Document:

Exhibit

Exhibit 10.62
Guaranty Agreement
This Guaranty Agreement (this “Guaranty”) is made as of the 18th day of August, 2017, by KBS SOR US Properties II LLC, a Delaware limited liability company (“Guarantor”), in favor of Bank of America, N.A., a national banking association, as agent for Lenders as that term is defined below (collectively with its successors or assigns, in such capacity, “Administrative Agent”), and each of the Lenders.
Recitals
Administrative Agent and certain other lenders from time to time (each a “Lender” and collectively, “Lenders”), and KBS SOR II Oakland City Center, LLC, a Delaware limited liability company (“Borrower”), are entering into concurrently herewith that certain Loan Agreement dated as of the date hereof (herein called, as it may hereafter be modified, supplemented, restated, extended, or renewed and in effect from time to time, the “Loan Agreement”), which Loan Agreement sets forth the terms and conditions of a loan (the “Loan”) to Borrower.
A condition precedent to Lenders’ obligation to make the Loan to Borrower is Guarantor’s execution and delivery to Administrative Agent of this Guaranty.
The Loan will be evidenced by those certain Promissory Notes of even date herewith, each made by Borrower and payable to the order of a Lender, in the aggregate original face principal amount of One Hundred Three Million Four Hundred Thousand and No/100ths Dollars ($103,400,000) (such notes, as they may hereafter be renewed, extended, supplemented, increased or modified and in effect from time to time, and all other notes given in substitution therefor, or in modification, renewal, or extension thereof, in whole or in part, are herein called the “Note”).
Any capitalized term used and not defined in this Guaranty shall have the meaning given to such term in the Loan Agreement.  This Guaranty is one of the Loan Documents described in the Loan Agreement.
Agreements
For good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, and in order to induce Lenders to make the Loan to Borrower, Guarantor hereby guarantees to Administrative Agent and the Lenders the prompt and full payment and performance of the indebtedness and obligations described below in this Guaranty (collectively called the “Guaranteed Obligations”), this Guaranty being upon the following terms and conditions:
Section 1.Guaranty of Payment.  
Guarantor hereby unconditionally and irrevocably guarantees to Administrative Agent and Lenders the punctual payment when due, whether by lapse of time, by acceleration of maturity, or otherwise, of (i) upon the occurrence of a Triggering Event (as hereinafter defined), all principal and interest (including interest accruing after maturity and after the commencement of any 

bankruptcy or insolvency proceeding by or against Borrower, whether or not allowed in such proceeding) now or hereafter due and owing, or which Borrower is obligated to pay, pursuant to the terms of any Note, the Loan Agreement, the Deeds of Trust, or any of the other Loan Documents, as the same may from time to time be amended, supplemented, restated or otherwise modified, and (ii) regardless of whether a Triggering Event shall have occurred, one hundred percent (100%) of all amounts owing under the Environmental Agreement by Borrower if (and only if) the Environmental Insurance Policy (as defined in and substantially and materially in the form approved by Administrative Agent pursuant to the Loan Agreement) is not then in place or, if not then in place, does not otherwise cover Borrower for claims relating to environmental matters when and if demand is made by Administrative Agent or any Lender under the Environmental Agreement (i.e., Guarantor shall have no liability under this Guaranty for, and the Indebtedness (as hereinafter defined) shall not include, amounts owing under the Environmental Agreement so long as the Environmental Insurance Policy is in place or otherwise covers the liability of Borrower for environmental matters at the time demand is made by Administrative Agent or a Lender to Borrower under the Environmental Agreement, whether or not the claim relating to any such environmental matter is a covered claim under such Environmental Insurance Policy) (the amounts described in clauses (i) and (ii) above shall be referred to herein, collectively, as the “Indebtedness”).  The Indebtedness shall also include all costs and expenses incurred by Administrative Agent in seeking to enforce Administrative Agent’s rights and remedies under this Guaranty, including court costs, costs of alternative dispute resolution and reasonable attorneys’ fees, whether or not suit is filed or other proceedings are initiated thereon.  This Guaranty covers, subject to the other terms and conditions of this Guaranty, the Indebtedness presently outstanding and the Indebtedness arising subsequent to the date hereof, including all amounts advanced by Administrative Agent or Lenders in stages or installments.  The guaranty of Guarantor as set forth in this Section 1 is a continuing guaranty of payment and not a guaranty of collection.
Section 2.    Guaranty of Specific Obligations.  
Guarantor also hereby unconditionally and irrevocably guarantees payment of, and agrees to protect, defend, indemnify and hold harmless Administrative Agent and each Lender for, from and against, one hundred percent (100%) of any deficiency, loss or damage suffered by Administrative Agent or any Lender because of: 
(a)    The intentional misapplication or misappropriation by Borrower of any funds derived from the Property, including the misapplication or misappropriation by Borrower of rent, security deposits, insurance proceeds, condemnation awards, or other income arising with respect to any Properties; 
(b)    Borrower’s intentional commission of physical waste with respect to the Property; 
(c)    The fraud or intentional misrepresentation by Borrower or Guarantor made in or in connection with the Loan Documents or the Loan;
(d)    Any voluntary transfer of the Property in violation of the terms of the Loan Documents; or

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(e)    Borrower’s voluntary filing of any proceeding for relief under any federal or state bankruptcy, insolvency or receivership laws or any assignment for the benefit of creditors made by Borrower, or the involuntary filing against Borrower by any member of Borrower, Guarantor or any Affiliate thereof of any proceeding for relief under any federal or state bankruptcy, insolvency or receivership laws, and such proceeding is not dismissed within ninety (90) days of the filing thereof (a “Triggering Event”).
Section 3.    Primary Liability of Guarantor.  
(a)    This Guaranty is an absolute, irrevocable and unconditional guaranty of payment and performance, and Guarantor shall be liable for the payment and performance of the Guaranteed Obligations as a primary obligor.  This Guaranty shall be effective as a waiver of, and Guarantor hereby expressly waives, any right to which Guarantor may otherwise have been entitled, whether existing under statute, at Law or in equity, to require Administrative Agent or any Lender to take prior recourse or proceedings against any collateral, security or Person.  It shall not be necessary for Administrative Agent or any Lender, in order to enforce such payment or performance by Guarantor, first to institute suit or pursue or exhaust any rights or remedies against Borrower or other Person liable on such indebtedness or for such performance, or to enforce any rights against any security given to secure such indebtedness or performance, or to join Borrower or any other Person liable for the payment or performance of the Guaranteed Obligations or any part thereof in any action to enforce this Guaranty, or to resort to any other means of obtaining payment or performance of the Guaranteed Obligations; provided, however, that nothing herein contained shall prevent Administrative Agent or any Lender from suing on any Note or foreclosing the Deeds of Trust or exercising any other right under the Loan Documents.  
(b)    Suit may be brought or demand may be made against Borrower or against any or all parties who have signed this Guaranty or any other guaranty covering all or any part of the Guaranteed Obligations, or against any one or more of them, separately or together, without impairing the rights of Administrative Agent or any Lender against any party hereto. 
Section 4.    Certain Agreements and Waivers by Guarantor.
(a)    Guarantor agrees that neither the rights or remedies of Administrative Agent and Lenders nor Guarantor’s obligations under the terms of this Guaranty shall be released, diminished, impaired, reduced or affected by any one or more of the following events, actions, facts, or circumstances, Guarantor waives any rights, claims or defenses arising from any such events, actions, facts, or circumstances, and the liability of Guarantor under this Guaranty shall be absolute, unconditional and irrevocable irrespective of:
(i)    any limitation on the liability of, or recourse against, any other Person in any Loan Document or arising under any Law;
(ii)    any claim or defense that this Guaranty was made without consideration or is not supported by adequate consideration or that the obligations of Guarantor hereunder exceed or are more burdensome than those of Borrower under the other Loan Documents;

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(iii)    the taking or accepting of any other security or guaranty for, or right of recourse with respect to, any or all of the Guaranteed Obligations;
(iv)    the operation of any statutes of limitation or other Laws regarding the limitation of actions, all of which are hereby waived as a defense to any action or proceeding brought by Administrative Agent or any Lender against Guarantor, to the fullest extent permitted by Law;
(v)    any homestead exemption or any other exemption under applicable Law;
(vi)    any release, surrender, abandonment, exchange, alteration, sale or other disposition, subordination, deterioration, waste, failure to protect or preserve, impairment, or loss of, or any failure to create or perfect any lien or security interest with respect to, or any other dealings with, any collateral or security at any time existing or purported, believed or expected to exist in connection with any or all of the Guaranteed Obligations, or any impairment of Guarantor’s recourse against any Person or collateral;
(vii)    whether express or by operation of Law, any partial release of the liability of Guarantor hereunder (except to the extent expressly so released) or any complete or partial release of Borrower or any other Person liable, directly or indirectly, for the payment or performance of any or all of the Guaranteed Obligations;
(viii)    the death, insolvency, bankruptcy, disability, dissolution, liquidation, termination, receivership, reorganization, merger, consolidation, change of form, structure or ownership, sale of all assets, or lack of corporate, partnership or other power of Borrower or any other Person at any time liable for the payment or performance of any or all of the Guaranteed Obligations;
(ix)    either with or without notice to or consent of Guarantor, any renewal, extension, modification, supplement, subordination or rearrangement of the terms of any or all of the Guaranteed Obligations and/or any of the Loan Documents, including material alterations of the terms of payment (including changes in maturity date(s) and interest rate(s)) or performance (including changes with respect to the construction of the Improvements) or any other terms thereof, or any waiver, termination, or release of, or consent to departure from, any of the Loan Documents or any other guaranty of any or all of the Guaranteed Obligations, or any adjustment, indulgence, forbearance, or compromise that may be granted from time to time by Administrative Agent or Lenders to Borrower or any other Person at any time liable for the payment or performance of any or all of the Guaranteed Obligations; 
(x)    any neglect, lack of diligence, delay, omission, failure, or refusal of Administrative Agent or any Lender to take or prosecute (or in taking or prosecuting) any action for the collection or enforcement of any of the Guaranteed Obligations, or to foreclose or take or prosecute any action to foreclose (or in foreclosing or taking or prosecuting any action to foreclose) upon any security therefor, or to exercise (or in exercising) any other right or power with respect to any security therefor, or to take or prosecute (or in taking or 

