Document:

Exhibit 4.1

 

SHORE BANCSHARES, INC.

 

As Issuer,

 

and

 

UMB Bank National Association

 

As Trustee

 

INDENTURE

 

Dated as of August 25, 2020

 

5.375% Fixed to Floating Rate Subordinated
Notes due 2030

 

     

     

    

 

	TABLE OF CONTENTS	 
	 	 	 
	ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE 	1
	 	 	 
	Section 101	Definitions.	1
	Section 102	Compliance Certificates and Opinions.	9
	Section 103	Form of Documents Delivered to Trustee.	9
	Section 104	Acts of Holders.	10
	Section 105	Required Notices or Demands.	12
	Section 106	Language of Notices.	13
	Section 107	Incorporation by Reference of Trust Indenture Act; Conflicts.	13
	Section 108	Effect of Headings and Table of Contents.	13
	Section 109	Successors and Assigns.	13
	Section 110	Severability.	14
	Section 111	Benefits of Indenture.	14
	Section 112	Governing Law.	14
	Section 113	Legal Holidays.	14
	Section 114	Counterparts; Electronic Transmission.	14
	Section 115	Immunity of Certain Persons.	15
	Section 116	Waiver of Jury Trial.	15
	Section 117	Force Majeure.	15
	Section 118	USA Patriot Act.	15
	Section 119	No Sinking Fund.	15
	Section 120	Rules of Construction.	16
	 	 	 
	ARTICLE II THE SUBORDINATED NOTES 	16
	 	 	 
	Section 201	Forms Generally.	16
	Section 202	Definitive Subordinated Notes.	17
	Section 203	Global Subordinated Notes.	17
	Section 204	Restricted Subordinated Notes.	17
	Section 205	Execution and Authentication.	18
	Section 206	Registrar and Paying Agent.	19
	Section 207	Registration of Transfer and Exchange	19
	Section 208	Exchange Offer.	23
	Section 209	Mutilated, Destroyed, Lost and Stolen Subordinated Notes.	23
	Section 210	Payment of Interest; Rights to Interest Preserved.	24
	Section 211	Persons Deemed Owners.	25
	Section 212	Cancellation.	26
	Section 213	Computation of Interest.	26
	Section 214	CUSIP Numbers.	33
	 	 	 
	ARTICLE III SATISFACTION AND DISCHARGE OF INDENTURE 	33
	 	 
	Section 301	Satisfaction and Discharge.	33
	Section 302	Defeasance and Covenant Defeasance.	34
	Section 303	Application of Trust Money.	36
	Section 304	Reinstatement.	37
	Section 305	Effect on Subordination Provisions.	37

 

    i

     

    

 

	 	 	 
	ARTICLE IV REMEDIES 	37
	 	 	 
	Section 401	Events of Default; Acceleration.	37
	Section 402	Failure to Make Payments.	39
	Section 403	Trustee May File Proofs of Claim.	40
	Section 404	Trustee May Enforce Claims Without Possession of Subordinated Notes.	40
	Section 405	Application of Money Collected.	41
	Section 406	Limitation on Suits.	41
	Section 407	Unconditional Right of Holders to Payments.	42
	Section 408	Restoration of Rights and Remedies.	42
	Section 409	Rights and Remedies Cumulative.	42
	Section 410	Delay or Omission Not Waiver.	42
	Section 411	Control by Holders.	42
	Section 412	Waiver of Past Defaults.	43
	Section 413	Undertaking for Costs.	43
	 	 	 
	ARTICLE V THE TRUSTEE 	43
	 	 
	Section 501	Duties of Trustee.	43
	Section 502	Certain Rights of Trustee.	44
	Section 503	Notice of Defaults.	46
	Section 504	Not Responsible for Recitals or Issuance of Subordinated Notes.	47
	Section 505	May Hold Subordinated Notes.	47
	Section 506	Money Held in Trust.	47
	Section 507	Compensation and Reimbursement.	47
	Section 508	Corporate Trustee Required; Eligibility.	48
	Section 509	Resignation and Removal; Appointment of Successor.	49
	Section 510	Acceptance of Appointment by Successor.	50
	Section 511	Merger, Conversion, Consolidation or Succession to Business.	51
	Section 512	Appointment of Authenticating Agent.	51
	Section 513	Preferred Collection of Claims against Company.	53
	 	 	 
	ARTICLE VI HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY 	53
	 	 
	Section 601	Holder Lists.	53
	Section 602	Preservation of Information; Communications to Holders.	53
	Section 603	Reports by Trustee.	53
	Section 604	Reports by Company.	54
	 	 	 
	ARTICLE VII SUCCESSORS 	55
	 	 
	Section 701	Merger, Consolidation or Sale of All or Substantially All Assets.	55
	Section 702	Successor Person Substituted for Company.	56

 

    ii

     

    

 

	 	 	 
	ARTICLE VIII SUPPLEMENTAL INDENTURES 	56
	 	 
	Section 801	Supplemental Indentures without Consent of Holders.	56
	Section 802	Supplemental Indentures with Consent of Holders.	57
	Section 803	Execution of Supplemental Indentures.	58
	Section 804	Effect of Supplemental Indentures.	58
	Section 805	Reference in Subordinated Notes to Supplemental Indentures.	58
	Section 806	Effect on Senior Indebtedness.	58
	Section 807	Conformity with Trust Indenture Act.	59
	 	 	 
	ARTICLE IX COVENANTS 	59
	 	 	 
	Section 901	Payment of Principal and Interest.	59
	Section 902	Maintenance of Office.	59
	Section 903	Money for Subordinated Notes Payments to Be Held in Trust.	60
	Section 904	Corporate Existence.	61
	Section 905	Maintenance of Properties.	61
	Section 906	Waiver of Certain Covenants.	61
	Section 907	Company Statement as to Compliance.	62
	 	 	 
	ARTICLE X REDEMPTION OF SECURITIES 	62
	 	 
	Section 1001	Applicability of Article.	62
	Section 1002	Election to Redeem; Notice to Trustee.	63
	Section 1003	Selection by Trustee of Subordinated Notes to be Redeemed.	63
	Section 1004	Notice of Redemption.	63
	Section 1005	Deposit of Redemption Price.	64
	Section 1006	Subordinated Notes Payable on Redemption Date.	65
	Section 1007	Subordinated Notes Redeemed in Part.	65
	 	 	 
	ARTICLE XI SUBORDINATION OF SECURITIES 	65
	 	 
	Section 1101	Agreement to Subordinate.	65
	Section 1102	Distribution of Assets.	66
	Section 1103	Default With Respect to Senior Indebtedness.	68
	Section 1104	No Impairment.	68
	Section 1105	Effectuation of Subordination Provisions.	69
	Section 1106	Notice to Trustee.	69
	Section 1107	Trustee Knowledge of Senior Indebtedness.	70
	Section 1108	Senior Indebtedness to Trustee.	70
	Section 1109	Subordination Not Applicable to Trustee Compensation.	70

 

    iii

     

    

 

CROSS-REFERENCE TABLE

 

	Trust Indenture Act Section	Indenture Section
	§310 (a)(1)	508
	 	(a)(2)	508
	 	(a)(5)	508
	 	(b)	508, 509
	§311 (a)	505
	 	(b)	505
	§312 (a)	601
	 	(b)	602
	 	(c)	602
	§313 (a)	603
	 	(b)(2)	603
	 	(c)	603
	 	(d)	603
	§314 (a)	604
	 	(a)(4)	907
	 	(c)(1)	102
	 	(c)(2)	102
	 	(e)	102
	§315 (a)	501,502
		(b)	503
	 	(c)	501
	 	(d)	501,502
	 	(e)	413
	§316 (a) (last sentence)	101
	 	(a)(1)(A)	402,411
	 	(a)(1)(B)	411,412
	 	(b)	407
	 	(c)	104
	§317 (a)(1)(	402
	 	(a)(2)	403
	 	(b)	903
	§318 (a)	107
	 	(b)	107
	 	(c)	107

 

Note: This Cross-Reference table will not,
for any purpose, be deemed part of this Indenture.

 

    iv

     

    

 

INDENTURE

 

This INDENTURE dated
as of August 25, 2020 is between Shore Bancshares, Inc., a Maryland corporation (the “Company”), and UMB
Bank National Association, a national banking association duly organized and existing under the laws of the United States of America,
as trustee (the “Trustee”).

 

RECITALS

 

WHEREAS, the Company
has duly authorized the execution and delivery of this Indenture to provide for an issue of $25 million in aggregate principal
amount of 5.375% Fixed to Floating Rate Subordinated Notes due 2030, subject to the terms and conditions set forth in this Indenture.

 

NOW, THEREFORE, in
order to declare the terms and conditions upon which the Subordinated Notes are authenticated, issued and delivered, and in consideration
of the premises, and of the purchase and acceptance of the Subordinated Notes by the Holders thereof, the Company and the Trustee
agree as follows for the benefit of each other and for the benefit of the respective Holders from time to time of the Subordinated
Notes.

 

ARTICLE I

DEFINITIONS AND INCORPORATION BY REFERENCE

 

Section 101     Definitions.

 

Except as otherwise
expressly provided in this Indenture or unless the context otherwise requires, the terms defined in this Section for all purposes
of this Indenture, any Company Order, any Board Resolution, and any indenture supplemental hereto will have the respective meanings
specified in this Section.

 

“Act,”
when used with respect to any Holders, is defined in Section 104.

 

“Additional
Interest” has the meaning set forth in the Registration Rights Agreement.

 

“Affiliate”
means, with respect to any specified Person, any other Person directly or indirectly controlling or controlled by or under direct
or indirect common control with such specified Person. For the purposes of this definition, “control,” when used with
respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled”
have meanings correlative to the foregoing.

 

“Applicable
Procedures” means, with respect to any transfer or exchange of or for beneficial interests in any Global Subordinated
Note, the rules and procedures of the Depositary that apply to such transfer or exchange.

 

“Authenticating
Agent” means any Person authorized by the Trustee in accordance with Section 512 to act on behalf of the Trustee
to authenticate Subordinated Notes.

 

    1

     

    

 

“Authorized
Newspaper” means a newspaper, in an official language of the place of publication or in the English language, customarily
published on each day that is a Business Day in the place of publication, whether or not published on days that are not Business
Days in the place of publication, and of general circulation in each place in connection with which the term is used or in the
financial community of each such place. Where successive publications are required to be made in Authorized Newspapers, the successive
publications may be made in the same or in different newspapers in the same place meeting the foregoing requirements and in each
case on any day that is a Business Day in the place of publication.

 

“Authorized
Officer” means each of the Chairman of the Board, the Chief Executive Officer, the President, any Senior Executive
Vice President and the Chief Financial Officer of the Company.

 

“Bankruptcy
Laws” mean Title 11, United States Code (11 U.S.C. §§101 et seq.) or any similar federal or state law for
the relief of debtors.

 

“Board
of Directors” means, as to any Person, the board of directors, or similar governing body, of such Person or any duly
authorized committee (or subcommittee) thereof.

 

“Board
Resolution” means one or more resolutions, certified by the Secretary or an Assistant Secretary of the Company to
have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification, delivered
to the Trustee.

 

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

 

“Commission”
means the U.S. Securities and Exchange Commission, as from time to time constituted, or, if at any time after the execution of
this Indenture such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then
the body performing such duties at such time.

 

“Common
Stock” means any and all shares of the common stock, par value $0.01 per share, of the Company, whether outstanding
on the date of this Indenture or issued thereafter, and includes, without limitation all series and classes of such common stock.

 

“Company”
is defined in the preamble to this Indenture,

 

“Company
Request” and “Company Order” mean, respectively, a written request or order, as the case
may be, signed on behalf of the Company by an Authorized Officer and delivered to the Trustee.

 

“Corporate
Trust Office” means the address of the Trustee specified in Section 105 or such other address as the Trustee
may designate from time to time by notice to the Holders and the Company, or the designated address of any successor Trustee (or
such other address as such successor Trustee may designate from time to time by notice to the Holders and the Company).

 

“Covenant
Defeasance” is defined in Section 302(3).

 

    2

     

    

 

“Defaulted
Interest” is defined in Section 210.

 

“Definitive
Subordinated Notes” means, individually and collectively, each Restricted Definitive Subordinated Note and each Unrestricted
Definitive Subordinated Note, substantially in the form of Exhibit A-l hereto, issued under this Indenture.

 

“Depositary”
means, with respect to any Subordinated Note issuable or issued in whole or in part in global form, the Person designated as depositary
by the Company in accordance with this Indenture, and any and all successors thereto appointed as Depositary under this Indenture.

 

“Dollars”
or “$” means a dollar or other equivalent unit of legal tender for payment of public or private debts
in the United States.

 

“Event
of Default” is defined in Section 401.

 

“Exchange
Act” means the Securities Exchange Act of 1934, as amended, or any successor statute thereto.

 

“Exchange
Notes” means the Subordinated Notes issued in the Exchange Offer in accordance with Section 208.

 

“Exchange
Offer” has the meaning set forth in the Registration Rights Agreement.

 

“Exchange
Offer Registration Statement” has the meaning set forth in the Registration Rights Agreement.

 

“Federal
Reserve” means the Board of Governors of the Federal Reserve System or any successor regulatory authority with jurisdiction
over bank holding companies.

 

“Fixed
Interest Payment Date” means March 1 and September 1 of each year, beginning March 1, 2021.

 

“Floating
Interest Payment Date” means March 1, June 1, September 1 and December 1 of each year, beginning
September 1, 2025.

 

“GAAP”
means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants, the statements and pronouncements of the Financial
Accounting Standards Board and such other statements by such other entities (including the Commission) as have been accepted by
a significant segment of the accounting profession, which are applicable at the date of this Indenture.

 

“Global
Subordinated Notes” means, individually and collectively, each Restricted Global Subordinated Note and each Unrestricted
Global Subordinated Note, substantially in the form of Exhibit A-2 hereto, issued under this Indenture.

 

    3

     

    

 

“Government
Obligations” means securities which are direct obligations of the United States of America in each case where the
payment or payments thereunder are supported by the full faith and credit of the United States of America.

 

“Holder”
means the Person in whose name the Subordinated Note is registered in the Subordinated Note Register.

 

“Indenture”
means this Indenture, as amended and supplemented from time to time in accordance with its terms.

 

“Initial
Notes” means the $25 million in aggregate principal amount of the Company’s 5.375% Fixed to Floating Rate Subordinated
Notes due 2030 issued under this Indenture on the date hereof.

