Purchaser and
Purchaser’s advisors have been furnished with all materials relating to the business, finances and operations of
Company that have been requested by Purchaser and Purchaser’s 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.


 






    	 	19	 



     


    

 


6.10      
Investment Decision. Purchaser has made Purchaser’s own investment decision based upon Purchaser’s
own judgment, due diligence, and advice from such advisors as Purchaser has deemed necessary and not upon any view expressed by
any other Person, including the Financial Advisor. 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. Purchaser is not relying upon, and has not relied upon, any advice, statement, representation
or warranty made by any Person by or on behalf of Company, including the Financial Advisor, except for the express statements,
representations and warranties of Company made or contained in this Agreement. Furthermore, Purchaser acknowledges that (i) the
Financial Advisor has not performed any due diligence review on behalf of Purchaser and (ii) nothing in this Agreement or any
other materials presented by or on behalf of Company to Purchaser in connection with the purchase of the Subordinated Note constitutes
legal, tax or investment advice.


 


6.11      
Private Placement; No Registration; Restricted Legends. Purchaser understands and acknowledges
that the Subordinated Note comes within the definition of “restricted securities” under Rule 144 of the Securities
Act and is being sold by Company without registration under the Securities Act in reliance on the exemption from federal registration
set forth in Section 4(a)(2) of the Securities Act or any state securities laws, and accordingly, may be resold, pledged or otherwise
transferred only in compliance with the registration requirements of federal and state securities laws or if exemptions from the
Securities Act and applicable state securities laws are available to Purchaser. Purchaser is not subscribing for the Subordinated
Note 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. Purchaser further acknowledges
and agrees that all certificates or other instruments representing the Subordinated Note will bear the restrictive legend set forth
in the form of Subordinated Note. Purchaser further acknowledges Purchaser’s primary responsibilities under the Securities
Act and, accordingly, will not sell or otherwise transfer the Subordinated Note 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. Neither the Company nor its Financial Advisor have or has made or are or is making any representation, warranty or covenant,
express or implied, as to the availability of any exemption from registration under the Securities Act or any applicable state
securities laws for the resale, pledge or other transfer of the Subordinated Note, or that the Subordinated Note purchased by Purchaser
will ever be able to be lawfully resold, pledged or otherwise transferred.


 


6.12      
Role of Financial Advisor. Purchaser will purchase the Subordinated Note directly from Company
and not from the Financial Advisor, and Purchaser understands that neither the Financial Advisor nor any other broker or dealer
has any obligation to make a market in the Subordinated Notes. Purchaser understands that the Financial Advisor has acted solely
as a financial advisor to the Company and not as placement agent or underwriter in connection with offer and sale of the Subordinated
Note.


 


6.13      
Tier 2 Capital. If all or any portion of the Subordinated Note ceases to qualify for inclusion
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 Note, Company will immediately notify the Purchaser, and thereafter,
the Company and the Purchaser 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 Note to qualify as Tier 2 Capital.


 






    	 	20	 



     


    

 


6.14      
Accuracy of Representations. Purchaser understands that the Company is relying and 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.


 


7.           
MISCELLANEOUS.


 


7.1        
Prohibition on Assignment by Company. Except as described in Section 8(b) (Merger or Sale
of Assets) of the Subordinated Note, Company may not assign, transfer or delegate any of its rights or obligations under this Agreement
or the Subordinated Note without the prior written consent of Purchaser. In addition, in accordance with the terms of the Subordinated
Note, any transfer of such Subordinated Note must be made in accordance with the Assignment Form attached thereto and the requirements
and restrictions thereof.


 


7.2        
Time of the Essence. Time is of the essence with respect to this Agreement.


 


7.3        
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 prior written consent of Purchaser. Notwithstanding the
foregoing, Company may amend or supplement the Subordinated Notes without the consent of Purchaser 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 Purchaser. No failure to exercise or delay in exercising, by
Purchaser, 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 at
law or in equity. No notice or demand on Company in any case shall, in and of itself, entitle Company to any other or further notice
or demand in similar or other circumstances or constitute a waiver of the rights of Purchaser to any other or further action in
any circumstances without notice or demand. No consent or waiver, express or implied, by Purchaser 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 Purchaser
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 Purchaser of its rights hereunder or impair any rights, powers or remedies on account of any breach
or default by Company.


 






    	 	21	 



     


    

 


7.4        
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.


 


7.5        
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:	
        Delmar Bancorp

        2245 Northwood Drive

        Salisbury, Maryland 21801

        Attention: Lloyd B. Harrison, III

        Chief Executive Officer

         

	with a copy to:	
        Troutman Sanders LLP

        The Troutman Sanders Building

        1001 Haxall Point

        Richmond, Virginia 23219

        Tel: (804)697-1200

        Fax: (804)697-1339

        Attention: Jacob A. Lutz, III, Esq.

         

	if to Purchaser:	To the address indicated on Purchaser’s signature page.


 


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).


 


7.6        
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 the 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.


 






    	 	22	 



     


    

 


7.7        
No Joint Venture. Nothing contained herein or in any document executed pursuant hereto and no action
or inaction whatsoever on the part of the Purchaser, shall be deemed to make a Purchaser a partner or joint venturer with Company.


 


7.8        
Documentation. All documents and other matters required by any of the provisions of this Agreement
to be submitted or furnished to the Purchaser shall be in form and substance satisfactory to such Purchaser.


 


7.9        
Entire Agreement. This Agreement and the Subordinated Note 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 Note.


 


7.10      
Choice of Law. This Agreement shall be governed by and construed in accordance with the laws of
the State of North Carolina 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 the 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.


 


7.11      
No Third Party Beneficiary. This Agreement is made for the sole benefit of Company and the Purchaser,
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.


 


7.12      
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.


 


7.13     
Reinstatement of Obligations. To the extent that Purchaser receives any payment on account of Company’s
obligations under the Subordinated Note and any such payment and/or any part thereof is subsequently invalidated, declared to be
fraudulent or preferential, set aside, subordinated and/or required to be repaid to a trustee, receiver or any other Person under
any bankruptcy act, state or federal law, common law or equitable cause, then to the extent of such payment received, Company’s
obligations under the Subordinated Note or part thereof intended to be satisfied shall be revived and continue in full force and
effect, as if such payment(s) had not been received by Purchaser and applied on account of Company’s obligations; provided,
however, if Purchaser successfully contests any such invalidation, declaration, set aside, subordination or other order to
pay any such payment to any third party, the Company’s obligations to Purchaser that otherwise would have been revived pursuant
to this subsection shall be deemed satisfied.