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prosecuting) any action in connection with any Loan Document, or any failure to sell or otherwise dispose of in a commercially reasonable manner any collateral securing any or all of the Guaranteed Obligations;
(xi)    any failure of Administrative Agent or any Lender to notify Guarantor of any creation, renewal, extension, rearrangement, modification, supplement, subordination, or assignment of the Guaranteed Obligations or any part thereof, or of any Loan Document, or of any release of or change in any security, or of the occurrence or existence of any Default or Potential Default, or of any other action taken or refrained from being taken by Administrative Agent or any Lender against Borrower or any security or other recourse, or of any new agreement between or among Administrative Agent, any Lender and Borrower, it being understood that Administrative Agent shall not be required to give Guarantor any notice of any kind under any circumstances with respect to or in connection with the Guaranteed Obligations, any and all rights to notice Guarantor may have otherwise had being hereby waived by Guarantor, and Guarantor shall be responsible for obtaining for itself information regarding Borrower and any collateral, including any changes in the business or financial condition of Borrower or any collateral, and Guarantor acknowledges and agrees that neither Administrative Agent nor any Lender shall have any duty to notify Guarantor of any information which Administrative Agent or such Lender may have concerning Borrower or any collateral;
(xii)    the existence of any claim, counterclaim, set‐off or other right that Guarantor may at any time have against Borrower, Administrative Agent, any Lender, or any other Person, whether or not arising in connection with this Guaranty, any Note, the Loan Agreement or any other Loan Document;
(xiii)    the unenforceability of all or any part of the Guaranteed Obligations against Borrower, whether because the Guaranteed Obligations exceed the amount permitted by Law or violate any usury law, or because the Persons creating the Guaranteed Obligations acted in excess of their authority, or because of a lack of validity or enforceability of or defect or deficiency in any of the Loan Documents, or because Borrower has any valid defense, claim or offset with respect thereto, or because Borrower’s obligation ceases to exist by operation of Law, or because of any other reason or circumstance, it being agreed that Guarantor shall remain liable hereon regardless of whether Borrower or any other Person be found not liable on the Guaranteed Obligations, or any part thereof, for any reason (and regardless of any joinder of Borrower or any other party in any action to obtain payment or performance of any or all of the Guaranteed Obligations);
(xiv)    any order, ruling or plan of reorganization emanating from proceedings under Title 11 of the United States Code with respect to Borrower or any other Person, including any extension, reduction, composition, or other alteration of the Guaranteed Obligations, whether or not consented to by Administrative Agent or any Lender, or any action taken or omitted by Administrative Agent or any Lender in any such proceedings, including any election to have Administrative Agent’s or such Lender’s claim allowed as being secured, partially secured or unsecured, any extension of credit by 

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Administrative Agent or such Lender in any such proceedings or the taking and holding by Administrative Agent or such Lender of any security for any such extension of credit;
(xv)    any other condition, event, omission, action or inaction that would in the absence of this paragraph result in the release or discharge of the Guarantor from the performance or observance of any obligation, covenant or agreement contained in this Guaranty or any other agreement;
(xvi)    any early termination of any of the Guaranteed Obligations; or
(xvii)    Administrative Agent or any Lender’s enforcement or forbearance from enforcement of the Guaranteed Obligations on a net or gross basis.
(b)    In the event any payment by Borrower or any other Person to Administrative Agent or any Lender is held to constitute a preference, fraudulent transfer or other voidable payment under any bankruptcy, insolvency or similar Law, or if for any other reason Administrative Agent or any Lender is required to refund such payment or pay the amount thereof to any other party, such payment by any Borrower or any other party to Administrative Agent or such Lender shall not constitute a release of Guarantor from any liability hereunder, and this Guaranty shall continue to be effective or shall be reinstated (notwithstanding any prior release, surrender or discharge by Administrative Agent of this Guaranty or of Guarantor), as the case may be, with respect to, and this Guaranty shall apply to, any and all amounts so refunded by Administrative Agent or any Lender or paid by Administrative Agent or any Lender to another Person (which amounts shall constitute part of the Guaranteed Obligations), and any interest paid by Administrative Agent or any Lender and any attorneys’ fees, costs and expenses paid or incurred by Administrative Agent or any Lender in connection with any such event.  
(c)    It is the intent of Guarantor, Administrative Agent and each Lender that the obligations and liabilities of Guarantor hereunder are absolute, irrevocable and unconditional under any and all circumstances and that until the Guaranteed Obligations are fully and finally paid and performed, and not subject to refund or disgorgement, the obligations and liabilities of Guarantor hereunder shall not be discharged or released, in whole or in part, by any act or occurrence that might, but for the provisions of this Guaranty, be deemed a legal or equitable discharge or release of a guarantor.
(d)    Guarantor’s obligations shall not be affected, impaired, lessened or released by loans, credits or other financial accommodations now existing or hereafter advanced by Administrative Agent or any Lender to Borrower in excess of the Guaranteed Obligations.  All payments, repayments and prepayments of the Loan, whether voluntary or involuntary, received by Administrative Agent or any Lender from Borrower, any other Person or any other source (other than from Guarantor pursuant to a demand by Administrative Agent hereunder), and any amounts realized from any collateral for the Loan, shall be deemed to be applied first to any portion of the Loan which is not covered by this Guaranty, and last to the Guaranteed Obligations, and this Guaranty shall bind Guarantor to the extent of any Guaranteed Obligations that may remain owing to Administrative Agent or any Lender.  Administrative Agent shall have the right to apply any sums paid by Guarantor to any portion of the Loan in Administrative Agent’s sole and absolute discretion.

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(e)    If acceleration of the time for payment of any amount payable by Borrower under any Note, the Loan Agreement, or any other Loan Document is stayed or delayed by any Law or tribunal, all such amounts shall nonetheless be payable by Guarantor on demand by Administrative Agent.
(f)    This Guaranty may not be changed orally and no obligation of Guarantor can be released or waived by Administrative Agent except by a signed writing by an authorized officer of Administrative Agent.
(g)    Guarantor further waives: (i) any defense to the recovery by Administrative Agent or any Lender against Guarantor of any deficiency or otherwise to the enforcement of this Guaranty or any security for this Guaranty based upon Administrative Agent’s or any Lender’s election of any remedy against Guarantor or Borrower, including the defense to enforcement of this Guaranty (the so-called “Gradsky” defense) which, absent this waiver, Guarantor would have by virtue of an election by Administrative Agent or any Lender to conduct a non-judicial foreclosure sale (also known as a “trustee’s sale”) of any real property security for the Indebtedness, it being understood by Guarantor that any such non-judicial foreclosure sale will destroy, by operation of California Code of Civil Procedure (“CCP”) Section 580d, all rights of any party to a deficiency judgment against Borrower and, as a consequence, will destroy all rights that Guarantor would otherwise have (including the right of subrogation, the right of reimbursement, and the right of contribution) to proceed against Borrower; (ii) any defense or benefits that may be derived from CCP Sections 580a, 580b, 580d or 726, or comparable provisions of the Laws of any other jurisdiction and all other anti-deficiency and one form of action defenses under the Laws of California and any other jurisdiction; and (iii) any right to a fair value hearing under CCP Section 580a, or any other similar Law, to determine the size of any deficiency owing (for which Guarantor would be liable hereunder) following a non-judicial foreclosure sale.  Nothing in this subsection (g) shall operate to change, waive or affect the provisions of Section 19 hereof.
(h)    Without limiting any other provision of this Guaranty, Guarantor waives all rights and defenses that Guarantor may have because the Guaranteed Obligations are secured by real property.  This means, among other things:
(i)    That Administrative Agent or Lenders may collect from Guarantor without first foreclosing on any real or personal property collateral pledged by Borrower; and
(ii)    If Administrative Agent forecloses on any real property collateral pledged by Borrower: (A) the amount of the Guaranteed Obligations may be reduced only by the price for which that collateral is sold at the foreclosure sale, even if the collateral is worth more than the sale price; and (B) Administrative Agent and Lenders may collect from Guarantor even if Administrative Agent, by foreclosing on the real property collateral, has destroyed any right Guarantor may have to collect from Borrower.

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This is an unconditional and irrevocable waiver of any rights and defenses that Guarantor may have because the Guaranteed Obligations are secured by real property.  These rights and defenses include, but are not limited to, any rights or defenses based upon CCP Sections 580a, 580b, 580d, or 726.
(i)    Guarantor waives all rights and defenses arising out of an election of remedies by Administrative Agent and Lenders, even though that election of remedies, such as a nonjudicial foreclosure with respect to security for the Guaranteed Obligations, has destroyed Guarantor’s rights of subrogation and reimbursement against Borrower by operation of CCP Section 580d or otherwise.
(j)    Guarantor waives Guarantor’s rights of subrogation and reimbursement, including any rights or defenses Guarantor may have by reason of protection afforded to Borrower with respect to the Guaranteed Obligations pursuant to the anti-deficiency or other Laws of California limiting or discharging Borrower’s obligations, including CCP Sections 580a, 580b, 580d or 726.
(k)    Guarantor waives notice of acceptance of this Guaranty, any rights, defenses and benefits that may be derived from Sections 2787 to 2855, inclusive, of the California Civil Code or comparable provisions of the Laws of any other jurisdiction, and all other suretyship defenses Guarantor would otherwise have under the Laws of California or any other jurisdiction.
(l)    No provision or waiver in this Guaranty shall be construed as limiting the generality of any other provision or waiver contained in this Guaranty.  All of the waivers contained herein are irrevocable and unconditional and are intentionally and freely made by Guarantor.
Section 5.    Subordination.
If, for any reason whatsoever, Borrower is now or hereafter becomes indebted to Guarantor:
(a)    such indebtedness and all interest thereon and all liens, security interests and rights now or hereafter existing with respect to property of Borrower securing such indebtedness shall, at all times, be subordinate in all respects to the Guaranteed Obligations and to all liens, security interests and rights now or hereafter existing to secure the Guaranteed Obligations;
(b)    Guarantor shall not be entitled to enforce or receive payment, directly or indirectly, of any such indebtedness of Borrower to Guarantor until the Guaranteed Obligations have been fully and finally paid and performed; provided, however, that so long as no Default shall have occurred and be continuing, Guarantor shall not be prohibited from receiving such (i) reasonable management fees or reasonable salary from Borrower as Administrative Agent may find acceptable from time to time in its sole and absolute discretion, and (ii) distributions from Borrower in an amount equal to any income taxes imposed on Guarantor which are attributable to Borrower’s income from the Property;
(c)    Guarantor hereby assigns and grants to Administrative Agent a security interest in all such indebtedness and security therefor, if any, of Borrower to Guarantor now existing or hereafter arising, including any dividends and payments pursuant to debtor relief or insolvency proceedings referred to below.  In the event of receivership, bankruptcy, reorganization, arrangement or other debtor relief or insolvency proceedings involving Borrower as debtor, Administrative Agent shall 