 

“Interest
Payment Date” means either a Fixed Interest Payment Date or a Floating Interest Payment Date, as applicable.

 

“Interest
Period” means (i) each six-month period beginning on a Fixed Interest Payment Date for the period beginning
on the original issue date of the Subordinated Notes or (ii) each three-month period beginning on a Floating Interest Payment
Date for the period beginning September 1, 2025.

 

“Investment
Company Event” means receipt by the Company of an opinion of independent counsel experienced in such matters to the
effect that there is more than an insubstantial risk that the Company is or, within 90 days of the date of such legal opinion will
be, considered an “investment company” that is required to be registered under the Investment Company Act of 1940,
as amended.

 

“Legal
Defeasance” is defined in Section 302(2).

 

“Letter
of Transmittal” means the letter of transmittal to be prepared by the Company and sent to all Holders for use by
such Holders in connection with an Exchange Offer.

 

“Maturity”
means the date on which the principal of a Subordinated Note or an installment of principal becomes due and payable as provided
in or under this Indenture or such Subordinated Note, whether at the Stated Maturity or by an acceleration of the maturity of such
Subordinated Note in accordance with the terms of such Subordinated Note, upon redemption at the option of the Company, upon repurchase
or repayment or otherwise, and includes a Redemption Date for such Subordinated Note and a date fixed for the repurchase or repayment
of such Subordinated Note at the option of the Holder.

 

“Officer”
means, with respect to any Person, the chairman of the board, vice chairman of the board, the chief executive officer, the president,
the chief operating officer, the chief financial officer, the treasurer, any assistant treasurer, the controller, the secretary
or any vice president of such Person.

 

“Officers’
Certificate” means a certificate signed on behalf of the Company by two Officers of the Company, one of whom must
be the principal executive officer, the principal financial officer or the principal accounting officer of the Company, that complies
with the requirements of Section 102 and is delivered to the Trustee.

 

    4

     

    

 

“Opinion
of Counsel” means a written opinion from legal counsel who is reasonably acceptable to the Trustee, which opinion
meets the requirements of Section 102. The counsel may be an employee of or counsel to the Company or any Subsidiary of the
Company.

 

“Outstanding,”
when used with respect to any Subordinated Notes, means, as of the date of determination, all such Subordinated Notes theretofore
authenticated and delivered under this Indenture, except (1) any such Subordinated Note theretofore cancelled by the Trustee
or the Registrar or delivered to the Trustee or the Registrar for cancellation; (2) any such Subordinated Note for whose payment
at the Maturity thereof money in the necessary amount has been theretofore deposited in accordance with this Indenture (other than
in accordance with Section 302) with the Trustee or any Paying Agent (other than the Company) in trust or set aside and segregated
in trust by the Company (if the Company will act as its own Paying Agent) for the Holders of such Subordinated Notes, provided
that, if such Subordinated Notes are to be redeemed, notice of such redemption has been duly given in accordance with this Indenture
or provision therefor satisfactory to the Trustee has been made; (3) any such Subordinated Note with respect to which the
Company has effected Legal Defeasance or Covenant Defeasance in accordance with Section 302, except to the extent provided
is Section 302; and (4) any such Subordinated Note that has been paid in accordance with Section 209 or in exchange
for or in lieu of which other Subordinated Notes have been authenticated and delivered under this Indenture, unless there will
have been presented to the Trustee proof satisfactory to the Trustee that such Subordinated Note is held by a bona fide purchaser
in whose hands such Subordinated Note is a valid obligation of the Company; provided, however, in all cases, that in determining
whether the Holders of the requisite principal amount of Outstanding Subordinated Notes have given any request, demand, authorization,
direction, notice, consent or waiver hereunder, Subordinated Notes owned by the Company or any Affiliate of the Company will be
disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee will be protected in making any such
determination or relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Subordinated
Notes that a Responsible Officer of the Trustee actually knows to be so owned will be so disregarded. Subordinated Notes so owned
that will have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee’s right so to act with respect to such Subordinated Notes and that the pledgee is not the Company or
an Affiliate of the Company.

 

“Participating
Broker-Dealer” has the meaning set forth in the Registration Rights Agreement.

 

“Paying
Agent” is defined in Section 206.

 

“Person”
means any individual, corporation, partnership, association, limited liability company, other company, statutory trust, business
trust, joint venture, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision
thereof.

 

“Place
of Payment,” with respect to any Subordinated Note, means the place or places where the principal of, or interest
on, such Subordinated Note are payable as provided in or under this Indenture or such Subordinated Note.

 

    5

     

    

 

“Private
Placement Legend” means the legend set forth in Section 204 of this Indenture to be placed on all Subordinated
Notes issued under this Indenture, except where otherwise permitted by the provisions of this Indenture.

 

“Purchase
Agreement” means the Subordinated Note Purchase Agreement concerning the Subordinated Notes, dated August 25,
2020, by and among the Company and the purchasers identified therein.

 

“Redemption
Date” with respect to any Subordinated Note or portion thereof to be redeemed, means the date fixed for such redemption
by or under this Indenture or such Subordinated Note.

 

“Redemption
Price” with respect to any Subordinated Note or portion thereof to be redeemed, means the price at which it is to
be redeemed as determined by or under this Indenture or such Subordinated Note.

 

“Registrar”
is defined in Section 206.

 

“Registration
Rights Agreement” means the Registration Rights Agreement in the form attached as Exhibit B to the Purchase
Agreement with respect to the Subordinated Notes, dated as of the date of this Indenture, by and among the Company and the purchasers
of the Initial Notes identified therein.

 

“Regular
Record Date,” with respect to any Interest Payment date, means the close of business on the fifteenth calendar day
prior to the applicable Interest Payment Date, without regard to whether the Regular Record Date is a Business Day.

 

“Responsible
Officer” means, when used with respect to the Trustee, any officer within the corporate trust department of the Trustee,
including any vice president, assistant vice president, assistant secretary, assistant treasurer, trust officer or any other officer
of the Trustee who customarily performs functions similar to those performed by the Persons who at the time will be such officers,
respectively, or to whom any corporate trust matter is referred because of such Person’s knowledge of and familiarity with
the particular subject and who will have direct responsibility for the administration of this Indenture.

 

“Restricted
Definitive Subordinated Note” means a Definitive Subordinated Note bearing, or that is required to bear, the Private
Placement Legend.

 

“Restricted
Global Subordinated Note” means a Global Subordinated Note bearing, or that is required to bear, the Private Placement
Legend,

 

“Restricted
Subordinated Note” means a Restricted Global Subordinated Note or a Restricted Definitive Subordinated Note.

 

“Rule 144”
means Rule 144 promulgated under the Securities Act.

 

“Rule 144A”
means Rule 144A promulgated under the Securities Act.

 

    6

     

    

 

“Securities
Act” means the Securities Act of 1933, as amended, or any successor statute thereto.

 

“Senior
Indebtedness” means the principal of (and premium, if any) and interest, if any, on: (1) all indebtedness and
obligations of, or guaranteed or assumed by, the Company for money borrowed, whether or not evidenced by bonds, debentures, securities,
notes or other similar instruments, and including, but not limited to all obligations to the Company’s general and secured
creditors; (2) any deferred obligations of the Company for the payment of the purchase price of property or assets acquired
other than in the ordinary course of business; (3) all obligations, contingent or otherwise, of the Company in respect of
any letters of credit, bankers’ acceptances, security purchase facilities and similar direct credit substitutes; (4) any
capital lease obligations of the Company; (5) all obligations of the Company in respect of interest rate swap, cap or other
agreements, interest rate future or option contracts, currency swap agreements, currency future or option contracts, commodity
contracts and other similar arrangements or derivative products; (6) all obligations that are similar to those in clauses
(1) through (5) of other persons for the payment of which the Company is responsible or liable as obligor, guarantor
or otherwise arising from an off-balance sheet guarantee; (7) all obligations of the types referred to in clauses (1) through
(6) of other persons secured by a lien on any property or asset of the Company; and (8) in the case of (1) through
(7) above, all amendments, renewals, extensions, modifications and refundings of such indebtedness and obligations; except
“Senior Indebtedness” does not include (A) the Subordinated Notes, (B) any obligation that by its terms expressly
is junior to, or ranks equally in right of payment with, the Subordinated Notes, (C) the existing junior subordinated debentures
of the Company (underlying the outstanding trust preferred securities) as of the date of the issuance of this Subordinated Note
to which this Subordinated Note shall be senior, or (D) any indebtedness between the Company and any of its subsidiaries or
Affiliates.

 

“Significant
Subsidiary” means any Subsidiary of the Company that is a “significant subsidiary” as defined in Rule 1-02
of Regulation S-X promulgated by the Commission (as such rule is in effect on the date of this Indenture).

 

“Special
Record Date” for the payment of any Defaulted Interest on any Subordinated Note means a date fixed in accordance
with Section 210.

 

“Stated
Maturity” means September 1, 2030.

 

“Subordinated
Note” or “Subordinated Notes” means the Initial Notes and the Exchange Notes and, more
particularly, any Subordinated Note authenticated and delivered under this Indenture, including those Subordinated Notes issued
or authenticated upon transfer, replacement or exchange.

 

“Subordinated
Note Register” is defined in Section 206.

 

“Subordination
Provisions” means the provisions contained in Article XI or any provisions with respect to subordination contained
in the Subordinated Notes.

 

    7

     

    

 

“Subsidiary”
means a corporation, a partnership, business or statutory trust or a limited liability company, a majority of the outstanding voting
equity securities or a majority of the voting membership or partnership interests, as the case may be, of which is owned or controlled,
directly or indirectly, by the Company or by one or more other Subsidiaries of the Company. For the purposes of this definition,
“voting equity securities” means securities having voting power for the election of directors, managers, managing partners
or trustees, as the case may be, whether at all times or only so long as no senior class of stock has voting power by reason of
any contingency.

 

“Tax Event”
means the receipt by the Company of an opinion of independent tax counsel experienced in such matters to the effect that as a result
of (1) an amendment to or change (including any announced prospective amendment or change) in any law or treaty, or any regulation
thereunder, of the United States or any of its political subdivisions or taxing authorities; (2) a judicial decision, administrative
action, official administrative pronouncement, ruling, regulatory procedure, regulation, notice or announcement, including any
notice or announcement of intent to adopt or promulgate any ruling, regulatory procedure or regulation (any of the foregoing, an
“Administrative or Judicial Action”); or (3) an amendment to or change in any official position
with respect to, or any interpretation of, an Administrative or Judicial Action or a law or regulation of the United States that
differs from the previously generally accepted position or interpretation, in each case, which change or amendment or challenge
becomes effective or which pronouncement, decision or challenge is announced on or after the issue date of the Subordinated Notes,
there is more than an insubstantial risk that interest payable by the Company on the Subordinated Notes is not, or, within 90 days
of the date of such opinion, will not be, deductible by the Company, in whole or in part, for United States federal income tax
purposes.

 

“Tier 2
Capital” means Tier 2 capital (or its equivalent) for purposes of capital adequacy guidelines of the Federal Reserve,
as then in effect and applicable to the Company.

 

“Tier 2
Capital Event” means the Company’s good faith determination that, as a result of (1) any amendment to,
or change in, the laws, rules or regulations of the United States (including, for the avoidance of doubt, any agency or instrumentality
of the United States, including the Federal Reserve and other federal bank regulatory agencies) or any political subdivision of
or in the United States that is enacted or becomes effective after the issue date of the Subordinated Notes, (2) any proposed
change in those laws, rules or regulations that is announced or becomes effective after the issue date of the Subordinated
Notes, or (3) any official administrative decision or judicial decision or administrative action or other official pronouncement
interpreting or applying those laws, rules, regulations, policies or guidelines with respect thereto that is announced after the
issue date of the Subordinated Notes, there is more than an insubstantial risk that the Company will not be entitled to treat the
Subordinated Notes then Outstanding as Tier 2 Capital for so long as any Subordinated Notes are Outstanding.

 

“Trust
Indenture Act” means the Trust Indenture Act of 1939, as amended.

 

“Trustee”
means UMB Bank National Association, as trustee, until a successor replaces it in accordance with the provisions of this Indenture
and thereafter means the successor serving hereunder.

 

“United
States,” means the United States of America (including the states thereof and the District of Columbia), its territories,
its possessions and other areas subject to its jurisdiction.

 

    8

     

    

 

“Unrestricted
Definitive Subordinated Note” means a Definitive Subordinated Note that does not bear, and is not required to bear,
the Private Placement Legend.

 

“Unrestricted
Global Subordinated Note” means a Global Subordinated Note that does not bear, and is not required to bear, the Private
Placement Legend.

 

Section 102     Compliance
Certificates and Opinions.

 

Except as otherwise
expressly provided in or under this Indenture, upon any application or request by the Company to the Trustee to take any action
under any provision of this Indenture, the Company will furnish to the Trustee an Officers’ Certificate in form reasonably
satisfactory to the Trustee stating that, in the opinion of the signers, all conditions precedent (including covenants compliance
with which constitutes a condition precedent), if any, provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel in form reasonably satisfactory to the Trustee stating that, in the opinion of such counsel,
all such conditions precedent (including covenants compliance with which constitutes a condition precedent), if any, have been
complied with, except that in the case of any such application or request as to which the furnishing of such documents or any of
them is specifically required by any provision of this Indenture relating to such particular application or request, no additional
certificate or opinion need be furnished.

 

Each certificate or
opinion with respect to which compliance with a condition provided for in this Indenture (other than an Officers’ Certificate
provided under Section 907) must comply with the provisions of Section 314(e) of the Trust Indenture Act and must
include:

 

(1)            a
statement that the person making such certificate or opinion has read such covenant or condition;

 

(2)            a
brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained
in such certificate or opinion are based;

 

(3)            a
statement that, in the opinion of such person, he or she has made such examination or investigation as is necessary to enable him
or her to express an informed opinion as to whether or not such condition has been satisfied; and

 

(4)            a
statement as to whether or not, in the opinion of such person, such condition has been satisfied.

 

Section 103     Form of
Documents Delivered to Trustee.

 

In any case where several
matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters
be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document,
but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other
matters, and any such Person may certify or give an opinion as to such matters in one or several documents.

 

    9

     

    

 

Any certificate or
opinion of an Officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such Officer knows, or in the exercise of reasonable care, but without investigation, should
know, that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based
is erroneous.