 






    	 	23	 



     


    

 


7.14     
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.


 


7.15      
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, and such knowledge as would reasonably be expected
to come to the attention of such officers in the performance of their respective duties. Unless specified to the contrary herein,
all references herein to an exercise of discretion or judgment by the Purchaser, to the making of a determination or designation
by the Purchaser, to the application of the Purchaser’s discretion or opinion, to the granting or withholding of the Purchaser’s
consent or approval, to the consideration of whether a matter or thing is satisfactory or acceptable to the Purchaser, or otherwise
involving the decision making of the Purchaser, shall be deemed to mean that such Purchaser shall decide using the reasonable discretion
or judgment of a prudent lender.


 


7.16     
Waiver Of Right To Jury Trial. TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, THE PARTIES HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT THAT THEY 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 PURCHASER. THE PARTIES
ACKNOWLEDGE THAT THEY HAVE BEEN REPRESENTED IN THE SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL
COUNSEL SELECTED OF THEIR OWN FREE WILL. THE PARTIES FURTHER ACKNOWLEDGE THAT (I) THEY HAVE READ AND UNDERSTAND THE MEANING AND
RAMIFICATIONS OF THIS WAIVER, (II) THIS WAIVER HAS BEEN REVIEWED BY THE PARTIES AND THEIR COUNSEL AND IS A MATERIAL INDUCEMENT
FOR ENTRY INTO THIS AGREEMENT AND (III) THIS WAIVER SHALL BE EFFECTIVE AS TO EACH OF SUCH TRANSACTION DOCUMENTS AS IF FULLY INCORPORATED
THEREIN.


 


7.17      
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.


 


7.18     
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]


 






    	 	24	 



     


    







 


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:
	 	 	 
	 	DELMAR BANCORP
	 	 	 
	 	By:	/s/ Lloyd B. Harrison, III
	 	Name:	Lloyd B. Harrison, III
	 	Title: 	Chief Executive Officer



 


[Company Signature
Page to Subordinated Note Purchase Agreement]


 






    	 	 	 



     


    

 





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:	 
	 	 	 
	 	[PURCHASER’S NAME]
	 	 	 
	 	By:	               
	 	Name:	 
	 	Title:	 
	 	 	 
	 	Address of Purchaser:
	 	 	 
	 	[_____]	 
	 	[_____]	 
	 	[_____]	 
	 	 	 
	 	Address for Delivery of Note:
	 	 	 
	 	[_____]	 
	 	[_____]	 
	 	[_____]	 
	 	 	 
	 	Principal Amount of Subordinated Note Purchased:
	 	 	 
	 	$[_____]	 



 


[Purchaser Signature
Page to Subordinated Note Purchase Agreement]


 






    	 	 	 



     


    

 





EXHIBIT A


 


FORM OF SUBORDINATED NOTE


 






    	 	Exhibit A-1	 



     


    

 


EXHIBIT A


 





DELMAR BANCORP


 


6.000% FIXED TO FLOATING
RATE SUBORDINATED NOTE DUE JULY 1, 2030


 


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


 


THE INDEBTEDNESS EVIDENCED BY THIS SUBORDINATED
NOTE IS SUBORDINATED AND JUNIOR IN RIGHT OF PAYMENT TO SENIOR INDEBTEDNESS (AS DEFINED IN SECTION 3 (SUBORDINATION) OF THIS
SUBORDINATED NOTE) OF DELMAR BANCORP, A MARYLAND 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 in the right of payment to the Subordinated Notes, (ii) WITH RESPECT TO 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.


 


THIS SUBORDINATED NOTE WILL BE ISSUED AND
MAY BE TRANSFERRED ONLY IN MINIMUM DENOMINATIONS OF $100,000 AND INTEGRAL MULTIPLES OF $1,000 IN EXCESS THEREOF. ANY ATTEMPTED
TRANSFER OF THIS SUBORDINATED NOTE IN A DENOMINATION OF LESS THAN $100,000 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.


 






    	 	 A-1	 



     


    

 


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


 






    	 	 A-2	 



     


    







 


	 	No. [__________]	CUSIP Accredited Investors: 247035 AB4 / US247035AB45 
	 	 	CUSIP QIBs: 247035 AA6 / US247035AA61



 


DELMAR
BANCORP


 


6.000% FIXED TO FLOATING
RATE SUBORDINATED NOTE DUE JULY 1, 2030


 


1.          
Subordinated Notes. This subordinated note is one of an issue of notes of Delmar Bancorp, a Maryland corporation
(the “Company”), designated as the “6.000% Fixed to Floating Rate Subordinated Notes due July 1, 2030”
(the “Subordinated Notes”) issued pursuant to that Subordinated Note Purchase Agreement, dated as of the date
upon which this Subordinated Note was originally issued (the “Issue Date”), between the Company and the one
or more purchasers of the Subordinated Notes identified in the signature pages thereto (the “Purchase Agreement”).


 


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 July 1, 2030 (the “Maturity Date”)
and to pay interest thereon (i) from and including the original issue date of the Subordinated Notes to but excluding July 1, 2025
or the earlier redemption date contemplated by Section 4 (Redemption) of this Subordinated Note (the “Fixed Rate
Period”), at the rate of 6.000% per annum, computed on the basis of a 360-day year consisting of twelve 30-day months
and payable semi-annually in arrears on January 1 and July 1 of each year (each payment date, a “Fixed Interest Payment
Date”), beginning January 1, 2021, and (ii) from and including July 1, 2025 to but excluding the Maturity Date or earlier
redemption date contemplated by Section 4 (Redemption) of this Subordinated Note (the “Floating Rate Period”),
at the rate per annum, reset quarterly, equal to the Floating Interest Rate (as defined below) determined on the Floating Interest
Determination Date (as defined below) of the applicable interest period plus 590 basis points, computed on the basis of a 360-day
year and the actual number of days elapsed and payable quarterly in arrears (each quarterly period, a “Floating Interest
Period”) on January 1, April 1, July 1, and October 1 of each year (each payment date, a “Floating Interest
Payment Date”). Dollar amounts resulting from this calculation shall be rounded to the nearest cent, with one-half cent
being rounded up. The term “Floating Interest Determination Date” means the date upon which the Floating Interest
Rate is determined by the Calculation Agent (as defined below) pursuant to the Three-Month Term SOFR Conventions (as defined below).