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have the right to prove its claim in any such proceeding so as to establish its rights hereunder and shall have the right to receive directly from the receiver, trustee or other custodian (whether or not a Default or an Event of Default shall have occurred or be continuing under any of the Loan Documents), dividends and payments that are payable upon any obligation of Borrower to Guarantor now existing or hereafter arising, and to have all benefits of any security therefor, until the Guaranteed Obligations have been fully and finally paid and performed.  If, notwithstanding the foregoing provisions, Guarantor should receive any payment, claim or distribution that is prohibited as provided above in this Section 5, Guarantor shall pay the same to Administrative Agent immediately, Guarantor hereby agreeing that it shall receive the payment, claim or distribution in trust for Administrative Agent and shall have absolutely no dominion over the same except to pay it immediately to Administrative Agent; and
(d)    Guarantor shall promptly upon written request of Administrative Agent from time to time execute such documents and perform such acts as Administrative Agent may reasonably require to evidence and perfect its interest and to permit or facilitate exercise of its rights under this Section 5, including execution and delivery of proofs of claim, further assignments and security agreements, and delivery to Administrative Agent of any promissory notes or other instruments evidencing indebtedness of Borrower to Guarantor.  All promissory notes, accounts receivable ledgers or other evidences, now or hereafter held by Guarantor, of obligations of such Borrower to Guarantor shall contain a specific written notice thereon that the indebtedness evidenced thereby is subordinated under and is subject to the terms of this Guaranty.
Section 6.    Other Liability of Guarantor or Borrower.
If Guarantor is or becomes liable, by endorsement or otherwise, for any indebtedness owing by Borrower to Administrative Agent or any Lender other than under this Guaranty, such liability shall not be in any manner impaired or affected hereby, and the rights of Administrative Agent and Lenders hereunder shall be cumulative of any and all other rights that Administrative Agent or any Lender may have against Guarantor.  If Borrower is or becomes indebted to Administrative Agent or any Lender for any indebtedness other than or in excess of the Guaranteed Obligations, any payment received or recovery realized upon such other indebtedness of Borrower to Administrative Agent or such Lender may be applied to such other indebtedness.  This Guaranty is independent of (and shall not be limited by) any other guaranty now existing or hereafter given.  Further, Guarantor’s liability under this Guaranty is in addition to any and all other liability Guarantor may have in any other capacity, including, if applicable, its capacity as a general partner.
Section 7.    Lender Assigns; Disclosure of Information.
This Guaranty is for the benefit of Administrative Agent and Lenders and the permitted successors and assigns of each of them.  Administrative Agent and any Lender may, at any time, sell, transfer or assign all or a portion of its interest in the Guaranteed Obligations and the Loan Documents, on and subject to the terms and conditions of the Loan Agreement.  In the event of any such permitted sale, transfer or assignment of the Guaranteed Obligations or any part thereof, the rights and benefits under this Guaranty, to the extent applicable to the Guaranteed Obligations so sold, transferred or assigned, may be transferred with such obligations.  Subject to the provisions of Section 9.5 of the Loan Agreement, Guarantor waives notice of any sale, transfer or assignment 

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of the Guaranteed Obligations and/or this Guaranty or any part thereof, and agrees that failure to give notice of any such sale, transfer or assignment will not affect the liability of Guarantor hereunder.  Subject to the terms and conditions of the Loan Agreement, including, without limitation, Section 9.6 thereof, Administrative Agent and each Lender are hereby authorized to disseminate any information they now have or hereafter obtain pertaining to the Guaranteed Obligations or this Guaranty, including credit or other information on Borrower, Guarantor and/or any party liable, directly or indirectly, for any part of the Guaranteed Obligations, to any actual or prospective assignee or participant with respect to the Guaranteed Obligations, to any of the affiliates of Administrative Agent or such Lender, including Merrill Lynch, Pierce, Fenner & Smith Incorporated, to any regulatory body having jurisdiction over Administrative Agent or such Lender, and to any other parties as necessary or appropriate in the reasonable judgment of Administrative Agent or such Lender.
Section 8.    Binding Effect; Joint and Several Liability.
This Guaranty is binding not only on Guarantor, but also on Guarantor’s heirs, personal representatives, successors and assigns.  Upon the death of Guarantor, if Guarantor is a natural person, this Guaranty shall continue against Guarantor’s estate as to all of the Guaranteed Obligations, including that portion incurred or arising after the death of Guarantor and shall be provable in full against Guarantor’s estate, whether or not the Guaranteed Obligations are then due and payable.  If this Guaranty is signed by more than one Person, then all of the obligations of Guarantor arising hereunder shall be jointly and severally binding on each of the undersigned, and their respective heirs, personal representatives, successors and assigns, and the term “Guarantor” shall mean all of such Persons and each of them individually. 
Section 9.    Governing Law.
The validity, enforcement, and interpretation of this Guaranty, shall for all purposes be governed by and construed in accordance with the laws of the State of California and applicable United States federal law, and is intended to be performed in accordance with, and only to the extent permitted by, such laws.  All obligations of Guarantor hereunder are payable and performable at the place or places where the Guaranteed Obligations are payable and performable.
Section 10.    Invalidity of Certain Provisions.
If any provision of this Guaranty or the application thereof to any Person or circumstance shall, for any reason and to any extent, be declared to be invalid or unenforceable, neither the remaining provisions of this Guaranty nor the application of such provision to any other Person or circumstance shall be affected thereby, and the remaining provisions of this Guaranty, or the applicability of such provision to other Persons or circumstances, as applicable, shall remain in effect and be enforceable to the maximum extent permitted by applicable Law.

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Section 11.    Costs and Expenses of Enforcement.
Guarantor shall pay on demand all attorneys’ fees and all other costs and expenses incurred by Administrative Agent in the enforcement of or preservation of Administrative Agent or Lenders’ rights under this Guaranty including all attorneys’ fees and expenses, investigation costs, and all court costs, whether or not suit is filed hereon, or whether at maturity or by acceleration, or whether before or after maturity, or whether in connection with bankruptcy, insolvency or appeal.  
Section 12.    No Usury.
It is not the intention of Administrative Agent, any Lender or Guarantor to obligate Guarantor to pay interest in excess of that lawfully permitted to be paid by Guarantor under applicable Law.  Should it be determined that any portion of the Guaranteed Obligations or any other amount payable by Guarantor under this Guaranty constitutes interest in excess of the maximum amount of interest that Guarantor, in Guarantor’s capacity as guarantor, may lawfully be required to pay under applicable Law, the obligation of Guarantor to pay such interest shall automatically be limited to the payment thereof in the maximum amount so permitted under applicable Law.  The provisions of this Section shall override and control all other provisions of this Guaranty and of any other agreement between Guarantor, Administrative Agent and Lenders.
Section 13.    Representations, Warranties, and Covenants of Guarantor.
Guarantor hereby represents, warrants, and covenants that: (a) Guarantor has a financial interest (indirectly) in Borrower and will derive a material and substantial benefit, directly or indirectly, from the making of the Loan to Borrower and from the making of this Guaranty by Guarantor; (b) this Guaranty is duly authorized and valid, and is binding upon and enforceable against Guarantor; (c) Guarantor is not, and the execution, delivery and performance by Guarantor of this Guaranty will not cause Guarantor to be, in violation of or in default with respect to any law or in default (or at risk of acceleration of indebtedness) under any agreement or restriction by which Guarantor is bound or affected; (d) unless Guarantor is a natural person, Guarantor is duly organized, validly existing, and in good standing under the laws of the state of its organization and has full power and authority to enter into and perform this Guaranty; (e) there is no material litigation pending with respect to which process has been served or, to the knowledge of Guarantor, threatened by or before any tribunal against or affecting Guarantor which, if adversely determined, would have a material adverse effect on Guarantor’s ability to perform its obligations hereunder; (f) all financial statements and information heretofore furnished to Administrative Agent by Guarantor do, and all financial statements and information hereafter furnished to Administrative Agent by Guarantor will, fully and accurately present the condition (financial or otherwise) of Guarantor as of their dates and the results of Guarantor’s operations for the periods therein specified, and, since the date of the most recent financial statements of Guarantor heretofore furnished to Administrative Agent, no material adverse change has occurred in the financial condition of Guarantor, nor, except as heretofore disclosed in writing to Administrative Agent, has Guarantor incurred any material liability, direct or indirect, fixed or contingent; (g) after giving effect to this Guaranty, Guarantor is solvent, is not engaged or about to engage in business or a transaction for which the property of Guarantor is an unreasonably small capital, and does not intend to incur or believe that it will incur debts that will be beyond its ability to pay as such debts mature; and (h) Guarantor has read and 