  

Any such certificate
or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations
by, an Officer or Officers of the Company stating that the information with respect to such factual matters is in the possession
of the Company unless such counsel knows, or in the exercise of reasonable care, but without investigation, should know, that the
certificate or opinion or representations with respect to such matters are erroneous.

 

Where any Person is
required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments
under this Indenture or any Subordinated Note, they may, but need not, be consolidated and form one instrument.

 

Section 104     Acts
of Holders.

 

(1)            Any
request, demand, authorization, direction, notice, consent, waiver or other action provided by or under this Indenture to be made,
given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by
such Holders in person or by an agent duly appointed in writing. Except as herein otherwise expressly provided, such action will
become effective when such instrument or instruments or record or both are delivered to the Trustee and, where it is hereby expressly
required, to the Company. Such instrument or instruments and any such record (and the action embodied therein and evidenced thereby)
are herein sometimes referred to as the “Act” of the Holders signing such instrument or instruments. Proof of execution
of any such instrument or of a writing appointing any such agent, or of the holding by any Person of a Subordinated Note, will
be sufficient for any purpose of this Indenture and (subject to Section 501) conclusive in favor of the Trustee and the Company
and any agent of the Trustee or the Company, if made in the manner provided in this Section.

 

(2)            The
fact and date of the execution by any Person of any such instrument or writing may be proved in any reasonable manner that the
Trustee deems sufficient and in accordance with such reasonable rules as the Trustee may determine, and the Trustee may in
any instance require further proof with respect to any of the matters referred to in this Section.

 

(3)            The
ownership, principal amount and serial numbers of Subordinated Notes held by any Person, and the date of the commencement and the
date of the termination of holding the same, will be proved by the Subordinated Note Register.

 

(4)            The
Company may, in the circumstances permitted by the Trust Indenture Act, set a record date for purposes of determining the identity
of Holders entitled to give any request, demand, authorization, direction, notice, consent, waiver or take any other act authorized
or permitted to be given or taken by Holders. Unless otherwise specified, if not set by the Company prior to the first solicitation
of a Holder made by any Person in respect of any such action, any such record date will be the later of 30 days prior to the first
solicitation of such consent or the date of the most recent list of Holders furnished to the Trustee prior to such solicitation.
If a record date is fixed, the Holders on such record date, and only such Persons, will be entitled to make, give or take such
request, demand, authorization, direction, notice, consent, waiver or other action, whether or not such Holders remain Holders
after such record date. No such request, demand, authorization, direction, notice, consent, waiver or other action will be valid
or effective if made, given or taken more than 90 days after such record date.

 

    10

     

    

  

(5)            Any
effective request, demand, authorization, direction, notice, consent, waiver or other Act by the Holder of any Subordinated Note
will bind every future Holder of the same Subordinated Note and the Holder of every Subordinated Note issued upon the registration
of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done or suffered to be done by the Trustee,
any Registrar, any Paying Agent or the Company in reliance thereon, whether or not notation of such Act is made upon such Subordinated
Note.

 

(6)            Without
limiting the foregoing, a Holder entitled to take any action hereunder with regard to any particular Note may do so with regard
to all or any part of the principal amount of such Note or by one or more duly appointed agents, each of which may do so in accordance
with such appointment with regard to all or any part of such principal amount. Any notice given or action taken by a Holder or
its agents with regard to different parts of such principal amount in accordance with this paragraph will have the same effect
as if given or taken by separate Holders of each such different part.

 

(7)            Without
limiting the generality of this Section 104, a Holder, including a Depositary that is a Holder of a Global Subordinated Note,
may make, give or take, by a proxy or proxies, duly appointed in writing, any request, demand, authorization, direction, notice,
consent, waiver or other Act provided in or under this Indenture or the Subordinated Notes to be made, given or taken by Holders,
and a Depositary that is a Holder of a Global Subordinated Note may provide its proxy or proxies to the beneficial owners of interests
in any such Global Subordinated Note through such Depositary’s Applicable Procedures. The Company may fix a record date for
the purpose of determining the Persons who are beneficial owners of interests in any Global Subordinated Note entitled under the
Applicable Procedures of such Depositary to make, give or take, by a proxy or proxies duly appointed in writing, any request, demand,
authorization, direction, notice, consent, waiver or other action provided in this Indenture to be made, given or taken by Holders.
If such a record date is fixed, the Holders on such record date or their duly appointed proxy or proxies, and only such Persons,
will be entitled to make, give or take such request, demand, authorization, direction, notice, consent, waiver or other action,
whether or not such Holders remain Holders after such record date. No such request, demand, authorization, direction, notice, consent,
waiver or other action will be valid or effective if made, given or taken more than 90 days after such record date.

 

Promptly upon any record
date being set in accordance with this Section 104, the Company, at its own expense, will cause notice of the record date,
the proposed action by Holders and the expiration date to be given to the Trustee in writing and the Holders in the manner set
forth in Section 105.

 

    11

     

    

 

Section 105     Required
Notices or Demands.

 

Any notice or communication
by the Company or the Trustee to the other is duly given if in writing and delivered in Person or delivered by registered or certified
mail (return receipt requested), facsimile or overnight air courier guaranteeing next day delivery, to the other’s address:

 

If to the Company:

 

Shore Bancshares, Inc.

28969 Information Lane

Easton, Maryland 21601

Attention: Chief Financial Officer

Facsimile: (410) 822-7265

 

If to the Trustee:

 

UMB Bank National Association, as Trustee

5555 San Felipe Street, Suite 870

Houston, Texas 77056

Attention: Mauri Cowen / Corporate Trust

Facsimile: (214) 389-5949

 

The Company or the
Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications.

 

All notices and communications
will be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being
deposited in the mail, postage prepaid, if delivered by mail; on the first Business Day after being sent, if sent by facsimile
and the sender receives confirmation of successful transmission; and the next Business Day after timely delivery to the courier,
if sent by overnight air courier guaranteeing next day delivery.

 

Any notice required
or permitted to be given to a Holder under the provisions of this Indenture will be deemed to be properly delivered by being deposited
postage prepaid in a post office letter box in the United States addressed to such Holder at the address of such Holder as shown
on the Subordinated Note Register. Any report in accordance with Section 313 of the Trust Indenture Act will be transmitted
in compliance with subsection (c) therein. If the Company delivers a notice or communication to Holders, the Company will
deliver a copy to the Trustee at the same time.

 

In any case where notice
to Holders of Subordinated Notes is delivered by mail, neither the failure to deliver such notice, nor any defect in any notice
so delivered, to any particular Holder of a Subordinated Note will affect the sufficiency of such notice with respect to other
Holders of Subordinated Notes. Any notice that is delivered in the manner herein provided will be conclusively presumed to have
been duly given or provided. In the case by reason of the suspension of regular mail service or by reason of any other cause it
will be impracticable to give such notice by mail, then such notification as will be made with the approval of the Trustee will
constitute a sufficient notification for every purpose hereunder.

 

    12

     

    

 

Where this Indenture
provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before
or after the event, and such waiver will be the equivalent of such notice. Waivers of notice by Holders of Subordinated Notes will
be filed with the Trustee, but such filing will not be a condition precedent to the validity of any action taken in reliance upon
such waiver.

 

Notwithstanding any
other provision herein, where this Indenture provides for notice to any Holder of a Global Subordinated Note, or of an interest
therein, such notice will be sufficiently given if given to the Depositary for such Global Subordinated Note (or its designee)
according to the applicable procedures of such Depositary prescribed for giving such notice.

 

Section 106     Language
of Notices.

 

Any request, demand,
authorization, direction, notice, consent or waiver or other Act required or permitted under this Indenture will be in the English
language, except that, if the Company so elects, any published notice may be in an official language of the country of publication.

 

Section 107     Incorporation
by Reference of Trust Indenture Act; Conflicts.

 

Whenever this Indenture
refers to a provision of the Trust Indenture Act, the provision is incorporated by reference in and made a part of this Indenture.
The Trust Indenture Act term “obligor” used in this Indenture means the Company and any successor obligor upon
the Subordinated Notes.

 

All other terms used
in this Indenture that are defined by the Trust Indenture Act, defined by Trust Indenture Act reference to another statute or defined
by Commission rule under the Trust Indenture Act have the meanings so assigned to them as of the date of this Indenture. If
and to the extent that any provision of this Indenture limits, qualifies or conflicts with another provision included in this Indenture
that is required to be included in this Indenture by any of Sections 310 to 317, inclusive, of the Trust Indenture Act, such required
provision will control. If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by Section 318(c) of
the Trust Indenture Act, the duties imposed by Section 318(c) of the Trust Indenture Act will control. If any provision
of this Indenture modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded, the provisions
of the Trust Indenture Act will be deemed to apply to this Indenture as so modified or will be excluded, as the case may be.

 

Section 108     Effect
of Headings and Table of Contents.

 

The Article and
Section headings in this Indenture and the Table of Contents are for convenience only and will not affect the construction
of this Indenture.

 

Section 109     Successors
and Assigns.

 

All the covenants,
stipulations, promises and agreements in this Indenture by or on behalf of the Company or the Trustee will bind its respective
successors and permitted assigns, whether so expressed or not.

 

    13

     

    

 

Section 110     Severability.

 

In case any provision
in this Indenture or any Subordinated Note will be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions will not, to the fullest extent permitted by law, in any way be affected or impaired thereby.

 

Section 111     Entire
Agreement.

 

This Indenture and
the exhibits hereto set forth the entire agreement and understanding of the parties related to this transaction and supersedes
all prior agreements and understandings, oral or written.

 

Section 112     Benefits
of Indenture.

 

Nothing in this Indenture
or any Subordinated Note, express or implied, will give to any Person, other than the parties hereto, any Registrar, any Paying
Agent and their respective successors hereunder and the Holders of Subordinated Notes, and the holders of Senior Indebtedness,
any benefit or any legal or equitable right, remedy or claim under this Indenture.

 

Section 113     Governing
Law.

 

This Indenture and
the Subordinated Notes will be governed by and construed in accordance with the laws of the State of New York applicable to agreements
made or instruments entered into and, in each case, performed in said State (without reference to principles of conflicts of law).

 

Section 114     Legal
Holidays.

 

Unless otherwise specified
in or under this Indenture or any Subordinated Notes, in any case where any Interest Payment Date, Stated Maturity or Maturity
of, or any other day on which a payment is due with respect to, any Subordinated Note will be a day that is not a Business Day
at any Place of Payment, then (notwithstanding any other provision of this Indenture or any Subordinated Note other than a provision
in any Subordinated Note or in the Board Resolution, Officers’ Certificate or supplemental indenture establishing the terms
of any Subordinated Note that specifically states that such provision will apply in lieu hereof) payment need not be made at such
Place of Payment on such date, but such payment may be made on the next succeeding day that is a Business Day at such Place of
Payment with the same force and effect as if made on the Interest Payment Date, at the Stated Maturity or Maturity or on any such
other payment date, as the case may be, and no interest will accrue on the amount payable on such date or at such time for the
period from and after such Interest Payment Date, Stated Maturity, Maturity or other payment date, as the case may be, to the next
succeeding Business Day,

 

    14

     

    

 

Section 115     Counterparts;
Electronic Transmission.

 

This Indenture may
be executed in several counterparts, each of which will be an original and all of which will constitute but one and the same instrument.
Any facsimile or electronically transmitted copies hereof or signature hereon will, for all purposes, be deemed originals. Unless
otherwise provided herein or in any other related document, the words “execute”, “execution”, “signed”,
and “signature” and words of similar import used in or related to any document to be signed in connection with this
Indenture, any other related document or any of the transactions contemplated hereby (including amendments, waivers, consents and
other modifications) shall be deemed to include electronic signatures via Docusign and the keeping of records in electronic form,
each of which shall be of the same legal effect, validity or enforceability as a manually executed signature in ink or the use
of a paper-based recordkeeping system, as applicable, to the fullest extent and as provided for in any applicable law, including
the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act,
and any other similar state laws based on the Uniform Electronic Transactions Act, provided that, notwithstanding anything herein
to the contrary, the Trustee may conclusively rely upon any such electronic signature, shall in no instance be responsible for
determining if any such electronic signature is permitted by applicable law nor be liable for any loss or damages resulting from
its reliance upon the same electronic signature, and is not under any obligation to agree to accept electronic signatures in any
form or in any format unless expressly agreed to by such Trustee pursuant to procedures approved by the Trustee.

 

Section 116     Immunity
of Certain Persons.

 

No recourse under or
upon any obligation, covenant or agreement contained in this Indenture, or in any Subordinated Note, or because of any indebtedness
evidenced thereby, will be had against any past, present or future shareholder, employee, officer or director, as such, of the
Company or of any predecessor or successor, either directly or through the Company or any predecessor or successor, under any rule of
law, statute or constitutional provision or by the enforcement of any assessment or by any legal or equitable proceeding or otherwise,
all such liability being expressly waived and released by the acceptance of the Subordinated Notes by the Holders and as part of
the consideration for the issue of the Subordinated Notes.

 

Section 117     Waiver
of Jury Trial.

 

EACH PARTY HERETO IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY
OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS INDENTURE, THE SUBORDINATED NOTES OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

Section 118     Force
Majeure.

 

In no event will the
Trustee be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused
by, directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages, accidents, acts
of war or terrorism, civil or military disturbances, epidemics or pandemics, nuclear or natural catastrophes or acts of God, and
interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services; it being understood
that the Trustee will use reasonable efforts that are consistent with accepted practices in the banking industry to resume performance
as soon as practicable under the circumstances.

 

Section 119     USA
Patriot Act.

 

The Trustee hereby
notifies the Company that in accordance with the requirements of the USA Patriot Act, it is required to obtain, verify and record
information that identifies the Company, which information includes the name and address of the Company and other information that
will allow the Trustee to identify the Company in accordance with the USA Patriot Act.

 

    15

     

    

  

 

Section 120         No
Sinking Fund.

 

The Subordinated Notes
are not entitled to the benefit of any sinking fund.

 

Section 121         Rules of
Construction.

 

Unless the context
otherwise requires:

 

(1)          a
term has the meaning assigned to it;

 

(2)          an
accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;

 

(3)          “or”
is not exclusive;

 

(4)          words
in the singular include the plural, and in the plural include the singular;

 

(5)          “including”
means including without limitation;

 

(6)          “will”
will be interpreted to express a command;

 

(7)          provisions
apply to successive events and transactions;

 

(8)          references
to sections of, or rules under, the Securities Act will be deemed to include substitute, replacement or successor sections
or rules adopted by the Commission from time to time;

 

(9)         unless
the context otherwise requires, any reference to an “Article,” “Section” or “clause” refers
to an Article, Section or clause, as the case may be, of this Indenture; and

 

(10)       the
words “herein,” “hereof and “hereunder” and other words of similar import refer to this Indenture
as a whole and not any particular Article, Section, clause or other subdivision.