 


(a)         
An “Interest Payment Date” is either a Fixed Interest Payment Date or a Floating Interest Payment Date,
as applicable.


 


(b)         
The “Floating Interest Rate” means:


 


(i)          
initially Three-Month Term SOFR (as defined below).


 


(ii)         
Notwithstanding the foregoing clause (i) of this Section 2(b):


 


(1)              
If the Calculation Agent, reasonably determines in good faith prior to the relevant Floating Interest Determination Date
that a Benchmark Transition Event and its related Benchmark Replacement Date (each of such terms as defined below) have occurred
with respect to Three-Month Term SOFR, then the Company shall promptly provide notice of such determination to the Noteholders
(as defined below) and Section 2(c) (Effect of Benchmark Transition Event) will thereafter apply to all determinations,
calculations and quotations made or obtained for the purposes of calculating the Floating Interest Rate payable on the Subordinated
Notes during a relevant Floating Interest Period.


 






    	 	 A-3	 



     


    

 


(2)              
However, if the Calculation Agent reasonably determines in good faith that a Benchmark Transition Event and its related
Benchmark Replacement Date have occurred with respect to Three-Month Term SOFR, but for any reason the Benchmark Replacement has
not been determined as of the relevant Floating Interest Determination Date, the Floating Interest Rate for the applicable Floating
Interest Period will be equal to the Floating Interest Rate on the last Floating Interest Determination Date for the Subordinated
Notes, as determined by the Calculation Agent.


 


(iii)       
If the then-current Benchmark is Three-Month Term SOFR and any of the foregoing provisions concerning the calculation of
the interest rate and the payment of interest during the Floating Rate Period are inconsistent with any of the Three-Month Term
SOFR Conventions determined by the Company, then the relevant Three-Month Term SOFR Conventions will apply.


 


(c)         
Effect of Benchmark Transition Event.


 


(i)         
If the Calculation Agent reasonably determines in good faith that a Benchmark Transition Event and its related Benchmark
Replacement Date have occurred prior to the Reference Time (as defined below) in respect of any determination of the Benchmark
(as defined below) on any date, the Benchmark Replacement will replace the then-current Benchmark for all purposes relating to
the Subordinated Notes during the relevant Floating Interest Period in respect of such determination on such date and all determinations
on all subsequent dates.


 


(ii)        
In connection with the implementation of a Benchmark Replacement, the Company will have the right to make Benchmark Replacement
Conforming Changes from time to time, and such changes shall become effective without consent from the relevant Noteholders or
any other party.


 


(iii)       
Any determination, decision or election that may be made by the Company or by the Calculation Agent pursuant to the benchmark
transition provisions set forth herein, including any determination with respect to a tenor, rate or adjustment or of the occurrence
or non-occurrence of an event, circumstance or date, and any decision to take or refrain from taking any action or any selection:


 


(1)              
will be conclusive and binding absent manifest error;


 


(2)              
if made by the Company, will be made in the Company’s sole discretion;


 


(3)              
if made by the Calculation Agent, will be made after consultation with the Company, and the Calculation Agent will not make
any such determination, decision or election to which the Company reasonably objects; and


 






    	 	 A-4	 



     


    

 


(4)         
notwithstanding anything to the contrary in this Subordinated Note or the Purchase Agreement, shall become effective without
consent from the relevant Noteholders or any other party.


 


(iv)       
For the avoidance of doubt, after a Benchmark Transition Event and its related Benchmark Replacement Date have occurred,
interest payable on this Subordinated Note for the Floating Rate Period will be an annual rate equal to the sum of the applicable
Benchmark Replacement and the spread specified on the face hereof.


 


(v)         
As used in this Subordinated Note, the following terms have the meanings as set forth below:


 


(1)         
“Benchmark” means, initially, Three-Month Term SOFR; provided that if a Benchmark Transition Event and
its related Benchmark Replacement Date have occurred with respect to Three-Month Term SOFR or the then-current Benchmark, then
 “Benchmark” means the applicable Benchmark Replacement.


 


(2)          “Benchmark
Replacement” means the Interpolated Benchmark with respect to the then-current Benchmark; provided that if (a) the Calculation
Agent cannot determine the Interpolated Benchmark as of the Benchmark Replacement Date or (b) the then-current Benchmark is Three-Month
Term SOFR and a Benchmark Transition Event and its related Benchmark Replacement Date have occurred with respect to Three-Month
Term SOFR (in which event no Interpolated Benchmark with respect to Three-Month Term SOFR shall be determined), then “Benchmark
Replacement” means the first alternative set forth in the order below that can be determined by the Calculation Agent,
as of the Benchmark Replacement Date:


 


a.                 
The sum of (i) Compounded SOFR and (ii) the Benchmark Replacement Adjustment;


 


b.                 
the sum of: (i) the alternate rate of interest that has been selected or recommended by the Relevant Governmental Body
as the replacement for the then-current Benchmark for the applicable Corresponding Tenor and (ii) the Benchmark Replacement
Adjustment;


 


c.                 
the sum of: (i) the ISDA Fallback Rate and (ii) the Benchmark Replacement Adjustment;


 


d.                 
the sum of: (i) the alternate rate of interest that has been selected by the Company as the replacement for the then-current
Benchmark for the applicable Corresponding Tenor giving due consideration to any industry-accepted rate of interest as a replacement
for the then-current Benchmark for U.S. dollar denominated floating rate notes at such time and (ii) the Benchmark Replacement
Adjustment.


 


(3)          “Benchmark Replacement Adjustment” means the first alternative set forth in the order below that can
be determined by the Calculation Agent, as of the Benchmark Replacement Date:


 


a.                  
the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative
value or zero) that has been selected or recommended by the Relevant Governmental Body for the applicable Unadjusted Benchmark
Replacement;


 






    	 	 A-5	 



     


    

 


b.                 
if the applicable Unadjusted Benchmark Replacement is equivalent to the ISDA Fallback Rate, then the ISDA Fallback Adjustment;


 


c.                  
the spread adjustment (which may be a positive or negative value or zero) that has been selected by the Company giving due
consideration to any industry-accepted spread adjustment, or method for calculating or determining such spread adjustment, for
the replacement of the then-current Benchmark with the applicable Unadjusted Benchmark Replacement for U.S. dollar denominated
floating rate notes at such time.