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fully understands the provisions contained in the Note, the Loan Agreement, the Deeds of Trust, the Environmental Agreement and the other Loan Documents.  Guarantor’s representations, warranties and covenants are a material inducement to Administrative Agent to enter into the other Loan Documents and any Swap Contract, and shall survive the execution hereof and any bankruptcy, foreclosure, transfer of security or other event affecting Borrower, Guarantor, any other party, or any security for all or any part of the Guaranteed Obligations.  
Section 14.    Notices.  
All notices, requests, consents, demands and other communications required or which any party desires to give hereunder or under any other Loan Document shall be in writing and, unless otherwise specifically provided in such other Loan Document, shall be deemed sufficiently given or furnished if delivered by personal delivery, by nationally recognized overnight courier service, or by certified United States mail, postage prepaid, addressed to the party to whom directed at the addresses specified at the end of this Guaranty (unless changed by similar notice in writing given by the particular party whose address is to be changed) or by facsimile.  Any such notice or communication shall be deemed to have been given either at the time of personal delivery or, in the case of courier or mail, as of the date of first attempted delivery at the address and in the manner provided herein, or, in the case of facsimile, upon receipt; provided that service of a notice required by any applicable statute shall be considered complete when the requirements of that statute are met.  Notwithstanding the foregoing, no notice of change of address shall be effective except upon actual receipt.  This Section shall not be construed in any way to affect or impair any waiver of notice or demand provided in this Guaranty or in any other Loan Document or to require giving of notice or demand to or upon any Person in any situation or for any reason.  
Section 15.    Cumulative Rights.
All of the rights and remedies of Administrative Agent and Lenders under this Guaranty and the other Loan Documents are cumulative of each other and of any and all other rights at law or in equity, and the exercise by Administrative Agent or any Lender of any one or more of such rights and remedies shall not preclude the simultaneous or later exercise by Administrative Agent or any Lender of any or all such other rights and remedies.  No single or partial exercise of any right or remedy shall exhaust it or preclude any other or further exercise thereof, and every right and remedy may be exercised at any time and from time to time.  No failure by Administrative Agent or Lenders to exercise, nor delay in exercising, any right or remedy shall operate as a waiver of such right or remedy or as a waiver of any Default.  No notice to or demand on Guarantor in any case shall of itself entitle Guarantor to any other or further notice or demand in similar or other circumstances.  No provision of this Guaranty or any right or remedy of Administrative Agent or any Lender with respect hereto, or any default or breach, can be waived, nor can this Guaranty or Guarantor be released or discharged in any way or to any extent, except specifically in each case by a writing intended for that purpose (and which refers specifically to this Guaranty) executed and delivered by Administrative Agent to Guarantor.

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Section 16.    Term of Guaranty.
This Guaranty shall continue in effect until all the Guaranteed Obligations and all of the obligations of Guarantor to Administrative Agent and Lenders under this Guaranty are fully and finally paid, performed and discharged and are not subject to any bankruptcy preference period or any other disgorgement.
Notwithstanding anything stated to the contrary in this Guaranty, in the event that Administrative Agent or its nominee or any third party takes record title to any portion of the Property following the exercise of Administrative Agent’s rights and remedies under the Loan Documents, Guarantor shall nonetheless have the right to terminate its continuing liability under clause (ii) of Section 1 of this Guaranty with respect to Borrower’s obligations under the Environmental Agreement (and only as to such obligations) with respect to such portion of the Property, upon fulfillment of each of the following conditions to the reasonable satisfaction of Administrative Agent with respect to such portion of the Property:
(a)    Guarantor or Borrower shall have delivered to Administrative Agent a new environmental insurance policy which insures Lender (“New Environmental Insurance Policy”) and which:
(i)    is comparable to the existing Environmental Insurance Policy approved by Lender except the policy limits shall be at least Five Million and No/100ths Dollars ($5,000,000) for each occurrence and in the aggregate with a retention of no greater than One Hundred Thousand and No/100ths Dollars ($100,000); and
(ii)    is issued by the same company as the existing Environmental Insurance Policy or a replacement company with an AM Best’s Rating equivalent or better than A‐ (Excellent)/IX; and
(iii)    has a term of three (3) years from the date of issuance; and
(b)    Administrative Agent shall have received evidence that all premiums for three (3) years coverage under such New Environmental Insurance Policy have been prepaid in full.
Such termination of Guarantor’s liability under clause (ii) of Section 1 of this Guaranty with respect to Borrower’s obligations under the Environmental Agreement, shall become effective only upon the delivery by Administrative Agent to Guarantor of a specific written acknowledgment of the satisfaction of all of the foregoing conditions and the termination of such obligations, which acknowledgement Administrative Agent agrees to provide unless any of the conditions to such termination have not been satisfied.  This Section 16 shall under no circumstance be interpreted to terminate or limit any of Guarantor’s liabilities in Section 1 of this Guaranty except to the extent such liabilities relate to Borrower’s obligations under the Environmental Agreement.
Notwithstanding anything stated to the contrary in this Guaranty, in the event that Borrower successfully exercises its right to terminate its continuing liability under the Environmental Agreement pursuant to and in accordance with the terms and conditions of Section 7 thereof, Guarantor’s liability under clause (ii) of Section 1 of this Guaranty with respect to its guaranty of 

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Borrower’s obligations under the Environmental Agreement (and only as to such obligations) shall automatically terminate.
Section 17.    Financial Statements.
Guarantor agrees to provide to Administrative Agent, as and when required, the Financial Statements and other financial information required to be delivered to Administrative Agent with respect to Guarantor pursuant to the terms of the Loan Agreement and the other Loan Documents, in the form and detail required by the Loan Documents.  Guarantor also agrees to provide to Administrative Agent such other and further financial information with respect to Guarantor as Administrative Agent shall from time to time reasonably request.  Acceptance of any Financial Statement by Administrative Agent, whether or not in the form prescribed herein, shall be relied upon by Administrative Agent in the administration, enforcement, and extension of the Guaranteed Obligations.
Section 18.    Subrogation.
Guarantor shall not have any right of subrogation under any of the Loan Documents or any right to participate in any security for the Guaranteed Obligations or any right to reimbursement, exoneration, contribution, indemnification or any similar rights, until the Guaranteed Obligations have been fully and finally paid, performed and discharged in accordance with Section 16 above, and Guarantor hereby waives all of such rights.  
Section 19.    Time of Essence.
Time shall be of the essence in this Guaranty with respect to all of Guarantor’s obligations hereunder.
Section 20.    Entire Agreement; Counterparts; Construction.
This Guaranty embodies the entire agreement between Administrative Agent and Lenders and Guarantor with respect to the guaranty by Guarantor of the Guaranteed Obligations.  This Guaranty supersedes all prior agreements and understandings, if any, with respect to the guaranty by Guarantor of the Guaranteed Obligations.  This Guaranty shall be effective upon execution by Guarantor and delivery to Administrative Agent.  This Guaranty may not be modified, amended or superseded except in a writing signed by Administrative Agent and Guarantor referencing this Guaranty by its date and specifically identifying the portions hereof that are to be modified, amended or superseded.  This Guaranty has been executed in a number of identical counterparts, each of which shall be deemed an original for all purposes and all of which constitute, collectively, one agreement.  As used herein, the words “include” and “including” shall be interpreted as if followed by the words “without limitation.”
Section 21.    [Intentionally Omitted.]
Section 22.    Forum.

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Guarantor hereby irrevocably submits generally and unconditionally for itself and in respect of its property to the jurisdiction of any state court or any United States federal court sitting in the State specified in the governing law section of this Guaranty and to the jurisdiction of any state court or any United States federal court sitting in the state in which any of the Property is located, over any Dispute.  Guarantor hereby irrevocably waives, to the fullest extent permitted by Law, any objection that Guarantor may now or hereafter have to the laying of venue in any such court and any claim that any such court is an inconvenient forum.  Guarantor hereby agrees and consents that, in addition to any methods of service of process provided for under applicable law, all service of process in any such suit, action or proceeding in any state court or any United States federal court sitting in the state specified in the governing law section of this Guaranty may be made by certified or registered mail, return receipt requested, directed to Guarantor at its address for notice set forth in this Guaranty, or at a subsequent address of which Administrative Agent received actual notice from Guarantor in accordance with the notice section of this Guaranty, and service so made shall be complete five (5) days after the same shall have been so mailed.  Nothing herein shall affect the right of Administrative Agent or any Lender to serve process in any manner permitted by Law or limit the right of Administrative Agent or any Lender to bring proceedings against Guarantor in any other court or jurisdiction.
Section 23.    WAIVER OF JURY TRIAL.  
TO THE EXTENT PERMITTED BY APPLICABLE LAW, GUARANTOR AND ADMINISTRATIVE AGENT AND EACH LENDER WAIVE TRIAL BY JURY IN RESPECT OF ANY DISPUTE (AS DEFINED IN THE LOAN AGREEMENT) AND ANY ACTION ON SUCH DISPUTE.  THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY MADE BY GUARANTOR, ADMINISTRATIVE AGENT AND EACH LENDER, AND GUARANTOR, ADMINISTRATIVE AGENT AND EACH LENDER HEREBY REPRESENT THAT NO REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE BY ANY PERSON OR ENTITY TO INDUCE THIS WAIVER OF TRIAL BY JURY OR TO IN ANY WAY MODIFY OR NULLIFY ITS EFFECT.  GUARANTOR, ADMINISTRATIVE AGENT AND EACH LENDER ARE EACH HEREBY AUTHORIZED TO FILE A COPY OF THIS SECTION IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER OF JURY TRIAL.  GUARANTOR FURTHER REPRESENTS AND WARRANTS THAT IT HAS BEEN REPRESENTED IN THE SIGNING OF THIS GUARANTY AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL, OR HAS HAD THE OPPORTUNITY TO BE REPRESENTED BY INDEPENDENT LEGAL COUNSEL SELECTED OF ITS OWN FREE WILL, AND THAT IT HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL.  
Section 24.    Credit Verification.
Each legal entity and individual obligated on this Guaranty, whether as a Guarantor, a general partner of a Guarantor or in any other capacity, hereby authorizes Administrative Agent and each Lender to check any credit references, verify his/her employment and obtain credit reports from credit reporting agencies of Administrative Agent’s or such Lender’s choice in connection with any 

15

monitoring, collection or future transaction concerning the Loan, including any modification, extension or renewal of the Loan.  Also in connection with any such monitoring, collection or future transaction, Administrative Agent and each Lender is hereby authorized to check credit references, verify employment and obtain a third party credit report for the spouse of any married person obligated on this Guaranty, if such person lives in a community property state.
Section 25.    Limited Recourse Provision.
Administrative Agent and Lenders shall have no recourse against, nor shall there be any personal liability to, the members of Guarantor, or to any shareholders, members, partners, beneficial interest holders or any other entity or person in the ownership (directly or indirectly) of Guarantor with respect to the obligations of Guarantor under this Guaranty.  For purposes of clarification, in no event shall the above language limit, reduce or otherwise affect any Borrower’s liability or obligations under the Loan Documents, Guarantor’s liability or obligations under the Guaranty, or Administrative Agent’s or any Lender’s right to exercise any rights or remedies against any collateral securing the Loan.
Section 26.    Unsecured Obligations.
Notwithstanding anything to the contrary herein or in any of the Loan Documents, the Guaranteed Obligations of Guarantor are not secured by the Deeds of Trust.
[Signatures begin on following page.]