 

ARTICLE II

THE SUBORDINATED NOTES

 

Section 201         Forms
Generally.

 

The Subordinated Notes
and the Trustee’s certificate of authentication and the Global Subordinated Notes and the Trustee’s certificate of
authentication will be substantially in the form of Exhibit A-l and Exhibit A-2, as applicable, which are
a part of this Indenture. The Subordinated Notes may have notations, legends or endorsements required by law, stock exchange rule or
usage (provided that any such notation, legend or endorsement is in a form acceptable to the Company). The Company will provide
any such notations, legends or endorsements to the Trustee in writing. Each Subordinated Note will be dated the date of its authentication.
The terms and provisions contained in the Subordinated Notes will constitute, and are hereby expressly made a part of this Indenture
and the Company and the Trustee, by their execution and delivery of this Indenture, agree to such terms and provisions and to be
bound thereby. However, to the extent any provision of any Subordinated Note irreconcilably conflicts with the express provisions
of this Indenture, the provisions of this Indenture will govern and be controlling.

 

    16

     

    

 

Section 202         Definitive
Subordinated Notes.

 

The Initial Notes and
the Exchange Notes will be issued initially in the form of one or more Definitive Subordinated Notes, unless, before the issuance
of such Initial Notes or Exchange Notes, the Company has determined that the Subordinated Notes may be represented by Global Subordinated
Notes and has so notified the Trustee, in which event the Initial Notes and/or Exchange Notes will be issued in the form of one
or more Global Subordinated Notes. Except as provided in Section 207, Holders of Definitive Subordinated Notes will not be
entitled to transfer Definitive Subordinated Notes in exchange for beneficial interests in Global Subordinated Notes, and owners
of beneficial interests in Global Subordinated Notes will not be entitled to receive physical delivery of Definitive Subordinated
Notes.

 

Section 203         Global
Subordinated Notes.

 

Each Global Subordinated
Note issued under this Indenture will be deposited with the Trustee at its Corporate Trust Office, as custodian for the Depositary,
and registered in the name of the Depositary or the nominee thereof, duly executed by the Company and authenticated by the Trustee
as hereinafter provided. The aggregate principal amount of any Global Subordinated Note may from time to time be increased or decreased
by adjustments made on the records of the Trustee and the Depositary as hereinafter provided. Any adjustment of the aggregate principal
amount of a Global Subordinated Note to reflect the amount of any increase or decrease in the amount of Outstanding Subordinated
Notes represented thereby will be made by the Trustee in accordance with instructions given by the Holder thereof as required by
Section 207 hereof and will be made on the records of the Trustee and the Depositary.

 

Section 204         Restricted
Subordinated Notes.

 

Each Restricted Definitive
Subordinated Note and Restricted Global Subordinated Note will bear a legend in substantially the following form:

 

THE SECURITIES EVIDENCED BY
THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR UNDER
ANY APPLICABLE STATE SECURITIES LAW. THESE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN
THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OR (B) AN AVAILABLE
EXEMPTION FROM, INCLUDING (BUT NOT LIMITED TO) IN ACCORDANCE AND IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, OR
IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES
LAWS OR BLUE SKY LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY, IF REQUESTED, OR
(II) UNLESS SOLD IN ACCORDANCE WITH RULE 144 UNDER SAID ACT.

 

    17

     

    

 

The Private Placement
Legend set forth above will be removed and a new Subordinated Note of like tenor and principal amount without such Private Placement
Legend will be executed by the Company, and upon written request of the Company (together with an Officers’ Certificate and
an Opinion of Counsel) given at least three Business Days prior to the proposed authentication date, the Trustee will authenticate
and deliver such new Subordinated Note to the respective Holder, if legal counsel to the Holder or owner of beneficial interests
requesting the removal of such Private Placement Legend delivers to the Trustee, any Registrar and Paying Agent (if a different
Person than the Trustee) and the Company an Opinion of Counsel in compliance with this Indenture and additionally opining that
the Subordinated Note is eligible for immediate resale, without any remaining holding period, under Rule 144 without regard
to the requirement for the Company to be in compliance with the current public information required under Rule 144 as to such
securities.

 

Section 205         Execution
and Authentication.

 

Subordinated Notes
will be executed on behalf of the Company by any Authorized Officer and may (but need not) have the Company’s corporate seal
or a facsimile thereof reproduced thereon. The signature of an Authorized Officer on the Subordinated Notes may be manual or facsimile.
Subordinated Notes bearing the manual or facsimile signatures of individuals who were at the time of execution Authorized Officers
of the Company will, to the fullest extent permitted by law, bind the Company, notwithstanding that such individuals or any of
them have ceased to hold such offices prior to the authentication and delivery of such Subordinated Notes or did not hold such
offices at the date of such Subordinated Notes.

 

The Trustee or an Authenticating
Agent will authenticate and deliver the Initial Notes for original issue in an aggregate principal amount of up to $25,000,000
upon one or more Company Orders and an Opinion of Counsel. In addition, the Trustee or an Authenticating Agent will upon receipt
of a Company Order, Opinion of Counsel and Officers’ Certificate authenticate and deliver any Exchange Notes for an aggregate
principal amount not to exceed $25,000,000 specified in such Company Order for Exchange Notes issued hereunder. The aggregate principal
amount of Outstanding Subordinated Notes at any time may not exceed the amount set forth in the foregoing sentence, except as otherwise
provided in this Article II. The Subordinated Notes will be issued only in registered form without coupons and in minimum
denominations of $100,000 and any integral multiple of $1,000 in excess thereof.

 

The Trustee will not
be required to authenticate any Subordinated Notes if the issue of such Subordinated Notes under this Indenture will affect the
Trustee’s own rights, duties or immunities under the Subordinated Notes and this Indenture or otherwise in a manner that
is not reasonably acceptable to the Trustee or if the Trustee, being advised by counsel, determines that such action may not lawfully
be taken.

 

    18

     

    

 

No Subordinated Note
will be entitled to any benefit under this Indenture or be valid or obligatory for any purpose, unless there appears on such Subordinated
Note a certificate of authentication substantially in the form provided for herein executed by or on behalf of the Trustee or by
the Authenticating Agent by the manual signature of one of its authorized signatories. Such certificate upon any Subordinated Note
will be conclusive evidence, and the only evidence, that such Subordinated Note has been duly authenticated and delivered hereunder.

 

Section 206         Registrar
and Paying Agent.

 

The Company will maintain
an office or agency where Subordinated Notes may be presented for registration of transfer or for exchange (“Registrar”)
and an office or agency where Subordinated Notes may be presented for payment (“Paying Agent”). The Registrar will
keep a register of the Subordinated Notes (“Subordinated Note Register”) and of their transfer and exchange. The registered
Holder of a Subordinated Note will be treated as the owner of the Subordinated Note for all purposes. The Company may appoint one
or more co-registrars and one or more additional Paying Agents. The term “Registrar” includes any co-registrar and
the term “Paying Agent” includes any additional paying agent. The Company may change any Paying Agent or Registrar
without prior notice to any Holder; provided that no such removal or replacement will be effective until a successor Paying Agent
or Registrar will have been appointed by the Company and will have accepted such appointment. The Company will notify the Trustee
in writing of the name and address of any Registrar or Paying Agent not a party to this Indenture. If the Company fails to appoint
or maintain another entity as Registrar or Paying Agent, the Trustee will act as such. The Company or any of its Subsidiaries may
act as Paying Agent or Registrar.

 

The Company initially
appoints the Trustee to act as the Paying Agent and Registrar for the Subordinated Notes and, in the event that any Subordinated
Notes are issued in global form, to initially act as custodian with respect to the Global Subordinated Notes. In the event that
the Trustee will not be or will cease to be Registrar with respect the Subordinated Notes, it will have the right to examine the
Subordinated Note Register at all reasonable times. There will be only one Subordinated Note Register.

 

Section 207         Registration
of Transfer and Exchange

 

(1)            Except
as otherwise provided in or under this Indenture, upon surrender for registration of transfer of any Subordinated Note, the Company
will execute, and the Trustee will authenticate and deliver, in the name of the designated transferee or transferees, one or more
new Subordinated Notes denominated as authorized in or under this Indenture, of a like aggregate principal amount bearing a number
not contemporaneously outstanding and containing identical terms and provisions.

 

Except as otherwise
provided in or under this Indenture, at the option of the Holder, Subordinated Notes may be exchanged for other Subordinated Notes
containing identical terms and provisions, in any authorized denominations (minimum denominations of $100,000 and any integral
multiple of $1,000 in excess thereof), and of a like aggregate principal amount, upon surrender of the Subordinated Notes to be
exchanged at any office or agency for such purpose. Whenever any Subordinated Notes are so surrendered for exchange, the Company
will execute, and the Trustee will authenticate and deliver, subject to the terms hereof, the Subordinated Notes that the Holder
making the exchange is entitled to receive.

 

    19

     

    

 

All Subordinated Notes
issued upon any registration of transfer or exchange of Subordinated Notes will be the valid obligations of the Company evidencing
the same debt and entitling the Holders thereof to the same benefits under this Indenture as the Subordinated Notes surrendered
upon such registration of transfer or exchange.

 

Every Subordinated
Note presented or surrendered for registration of transfer or for exchange or redemption will (if so required by the Company or
the Registrar for such Subordinated Note) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory
to the Company and the Registrar for such Subordinated Note duly executed by the Holder thereof or his attorney duly authorized
in writing.

 

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

 

Except as otherwise
provided in or under this Indenture, the Company will not be required (i) to issue, register the transfer of or exchange any
Subordinated Notes during a period beginning at the opening of business 15 days before the day of the selection for redemption
of Subordinated Notes under Section 1003 and ending at the close of business on the day of such selection, or (ii) to
register the transfer of or exchange any Subordinated Note, or portion thereof, so selected for redemption, except in the case
of any Subordinated Note to be redeemed in part, the portion thereof not to be redeemed.

 

Any Registrar appointed
in accordance with Section 206 hereof will provide to the Trustee such information as the Trustee may reasonably require in
connection with the delivery by such Registrar of Subordinated Notes upon transfer or exchange of Subordinated Notes. No Registrar
will be required to make registrations of transfer or exchange of Subordinated Notes during any periods designated in the Subordinated
Notes or in this Indenture as periods during which such registration of transfers and exchanges need not be made.

 

The Trustee will have
no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture
or under applicable law with respect to any transfer of any interest in any Subordinated Note (including any transfers between
or among Depositary participants or beneficial owners of interests in any Global Subordinated Note) other than to require delivery
of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required
by the terms of, this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements
hereof.

 

Neither the Trustee
nor any Paying Agent will have any responsibility for any actions taken or not taken by the Depositary.

 

    20

     

    

 

(2)            When
Definitive Subordinated Notes are presented by a Holder to the Registrar with a request to register the transfer of such Definitive
Subordinated Notes or to exchange such Definitive Subordinated Notes for an equal principal amount of Definitive Subordinated Notes
of other authorized denominations, the Registrar will register the transfer or make the exchange as requested if its reasonable
requirements for such transaction are met; provided, however, that the Definitive Subordinated Notes surrendered for transfer or
exchange will be duly endorsed or accompanied by a written instrument of transfer in form reasonably satisfactory to the Company
and the Registrar, duly executed by the Holder thereof or such Holder’s attorney duly authorized in writing.

 

(3)            A
Global Subordinated Note may not be transferred except by the Depositary to a nominee of the Depositary, by a nominee of the Depositary
to the Depositary or to another nominee of the Depositary, or by the Depositary or any such nominee to a successor Depositary or
a nominee of such successor Depositary. All Global Subordinated Notes will be exchanged by the Company for Definitive Subordinated
Notes if: (i) the Depositary has notified the Company that it is unwilling or unable to continue as Depositary for such Global
Subordinated Note or such Depositary has ceased to be a “clearing agency” registered under the Exchange Act, and a
successor depositary is not appointed by the Company within 90 days, (ii) the Company determines that the Subordinated Notes
are no longer to be represented by Global Subordinated Notes and so notifies the Trustee, or (iii) an Event of Default has
occurred and is continuing with respect to the Subordinated Notes and the Depositary or its participant(s) has requested the
issuance of Definitive Subordinated Notes.

 

Any Global Subordinated
Note exchanged in accordance with clause (i) or (ii) above will be so exchanged in whole and not in part, and any Global
Subordinated Note exchanged in accordance with clause (iii) above may be exchanged in whole or from time to time in part as
directed by the Depositary.

 

Upon the occurrence
of any of the preceding events in (i), (ii) or (iii) above, Definitive Subordinated Notes will be issued in fully registered
form, without interest coupons, will have an aggregate Principal Amount equal to that of the Global Subordinated Note or portion
thereof to be so exchanged, will be registered in such names and be in such authorized denominations as the Depositary will instruct
the Trustee in writing and will bear such legends as provided herein. Global Subordinated Notes also may be exchanged or replaced,
in whole or in part, as provided in Section 209 hereof. Every Subordinated Note authenticated and delivered in exchange for,
or in lieu of, a Global Subordinated Note or any portion thereof, in accordance with this Section 207 or Section 209
hereof, will be authenticated and delivered in the form of, and will be, a Global Subordinated Note, except as otherwise provided
herein. A Global Subordinated Note may not be exchanged for another Subordinated Note other than as provided in this Section 207(3);
however, beneficial interests in a Global Subordinated Note may be transferred and exchanged as provided in Section 207(4) hereof.

 

Any Global Subordinated
Note to be exchanged in whole will be surrendered by the Depositary to the Trustee. With regard to any Global Subordinated Note
to be exchanged in part, either such Global Subordinated Note will be so surrendered for exchange or, if the Trustee is acting
as custodian for the Depositary or its nominee with respect to such Global Subordinated Note, the principal amount thereof will
be reduced, by an amount equal to the portion thereof to be so exchanged, by means of an appropriate adjustment made on the records
of the Trustee. Upon any such surrender or adjustment, the Trustee will authenticate and deliver the Subordinated Note issuable
on such exchange to or upon the order of the Depositary or an authorized representative thereof.

 

    21

     

    

 

(4)            The
transfer and exchange of beneficial interests in the Global Subordinated Notes will be effected through the Depositary in accordance
with the Applicable Procedures and this Section 207.