 


(4)        
“Benchmark Replacement Conforming Changes” means, with respect to any Benchmark Replacement, any technical,
administrative or operational changes (including changes to the definition of “Floating Interest Period,” timing
and frequency of determining rates with respect to each Floating Interest Period and making payments of interest, rounding of amounts
or tenors and other administrative matters) that the Company reasonably decides in good faith may be appropriate to reflect the
adoption of such Benchmark Replacement in a manner substantially consistent with market practice (or, if the Company reasonably
decides in good faith that adoption of any portion of such market practice is not administratively feasible or if the Company reasonably
determines in good faith that no market practice for use of the Benchmark Replacement exists, in such other manner as the Company
determines in good faith is reasonably necessary).


 


(5)        
“Benchmark Replacement Date” means the earliest to occur of the following events with respect to the
then-current Benchmark:


 


a.                  
in the case of clause (a) of the definition of “Benchmark Transition Event,” the relevant Reference
Time in respect of any determination;


 


b.                 
in the case of clause (b) or (c) of the definition of “Benchmark Transition Event,”
the later of (i) the date of the public statement or publication of information referenced therein and (ii) the date
on which the administrator of the Benchmark permanently or indefinitely ceases to provide the Benchmark; or


 


c.                  
in the case of clause (d) of the definition of “Benchmark Transition Event,” the date of such
public statement or publication of information referenced therein.


 


For the avoidance of
doubt, if the event giving rise to the Benchmark Replacement Date occurs on the same day as, but earlier than, the Reference Time
in respect of any determination, the Benchmark Replacement Date will be deemed to have occurred prior to the Reference Time for
purposes of such determination.


 






    	 	 A-6	 



     


    

 


(6)         
“Benchmark Transition Event” means the occurrence of one or more of the following events with respect
to the then-current Benchmark:


 


a.                 
if the Benchmark is Three-Month Term SOFR, (i) the Relevant Governmental Body has not selected or recommended a forward-looking
term rate for a tenor of three months based on SOFR, (ii) the development of a forward-looking term rate for a tenor of three months
based on SOFR that has been recommended or selected by the Relevant Governmental Body is not complete or (iii) the Company reasonably
determines in good faith that the use of a forward-looking rate for a tenor of three months based on SOFR is not administratively
feasible;


 


b.                 
a public statement or publication of information by or on behalf of the administrator of the Benchmark announcing that such
administrator has ceased or will cease to provide the Benchmark, permanently or indefinitely, provided that, at the time of such
statement or publication, there is no successor administrator that will continue to provide the Benchmark;


 


c.                  
a public statement or publication of information by the regulatory supervisor for the administrator of the Benchmark, the
central bank for the currency of the Benchmark, an insolvency official with jurisdiction over the administrator for the Benchmark,
a resolution authority with jurisdiction over the administrator for the Benchmark or a court or an entity with similar insolvency
or resolution authority over the administrator for the Benchmark, which states that the administrator of the Benchmark has ceased
or will cease to provide the Benchmark permanently or indefinitely, provided that, at the time of such statement or publication,
there is no successor administrator that will continue to provide the Benchmark; or


 


d.                 
a public statement or publication of information by the regulatory supervisor for the administrator of the Benchmark announcing
that the Benchmark is no longer representative.


 


(7)         
“Calculation Agent” means such bank or other entity as may be appointed by the Company to act as Calculation
Agent for the Subordinated Notes during the Floating Rate Period, which entity may, but need not, be the Company or an Affiliate
(as defined below) of the Company.


 


(8)         
“Compounded SOFR” means the compounded average of SOFRs for the applicable Corresponding Tenor, with
the rate, or methodology for this rate, and conventions for this rate being established by the Company or its designee in accordance
with:


 


a.                  
the rate, or methodology for this rate, and conventions for this rate selected or recommended by the Relevant Governmental
Body for determining compounded SOFR; provided that:


 


b.                 
if, and to the extent that, the Company or its designee reasonably determines in good faith that Compounded SOFR cannot
be determined in accordance with clause (a) above, then the rate, or methodology for this rate, and conventions for
this rate that have been selected by the Company or its designee giving due consideration to any industry-accepted market practice
for U.S. dollar denominated floating rate notes at such time.


 


For the avoidance of
doubt, the calculation of Compounded SOFR will exclude the Benchmark Replacement Adjustment.


 






    	 	 A-7	 



     


    

 


(9)         
“Corresponding Tenor” with respect to a Benchmark Replacement means a tenor (including overnight) having
approximately the same length (disregarding Business Day adjustment) as the applicable tenor for the then-current Benchmark.


 


(10)        
“FRBNY” means the Federal Reserve Bank of New York.


 


(11)        
“FRBNY’s Website” means the website of the FRBNY at http://www.newyorkfed.org, or any successor
source.


 


(12)        
“Interpolated Benchmark” with respect to the Benchmark means the rate determined for the Corresponding
Tenor by interpolating on a linear basis between: (1) the Benchmark for the longest period (for which the Benchmark is available)
that is shorter than the Corresponding Tenor and (2) the Benchmark for the shortest period (for which the Benchmark is available)
that is longer than the Corresponding Tenor.


 


(13)        
“ISDA” means the International Swaps and Derivatives Association, Inc. or any successor thereto.


 


(14)        
 “ISDA Definitions” means the 2006 ISDA Definitions published by the ISDA or any successor thereto, as
amended or supplemented from time to time, or any successor definitional booklet for interest rate derivatives published from time
to time.


 


(15)        
“ISDA Fallback Adjustment” means the spread adjustment (which may be a positive or negative value or
zero) that would apply for derivatives transactions referencing the ISDA Definitions to be determined upon the occurrence of an
index cessation event with respect to the Benchmark for the applicable tenor.


 


(16)       
“ISDA Fallback Rate” means the rate that would apply for derivatives transactions referencing the ISDA
Definitions to be effective upon the occurrence of an index cessation date with respect to the Benchmark for the applicable tenor
excluding the applicable ISDA Fallback Adjustment.