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IN WITNESS WHEREOF, Guarantor has duly executed and delivered this Guaranty under seal as of the date first written above.
	
		
	Address of Guarantor:

KBS SOR US Properties II LLC
c/o KBS Capital Advisors LLC
800 Newport Center Drive, Suite 700
Newport Beach, California 92660
Attn: Bryce Lin, Director of Finance
         and Reporting
Fax Number: (949) 417-6501

With copies to:

KBS SOR US Properties II LLC
c/o KBS Capital Advisors LLC
800 Newport Center Drive, Suite 700
Newport Beach, California 92660
Attn: Todd Smith, Vice President,
         Controller REIT Corporate Accounts
Fax Number: (949) 417-6501

KBS SOR US Properties II LLC
c/o KBS Capital Advisors LLC
11150 Santa Monica Boulevard, Suite 400
Los Angeles, California 90024
Attn:  Michael Potter
Fax Number: (310) 432-2119
	GUARANTOR:

KBS SOR US PROPERTIES II LLC,
a Delaware limited liability company

By:   KBS STRATEGIC OPPORTUNITY LIMITED       PARTNERSHIP II,
   a Delaware limited partnership,
   its sole member

   By:   KBS STRATEGIC OPPORTUNITY          REIT II, INC.,
      a Maryland corporation,
      its sole general partner

      By:    /s/ Jeffrey K. Waldvogel                  
             Jeffrey K. Waldvogel,
            Chief Financial Officer

	 
	 

	Address of Lender:

Bank of America, N.A.
520 Newport Center Drive, Suite 1100
Irvine, California 92660
Attn: Kevin McLain
Fax No.: (949) 794-7422
	 

    

SIGNATURE PAGE TO KBS SOR II OAKLAND CITY CENTER, LLC, GUARANTYExhibit 10.1

 

EMPLOYMENT AGREEMENT

 

THIS AGREEMENT is entered into as
of the date set forth below, by and between Village Bank and Trust Financial Corp., a Virginia corporation (the “Corporation”),
and William G. Foster, Jr. (the “Executive”) and is made effective October 1, 2017.

 

WITNESSETH:

 

WHEREAS, the Corporation desires
to retain the services of the Executive on the terms and conditions set forth herein and, for purpose of effecting the same, the
Board of Directors of the Corporation has approved this Employment Agreement and authorized its execution and delivery on the Corporation’s
behalf to the Executive;

 

WHEREAS, the Executive has significant
experience serving in senior bank management positions, and the Corporation desires to employ the Executive as a key executive
officer of the Corporation whose dedication, availability, advice and counsel to the Corporation is deemed important to the Board
of Directors of the Corporation, the Corporation and its stockholders;

 

WHEREAS, the services of the Executive,
his experience and knowledge of the affairs of the Corporation, and his reputation and contacts in the industry are valuable to
the Corporation;

 

WHEREAS, the Corporation wishes to
attract and retain such well-qualified executives and it is in the best interests of the Corporation and of the Executive to secure
the services of the Executive;

 

WHEREAS, the Corporation considers
the establishment and maintenance of a sound management to be part of its overall corporate strategy and to be essential to protecting
and enhancing the best interests of the Corporation and its stockholders; and

 

WHEREAS, the Corporation desires
to safeguard its proprietary confidential information, retain its employees and protect itself against unfair competition.

 

NOW, THEREFORE, to assure the Corporation
of the Executive’s dedication, the availability of his advice and counsel to the Corporation, and to induce the Executive
to remain and continue in the employ of the Corporation and for other good and valuable consideration, the receipt and adequacy
whereof each party hereby acknowledges, the Corporation and the Executive hereby agree as follows:

 

		1.	EMPLOYMENT: The Corporation agrees to, and does hereby employ, the Executive, and the Executive agrees to, and
does hereby accept such employment, for the period beginning on or before October 1, 2017, and ending on September 30, 2020, which
period of employment may be extended or terminated only upon the terms and conditions hereinafter set forth.

 

     

     

    

 

		2.	TERM, EXTENSIONS OF TERM, AND CONTINUING OBLIGATIONS: This Agreement will be effective on the date set forth
above and will expire on September 30, 2020; provided that on September 30, 2019 and on each September 30th thereafter
(each such September 30th is referred to as the “Renewal Date”), this Agreement will be automatically extended
for an additional twelve (12) month period from such Renewal Date. This Agreement will not, however, be extended if either party
gives written notice of non-renewal (“Nonrenewal Notice”) at least ninety (90) days before the Renewal Date. The parties
intend that the covenants and restrictions in Sections 11 and 18 be enforceable against Executive regardless of the reason that
his employment by the Corporation may terminate and that such covenants and restrictions shall be enforceable against Executive
even if this Agreement expires after a Nonrenewal Notice is given by the Executive. The existence of any claim or cause of action
by the Executive against the Corporation, whether predicated on this Agreement or otherwise, shall not constitute a defense to
the enforcement by the Corporation of the restrictive covenants and confidentiality requirements set forth in Sections 11
and 18 of this Agreement.

 

		3.	EXECUTIVE DUTIES: The Executive agrees that, during the term of his employment under this Agreement and in his
capacity of President and Chief Executive Officer, he will devote his full business time and energy to the business, affairs and
interests of the Corporation and serve it diligently, to the best of his ability and in accordance with general business standards.
The Executive, however, may devote reasonable time and energy to charitable and civic activities that enhance the reputation and
good standing of the Executive and the Corporation in the community. The Executive shall comply with all policies, standards and
regulations of the Corporation now or hereafter promulgated. The services and duties to be performed by the Executive shall be
those appropriate to his office and title as currently and from time to time hereafter specified in the Corporation’s Bylaws
or otherwise specified by the Board of Directors of the Corporation.

 

		4.	COMPENSATION:

 

(a) Base Salary. The Corporation agrees to
pay the Executive, as compensation for all services rendered by him to the Corporation during the period of his employment under
this Agreement, base salary in an annual amount of no less than $300,000, which shall be payable in monthly, semi-monthly or bi-weekly
installments in conformity with Corporation’s payroll practices for salaried employees. Such salary may be increased in the
sole and absolute discretion of the Corporation’s Board of Directors or Compensation Committee thereof duly authorized by
the Board to so act. The Board of Directors shall review the Executive’s base salary at least annually during his employment
and may increase such salary as determined in its discretion.

 

(b) Annual Bonus. The Executive shall be entitled
to an annual performance bonus based on a target of 30% of his annual base salary, provided that the Executive meets the performance
goals established by the Corporation’s Board of Directors or Compensation Committee in its discretion.

 

    	 	2	 

     

    

 

(c) Stock Awards and Incentive Compensation.
The Corporation may make stock awards and provide such other incentive compensation to the Executive in such amounts and at such
time as may be determined by the Corporation’s Board of Directors or Compensation Committee.

 

(d) Supplemental Executive Retirement Benefit.
The Executive will be a participant in the Supplemental Executive Retirement Plan. Under the plan, the Executive will be eligible
to receive a supplemental nonqualified annual cash benefit of $50,000 per year over a twenty (20) year period beginning at his
retirement or as otherwise provided under the plan.

 

(e) Employee Benefits. During the term of employment
under this Agreement, the Executive will be entitled to participate in all employee benefit plans, practices and programs maintained
by the Corporation, as in effect from time to time (collectively, the “Employee Benefit Plans”), on a basis which is
no less favorable than is provided to other similarly situated officers of the Corporation, to the extent consistent with applicable
law and the terms of the applicable Employee Benefit Plans. The Corporation reserves the right to amend or cancel any Employee
Benefit Plan at any time in its sole discretion, subject to the terms of such Employee Benefit Plan and applicable law.

 

(f) Vacation; Paid Time-off. During the term
of employment under this Agreement, the Executive will be entitled to paid vacation on a basis which is no less favorable than
is provided to other similarly-situated officers of the Corporation, which in the Executive’s case will initially consisit
of four (4) weeks of paid vacation. The Executive will also receive other paid time-off in accordance with the Corporation’s
policies as they may exist from time to time.

 

		5.	REIMBURSEMENT OF BUSINESS EXPENSES: During the term of this Agreement, to the extent that such expenditures are
substantiated by the Executive as required by the Internal Revenue Service and policies of the Corporation, the Corporation shall
reimburse the Executive promptly for all expenditures (including business related travel, business entertainment and business meetings)
made in accordance with written rules and policies established from time to time by the Board of Directors of the Corporation in
pursuance and furtherance of the Corporation’s business and good will, provided any permitted expenditures are objectively
determinable and nondiscretionary under such rules and policies. Any reimbursements hereunder shall be made by the end of the calendar
year following the calendar year in which the related expense is incurred, or on such earlier date as provided in the Corporation’s
rules and policies regarding such reimbursements.