 

(5)            A
Definitive Subordinated Note may not be exchanged for a beneficial interest in a Global Subordinated Note unless the Company determines
that the Subordinated Notes may be represented by Global Subordinated Notes and so notifies the Trustee. After the Company has
determined that the Subordinated Notes may be represented by Global Subordinated Notes and so notifies the Trustee, then upon receipt
by the Trustee of a Definitive Subordinated Note, duly endorsed or accompanied by appropriate instruments of transfer, in form
satisfactory to the Trustee, together with written instructions from such Holder directing the Trustee to make, or to direct the
Registrar to make, an adjustment on its books and records with respect to such Global Subordinated Note to reflect an increase
in the aggregate principal amount of the Subordinated Notes represented by the Global Subordinated Note, such instructions to contain
information regarding the Depositary account to be credited with such increase, the Trustee will cancel such Definitive Subordinated
Note and cause, or direct the Registrar to cause, in accordance with the standing instructions and procedures existing between
the Depositary and the Registrar, the aggregate principal amount of Subordinated Notes represented by the Global Subordinated Note
to be increased by the aggregate principal amount of the Definitive Subordinated Note to be exchanged, and will credit or cause
to be credited to the account of the Person specified in such instructions a beneficial interest in the Global Subordinated Note
equal to the principal amount of the Definitive Subordinated Note so cancelled. If no Global Subordinated Notes are then outstanding,
the Company will issue and the Trustee will authenticate, upon Company Order, a new Global Subordinated Note in the appropriate
principal amount.

 

(6)            At
such time as all beneficial interests in a particular Global Subordinated Note have been exchanged for Definitive Subordinated
Notes or a particular Global Subordinated Note has been repurchased or canceled in whole and not in part, each such Global Subordinated
Note will be returned to or retained and canceled by the Trustee in accordance with Section 212 hereof. At any time prior
to such cancellation, if any beneficial interest in a Global Subordinated Note is exchanged for or transferred to a Person who
will take delivery thereof in the form of a beneficial interest in another Global Subordinated Note or for Definitive Subordinated
Notes, the principal amount of Subordinated Notes represented by such Global Subordinated Note will be reduced accordingly by adjustments
made on the records of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred
to a Person who will take delivery thereof in the form of a beneficial interest in another Global Subordinated Note, such other
Global Subordinated Note will be increased accordingly by adjustments made on the records of the Trustee to reflect such increase.

 

(7)            No
Restricted Subordinated Note will be transferred or exchanged except in compliance with the Private Placement Legend or as provided
in accordance with Section 208. In addition to the provisions for transfer and exchange set forth in this Section 207,
the Trustee, any Registrar and Paying Agent (if a different Person than the Trustee) and the Company may, prior to effecting any
requested transfer or exchange of any Restricted Subordinated Notes, other than an exchange in accordance with Section 208,
require that legal counsel to the Holder or owner of beneficial interests requesting such transfer or exchange deliver to the
Trustee, any Registrar and Paying Agent (if a different Person than the Trustee) and the Company, an Opinion of Counsel in compliance
with this Indenture and additionally opining that the transfer or exchange is in compliance with the requirements of the Private
Placement Legend and that the Subordinated Note issued to the transferee or in exchange for the Restricted Subordinated Note may
be issued free of the Private Placement Legend. Any untransferred or unexchanged balance of a Restricted Subordinated Note will
be reissued to the Holder with the Private Placement Legend, unless the Private Placement Legend may be omitted in accordance
with Section 204, as evidenced by the Opinion of Counsel.

 

    22

     

    

 

 

Section 208         Exchange
Offer.

 

Upon the occurrence
of an Exchange Offer in accordance with the Registration Rights Agreement, the Company will issue and, upon receipt of a Company
Order in accordance with Section 205 hereof, the Trustee will authenticate (i) Unrestricted Definitive Subordinated Notes
in an aggregate principal amount equal to the principal amount of the Restricted Definitive Subordinated Notes tendered in such
Exchange Offer for acceptance by Persons that certify in the applicable Letters of Transmittal that (x) they are not Participating
Broker-Dealers, (y) they are not participating in a distribution of the applicable Exchange Notes and (z) they are not
Affiliates of the Company, and accepted for exchange in such Exchange Offer or, if permitted by the Company, (ii) one or more
Unrestricted Global Subordinated Notes in an aggregate principal amount equal to the principal amount of the beneficial interests
in the Restricted Global Subordinated Notes tendered in such Exchange Offer for acceptance by Persons that certify in the applicable
Letters of Transmittal that (x) they are not Participating Broker-Dealers, (y) they are not participating in a distribution
of the applicable Exchange Notes and (z) they are not Affiliates of the Company, and accepted for exchange in such Exchange
Offer. Concurrently with the issuance of such Unrestricted Global Subordinated Notes upon exchange of Restricted Global Subordinated
Notes, the Trustee will cause the aggregate principal amount of the applicable Restricted Global Subordinated Notes to be reduced
accordingly, and the Company will execute and the Trustee will authenticate and deliver to the Persons designated by the Holders
of Restricted Definitive Subordinated Notes so accepted Unrestricted Definitive Subordinated Notes in the applicable principal
amount. Any Subordinated Notes that remain outstanding after the consummation of such Exchange Offer, and Exchange Notes issued
in connection with such Exchange Offer, will be treated as a single class of securities under this Indenture.

 

Section 209         Mutilated,
Destroyed, Lost and Stolen Subordinated Notes.

 

If any mutilated Subordinated
Note is surrendered to the Trustee, subject to the provisions of this Section 209, the Company will execute and the Trustee
will authenticate and deliver in exchange therefor a new Subordinated Note containing identical terms and of like principal amount
and bearing a number not contemporaneously outstanding.

 

If there be delivered
to the Company and to the Trustee (i) evidence to their satisfaction of the destruction, loss or theft of any Subordinated
Note, and (ii) such security or indemnity as may be required by them to save each of them and any agent of either of them
harmless, then, in the absence of notice to the Company or the Trustee that such Subordinated Note has been acquired by a bona
fide purchaser, the Company will execute and, upon the Company’s request the Trustee will authenticate and deliver, in exchange
for or in lieu of any such destroyed, lost or stolen Subordinated Note, a new Subordinated Note containing identical terms and
of like principal amount and bearing a number not contemporaneously outstanding.

 

    23

     

    

 

Notwithstanding the
foregoing provisions of this Section 209, in case the outstanding principal balance of any mutilated, destroyed, lost or stolen
Subordinated Note has become or is about to become due and payable, or is about to be redeemed by the Company pursuant to Article X
hereof, the Company in its discretion may, instead of issuing a new Subordinated Note, pay or redeem such Subordinated Note, as
the case may be.

 

Upon the issuance of
any new Subordinated Note under this Section, the Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee)
connected therewith.

 

Every new Subordinated
Note issued in accordance with this Section in lieu of any destroyed, lost or stolen Subordinated Note will constitute a separate
obligation of the Company, whether or not the destroyed, lost or stolen Subordinated Note will be at any time enforceable by anyone,
and will be entitled to all the benefits of this Indenture equally and proportionately with any and all other Subordinated Notes
duly issued hereunder.

 

The provisions of this
Section, as amended or supplemented in accordance with this Indenture with respect to particular Subordinated Notes or generally,
will (to the extent lawful) be exclusive and will preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Subordinated Notes.

 

Section 210         Payment
of Interest; Rights to Interest Preserved.

 

Any interest on any
Subordinated Note that will be payable, and punctually paid or duly provided for, on any Interest Payment Date will be paid to
the Person in whose name such Subordinated Note is registered as of the close of business on the Regular Record Date for such Interest
Payment Date.

 

Any interest on any
Subordinated Note that will be payable, but will not be punctually paid or duly provided for, on any Interest Payment Date for
such Subordinated Note (herein called “Defaulted Interest”) will cease to be payable to the Holder thereof on the relevant
Regular Record Date by virtue of having been such Holder; and such Defaulted Interest may be paid by the Company, at its election
in each case, as provided in either clause (1) or (2) below:

 

(1)            The
Company may elect to make payment of any Defaulted Interest to the Person in whose name such Subordinated Note will be registered
at the close of business on a Special Record Date for the payment of such Defaulted Interest, which will be fixed in the following
manner. The Company will notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on such Subordinated
Note and the date of the proposed payment, and at the same time the Company will deposit with the Trustee an amount of money equal
to the aggregate amount proposed to be paid in respect of such Defaulted Interest or will make arrangements satisfactory to the
Trustee for such deposit on or prior to the date of the proposed payment, such money when so deposited to be held in trust for
the benefit of the Person entitled to such Defaulted Interest as in this clause provided. Thereupon, the Company will fix or cause
to be fixed a Special Record Date for the payment of such Defaulted Interest, which will be no less than 15 days from the proposed
payment. The Company (or, upon the written request of the Company, the Trustee in the name and at the expense of the Company),
will cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be delivered to the
Holder of such Subordinated Note at the Holder’s address as it appears in the Subordinated Note Register not less than 10
days prior to such Special Record Date. The Company may, in its discretion, in the name and at the expense of the Company cause
a similar notice to be published at least once in an Authorized Newspaper of general circulation in the City of New York, New York
but such publication will not be a condition precedent to the establishment of such Special Record Date. Notice of the proposed
payment of such Defaulted Interest and the Special Record Date therefor having been delivered as aforesaid, such Defaulted Interest
will be paid to the Person in whose name such Subordinated Note will be registered at the close of business on such Special Record
Date.

 

    24

     

    

 

(2)            The
Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities
exchange on which such Subordinated Note may be listed, and upon such notice as may be required by such exchange, if, after notice
given by the Company to the Trustee of the proposed payment under this Clause, such payment will be deemed practicable by the Trustee.

 

Unless otherwise provided
in or under this Indenture or the Subordinated Notes, at the option of the Company, interest on Subordinated Notes that bear interest
may be paid by mailing a check to the address of the Person entitled thereto as such address will appear in the Subordinated Note
Register or by transfer to an account maintained by the payee with a bank located in the United States.

 

Subject to the foregoing
provisions of this Section and Section 207, each Subordinated Note delivered under this Indenture upon registration of
transfer of or in exchange for or in lieu of any other Subordinated Note will carry the rights to interest accrued and unpaid,
and to accrue, which were carried by such other Subordinated Note.

 

Section 211         Persons
Deemed Owners.

 

Prior to due presentment
of a Subordinated Note for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name such Subordinated Note is registered in the Subordinated Note Register as the owner of such Subordinated
Note for the purpose of receiving payment of principal of, and (subject to Section 207 and Section 210) interest on,
such Subordinated Note and for all other purposes whatsoever, whether or not any payment with respect to such Subordinated Note
will be overdue, and neither the Company, the Trustee or any agent of the Company or the Trustee will be affected by notice to
the contrary.

 

No holder of any beneficial
interest in any Global Subordinated Note held on its behalf by a Depositary will have any rights under this Indenture with respect
to such Global Subordinated Note, and such Depositary may be treated by the Company, the Trustee, and any agent of the Company
or the Trustee as the owner of such Global Subordinated Note for all purposes whatsoever. None of the Company, the Trustee, any
Paying Agent or the Registrar will have any responsibility or liability for any aspect of the records relating to or payments made
on account of beneficial ownership interests of a Global Subordinated Note or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.

 

    25

     

    

 

Notwithstanding the
foregoing, nothing herein will prevent the Company, the Trustee, any Paying Agent or the Registrar from giving effect to any written
certification, proxy or other authorization furnished by the applicable Depositary, as a Holder, with respect to a Global Subordinated
Note or impair, as between such Depositary and the owners of beneficial interests in such Global Subordinated Note, the operation
of customary practices governing the exercise of the rights of such Depositary (or its nominee) as the Holder of such Global Subordinated
Note.

 

Section 212         Cancellation.

 

All Subordinated Notes
surrendered for payment, redemption, registration of transfer or exchange will, if surrendered to any Person other than the Trustee,
be delivered to the Trustee, and any such Subordinated Note, as well as Subordinated Notes surrendered directly to the Trustee
for any such purpose, will be cancelled promptly by the Trustee. The Company may at any time deliver to the Trustee for cancellation
any Subordinated Notes previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever,
and all Subordinated Notes so delivered will be cancelled promptly by the Trustee, No Subordinated Notes will be authenticated
in lieu of or in exchange for any Subordinated Notes cancelled as provided in this Section, except as expressly permitted by or
under this Indenture. All cancelled Subordinated Notes held by the Trustee will be disposed of in accordance with its procedure
for the disposition of cancelled Subordinated Notes, and the Trustee upon the written request of the Company will deliver to the
Company a certificate of such disposition, unless by a Company Order the Company shall direct that cancelled Subordinated Notes
shall be returned to the Company.

 

Section 213         Computation
of Interest.

 

From and including
the original issue date of the Subordinated Notes to but excluding September 1, 2025 or the earlier Redemption Date contemplated
by Article X of this Indenture (the “Fixed Rate Period”), at the rate of 5.375% per annum, computed on the basis
of a 360-day year consisting of twelve 30-day months and payable semi-annually in arrears on each Fixed Interest Payment Date.
From and including September 1, 2025 to but excluding the Maturity Date or earlier Redemption Date contemplated by Article X
of this Indenture (the “Floating Rate Period”), at the rate per annum, reset quarterly, equal to the Floating Interest
Rate (as defined below) determined on the Floating Interest Determination Date (as defined below) of the applicable interest period
plus 526.5 basis points, computed on the basis of a 360-day year and the actual number of days elapsed and payable quarterly in
arrears (each quarterly period a “Floating Interest Period”) on each Floating Interest Payment Date. Dollar amounts
resulting from this calculation shall be rounded to the nearest cent, with one-half cent being rounded up. The term “Floating
Interest Determination Date” means the date upon which the Floating Interest Rate is determined by the Calculation Agent
pursuant to the Three-Month Term SOFR Conventions. Notwithstanding anything to the contrary, (i) in the event the Three-Month
Term SOFR (as defined below) is less than zero, the Three-Month Term SOFR shall be deemed to be zero, and (ii) if a Benchmark
Transition Event (as defined below) and its related Benchmark Replacement Date (as defined below) have occurred and the Benchmark
Replacement (as defined below) is less than zero, then the Benchmark Replacement shall be deemed to be zero.

 

    26

     

    

 

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

 

(b)            The
“Floating Interest Rate” means:

 

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

 

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

 

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

 

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

 

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

 

(c)            Effect
of Benchmark Transition Event.