 


(17)        
“Reference Time” with respect to any determination of a Benchmark means (1) if the Benchmark is Three-Month
Term SOFR, the time determined by the Calculation Agent after giving effect to the Three-Month Term SOFR Conventions, and (2) if
the Benchmark is not Three-Month Term SOFR, the time determined by the Calculation Agent after giving effect to the Benchmark Replacement
Conforming Changes.


 


(18)        
“Relevant Governmental Body” means the Board of Governors of the Federal Reserve System (the “Federal
Reserve”) and/or the FRBNY, or a committee officially endorsed or convened by the Federal Reserve and/or the FRBNY or
any successor thereto.


 


(19)        
“SOFR” means the daily Secured Overnight Financing Rate provided by the FRBNY, as the administrator of
the benchmark (or a successor administrator), on the FRBNY’s Website.


 






    	 	 A-8	 



     


    

 


(20)        
“Term SOFR” means the forward-looking term rate for the Corresponding Tenor based on SOFR that has been
selected or recommended by the Relevant Governmental Body.


 


(21)        
“Term SOFR Administrator” means any entity designated by the Relevant Governmental Body as the administrator
of Term SOFR (or a successor administrator).


 


(22)        
“Three-Month Term SOFR” means the rate for Term SOFR for a tenor of three months that is published by
the Term SOFR Administrator at the Reference Time for any Floating Interest Period, as determined by the Calculation Agent after
giving effect to the Three-Month Term SOFR Conventions; provided, however, that in the event Three-Month
Term SOFR calculated as described in the foregoing clause is less than zero, Three-Month Term SOFR shall be deemed to be zero.


 


(23)        
“Three-Month Term SOFR Conventions” means any determination, decision or election with respect to any
technical, administrative or operational matter (including with respect to the manner and timing of the publication of Three-Month
Term SOFR, or changes to the definition of “Floating Interest Period”, timing and frequency of determining Three-Month
Term SOFR with respect to each Floating Interest Period and making payments of interest, rounding of amounts or tenors, and other
administrative matters) that the Company reasonably decides in good faith may be appropriate to reflect the use of Three-Month
Term SOFR as the Benchmark in a manner substantially consistent with market practice (or, if the Company reasonably decides in
good faith that adoption of any portion of such market practice is not administratively feasible or if the Company reasonably determines
in good faith that no market practice for the use of Three-Month Term SOFR exists, in such other manner as the Company determines
in good faith is reasonably necessary).


 


(24)        
“Unadjusted Benchmark Replacement” means the Benchmark Replacement excluding the Benchmark Replacement
Adjustment.


 


(d)         
In the event that any Fixed Interest Payment Date during the Fixed Rate Period falls on a day that is not a Business Day
(as defined below), the interest payment due on that date shall be postponed to the next day that is a Business Day and no additional
interest shall accrue as a result of that postponement. In the event that any Floating Interest Payment Date during the Floating
Rate Period falls on a day that is not a Business Day (as defined below), the interest payment due on that date shall be postponed
to the next day that is a Business Day and interest shall accrue to but excluding the date interest is paid. However, if the postponement
would cause the day to fall in the next calendar month during the Floating Interest Period, the Floating Interest Payment Date
shall instead be brought forward to the immediately preceding Business Day. The term “Business Day” means any
day other than a Saturday or Sunday or any other day on which banking institutions in the State of Maryland are permitted or required
by law or executive order to be closed.


 






    	 	 A-9	 



     


    

 


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 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; (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; (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 refundings 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 or any of its subsidiaries or Affiliates. 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. The term “Person” as used in this Subordinated Note 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 or any other entity or organization. The term “control” (including
the terms “controlling,” “controlled by,” and “under common control with”)
means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person,
whether through the ownership of voting securities, by contract, or otherwise.


 


(b)          
In the event of any 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
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) with respect to any indebtedness between the Company and any of its subsidiaries or Affiliates or (iii) on account
of any capital stock.


 






    	 	 A-10	 



     


    

 


(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 (Subordination) 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. Each Noteholder, by its
acceptance hereof, further acknowledges and agrees that the foregoing subordination provisions are, and are intended to be, an
inducement and a consideration for each holder of any Senior Indebtedness, whether such Senior Indebtedness was created or acquired
before or after the issuance of the Subordinated Notes, to acquire and continue to hold, or to continue to hold, such Senior Indebtedness,
and such holder of Senior Indebtedness shall be deemed conclusively to have relied on such subordination provisions in acquiring
and continuing to hold or in continuing to hold such Senior Indebtedness.


 


		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 July 1, 2025, 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, subject to Section 4(f) (Regulatory Approvals)
hereof, in whole or in part at any time, upon giving not less than ten (10) business 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 one hundred twenty (120) days after receipt of such opinion there will be, a material
risk that this Subordinated Note does not qualify as “Tier 2” Capital (as defined by the Federal Reserve) (or its then
equivalent) as a result of a change in law or regulation, or interpretation or application thereof, 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 one hundred twenty (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 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.


 






    	 	 A-11	 



     


    

 


(b)          
Redemption on or after Fifth Anniversary. On or after July 1, 2025, subject to the provisions of Section 4(f)
(Regulatory Approvals) hereof, this Subordinated Note shall be redeemable at the option of and by the Company, in whole or in part
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 Noteholder 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 Noteholder.


 


(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 Noteholder to receive the amount payable on
such redemption, without interest. For purposes of clarity, any redemption made pursuant to the terms of this Subordinated Note
shall be made on a pro rata basis, and, to the extent applicable and for purposes of a redemption processed through The Depository
Trust Company (DTC), on a “Pro Rata Pass-Through Distribution of Principal” basis, among all of the Subordinated Notes
outstanding at the time thereof.


 


(f)           
Regulatory Approvals. Any redemption pursuant to this Section 4 shall be subject to receipt of any and all
required federal and state regulatory approvals or non-objections, including, but not limited to, the consent of the Federal Reserve.
In the case of any redemption of this Subordinated Note pursuant to paragraphs (b) or (c) of this Section 4, the Company
will give the Noteholder notice of redemption, which notice shall indicate the aggregate principal amount of Subordinated Notes
to be redeemed, not less than thirty (30) nor more than forty-five (45) calendar days prior to the redemption date.


 






    	 	 A-12	 



     


    

 


(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.