 

		6.	ILLNESS: In the event the Executive is unable to perform the essential functions of his job, with or without
reasonable accommodations, for a period of four (4) consecutive months by reason of illness or other physical or mental disability,
the Corporation may terminate this Agreement without further or additional compensation being due the Executive from the Corporation
pursuant to this Agreement, except benefits accrued through the date of such termination under Employee Benefit Plans of the Corporation.
Executive will also be entitled to any long-term disability and other insurance or other benefits then regularly provided by the
Corporation to disabled employees of senior executive status, as well as any other insurance benefits so provided, for which Executive
qualifies. Notwithstanding any other provision in this Agreement, the Corporation will comply with the Americans with Disabilities
Act and Family Medical Leave Act.

 

    	 	3	 

     

    

 

		7.	DEATH: In the event of the Executive’s death during the term of this Agreement, this Agreement shall terminate
as of the end of the month in which the Executive dies. This Section 7 shall not affect the rights of any person under other contracts
between the Executive and the Corporation or under any life insurance policy.

 

		8.	TERMINATION WITHOUT CAUSE/RESIGNATION FOR GOOD
REASON:

 

		(a)	Notwithstanding the provisions of Section 1 hereof, the Board of Directors of the Corporation may terminate the Executive’s
employment under this Agreement at any time by giving not less than thirty (30) days written notice to the Executive. The Executive
may resign for Good Reason (as hereafter defined) at any time by giving not less than thirty (30) days written notice to the Corporation.
It shall not constitute a breach of this Agreement for the Corporation to suspend Executive’s duties and to place the Executive
on a paid leave during the thirty (30) day notice period. If the Corporation terminates the Executive’s employment without
Cause (as hereafter defined) or the Executive resigns for Good Reason, then in either event the Executive shall receive the following,
provided that the Executive signs a release and waiver of claims reasonably satisfactory to the Corporation and such
release and waiver has become effective:

 

		(i)	The Executive shall be paid two times the Executive’s Final Compensation. For purposes of this Agreement, “Final
Compensation” means (a) the annual base salary in effect on the date of termination (or the annual base salary in effect
immediately prior to a reduction in the Executive’s base salary in the event the Executive resigns for Good Reason based
on Section 8(b)(iii) hereunder) and (b) an annual bonus amount equal to 30% of annual base salary. The payment of Final Compensation
shall be made over twenty-four months in installments such that the Final Compensation payments are made at the same time as Executive
would have received his base salary.

 

		(ii)	Payments under (i) above shall be made or commence upon the Executive’s termination of employment, subject to the satisfaction
of the release and waiver condition set forth above.

 

    	 	4	 

     

    

 

		(iii)	If the Executive timely and properly elects continuation coverage under the Consolidated Omnibus Reconciliation Act of 1985
(“COBRA”), the Corporation shall reimburse the Executive for the difference between the monthly COBRA premium amount
paid by the Executive for his and his eligible dependents’ group health insurance coverage and the monthly premium amount
paid by similarly situated active employees of the Corporation. Such reimbursement shall be paid to the Executive by the tenth
day of the month immediately following the month in which the Executive timely remits the COBRA premium payment. The Executive
shall be eligible to receive such reimbursement until the earliest of: (A) twenty-four (24) months following the Executive’s
termination; or (B) the date on which the Executive becomes eligible to receive substantially similar coverage from another employer.
If Executive becomes ineligible for COBRA coverage before either of these events occur, the Corporation shall continue payments
in the same amount to Executive for the remainder of the applicable time period. Notwithstanding the foregoing, if the Corporation’s
payments under this Section 8(a)(iii) would violate the nondiscrimination rules applicable to non-grandfathered plans or would
result in the imposition of penalties under applicable law, the parties agree to reform this Section 8(a)(iii) in a manner as is
necessary to comply with applicable law.

 

		(iv)	The Executive shall thereon have no further recourse, and the Corporation shall have no further obligation, under this Agreement,
provided that if the Executive breaches or fails to comply with any of the covenants and restrictions in Sections 11 and 18 then
the Corporation shall have no obligation to make any payments under this Section 8(a), such remedy being in addition to any other
remedies available to the Corporation under this Agreement or applicable law in connection with such breach or failure.

 

		(b)	For purposes of this Agreement, “Good Reason”
shall mean:

 

		(i)	The assignment of duties to the Executive by the Corporation which (A) are materially different from the Executive’s
duties on the date hereof, or (B) result in the Executive having significantly less authority and/or responsibility than he has
on the date hereof, without his express written consent;

 

		(ii)	The removal of the Executive from, or any failure to re-elect him to, the position of President and Chief Executive Officer
of the Corporation or President and Chief Executive Officer of Village Bank, except in connection with a termination of his employment
by the Corporation for Cause or by reason of the Executive’s death or disability;

 

		(iii)	A reduction by the Corporation of the Executive’s then current base salary without the Executive’s written consent;

 

		(iv)	A material reduction by the Corporation without the Executive’s written consent of the fringe benefits (including, without
limitation, paid vacations, split dollar life insurance benefits, SERP and short and long term incentive compensation arrangements,
including vesting provisions related to SERP and short and long term incentive compensation arrangements) that were provided to
the Executive immediately prior to the date thereof, provided that a material reduction of fringe benefits does not occur in connection
with the elimination or reduction of a fringe benefit for which the Corporation substitutes a fringe benefit or payment of substantially
equal value; or

 

    	 	5	 

     

    

 

		(v)	The failure of the Corporation to obtain the assumption of, and agreement to perform, this Agreement by any successor.

 

Notwithstanding the above, Good Reason shall not include
any resignation by the Executive where Cause for his termination by the Corporation exists.

 

		(c)	Resignation by the Executive for Good Reason shall be communicated by a written Notice of Resignation to the Corporation. A
“Notice of Resignation” shall mean a notice which shall indicate the specific provision(s) in this Agreement relied
upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for a resignation for Good
Reason. The notice must be delivered to the Corporation within ninety (90) days of the initial occurrence of the event or condition
alleged to constitute Good Reason. Upon delivery of such notice by the Executive, the Corporation shall have a period of twenty
(20) days during which it may remedy in good faith the event or condition constituting Good Reason and the Executive’s employment
shall continue in effect during such time so long as the Corporation is making diligent efforts to cure. In the event the Corporation
shall remedy in good faith the event or condition constituting Good Reason, then such notice of termination shall be null and void,
and the Corporation shall not be required to pay the amount due to the Executive under Section 8(a).

 

		(d)	If within thirty (30) days after any Notice of Resignation is given, the Corporation notifies the Executive that a dispute
exists concerning the resignation for Good Reason and that it is requesting arbitration pursuant to Section 17, the Corporation
shall continue to pay the Executive his full base salary as described in Section 4, when due and payable under the Corporation’s
payroll procedures, at least until such time as a final decision is reached by the panel of arbitrators, but subject to the limitation
in Section 8(a)(i) on the duration of such payments. If Good Reason for resignation by the Executive is ultimately determined not
to exist, then all sums paid by the Corporation to the Executive, from the date of such resignation to the date of the resolution
of such dispute shall be promptly repaid by the Executive to the Corporation with interest at the rate charged from time to time
by the Corporation to its most substantial customers for unsecured extensions of credit. Should it ultimately be determined that
Good Reason for resignation by the Executive exists, then the Executive shall be entitled to retain all sums paid to him, pending
the resolution of such dispute and he shall be entitled to receive the payments and other benefits provided for in Section 8(a).

 

    	 	6	 

     

    

 

A failure by the Corporation to notify the Executive
that a dispute exists concerning the resignation for Good Reason within thirty (30) days after any Notice of Resignation is given
shall constitute a final waiver by the Corporation of its right to contest either that such resignation was for Good Reason or
its obligations to the Executive under Section 8(a) hereof.

 

		(e)	If the Executive’s employment terminates after a Change of Control (as defined in Section 10 hereof), the payments to
which he is entitled pursuant to Section 10 shall be in lieu of any payment to which he might otherwise be entitled under the terms
of Section 8(a)(i).

 

		(f)	The Executive shall not be required to mitigate the amount of any payment provided for in this Agreement under Section 8(a)
by seeking other employment or otherwise.

 

		9.	RESIGNATION, TERMINATION FOR CAUSE, REGULATORY TERMINATION: The Corporation or the Executive may terminate this
Agreement, with or without Cause, subject to the following conditions:

 

		(a)	Notwithstanding the provision of Section 1 of this Agreement, the Board of Directors of the Corporation may, in its sole discretion,
terminate the Executive’s employment for Cause. For the purpose of this Agreement, “Cause” shall mean material
failure of the Executive to perform his duties under this Agreement, unlawful or unethical business conduct, dishonesty, willful
violation of any law, rule, or regulation (other than traffic violations or similar offenses), a material violation of the Corporation’s
work rules, Code of Ethics or policies, or a material breach of this Agreement. The Board of Directors shall not, however, terminate
the Executive’s employment based on the Executive’s material failure to perform his duties under this Agreement, his
material violation of the Corporation’s work rules, Code of Ethics or policies, or his material breach of this Agreement,
without first providing him written notice of any such failure or breach and a reasonable period of time, not less than ten (10)
days, in which to remedy such failure or breach.

 

		(b)	In the event the Executive resigns from or otherwise voluntarily terminates his employment with the Corporation at any time
(other than for Good Reason), or if the Corporation terminates the Executive’s employment for Cause, the Corporation thereafter
shall have no obligation to make any further payments under this Agreement.

 

		(c)	If the Executive is suspended and/or prohibited from participating in the conduct of the Corporation’s affairs by a notice
served under the Federal Deposit Insurance Act or any other regulatory authority, the Corporation’s obligations under this
Agreement shall be terminated and the Corporation thereafter shall have no obligation to make any further payments under this Agreement.

 

    	 	7	 

     

    

 

		10.	CHANGE OF CONTROL:

 

		(a)	Notwithstanding any other provision in this Agreement, if the Executive’s employment is terminated by the Executive for
Good Reason, or by the Corporation on account of its giving a Nonrenewal Notice in accordance with Section 2, or by the Corporation
without Cause (other than on account of the Executive’s death or incapacity as described in Section 6), in each case within
twenty-four (24) months following a Change of Control, then the payments set forth in Section 8(a) shall be replaced by the following,
provided that the Executive signs a release and waiver of claims reasonably satisfactory to the Corporation and such
release and waiver has become effective:

 

		(i)	The Executive shall be paid a lump sum equal to two and ninety-nine one hundredths (2.99) times his Final Compensation, as
defined in Section 8(a)(i).