 

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

 

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

 

    27

     

    

 

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

 

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

 

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

 

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

 

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

 

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

 

(v)            As
used in this Subordinated Note:

 

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

 

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

 

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

 

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

 

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

 

    28

     

    

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

    29

     

    

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(7)            “Calculation
Agent” means such bank or other entity (which may be the Company or an affiliate of the Company, but shall not be the
Trustee without the Trustee’s express written consent) as may be appointed by the Company to act as Calculation Agent for
the Subordinated Notes during the Floating Rate Period.

 

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

 

    30

     

    

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

    31

     

    

 

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

 

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

 

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

 

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

 

(22)            “Three-Month
Term SOFR” means the rate for Term SOFR for a tenor of three months that is published by the Term SOFR Administrator
at the Reference Time for any Floating Interest Period, as determined by the Calculation Agent after giving effect to the Three-Month
Term SOFR Conventions.

 

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

 

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

 

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

 

    32

     

    

 

Section 214         CUSIP
Numbers.

 

The Company may issue
the Subordinated Notes with one or more “CUSIP” numbers (if then generally in use). The Company will promptly notify
the Trustee of any change in the CUSIP numbers. The Trustee may use “CUSIP” numbers in notices (including but not limited
to notices of redemption or exchange) as a convenience to Holders; provided that any such notice may state that no representation
is made as to the correctness of such numbers either as printed on the Subordinated Notes or as contained in any notice (including
any notice of redemption or exchange) and that reliance may be placed only on the other identification numbers printed on the Subordinated
Notes, and any such notice will not be affected by any defect in or omission of such numbers.

 

ARTICLE III

SATISFACTION AND DISCHARGE OF INDENTURE

 

Section 301         Satisfaction
and Discharge.

 

This Indenture will
cease to be of further effect, and the Trustee, on receipt of a Company Order, at the expense of the Company, will execute proper
instruments acknowledging satisfaction and discharge of this Indenture, when

 

(1)            either

 

(a)            all
Subordinated Notes theretofore authenticated and delivered (other than (i) Subordinated Notes that have been destroyed, lost
or stolen and which have been replaced or paid as provided in Section 209 and (ii) Subordinated Notes for whose payment
money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company
or discharged from such trust, as provided in Section 903) have been delivered to the Trustee for cancellation; or

 

(b)            all
Subordinated Notes that have not been delivered to the Trustee for cancellation (i) have become due and payable, or (ii) will
become due and payable at their Stated Maturity within one year, or (iii) if redeemable at the option of the Company, are
to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption
by the Trustee in the name, and at the expense, of the Company, and the Company, in the case of (i), (ii) or (iii) above,
has deposited or caused to be deposited with the Trustee as trust funds in trust for such purpose, an amount sufficient to pay
and discharge the entire indebtedness on such Subordinated Notes not theretofore delivered to the Trustee for cancellation, including
the principal of, and interest on, such Subordinated Notes, to the date of such deposit (in the case of Subordinated Notes which
have become due and payable) or to the Maturity thereof, as the case may be;

 

(2)            the
Company has paid or caused to be paid all other sums payable hereunder by the Company with respect to the Outstanding Subordinated
Notes; and

 

    33

     

    

 

(3)            the
Company has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of this Indenture have been satisfied.

 

Notwithstanding the satisfaction and discharge
of this Indenture with respect to the Subordinated Notes, the obligations of the Company to the Trustee under Section 507
and, if money will have been deposited with the Trustee in accordance with Section 301(1)(b), the obligations of the Company
and the Trustee with respect to the Subordinated Notes under Section 303 and Section 903 will survive.

 

Section 302         Defeasance
and Covenant Defeasance.

 

(1)            The
Company may at its option and at any time, elect to have Section 302(2) or Section 302(3) be applied to such
Outstanding Subordinated Notes upon compliance with the conditions set forth below in this Section 302. Legal Defeasance and
Covenant Defeasance may be effected only with respect to all, and not less than all, of the Outstanding Subordinated Notes.

 

(2)            Upon
the Company’s exercise of the above option applicable to this Section 302(2), the Company will be deemed to have been
discharged from its obligations with respect to such Outstanding Subordinated Notes on the date the conditions set forth in clause
(4) of this Section 302 are satisfied (“Legal Defeasance”). For this purpose. Legal Defeasance means that
the Company will be deemed to have paid and discharged the entire indebtedness represented by such Outstanding Subordinated Notes,
which will thereafter be deemed to be “Outstanding” only for the purposes of Section 302(5) and the other
Sections of this Indenture referred to in clauses (i) through (iv) of this paragraph, and to have satisfied all of its
other obligations under such Subordinated Notes and this Indenture insofar as such Subordinated Notes are concerned (and the Trustee,
at the expense of the Company, will execute proper instruments acknowledging the same), except for the following which will survive
until otherwise terminated or discharged hereunder: (i) the rights of Holders of such Outstanding Subordinated Notes to receive,
solely from the trust fund described in Section 302(4)(a) and as more fully set forth in this Section 302 and Section 303,
payments in respect of the principal of and interest, if any, on, such Subordinated Notes when such payments are due, (ii) the
obligations of the Company and the Trustee with respect to such Subordinated Notes under Section 207, Section 209, Section 902
and Section 903, (iii) the rights, powers, trusts, duties and immunities of the Trustee hereunder and (iv) this
Section 302 and Section 303. The Company may exercise its option under this Section 302(2) notwithstanding
the prior exercise of its option under Section 302(3) with respect to such Subordinated Notes.

 

(3)            Upon
the Company’s exercise of the above option applicable to this Section 302(3), the Company will be released from its
obligations under clauses (ii) and (iii) of Section 904 and under Section 905, Section 906 and Section 907
on and after the date the conditions set forth in Section 302(4) are satisfied (“Covenant Defeasance”), and
such Subordinated Notes will thereafter be deemed to be not “Outstanding” for the purposes of any direction, waiver,
consent or declaration or Act of Holders (and the consequences of any thereof) in connection with any such covenant, but will continue
to be deemed “Outstanding” for all other purposes hereunder. For this purpose, such Covenant Defeasance means that
with respect to such Outstanding Subordinated Notes, the Company may omit to comply with, and will have no liability in respect
of. any term, condition or limitation set forth in any such Section or any such other covenant, whether directly or indirectly,
by reason of any reference elsewhere herein to any such Section or such other covenant or by reason of reference in any such
Section or such other covenant to any other provision herein or in any other document and such omission to comply will not
constitute a default, but, except as specified above, the remainder of this Indenture and such Subordinated Notes will be unaffected
thereby.

 

    34

     

    

 

(4)            The
following will be the conditions to application of Section 302(2) or Section 302(3) to any Outstanding Subordinated
Notes:

 

(a)            The
Company will irrevocably have deposited or caused to be deposited with the Trustee (or another trustee satisfying the requirements
of Section 508 who will agree to comply with the provisions of this Section 302 applicable to it) as trust funds in trust
for the purpose of making the following payments, specifically pledged as security for, and dedicated solely to, the benefit of
the Holders, (i) an amount in Dollars, (ii) Government Obligations that through the scheduled payment of principal and
interest in respect thereof in accordance with their terms will provide, not later than one day before the due date of any payment
of principal of and interest, if any, on such Subordinated Notes, money or (iii) a combination thereof, in any case, in an
amount, sufficient, without consideration of any reinvestment of such principal and interest, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge,
and which will be applied by the Trustee (or other qualifying trustee) to pay and discharge, the principal of and interest, if
any, on, such Outstanding Subordinated Notes on the Stated Maturity of such principal or installment of principal or interest or
the applicable Redemption Date, as the case may be.

 

(b)            Such
Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under, this Indenture
or any other material agreement or instrument to which the Company or any Subsidiary is a party or by which it is bound.

 

(c)            No
Event of Default or event which with notice or lapse of time or both would become an Event of Default with respect to such Subordinated
Notes will have occurred and be continuing on the date of such deposit, and, solely in the case of Legal Defeasance under Section 302(2),
no Event of Default, or event which with notice or lapse of time or both would become an Event of Default, under Section 401
will have occurred and be continuing at any time during the period ending on and including the 91st day after the date
of such deposit (it being understood that this condition to Legal Defeasance under Section 302(2) will not be deemed
satisfied until the expiration of such period).

 

(d)            In
the case of Legal Defeasance, the Company will have delivered to the Trustee an Opinion of Counsel reasonably acceptable to the
Trustee stating that (i) the Company has received from, or there has been published by, the Internal Revenue Service a ruling
or (ii) since the date of this Indenture there has been a change in applicable federal income tax law, in either case to the
effect that, and based thereon such opinion of independent counsel will confirm that, the Holders of such Outstanding Subordinated
Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be
subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such
Legal Defeasance had not occurred.

 

    35

     

    

 

 

(e)           In
the case of Covenant Defeasance, the Company will have delivered to the Trustee an Opinion of Counsel reasonably acceptable to
the Trustee to the effect that the Holders of such Outstanding Subordinated Notes will not recognize income, gain or loss for
federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts,
in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred.

 

(f)           The
Company will have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions
precedent to the Legal Defeasance or Covenant Defeasance, as the case may be, under this Indenture have been satisfied.

 

(g)            If
the moneys or Government Obligations or combination thereof, as the case may be, deposited under Section 302(4)(a) above
are sufficient to pay the principal of, and interest, if any, on, such Subordinated Notes provided such Subordinated Notes
are redeemed on a particular Redemption Date, the Company will have given the Trustee irrevocable instructions to redeem such
Subordinated Notes on such date and to provide notice of such redemption to Holders as provided in or under this
Indenture.

 

(h)          The
Trustee will have received such other documents, assurances and Opinions of Counsel as the Trustee will have reasonably required.

 

(5)           Subject
to the provisions of the last paragraph of Section 903, all money and Government Obligations deposited with the Trustee (or
other qualifying trustee, collectively for purposes of this Section 302(5), the “Trustee”) in accordance with
Section 302(4)(a) in respect of any Outstanding Subordinated Notes will be held in trust and applied by the Trustee,
in accordance with the provisions of such Subordinated Notes and this Indenture, to the payment, either directly or through any
Paying Agent (other than the Company or any Subsidiary or Affiliate of the Company acting as Paying Agent) as the Trustee may determine,
to the Holders of all sums due and to become due thereon in respect of principal and interest but such money and Government Obligations
need not be segregated from other funds, except to the extent required by law.

 

The Company will pay
and indemnify the Trustee against any tax, fee or other charge, imposed on or assessed against the Government Obligations deposited
in accordance with this Section 302 or the principal or interest received in respect thereof other than any such tax, fee
or other charge which by law is for the account of the Holders of the Outstanding Subordinated Notes.

 

Section 303  
   Application of Trust Money.

 

Subject to the provisions
of the last paragraph of Section 903, all money and Government Obligations deposited with the Trustee in accordance with Section 301
or Section 302 will be held in trust and applied by the Trustee, in accordance with the provisions of such Subordinated Notes
subject to discharge under Section 301 or Legal Defeasance or Covenant Defeasance under Section 302, and this Indenture,
to the payment, either directly or through any Paying Agent (including the Company, acting as its own Paying Agent) as the Trustee
may determine, to the Persons entitled thereto, of the principal and interest for whose payment such money has or Government Obligations
have been deposited with or received by the Trustee; but such money and Government Obligations need not be segregated from other
funds, except to the extent required by law.

 

    36

     

    

 

Section 304   
  Reinstatement.

 

If the Trustee (or
other qualifying trustee appointed in accordance with Section 302(4)(a)) or any Paying Agent is unable to apply any moneys
or Government Obligations deposited in accordance with Section 301(1) or Section 302(4)(a) to pay any principal
of, or interest, if any, on, the Subordinated Notes by reason of any legal proceeding or any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company’s obligations under
this Indenture and the Subordinated Notes will be revived and reinstated as though no such deposit had occurred, until such time
as the Trustee (or other qualifying trustee) or Paying Agent is permitted to apply all such moneys and Government Obligations to
pay the principal of, and interest, if any, on the Subordinated Notes as contemplated by Section 301 or Section 302 as
the case may be; provided, however, that if the Company makes any payment of the principal of, or interest if any on, the Subordinated
Notes following the reinstatement of its obligations as aforesaid, the Company will be subrogated to the rights of the Holders
of such Subordinated Notes to receive such payment from the funds held by the Trustee (or other qualifying trustee) or Paying Agent.

 

Section
305      Effect
on Subordination Provisions.

 

The provisions of Article XI
are expressly made subject to the provisions for, and to the right of the Company to effect, the satisfaction and discharge of
all of the Subordinated Notes as set forth in and in accordance with Section 301 and the provisions for, and to the right
of the Company to effect, Legal Defeasance and Covenant Defeasance of all of the Subordinated Notes as set forth in and in accordance
with Section 302. As a result, and anything herein to the contrary notwithstanding, if the Company complies with the provisions
of Section 301 to effect the satisfaction and discharge of the Subordinated Notes or complies with the provisions of Section 302
to effect the Legal Defeasance or Covenant Defeasance, upon the effectiveness of such satisfaction and discharge in accordance
with Section 301 or of Legal Defeasance or Covenant Defeasance in accordance with Section 302, in the case of satisfaction
and discharge in accordance with Section 301, or, in the case of Legal Defeasance or Covenant Defeasance in accordance with
Section 302, the Subordinated Notes as to which Legal Defeasance or Covenant Defeasance, as the case may be, will have become
effective will thereupon cease to be so subordinated in right of payment to the Senior Indebtedness and will no longer be subject
to the provisions of Article XI and, without limitation to the foregoing, all moneys and Government Obligations deposited
with the Trustee (or other qualifying trustee) in trust in connection with such satisfaction and discharge. Legal Defeasance or
Covenant Defeasance, as the case may be, and all proceeds therefrom may be applied to pay the principal of, and interest, if any,
on, such Subordinated Notes as and when the same will become due and payable notwithstanding the provisions of Article XI
without regard to whether any or all of the Senior Indebtedness then outstanding will have been paid or otherwise provided for.

 

ARTICLE IV

REMEDIES

 

Section
401      Events
of Default; Acceleration.