 


Notwithstanding any cure periods provided
for below, the Company shall promptly (but in no event later than five (5) Business Days following the Company becoming aware of
the occurrence of such event) notify the Noteholders in writing when the Company becomes aware of the happening of any event described
below. Regardless of whether the Company has provided the forgoing notice, 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 sixty (60) consecutive calendar days;


 


(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
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 fifteen (15) calendar 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 the 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 thirty (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 (Notices), to the Company by a Noteholder;


 






    	 	 A-13	 



     


    

 


(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 $1,000,000, 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; or


 


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


 


Unless the principal amount of this Subordinated
Note already shall have become due and payable, if an Event of Default set forth in Section 5(a) or Section 5(b)
above shall have occurred and be continuing, then the principal amount of this Subordinated Note, and accrued and unpaid interest,
if any, on the Subordinated Note will become and be immediately due and payable without any declaration or other act on the part
of the 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 treats 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 Maturity Date 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 forty-five (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 13 (Registration of Transfer, Security Register)
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 Noteholder, pay to the Noteholder 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 per annum 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 Noteholder 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.


 






    	 	 A-14	 



     


    

 


Upon the occurrence of an Event of Default,
until such Event of Default is cured by the Company or waived by the Noteholders in accordance with Section 17 (Waiver and
Consent) hereof, except as may be required by any federal or state bank regulatory agency, 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 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 (including,
without limitation, any repurchases or acquisitions in connection with the forfeiture of any stock award, cashless or net exercise
of any option, or acceptance of common stock in lieu of an award recipient’s tax obligations under any equity award) (the
foregoing clauses (i) through (v) are collectively referred to as the “Permitted Dividends”). The limitations
imposed by the provisions of this Section 6 shall apply whether or not the Noteholder has notified the Company of an Event of Default.


 


7.           
Affirmative Covenants of the Company; Compliance Certificate.


 


(a)         
Notice of Certain Events. To the extent permitted by applicable statute, rule or regulation, the Company shall provide
written notice to the Noteholder, at its addresses shown on the Security Register, 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 total risk-based capital ratio, Tier 1 risk-based capital ratio, common equity Tier 1 risk-based capital ratio or leverage
ratio of either The Bank of Delmarva or Virginia Partners Bank, the Company’s subsidiary banks (each individually, a “Bank”
and collectively, the “Banks”), becomes less than ten percent (10.0%), eight percent (8.0%), six and one-half
percent (6.50%) or five percent (5.0%), respectively, as of the end of any calendar quarter (provided that, to the extent either
Bank has opted into the community bank leverage ratio framework, no notice need be given until such Bank ceases to be a qualifying
community banking organization, as defined under 12 CFR § 3.12);


 


(ii)         
The Company, or any of the Company’s subsidiaries, or any officer of the Company (in such capacity), becomes subject
to any formal, written regulatory enforcement action (as defined by the applicable state or federal bank regulatory authority);


 


(iii)        
The ratio of non-performing assets to total assets of either Bank, as calculated by the Company in the ordinary course of
business and consistent with past practices, becomes greater than five percent (5.0%), as of the end of any calendar quarter;


 






    	 	 A-15	 



     


    

 


(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 Company;


 


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


 


(vi)        
The Company issues any additional Indebtedness.


 


(b)        
Payment of Principal and Interest. The Company covenants and agrees for the benefit of the Noteholder 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 Salisbury, Maryland 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 State of Maryland. 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 of the Company
and the Banks; and (iii) the rights (constituent governing documents and statutory), licenses and franchises of the Company and
each subsidiary of the Company and the Banks; provided, however, that the Company will not be required to preserve the existence
(corporate or other) of any of its subsidiaries (other than the Banks) or any such right, license or franchise of the Company or
any of its subsidiaries (other than the Banks) 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; provided further that the Company may in its discretion
merge the Banks into one another.


 


(e)         
Maintenance of Properties. The Company will, and will cause each subsidiary of the Company and the Banks 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 7(e) 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 reasonable 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 and that the discontinuance thereof will not
be disadvantageous in any material respect to the Noteholders.


 






    	 	 A-16	 



     


    

 


(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(c) (Maintenance of Office), Section 7(d) (Corporate Existence), or Section 7(e)
(Maintenance of Properties) above, with respect to this Subordinated Note if before the time for such compliance the Noteholders
of at least a majority in aggregate 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)         
Tier 2 Capital. If all or any portion of the Subordinated Notes ceases to qualify for inclusion 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, 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(g) (Tier 2 Capital) 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) (Redemption Prior to Fifth Anniversary) or
Section 4(b) (Redemption on or after Fifth Anniversary).


 


(h)         
Compliance with Laws. The Company and each subsidiary of the Company and the Banks 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 have a Material Adverse Effect (as such term is defined in the Purchase Agreement).


 


(i)          
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, however, that
no such taxes, assessments or other governmental charges need be paid if they are being contested in good faith by the Company.


 


(j)          
Financial Statements; Access to Records.


 


(i)           
Not later than forty-five (45) days following the end of each quarterly period for which the Company has not submitted a
Consolidated Financial Statements for Holding Companies Reporting Form FR Y-9C to the Federal Reserve, upon request, the Company
shall provide the Noteholder with a copy of the Company’s unaudited consolidated balance sheet and statement of income (loss)
for and as of the end of such immediately preceding fiscal quarter, prepared in accordance with past practice. Quarterly financial
statements, if required herein, shall be unaudited and need not comply with GAAP.


 






    	 	 A-17	 



     


    

 


(ii)          
Not later than one hundred twenty (120) days from the end of each fiscal year, upon request the Company shall provide the
Noteholder with copies of the Company’s audited financial statements consisting of the consolidated balance sheet of the
Company as of the fiscal year end and the related statements of income (loss) and retained earnings, stockholders’ equity
and cash flows for the fiscal year then ended. Such financial statements shall be prepared in accordance with GAAP applied on a
consistent basis throughout the period involved.


 


(k)         
 Company Statement as to Compliance. The Company will deliver to Noteholder, within one hundred twenty (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, (i) 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; and (ii) any
event or events have occurred that in the reasonable judgment of the management of the Company would have a Material Adverse Effect.


 


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 Permitted Dividends.


 


(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;
provided, however, that no express assumption shall be required by any successor by merger to the Company to the extent
such legal successor assumes the Company’s obligations hereunder by operation of law; 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 occurred and be continuing.