 

		(ii)	Payments under (i) above shall be made within forty-five (45) days of the Executive’s termination of employment, subject
to the satisfaction of the release and waiver condition set forth above.

 

		(iii)	If the Executive timely and properly elects continuation coverage under COBRA, the Corporation shall reimburse the Executive
for the difference between the monthly COBRA premium amount paid by the Executive for his and his eligible dependents’ group
health insurance coverage and the monthly premium amount paid by similarly situated active employees. Such reimbursement shall
be paid to the Executive by the tenth day of the month immediately following the month in which the Executive timely remits the
COBRA premium payment. The Executive shall be eligible to receive such reimbursement until the earliest of: (A) twenty-four (24)
months following the Executive’s termination; or (B) the date on which the Executive becomes eligible to receive substantially
similar coverage from another employer. If Executive becomes ineligible for COBRA coverage before either of these events occur,
the Corporation shall continue payments in the same amount to Executive for the remainder of the applicable time period. Notwithstanding
the foregoing, if the Corporation’s payments under this Section 8(a)(iii) would violate the nondiscrimination rules applicable
to non-grandfathered plans or would result in the imposition of penalties under applicable law, the parties agree to reform this
Section 8(a)(iii) in a manner as is necessary to comply with applicable law.

 

		(iv)	The Executive shall thereon have no further recourse, and the Corporation shall have no further obligation, under this Agreement.

 

    	 	8	 

     

    

 

		(b)	For purposes of this Agreement, a “Change of Control” shall mean (i) the acquisition by any “person”
or “group” (as defined in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (“Exchange Act”)),
other than the Corporation, any subsidiary of the Corporation or any Corporation’s or subsidiary’s employee benefit
plan, directly or indirectly, as “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act) of securities
of the Corporation representing fifty percent (50%) or more of either the then outstanding shares or the combined voting power
of the then outstanding securities of the Corporation; (ii) either a majority of the directors of the Corporation elected at the
Corporation’s most recent annual stockholders meeting shall have been nominated for election other than by or at the direction
of the “incumbent directors” of the Corporation, or the “incumbent directors” shall cease to constitute
a majority of the directors of the Corporation (the term “incumbent director” shall mean any director who was a director
of the Corporation on January 1, 2017 and any individual who becomes a director of the Corporation subsequent to January 1, 2017
and who is elected or nominated by or at the direction of at least two-thirds of the then incumbent directors); (iii) the Corporation
consummates a reorganization, merger, share exchange, consolidation or other business combination (a “Reorganization”)
with any other “person” or “group” (as defined in Sections 13(d) and 14(d) of the Exchange Act) or affiliate
thereof, other than a Reorganization that would result in the outstanding common stock of the Corporation immediately prior thereto
continuing to represent, either by remaining outstanding or by being converted into common stock of the surviving entity or a parent
or affiliate thereof, at least fifty percent (50%) of the common stock of the Corporation or such surviving entity or a parent
or affiliate thereof outstanding immediately after the Reorganization; or (iv) a plan of complete liquidation of the Corporation
or an agreement for the sale or disposition by the Corporation of all or substantially all of the Corporation’s assets.

 

		(c)	The Executive shall not be required to mitigate the amount of any payment provided for in this Agreement under Section 10(a)
by seeking other employment or otherwise.

 

		11.	COVENANTS:

 

		(a)	During the term of this Agreement and throughout any further period that he is an employee of the Corporation, and for the
longer of:

 

(x)   twenty-four
(24) months from and after the date that Executive is (for any reason) no longer employed by the Corporation; or

 

(y)   for
a period of twenty-four (24) months from the date of entry by a court of competent jurisdiction of a final judgment enforcing this
covenant in the event of a breach by the Executive,

 

    	 	9	 

     

    

 

the Executive covenants and agrees that he will not,
directly or indirectly, compete with the Corporation by performing job functions similar to those he is performing under this Agreement,
including the supervision of employees engaged in banking operations similar to those in which the Corporation is engaged, for
any bank or bank holding company within thirty-five (35) miles of the headquarters of the Corporation or within five (5) miles
of any bank branch that was in operation at the time the Executive’s employment with the Corporation ceased.

 

		(b)	During the term of this Agreement and throughout any further period that he is an employee of the Corporation, and for the
longer of:

 

(x)  twenty-four
(24) months from and after the date that the Executive is (for any reason) no longer employed by the Corporation; or

 

(y)  for
a period of twenty-four (24) months from the date of entry by a court of competent jurisdiction of a final judgment enforcing this
covenant in the event of a breach by the Executive,

 

the Executive will not, directly or indirectly, on behalf
of the Executive or any other person or entity, solicit or induce, or attempt to solicit or induce, any person then employed by
the Corporation to terminate the employee’s employment with the Corporation.

 

		(c)	During the term of this Agreement and throughout any further period that he is an employee of the Corporation, and for the
longer of:

 

(x)  twenty-four
(24) months from and after the date that the Executive is (for any reason) no longer employed by the Corporation; or

 

(y)  for
a period of twenty-four (24) months from the date of entry by a court of competent jurisdiction of a final judgment enforcing this
covenant in the event of a breach by the Executive,

 

the Executive will not, except to the extent necessary
to carry out his duties as an employee of the Corporation, directly or indirectly provide Competitive Services (as defined below)
to any Customer (as defined below), and shall not, directly or indirectly, on behalf of the Executive or any other person or entity,
solicit or divert away or attempt to solicit or divert away any Customer of the Corporation for the purpose of selling or providing
Competitive Services, provided the Corporation is then still engaged in the sale or provision of Competitive Services.

 

		(d)	It is agreed that notwithstanding the above to the contrary, Executive may engage in business ventures as long as they are
not competitive with the Corporation.

 

		(e)	For purposes of this Agreement, the term “Customer” means any individual or entity to whom or to which the Corporation
provided Competitive Services, and with whom or with which the Executive had contact in connection with the delivery of such Competitive
Services, within two years of the date on which the Executive’s employment terminates.

 

    	 	10	 

     

    

 

		(f)	For purposes of this Agreement, “Competitive Services” means providing commercial and consumer financial products
and services that, as of the date of this Agreement or as of the date of termination of employment, as the case may be, are provided
to Customers of the Corporation, whether such services are provided directly by the Corporation or by others under a contractual
arrangement with the Corporation.

 

		(g)	The Executive agrees that the covenants in this Section 11 are reasonably necessary to protect the legitimate interests of
the Corporation, are reasonable with respect to the time and territory and do not interfere with the interests of the public. The
Executive further agrees that the descriptions of the covenants contained in this Section 11 are sufficiently accurate and definite
to inform the Executive of the scope of the covenants. Finally, the Executive agrees that the consideration set forth in this Agreement
is full, fair and adequate to support the Executive’s obligations hereunder and the Corporation’s rights hereunder.
The Executive acknowledges that in the event the Executive’s employment with the Corporation is terminated for any reason,
the Executive will be able to earn a livelihood without violating such covenants.

 

		(h)	The parties have attempted to limit the Executive’s right to compete only to the extent necessary to protect the Corporation
from unfair competition. The parties recognize, however, that reasonable people may differ in making such a determination. Accordingly,
the parties intend that the covenants contained in this Section 11 to be completely severable and independent, and any invalidity
or unenforceability of any one or more such covenants will not render invalid or unenforceable any one or more of the other covenants.
The parties further agree that, if the scope or enforceability of a covenant contained in this Section 11 is in any way disputed
at any time, and if permitted by applicable law and public policy, a court or other trier of fact may modify and reform such provision
to substitute such other terms as are reasonable to protect the Corporation’s legitimate business interests.

 

		(i)	The Executive agrees that, given the nature of the positions held by the Executive with the Corporation, each and every one
of the covenants and restrictions set forth in this Agreement above are reasonable in scope, length of time and geographic area
and are necessary for the protection of the significant investment of the Corporation in developing, maintaining and expanding
its business. Accordingly, the parties hereto agree that in the event of any breach by the Executive of any of the provisions of
Sections 11 and/or 18 of this Agreement that monetary damages alone will not adequately compensate the Corporation for its losses
and, therefore, that it shall be entitled to any and all legal or equitable relief available to it, specifically including, but
not limited to, injunctive relief, and the Executive shall be liable for all damages, including actual and consequential damages,
costs and expenses, and legal costs and actual attorneys fees incurred by the Corporation as a result of taking action to enforce,
or recover for any breach of Section 11 or 18.

 

    	 	11	 

     

    

 

		(j)	The Executive covenants that he is not the subject of any contract that prevents him from executing this Agreement and performing
the duties of President and Chief Executive Officer. The Executive further covenants that he is not subject to any covenants or
obligations not to compete and is not subject to any other restrictions or obligations which would prevent him from fulfilling
the duties specified in this Agreement.

 

		(k)	Notwithstanding anything in this Agreement to the contrary, in the event that the Corporation gives the Executive a Nonrenewal
Notice pursuant to Section 2 of this Agreement, the restrictive covenants described in subparagraphs (a), (b) and (c) of this Section
11 shall apply only during the term of this Agreement and throughout any further period that Executive is an employee of the Corporation.

 

		12.	NOTICES: For the purposes of this Agreement, notices and all other communications provided for in the Agreement
shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered or certified
mail, return receipt requested, postage prepaid, addressed as follows:

 

	If to the Executive: 	 	William G. Foster, Jr.
	 	 	P.O. Box 581
	 	 	Midlothian, Virginia 23113
	 	 	 
	If to the Corporation:	 	Craig D. Bell, Esquire
	 	 	Chairman of the Board of Directors
	 	 	McGuireWoods LLP
	 	 	Gateway Plaza
	 	 	800 East Canal Street
	 	 	Richmond, Virginia  23219-3916
	 	 	 
	With a copy to:	 	Deborah Golding
	 	 	Vice President, Corporate Secretary
	 	 	Village Bank and Trust Financial Corp.
	 	 	P.O. Box 330
	 	 	Midlothian, Virginia  23113

 

or at such other address as any party may have furnished
to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.