 

An “Event of
Default” means any one of the following events (whatever the reason for such Event of Default and whether it will be voluntary
or involuntary or be effected by operation of law or in accordance with any judgment, decree, or order of any court or any order,
rule, or regulation of any administrative or governmental body):

 

    37

     

    

 

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

 

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

 

(3)           the
failure of the Company to pay any installment of interest on any of the Subordinated Notes as and when the same will become due
and payable, and the continuation of such failure for a period of 30 days;

 

(4)           the
failure of the Company to pay all or any part of the principal of any of the Subordinated Notes as and when the same will become
due and payable under this Indenture;

 

(5)           the
failure of the Company to perform any other covenant or agreement on the part of the Company contained in the Subordinated Notes
or in this Indenture, and the continuation of such failure for a period of 60 days after the date on which notice specifying such
failure, stating that such notice is a “Notice of Default” hereunder and demanding that the Company remedy the same,
will have been given, in the manner set forth in Section 105, to the Company by the Trustee, or to the Company and the Trustee
by the Holders of at least 25% in aggregate principal amount of the Subordinated Notes at the time Outstanding; or the default
by the Company under any bond, debenture, note or other evidence of indebtedness for money borrowed by the Company having an aggregate
principal amount outstanding of at least $25,000,000, whether such indebtedness now exists or is created or incurred in the future,
which default (i) constitutes a failure to pay any portion of the principal of such indebtedness when due and payable after
the expiration of any applicable grace period or (ii) results in such indebtedness becoming due or being declared due and
payable prior to the date on which it otherwise would have become due and payable without, in the case of clause (i), such indebtedness
having been discharged or, in the case of clause (ii), without such indebtedness having been discharged or such acceleration having
been rescinded or annulled.

 

Upon becoming aware
of any Event of Default, the Company will promptly deliver to the Trustee a written statement specifying the Event of Default.

 

If an Event of Default
described in Section 401(1) or Section 401(2) occurs, then the principal amount of all of the Outstanding
Subordinated Notes, and accrued and unpaid interest, if any, on all Outstanding Subordinated Notes will become and be immediately
due and payable without any declaration or other act on the part of the Trustee or any Holder, and the Company waives demand,
presentment for payment, notice of nonpayment, notice of protest, and all other notices. Notwithstanding the foregoing, because
the Company will treat the Subordinated Notes as Tier 2 Capital, upon the occurrence of an Event of Default other than an Event
of Default described in Section 401(1) or Section 401(2), neither the Trustee nor any Holder may accelerate the
Maturity of the Subordinated Notes and make the principal of, and any accrued and unpaid interest on, the Subordinated Notes,
immediately due and payable.

 

    38

     

    

 

If any Event of Default
occurs and is continuing, the Trustee may also pursue any other available remedy to collect the payment of principal of, and interest
on, the Subordinated Notes or to enforce the performance of any provision of the Subordinated Notes or this Indenture.

 

Section 402      Failure
to Make Payments.

 

If an Event of Default
described in Section 401(3) or Section 401(4) occurs, the Company will, upon demand of the Trustee, pay to
the Trustee, for the benefit of the Holders of such Subordinated Notes, the whole amount then due and payable with respect to such
Subordinated Notes, with interest upon the overdue principal, and, to the extent permitted by applicable law, upon any overdue
installments of interest at the rate or respective rates, as the case may be, provided for or with respect to such Subordinated
Notes or, if no such rate or rates are so provided, at the rate or respective rates, as the case may be, of interest borne by such
Subordinated Notes, and, in addition thereto, such further amount of money as will be sufficient to cover the costs and expenses
of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel
and all other amounts due to the Trustee under Section 507.

 

If the Company fails
to pay the money it is required to pay the Trustee, the Trustee, in its own name and as trustee of an express trust, may institute
a judicial proceeding for the collection of the sums so due and unpaid, may prosecute .such proceeding to judgment or final decree,
and may enforce the same against the Company or any other obligor upon such Subordinated Notes and collect the moneys adjudged
or decreed to be payable in the manner provided by law out of the property of the Company, wherever situated.

 

The Trustee may proceed
to protect and enforce its rights and the rights of the Holders of Subordinated Notes by such appropriate judicial proceedings
as the Trustee will deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant
or agreement in this Indenture or in aid of the exercise of any power granted in this Indenture, or to enforce any other proper
remedy.

 

During the continuance
of a failure by the Company to make any required payment of principal of or interest on the Subordinated Notes, the Company may
not declare or pay any dividends or distributions on, or redeem, purchase, acquire, or make a liquidation payment with respect
to, any of the Company’s capital stock, make any payment of principal or interest or premium, if any, on or repay, repurchase
or redeem any debt securities of the Company that rank equal with or junior to the Subordinated Notes, or make any payments under
any guarantee that ranks equal with or junior to the Subordinated Notes, other than: (i) any dividends or distributions in
shares of, or options, warrants or rights to subscribe for or purchase shares of, any class of Company’s Common Stock; (ii) any
declaration of a dividend in connection with the implementation of a shareholders’ rights plan, or the issuance of stock
under any such plan in the future, or the redemption or repurchase of any such rights pursuant thereto; (iii) as a result
of a reclassification of Company’s capital stock or the exchange or conversion of one class or series of Company’s
capital stock for another class or series of Company’s capital stock; (iv) the purchase of fractional interests in shares
of Company’s capital stock in accordance with the conversion or exchange provisions of such capital stock or the security
being converted or exchanged; or (v) purchases of any class of Company’s Common Stock related to the issuance of Common
Stock or rights under any benefit plans for Company’s directors, officers or employees or any of Company’s dividend
reinvestment plans.

 

    39

     

    

 

Section
403     Trustee
May File Proofs of Claim.

 

In case of any judicial
proceeding relative to the Company (or any other obligor upon the Subordinated Notes), its property or its creditors, the Trustee
will be entitled and empowered, by intervention in such proceeding or otherwise, to take any and all actions authorized under the
Trust Indenture Act in order to have claims of the Holders and the Trustee allowed in any such proceeding. In particular, the Trustee
will be authorized to

 

(1)           file
and prove a claim for the whole amount, or such lesser amount as may be provided for in the Subordinated Notes, of the principal
and interest owing and unpaid in respect of such Subordinated Notes and to file such other papers or documents as may be necessary
or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents or counsel) and of the Holders of such Subordinated Notes allowed in such judicial proceeding,
and

 

(2)           collect
and receive any moneys or other property payable or deliverable on any such claims and to distribute the same;

 

and any custodian, receiver, assignee,
trustee, liquidator, sequestrator, or other similar official in any such judicial proceeding is authorized by each Holder to make
such payments to the Trustee and, in the event that the Trustee will consent to the making of such payments directly to the Holders
and to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements, and advances of the Trustee,
its agents and counsel, and any other amounts due hereunder.

 

No provision of this
Indenture will be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan
of reorganization, arrangement, adjustment, or composition affecting the Subordinated Notes or the rights of any Holder or to authorize
the Trustee to vote in respect of the claim of any Holder in any such proceeding; provided, however, the Trustee may vote on behalf
of the Holders for the election of a trustee in bankruptcy or similar official and may be a member of a creditors, or other similar
committee.

 

Section
404      Trustee
May Enforce Claims Without Possession of Subordinated Notes.

 

All rights of action
and claims under this Indenture or the Subordinated Notes may be prosecuted and enforced by the Trustee without the possession
of any of the Subordinated Notes or the production of such Subordinated Notes in any related proceeding, and any such proceeding
instituted by the Trustee will be brought in its own name as trustee of an express trust, and any recovery of judgment will, after
provision for the payment of the reasonable compensation, expenses, disbursements, and advances of the Trustee, its agents, and
counsel, be for the ratable benefit of the Holders in respect of which such judgment has been recovered.

 

    40

     

    

 

Section
405      Application
of Money Collected.

 

Any money collected
by the Trustee in accordance with this Article IV or, after an Event of Default, any money or other property distributable
in respect of the Company’s obligations under this Indenture will be applied in the following order, at the date or dates
fixed by the Trustee and, in case of the distribution of such money on account of principal or any interest, upon presentation
of the Subordinated Notes and the notation on such Subordinated Notes of the payment if only partially paid and upon surrender
of such Subordinated Notes if fully paid:

 

FIRST: To the payment
of all amounts due the Trustee, acting in any capacity hereunder, (including any predecessor trustee) under Section 507;

 

SECOND: To the payment
of amounts then due and unpaid to the holders of Senior Indebtedness, to the extent required under the Subordination Provisions
established with respect to the Subordinated Notes;

 

THIRD: To the payment
of the amounts then due and unpaid for principal of and any interest on the Subordinated Notes in respect of which or for the benefit
of which such money has been collected, ratably, without preference or priority of any kind, according to the aggregate amounts
due and payable on such Subordinated Notes for principal and interest, respectively; and

 

FOURTH: The balance,
if any, to the Person or Persons entitled thereto.

 

Section
406      Limitation
on Suits.

 

No Holder of any Subordinated
Note will have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture or any Subordinated
Notes, or for the appointment of a receiver or trustee, or for any other remedy under this Indenture, unless:

 

(1)           such
Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Subordinated Notes;

 

(2)           the
Holders of not less than 25% in aggregate principal amount of the Outstanding Subordinated Notes will have made written request
to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee under the Indenture;

 

(3)           such
Holder or Holders have offered to the Trustee security and indemnity satisfactory to the Trustee against the costs, expenses, and
liabilities to be incurred in compliance with such request;

 

(4)           the
Trustee for 60 days after its receipt of such notice, request, and offer of indemnity has failed to institute any such proceeding;
and

 

(5)           no
direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority
of the aggregate principal amount of the Outstanding Subordinated Notes;

 

it being understood and intended that no
one or more of such Holders will have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture
to affect, disturb, or prejudice the rights of any other of such Holders, or to obtain or to seek to obtain priority or preference
over any other of such Holders or to enforce any right under this Indenture, except in the manner provided in this Indenture and
for the equal and ratable benefit of all of such Holders.

 

    41

     

    

 

Section
407      Unconditional
Right of Holders to Payments.

 

Notwithstanding any
other provision in this Indenture, the Holder of any Subordinated Note will have the right, which is absolute and unconditional,
to receive payment of the principal of and (subject to Section 207 and Section 210) any interest on such Subordinated
Note on the respective Stated Maturity or Maturities expressed in such Subordinated Note (or, in the case of redemption, on the
Redemption Date), and to institute suit for the enforcement of any such payment and such rights will not be impaired without the
consent of such Holder.

 

Section
408      Restoration
of Rights and Remedies.

 

If the Trustee or any
Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject
to any determination in such proceeding, the Company, the Trustee and the Holders will be restored severally and respectively to
their former positions under this Indenture, and thereafter all rights and remedies of the Trustee and the Holders will continue
as though no such proceeding had been instituted.

 

Section
409      Rights
and Remedies Cumulative.

 

Except as otherwise
provided with respect to the replacement or payment of mutilated, destroyed, lost, or stolen Subordinated Notes in the last paragraph
of Section 209, no right or remedy conferred in this Indenture upon or reserved to the Trustee or to the Holders is intended
to be exclusive of any other right or remedy, and every right and remedy will, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given under this Indenture or now or in the future existing at law or in equity or
otherwise. The assertion or employment of any right or remedy under this Indenture, or otherwise, will not prevent the concurrent
assertion or employment of any other appropriate right or remedy.

 

Section
410      Delay
or Omission Not Waiver.

 

No delay or omission
of the Trustee or of any Holder of any Subordinated Notes to exercise any right or remedy accruing upon any Event of Default will
impair any such right or remedy or constitute a waiver of or acquiescence in any such Event of Default. Every right and remedy
given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be
deemed expedient, by the Trustee or by the Holders, as the case may be.

 

Section
411      Control
by Holders.

 

The Holders of a majority
in aggregate principal amount of the Outstanding Subordinated Notes will have the right to direct the time, method, and place of
conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, with
respect to the Subordinated Notes, provided that

 

    42

     

    

 

(1)           such
direction will not violate any rule of law or this Indenture or the Subordinated Notes.

 

(2)           the
Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction, and

 

(3)           the
Trustee will have the right to decline to follow any such direction if the Trustee in good faith will determine that the proceeding
so directed would involve the Trustee in personal liability.

 

Section
412      Waiver
of Past Defaults.

 

The Holders of not
less than a majority in aggregate principal amount of the Outstanding Subordinated Notes may on behalf of the Holders of all the
Subordinated Notes waive any past default under this Indenture and its consequences, except a default in the payment of the principal
of, or interest on, any Subordinated Note, or in respect of a covenant or provision of this Indenture which under Article VIII
cannot be modified or amended without the consent of the Holder of each Outstanding Subordinated Note.

 

Upon any such waiver,
such default will cease to exist, and any Event of Default arising from such default will be deemed to have been cured, for every
purpose of this Indenture; but no such waiver will extend to any subsequent or other default or impair any consequent right.

 

Section
413      Undertaking
for Costs.

 

All parties to this
Indenture agree, and each Holder of any Subordinated Notes by his acceptance of such Subordinated Notes will be deemed to have
agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture,
or in any suit against the Trustee for any action taken, suffered, or omitted by it as Trustee, the filing by any party litigant
in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorney’s fees and expenses, against any party litigant in such suit, having due regard to the merits
and good faith of the claims or defenses made by such party litigant; but the provisions of this Section 413 will not apply
to any suit instituted by the Company, to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of
Holders, holding in the aggregate more than 10% in principal amount of the Outstanding Subordinated Notes, or to any suit instituted
by any Holder for the enforcement of the payment of the principal of or interest, if any, on any Subordinated Notes on or after
the Stated Maturity or Maturities expressed in such Subordinated Notes (or, in the case of redemption, on or after the Redemption
Date).

 

ARTICLE
V
 THE TRUSTEE

 

Section
501      Duties
of Trustee.

 

(1)           If
an Event of Default has occurred and is continuing, the Trustee will exercise such of the rights and powers vested in it hereby,
and use the same degree of care and skill in its exercise, as a prudent person would exercise or use under the circumstances in
the conduct of such person’s own affairs.

 

    43

     

    

 

(2)           Except
during the continuance of an Event of Default:

 

(a)           the
duties of the Trustee will be determined solely by the express provisions hereof and the Trustee need perform only those duties
that are specifically set forth herein and no others, and no implied covenants or obligations will be read into this Indenture
against the Trustee;

 

(b)           the
Trustee shall not be liable for any acts or omissions, except for such losses, damages or expenses which have been finally adjudicated
by a court of competent jurisdiction to have directly resulted from the Trustee's gross negligence or willful misconduct; and

 

(c)           in
the absence of gross negligence or willful misconduct on its part, the Trustee may conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to
the requirements hereof; however, the Trustee will examine the certificates and opinions to determine whether or not they conform
on their face to the requirements hereof (but need not confirm or investigate the accuracy of mathematical calculations or other
facts stated therein).