 






    	 	 A-18	 



     


    

 


(c)          
Continuance of Business. Other than in connection with a transaction which complies with Section 8(b), the Company
shall not take any action, omit to take any action or enter into any other transaction that would have the effect of: (i) the Company
ceasing to be a bank holding company under the Bank Holding Company Act of 1956, as amended (provided, however, for the
avoidance of doubt, nothing herein is intended to prohibit Company from electing to be a financial holding company or, following
such an election, exiting financial holding company status), (ii) the liquidation or dissolution of the Company or either Bank,
(iii) either Bank ceasing to be an “insured depository institution” under Section 3(c)(2) of the Federal Deposit Insurance
Act, as amended or (iv) the Company owning less than one hundred percent (100%) of the capital stock of either Bank; provided,
however, for the avoidance of doubt, nothing in this Section shall prohibit the Company from restructuring either or both
of the Banks to conduct business under a single banking charter.


 


9.           
Denominations. The Subordinated Notes are issuable only in registered form without interest coupons in minimum
denominations of $100,000 and integral multiples of $1,000 in excess thereof.


 


10.         
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.


 


11.         
Payment Procedures. Payment of the principal and interest payable on the Maturity Date will be made by check,
by wire transfer or by Automated Clearing House (ACH) transfer in immediately available funds to a bank account in the United States
designated by the registered Noteholder if such Noteholder shall have previously provided wire or ACH instructions to the Company,
upon presentation and surrender of this Subordinated Note at the Payment Office (as defined in Section 21 (Notices) below)
or at such other place or places as the Company shall designate by notice to the registered 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 Maturity Date) shall be made on
each Interest Payment Date by wire transfer in immediately available funds or check mailed to the registered Noteholder, as such
Person’s address appears on the Security Register. 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 (15th) calendar
day prior to the applicable Interest Payment Date, without regard to whether such date is a Business Day, except that interest
not paid on the Interest Payment Date, if any, will be paid to the holder 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 not less than ten (10) calendar days prior to such Special Record Date. 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 costs and expenses of the Noteholder, if any, for which the Company is liable under this Subordinated Note;
then against interest due hereunder; and then against principal due hereunder. The Noteholder 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 receives
payments in excess of the Noteholder’s pro rata share of the Company’s payments to the holders of all of the Subordinated
Notes, then the Noteholder shall hold in trust all such excess payments for the benefit of the other Noteholders and shall pay
such amounts held in trust to such other holders upon demand by such Noteholders.


 






    	 	 A-19	 



     


    

 


12.         
Form of Payment. Payments of principal of 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.


 


13.         
Registration of Transfer, Security Register. Except as otherwise provided herein, or in the Purchase Agreement
between Noteholder and the Company, and subject to limitations on transfer under applicable state and federal securities laws,
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 Noteholder in person, or by its attorney duly authorized in writing, at the Payment
Office or the offices of the Registrar. The Company or its agent (the “Registrar”) 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 or the Registrar
shall execute and deliver in exchange therefor a Subordinated Note or Subordinated Notes of like aggregate principal amount, each
in a minimum denomination of $100,000 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 Noteholder or its attorney duly authorized in writing,
with such tax identification number (including, without limitation, an appropriate and properly executed Internal Revenue Service
Form W-9 or appropriate type of Form W-8) 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 (15th) day immediately preceding the Maturity Date or (ii) the due
delivery of notice of redemption.


 


14.         
Successors and Assigns. This Subordinated Note shall be binding upon the Company and inure to the benefit of
the Noteholder and its respective successors and permitted assigns. The Noteholder may assign all, or any part of, or any interest
in, the Noteholder’s rights and benefits hereunder only to the extent and in the manner permitted by the terms of this Subordinated
Note, the Purchase Agreement, and under applicable securities laws and regulations. To the extent of any such assignment, such
assignee shall have the same rights and benefits against the Company and shall agree to be bound by and to comply with the terms
and conditions of the Purchase Agreement as it would have had if it were the Noteholder hereunder.


 


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-20	 



     


    





 


16.             
Ownership. Prior to due presentment of this Subordinated Note for registration of transfer, the Company may treat
the holder 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)               
This Subordinated Note may be amended or waived pursuant to, and in accordance with, the provisions set forth herein
and as set forth in Section 7.3 of the Purchase Agreement. Any such consent or waiver given by the Noteholder shall be conclusive
and binding upon such Noteholder and upon all subsequent holders 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 Noteholder 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 that shall be a Noteholder or that 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 Noteholders holding more than fifty percent (50%) in aggregate principal amount (excluding
any Subordinated Notes held by the Company or any of its Affiliates) of the Subordinated Notes at the time outstanding; provided,
however, that without the consent of each Noteholder of an affected Subordinated Note, no such amendment or waiver may:
(i) reduce the principal amount of the Subordinated Note; (ii) reduce the rate of or change the time for payment of interest on
any Subordinated Note; (iii) extend the maturity of any Subordinated Note; (iv) change the currency in which payment of the obligations
of the 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 4(c) (Partial
Redemption), Section 5 (Events of Default; Acceleration), Section 6 (Failure to Make Payments), Section 15 (Priority), or Section
17 (Waiver and Consent) of the Subordinated Notes that adversely affects the rights of any Noteholder; or (vii) disproportionately
and adversely affect the rights of any of the holders of the then outstanding Subordinated Notes. Notwithstanding the foregoing,
the Company may amend or supplement the Subordinated Notes without the consent of the Noteholders 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 the Company in any
case shall, in itself, entitle the Company to any other or further notice or demand in similar or other circumstances or constitute
a waiver of the rights of the Noteholders to any other or further action in any circumstances without notice or demand. No consent
or waiver, express or implied, by the Noteholders to or of any breach or default by the 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 the 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 the Company.


 






    A-21


     


    

 


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. No delay or omission of the Noteholder 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 any acquiescence therein.


 


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 of the Company.


 


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 Noteholder 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:


 


Delmar Bancorp


2245 Northwood
Drive


Salisbury,
Maryland 21801


Attention:
John W. Breda, President and Chief Operating Officer


 


and


 


Virginia Partners Bank


410 William Street


Fredericksburg, Virginia
22401


Attention: Lloyd B.
Harrison, III, Chief Executive Officer


 






    A-22


     


    

 


with a copy to


 


Troutman Sanders
LLP


The Troutman
Sanders Building


1001 Haxall
Point, Richmond, Virginia 23219


Attention:
Jacob A. Lutz, III, Esq.