 

		13.	MODIFICATION, WAIVERS, APPLICABLE LAW: No provision of this Agreement may be modified, waived or discharged unless
such waiver, modification or discharge is agreed to in writing, signed by the Executive and on behalf of the Corporation by such
officer as may be specifically designated by the Board of Directors of the Corporation. No waiver by either party hereto at any
time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar or dissimilar provision or conditions at the same or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been
made by either party, which are not set forth expressly in this Agreement. The validity, interpretation, construction and performance
of this Agreement shall be governed by the laws of the Commonwealth of Virginia.

 

    	 	12	 

     

    

 

		14.	INVALIDITY, ENFORCEABILITY: The invalidity or unenforceability of any provisions of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

 

		15.	SUCCESSOR RIGHTS: This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal
or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Executive should
die while any amounts would still be payable to him hereunder, all such amounts, unless otherwise provided herein, shall be paid
in accordance with the terms of this Agreement to his executor or, if there is no such executor, to his estate.

 

		16.	HEADINGS: Descriptive headings contained in this Agreement are for convenience only and shall not control or
affect the meaning or construction of any provision hereof.

 

		17.	ARBITRATION: With the exception of Sections 11 and 18 and the enforcement of these sections in accordance with
Section 11(i), all other claims under this Agreement will be resolved by binding arbitration. Any dispute, controversy or claim
arising under or in connection with this Agreement shall be settled exclusively by arbitration, in Richmond, Virginia in accordance
with the Employment Arbitration Rules and Procedures Rules of JAMS then in effect. The Corporation shall pay all administrative
fees associated with such arbitration. Judgment may be entered on the arbitrator’s award in any court having jurisdiction.
Unless otherwise provided in the rules of the American Arbitration Association, the arbitrators shall, in their award, allocate
between the parties the costs of arbitration, which shall include reasonable attorneys’ fees and expenses of the parties,
as well as the arbitrator’s fees and expenses, in such proportions as the arbitrator deems just.

 

		18.	CONFIDENTIALITY: Executive covenants and agrees that any and all proprietary information maintained as confidential
by the Corporation and concerning the customers or businesses and services of the Corporation of which he has knowledge as a result
of his association with the Corporation in any capacity, shall be deemed confidential in nature and shall not, without the proper
written consent of the Corporation, be directly or indirectly used, disseminated, disclosed or published by the Executive to third
parties other than in connection with the usual conduct of the business of the Corporation, or as required by law or the Corporation’s
Code of Ethics. Such information shall expressly include, but shall not be limited to, confidential and proprietary information
concerning the Corporation’s trade secrets within the meaning of the Virginia Trade Secrets Act, business operations, business
records, documented customer lists or other confidential customer information. Upon termination of employment, the Executive shall
deliver to the Corporation all property in his possession which belongs to the Corporation including all originals and copies of
documents, forms, records or other information, in whatever form it may exist, concerning the Corporation or its business, customers,
products or services. This Section 18 shall not be applicable to any information which, through no misconduct or negligence of
Executive, has been disclosed to the public by anyone other than Executive.

 

    	 	13	 

     

    

 

		19.	409A COMPLIANCE:

 

		(a)	The intent of the parties is that payments and benefits under this Agreement comply with Internal Revenue Code (“Code”)
Section 409A. Accordingly, to the maximum extent permitted under Code Section 409A, the terms of this Agreement, including, without
limitation, “termination” and “termination of employment,” and similar terms, shall be interpreted to be
in compliance with Code Section 409A. In no event whatsoever shall the Corporation be liable for any additional tax, interest or
penalty that may be imposed on the Executive by Code Section 409A or damages for failing to comply with Code Section 409A.

 

		(b)	Notwithstanding any other payment schedule provided herein to the contrary, if the Executive is deemed on the date of termination
to be a “specified employee” within the meaning of that term under Code Section 409A(a)(2)(B), then each of the following
shall apply:

 

		(i)	With regard to any payment that is considered deferred compensation under Code Section 409A payable on account of a “separation
from service,” such payment shall be made on the date which is the earlier of (x) the expiration of the six (6)-month period
measured from the date of such ‘separation from service’ of the Executive, and (y) the date of the Executive’s
death (the “Delay Period”) to the extent required under Code Section 409A. Upon the expiration of the Delay Period,
all payments delayed pursuant to this Section 19 (whether they would have otherwise been payable in a single sum or in installments
in the absence of such delay) shall be paid to the Executive in a lump sum, and all remaining payments due under this Agreement
shall be paid or provided in accordance with the normal payment dates specified for them herein; and

 

		(ii)	To the extent that any benefits to be provided during the Delay Period is considered deferred compensation under Code Section
409A provided on account of a “separation from service,” and such benefits are not otherwise exempt from Code Section
409A, the Executive shall pay the cost of such benefits during the Delay Period, and the Corporation shall reimburse the Executive,
to the extent that such costs would otherwise have been paid by the Corporation or to the extent that such benefits would otherwise
have been provided by the Corporation at no cost to the Executive, the Corporation’s share of the cost of such benefits upon
expiration of the Delay Period, and any remaining benefits shall be reimbursed or provided by the Corporation in accordance with
the procedures specified herein.

 

    	 	14	 

     

    

 

		(c)	All expenses or other reimbursements under this Agreement shall be made promptly and in any event on or prior to the last day
of the taxable year following the taxable year in which such expenses were incurred by the Executive (provided that if any such
reimbursements constitute taxable income to the Executive, such reimbursements shall be paid no later than March 15th
of the calendar year following the calendar year in which the expenses to be reimbursed were incurred), no such reimbursement or
expenses eligible for reimbursement in any taxable year shall in any way affect the expenses eligible for reimbursement in any
other taxable year and the Executive’s right to reimbursement shall not be subject to liquidation in exchange for any other
benefit.

 

		(d)	For purposes of Code Section 409A, the Executive’s right to receive any installment payments pursuant to this Agreement
shall be treated as a right to receive a series of separate and distinct payments. Whenever a payment under this Agreement specifies
a payment period with reference to a number of days (e.g., “payment shall be made within thirty (30) days”), the actual
date of payment within the specified period shall be within the sole discretion of the Corporation.

 

		(e)	In no event shall any payment under this Agreement that constitutes “deferred compensation” for purposes of Code
Section 409A be offset by any other payment pursuant to this Agreement or otherwise.

 

		20.	REGULATORY REQUIREMENTS AND CLAWBACK: Notwithstanding anything contained in this Agreement to the contrary, it
is understood and agreed that the Corporation (or any of its successors in interest) shall not be required to make any payment
or take any action under this Agreement if:

 

		(a)	such payment or action is prohibited by any governmental agency having jurisdiction over the Corporation or any of its subsidiaries
(hereinafter referred to as “Regulatory Authority”) because the Corporation or any of its subsidiaries is declared
by such Regulatory Authority to be insolvent, in default or operating in an unsafe or unsound manner; or

 

		(b)	such payment or action (i) would be prohibited by or would violate any provision of state or federal law applicable to the
Corporation, including, without limitation, the Emergency Economic Stabilization Act of 2008 and the Federal Deposit Insurance
Act, each as now in effect or hereafter amended, (ii) would be prohibited by or would violate any applicable rules, regulations,
orders or statements of policy, whether now existing or hereafter promulgated, of any Regulatory Authority, or (iii) otherwise
would be prohibited by any Regulatory Authority.

 

		(c)	Executive agrees that any incentive based compensation or award that he receives, or has received, from the Corporation under
this Agreement or otherwise, will be subject to clawback by the Corporation as may be required by applicable law or stock exchange
listing requirement and on such basis as the Board of Directors of the Corporation determines, but in no event with a look-back
period of more than three years, unless required by applicable law or stock exchange listing requirement.

 

    	 	15	 

     

    

 

		21.	POSSIBLE REDUCTION IN PAYMENT AND BENEFITS: No amounts will be payable and no benefits will be provided under
this Agreement to the extent that such payments or benefits, together with other payments or benefits under other plans, agreements
or arrangements, would make the Executive liable for the payment of an excise tax under Code Section 4999 or any successor provision.
The amounts otherwise payable and the benefits otherwise to be provided under this Agreement shall be reduced in a manner determined
by the Corporation (by the minimum possible amount) that is consistent with the requirements of Code Section 409A until no amount
payable to the Executive will be subject to such excise tax. All calculations and determinations under this Section 21 shall be
made by an independent accounting firm or independent tax counsel appointed by the Corporation (the “Tax Advisor”)
whose determinations shall be conclusive and binding on the Corporation and the Executive for all purposes. The Tax Advisor may
rely on reasonable, good faith assumptions and approximations concerning the application of Code Section 280G and Code Section
4999. The Corporation shall bear all costs of the Tax Advisor. In the event that the payment to the Executive under Sections 8(a)(i)
or 10(a)(i) is reduced in accordance with this paragraph, the length of the the noncompete and nonsolicitation periods described
in Sections 11(a), 11(b) and 11(c) shall be reduced proportionally. For example and for illustrative purposes, if the payment is
reduced by 50%, the noncompete and nonsolicition periods shall be reduced by 50%.

 

(Signatures
appear on the following page)

 

    	 	16	 

     

    

 

IN WITNESS WHEREOF, the parties have
executed this Agreement effective as of the date first above written.

 

	 	EXECUTIVE
	 	 
	 	By: 	/s/
    William G. Foster, Jr.
	 	 	William G. Foster, Jr.
	 	 	 
	 	Date:  	September
    28, 2017
	 	 
	 	VILLAGE BANK AND TRUST FINANCIAL CORP.
	 	 
	 	By: 	/s/
    Craig D. Bell
	 	 	Craig D. Bell
	 	 	Chairman of the Board
	 	 	 
	 	Date:	September
    29, 2017

 

    	 	17

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