 


or to such other address
as the Company may notify to the Noteholder (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, 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.


 


23.             
Governing Law; Interpretation. THIS SUBORDINATED NOTE WILL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF
THE STATE OF NORTH CAROLINA AND WILL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NORTH CAROLINA
WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES THEREOF. IT IS INTENDED THAT THIS SUBORDINATED NOTE SHALL 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-23


     


    

 


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


	 	 
	 	DELMAR BANCORP
	 	  
	 	By:	 
	 	Name:	Lloyd B. Harrison
	 	Title:	Chief Executive Officer



 


	 	 
	ATTEST:	 
	 	 
	Name:	John W. Breda	 
	Title:	President & Chief Operating Officer	 




  


[Signature Page to Subordinated Note]


 



    


     


    




 


ASSIGNMENT FORM


 


[Capitalized terms used herein but not defined
have the meanings assigned in the Subordinated Note]


 


To assign this Subordinated Note of Delmar
Bancorp, 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)


  


	 	FOR EXECUTION BY AN ENTITY:	 
	 	 	 
	 	Entity name:	 	 
	 	 	 
	 	By:	 	 
	 	Name:	 	 
	 	Title:	 	 
	 	 	 






	 	 
	 	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 promulgated under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”)).


 


The undersigned certifies
that he/she/it [is / is not] (circle one) an Affiliate of the Company and that, to its knowledge, the proposed transferee
[is / is not] (circle one) 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:


 






    A-25


     


    

 


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);
	□	(7)	transferred to an “accredited investor” (as defined in Rule 501(a)(4) under the Securities Act), not referred to in item (6) that has been provided with the information designated under Section 4(d) of the Securities Act; or
	□	(8)	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), (7) or (8) 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:	 
	 	(Sign
    exactly as your name appears on the face of this Subordinated Note)



 


	 	 
	 	FOR EXECUTION BY AN ENTITY:
	 	 
	 	Entity name:	 	 



	 	 
	 	By:	 	 



	 	Name:	 	 
	 	Title:	 	 



 


	 	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 Exchange Act Rule 17Ad-l5).


 






    A-26


     


    

 


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:	 
	 	 	 
	 	 	Print name:	 
	 	 	 






	 	 	 
	 	 	FOR EXECUTION BY AN ENTITY:
	 	 	 
	 	 	Entity
    name:	 
	 	 	 



	 	 	 
	 	 	By:	 



	 	 	Name:	 
	 	 	Title:	 






	 	 	 
	 	 	Tax Identification
    No.:	 




  



    A-27


     


    



 


EXHIBIT B


 


FORM OF OPINION OF COUNSEL


 


1.                    
The Company (i) has been incorporated and is validly existing and in good standing under the laws of its state of incorporation,
(ii) has all requisite power and authority to carry on its business and to own, lease and operate its properties and assets as
described in Company’s Reports and (iii) is duly qualified or licensed to do business and is in good standing as a foreign
corporation authorized to do business in each jurisdiction in which the nature of such businesses or the ownership or leasing of
such properties requires such qualification, except where the failure to be so qualified would not, individually or in the aggregate,
have a Material Adverse Effect.


 


2.                    
The Company is a registered bank holding company under the Bank Holding Company Act of 1956, as amended.


 


3.                    
Company has all necessary power and authority to execute, deliver and perform its obligations under the Transaction Documents
and to consummate the transactions contemplated by the Transaction Documents.


 


4.                    
The Agreement has been duly and validly authorized, executed and delivered by Company. The Agreement constitutes a legal,
valid and binding obligation of Company, enforceable against Company in accordance with its terms.


 


5.                    
The Subordinated Note has been duly and validly authorized by Company and when issued and delivered to and paid for by Purchaser
in accordance with the terms of the Agreement, will have been duly executed, issued and delivered and will constitute a legal,
valid and binding obligation of Company, enforceable against Company in accordance with its terms.


 


6.                    
Assuming the accuracy of the representations and warranties of, and compliance with the covenants and agreements by, Purchaser
set forth in the Agreement, the Subordinated Note will be issued in a transaction exempt from the registration requirements of
the Securities Act.


 


7.                    
The issuance and sale of the Subordinated Note by the Company, the compliance by the Company with all of the provisions
of the Agreement and the consummation of the transactions therein contemplated do not and will not, whether with or without the
giving of notice or passage of time or both, (A) result in any violation of the provisions of the Company Articles or the Bylaws
or (B) result in any violation of any law, statute or any order, rule or regulation of any federal, state, local or foreign court,
arbitrator, regulatory authority or governmental agency or body having jurisdiction over the Company or any of its properties,
except with respect to subsection (B) for such violation as would not reasonably be expected, individually or in the aggregate,
to have a Material Adverse Effect.


  


* The opinion letter of counsel will
be subject to customary limitations, qualifications and carveouts.


 






    Exhibit B-1


     


    

 


Schedule 4.1.1.2 – Direct and
Indirect Subsidiaries 


 


	Name of Entity	 	Jurisdiction of Organization	 	 	Ownership Interest	 
	Delmar Bancorp	 	  Maryland	 	 	 	 
	The Bank of Delmarva	 	 	Delaware	 	 	 	100.00	%
	(d/b/a in New Jersey as Liberty Bell Bank, a division of The Bank of Delmarva)	 	 	 	 	 	 	 	 
	Delmarva Real Estate Holdings, LLC	 	 	Maryland	 	 	 	100.00	%
	Davie Circle, LLC	 	 	Delaware	 	 	 	100.00	%
	Delmarva BK Holdings, LLC	 	 	Maryland	 	 	 	100.00	%
	FBW, LLC	 	 	Maryland	 	 	 	50.00	%
	Virginia Partners Bank	 	 	Virginia	 	 	 	100.00	%
	(d/b/a in Maryland as Maryland Partners Bank (a division of Virginia Partners Bank))	 	 	 	 	 	 	 	 
	Bear Holdings, Inc.	 	 	Virginia	 	 	 	100.00	%
	410 William Street, LLC	 	 	Virginia	 	 	 	100.00	%
	Johnson Mortgage Company, LLC	 	 	Virginia	 	 	 	51.00	%