 

(3)           Whether
or not therein expressly so provided, every provision hereof that in any way relates to the Trustee is subject to paragraphs (1) and
(2) of this Section 501 and to Section 502.

 

(4)           No
provision hereof will require the Trustee to expend or risk its own funds or incur any liability. The Trustee will be under no
obligation to exercise any of its rights and powers under this Indenture at the request of any Holders, unless such Holder has
offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense.

 

(5)           The
Trustee will not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee shall be held un-invested and need not be segregated from other funds except to the extent required
by law.

 

Section 502    
 Certain Rights of Trustee.

 

Subject to
Section 315(a) through Section 315(d) of the Trust Indenture Act:

 

(1)           the
Trustee may conclusively rely and will be protected in acting or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness
or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties;

 

(2)           any
request or direction of the Company mentioned herein will be sufficiently evidenced by a Company Request or a Company Order (unless
other evidence in respect thereof be herein specifically prescribed) and any resolution of the Board of Directors may be sufficiently
evidenced by a Board Resolution;

 

    44

     

    

 

(3)           whenever
in the administration of this Indenture the Trustee will deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence will be herein specifically prescribed) may require
and rely upon an Officers’ Certificate or Opinion of Counsel, or both, which will comply with Section 102, and will
not be liable for any action it takes or omits to take in reliance on such Officers’ Certificate or Opinion of Counsel;

 

(4)           before
the Trustee acts or refrains from acting, it shall be entitled to request and receive written instructions from the Company and
shall have no responsibility or liability for any losses or damages of any nature that may arise from any action taken or not taken
by the Trustee in accordance with the written direction of the Company;

 

(5)           the
Trustee may consult with counsel and the advice of such counsel or any Opinion of Counsel will be full and complete authorization
and protection from liability in respect of any action taken, suffered or omitted by it hereunder in reliance thereon;

 

(6)           the
Trustee will be under no obligation to exercise any of the rights or powers vested in it by or under this Indenture at the request
or direction of any Holder(s) under this Indenture, unless such Holder(s) will have offered to the Trustee security or
indemnity satisfactory to the Trustee against the costs, expenses and liabilities that might be incurred by it in compliance with
such request or direction;

 

(7)           the
Trustee will not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness
or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit, and, if the Trustee will determine to make such further inquiry or investigation, it will be entitled
to examine, during business hours and upon reasonable notice, the books, records and premises of the Company, personally or by
agent or attorney, at the sole cost of the Company and will incur no liability or additional liability of any kind by reason of
such inquiry or investigation;

 

(8)           the
Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents
or attorneys and the Trustee will not be responsible for any acts or omissions on the part of any agent or attorney appointed with
due care by it hereunder;

 

(9)           the
Trustee will not be liable for any action taken, suffered or omitted to be taken by it or any of its officers, employees or agents
in good faith;

 

(10)         the
Trustee will not be required to take notice or be deemed to have notice of any Default or Event of Default unless a Responsible
Officer of the Trustee shall have actual knowledge thereof, and in the absence of such knowledge the Trustee may conclusively assume
no Default or Event of Default exists;

 

(11)         the
rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified,
are extended to, and will be enforceable by, the Trustee in each of its capacities hereunder, and each agent, custodian and other
Person employed or appointed to act hereunder;

 

    45

     

    

 

(12)         the
Trustee may request that the Company deliver a certificate setting forth the names of individuals and/or titles of officers authorized
at such time to take specified actions under this Indenture;

 

(13)         the
Trustee shall not be required to give any bond or surety in respect of the performance of its powers and duties hereunder;

 

(14)         none
of the permissive rights of the Trustee enumerated in this Indenture shall be construed as a duty and, with respect to such permissive
rights, the Trustee shall not be liable or responsible for other than its gross negligence or willful misconduct;

 

(15)         the
Trustee shall not be liable or responsible for any calculation in connection with the transactions contemplated hereunder nor for
any information used in connection with such calculation, or for any act or omission of the Calculation Agent (if other than the
Trustee) or any designee appointed by the Company to make any such calculation;

 

(16)         in
no event shall the Trustee be responsible or liable for special, indirect, punitive, incidental or consequential loss or damage
of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Trustee has been advised of
the likelihood of such loss or damage and regardless of the form of action; and

 

(17)         the
Trustee shall not be bound to make any investigation into (i) the performance of or compliance with any of the covenants or
agreements set forth herein, (ii) the occurrence of any default, or the validity, enforceability, effectiveness or genuineness
of this Indenture or any other agreement, instrument or document.

 

Section 503      Notice
of Defaults.

 

Within 90 days after
a Responsible Officer of the Trustee is notified of the occurrence of any default hereunder with respect to the Subordinated Notes,
the Trustee will deliver to all Holders entitled to receive reports in accordance with Section 603(3), notice of such default
hereunder known to the Trustee, unless such default will have been cured or waived; provided, however, that, except in the case
of a default in the payment of the principal of or interest, if any, on, any Subordinated Note, the Trustee will be protected in
withholding such notice if and so long as the Trustee in good faith determines that the withholding of such notice is in the best
interest of the Holders. For the purpose of this Section, the term “default” means any event that is, or after notice
or lapse of time or both would become, an Event of Default with respect to Subordinated Notes.

 

    46

     

    

 

Section 504      Not
Responsible for Recitals or Issuance of Subordinated Notes.

 

The recitals contained
herein and in the Subordinated Notes, except the Trustee’s certificate of authentication, will be taken as the statements
of the Company and neither the Trustee nor any Authenticating Agent assumes any responsibility for their correctness. The Trustee
makes no representations as to the validity or sufficiency of this Indenture or of the Subordinated Notes, except that the Trustee
represents that it is duly authorized to execute and deliver this Indenture, authenticate the Subordinated Notes and perform its
obligations hereunder and that the statements made by it in any Statement of Eligibility on Form T-1 supplied to the Company
are true and accurate, subject to the qualifications set forth therein. Neither the Trustee nor any Authenticating Agent will
be accountable for the use or application by the Company of the Subordinated Notes or the proceeds thereof. The Trustee will not
be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Subordinated Notes, it
will not be accountable for the Company’s use of the proceeds from the Subordinated Notes or any money paid to the Company
or upon the Company’s direction under any provision hereof, it will not be responsible for the use or application of any
money received by any Paying Agent other than the Trustee, and it will not be responsible for any statement or recital herein
or any statement in the Subordinated Notes or any other document in connection with the sale of the Subordinated Notes or under
this Indenture other than its certificate of authentication.

 

Section 505      May Hold
Subordinated Notes.

 

The Trustee, any Authenticating
Agent, any Paying Agent, any Registrar or any other Person that may be an agent of the Trustee or the Company, in its individual
or any other capacity, may become the owner or pledgee of Subordinated Notes and, subject to Section 310(b) and Section 311
of the Trust Indenture Act, may otherwise deal with the Company with the same rights that it would have if it were not Trustee,
Authenticating Agent, Paying Agent, Registrar or such other Person.

 

The Trustee is subject
to Section 311(a) of the Trust Indenture Act, excluding any creditor relationship listed in Section 311(b) of
the Trust Indenture Act. A Trustee who has resigned or been removed shall be subject to Section 311(a) of Trust Indenture
Act to the extent indicated.

 

Section 506      Money
Held in Trust.

 

Except as provided
in Section 302(5), Section 303 and Section 903, money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law and will be held uninvested. The Trustee will be under no liability for interest
on any money received by it hereunder except as otherwise agreed in writing with the Company.

 

Section
507      Compensation
and Reimbursement.

 

The Company agrees:

 

(1)           to
pay to the Trustee from time to time compensation for all services rendered by the Trustee acting in any capacity hereunder (which
compensation will not be limited by any provision of law in regard to the compensation of a trustee of an express trust);

 

(2)           except
as otherwise expressly provided herein, to reimburse the Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation
and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable
to the Trustee’s gross negligence or willful misconduct; and

 

    47

     

    

 

(3)           to
indemnify each of the Trustee acting in any capacity or any predecessor Trustee and their agents for, and to hold them harmless
against, any loss, suit, action,liability or expense (including, without limitation, the reasonable fees and disbursements of
the Trustee’s agents, legal counsel, accountants and experts) and including taxes (other than taxes based upon, measured
by or determined by the income of the Trustee), arising out of or in connection with the acceptance or administration of its duties
hereunder, including the costs and expenses of enforcing this Indenture against the Company (including this Section 507)
and defending itself against any claim (whether asserted by the Company, or any Holder or any other Person) or liability in connection
with the exercise or performance of any of their powers or duties hereunder, or in connection with enforcing the provisions of
this Section, except to the extent that any such loss, liability or expense was due to the Trustee’s gross negligence or
willful misconduct as determined by a court of competent jurisdiction in a final, non-appealable order.

 

The obligations of
the Company under this Section 507 will survive the satisfaction and discharge of this Indenture.

 

As security for the
performance of the obligations of the Company under this Indenture, the Trustee will have a lien prior to the Subordinated Notes
upon all property and funds held or collected by the Trustee as such, except funds held in trust for the payment of principal of,
or interest on, Subordinated Notes. Such lien will survive the satisfaction and discharge hereof and the resignation or removal
of the Trustee.

 

Any compensation or
expense incurred by the Trustee after a default specified by Section 401 is intended to constitute an expense of administration
under any then applicable bankruptcy or insolvency law. “Trustee” for purposes of this Section 507 will include
any predecessor Trustee, but the negligence or bad faith of any Trustee will not affect the rights of any other Trustee under this
Section 507. The provisions of this Section 507 will, to the extent permitted by law, survive any termination of this
Indenture (including, without limitation, termination in accordance with any Bankruptcy Laws) and the resignation or removal of
the Trustee.

 

Section
508      Corporate
Trustee Required; Eligibility.

 

(1)          There
will at all times be a Trustee hereunder that is a corporation, organized and doing business under the laws of the United States,
any state thereof or the District of Columbia, eligible under Section 310(a)(1) of the Trust Indenture Act to act as
trustee under an indenture qualified under the Trust Indenture Act and that has a combined capital and surplus (computed in accordance
with Section 310(a)(2) of the Trust Indenture Act) of at least $50,000,000 and is subject to supervision or examination
by federal or state authority. The Trustee will also satisfy the requirements of Section 310(a)(5) of the Trust Indenture
Act. If at any time the Trustee will cease to be eligible in accordance with the provisions of this Section, it will resign immediately
in the manner and with the effect hereinafter specified in this Article.

 

(2)          The
Trustee will comply with Section 310(b) of the Trust Indenture Act; provided, however, that there will be excluded from
the operation of Section 310(b)(1) of the Trust Indenture Act this Indenture or any indenture or indentures under which
other securities or certificates of interest or participation in other securities of the Company are outstanding if the requirements
for such exclusion set forth in Section 310(b)(1) of the Trust Indenture Act are met.

 

    48

     

    

 

Section
509      Resignation
and Removal; Appointment of Successor.

 

(1)           No
resignation or removal of the Trustee and no appointment of a successor Trustee in accordance with this Article V will become
effective until the acceptance of appointment by the successor Trustee in accordance with Section 510.

 

(2)          The
Trustee may resign at any time with respect to the Subordinated Notes by giving written notice thereof to the Company. If the instrument
of acceptance by a successor Trustee required by Section 510 will not have been delivered to the Trustee within 30 days after
the giving of such notice of resignation, the resigning Trustee may, at the Company’s expense, petition any court of competent
jurisdiction for the appointment of a successor Trustee.

 

(3)          The
Trustee may be removed at any time with respect to the Subordinated Notes by Act of the Holders of a majority in principal amount
of the Outstanding Subordinated Notes, delivered to the Trustee and the Company.

 

If at any time:

 

(a)           the
Trustee will fail to comply with the obligations imposed upon it under Section 310(b) of the Trust Indenture Act with
respect to Subordinated Notes after written request therefor by the Company or any Holder who has been a bona fide Holder for at
least six months,

 

(b)           the
Trustee will cease to be eligible under Section 508 and will fail to resign after written request therefor by the Company
or any such Holder, or

 

(c)           the
Trustee will become incapable of acting or will be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property
will be appointed or any public officer will take charge or control of the Trustee or of its property or affairs for the purpose
of rehabilitation, conservation or liquidation,

 

then, in any such case, (i) the Company,
by or in accordance with a Board Resolution, may remove the Trustee with respect to the Subordinated Notes, or (ii) subject
to Section 315(e) of the Trust Indenture Act, any Holder who has been a bona fide Holder for at least six months may,
on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee
with respect to all Subordinated Notes and the appointment of a successor Trustee or Trustees.

 

(4)           If
the Trustee will resign, be removed or become incapable of acting, or if a vacancy will occur in the office of Trustee for any
cause, with respect to the Subordinated Notes, the Company, by or in accordance with a Board Resolution, will promptly appoint
a successor Trustee or Trustees with respect to the Subordinated Notes and will comply with the applicable requirements of Section 510.
If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee with
respect to the Subordinated Notes shall have been appointed by Act of the Holders of a majority in principal amount of the Outstanding
Subordinated Notes delivered to the Company and the retiring Trustee, the successor Trustee so appointed will, forthwith upon
its acceptance of such appointment in accordance with the applicable requirements of Section 510, become the successor Trustee
with respect to the Subordinated Notes and to that extent supersede the successor Trustee appointed by the Company. If no successor
Trustee with respect to the Subordinated Notes will have been so appointed by the Company or the Holders and accepted appointment
in the manner required by Section 510, any Holder who has been a bona fide Holder for at least six months may, on behalf
of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor
Trustee with respect to the Subordinated Notes.

 

    49

     

    

 

(5)           The
Company will give notice of each resignation and each removal of the Trustee with respect to the Subordinated Notes and each appointment
of a successor Trustee with respect to the Subordinated Notes by delivering written notice of such event by first-class mail, postage
prepaid, to the Holders as their names and addresses appear in the Subordinated Note Register. Each notice will include the name
of the successor Trustee with respect to the Subordinated Notes and the address of its Corporate Trust Office.

 

Section 510      Acceptance
of Appointment by Successor.

 

(1)           Upon
the appointment hereunder of any successor Trustee with respect to all Subordinated Notes, such successor Trustee so appointed
will execute, acknowledge and deliver to the Company and the retiring Trustee an instrument accepting such appointment, and thereupon
the resignation or removal of the retiring Trustee will become effective and such successor Trustee, without any further act, deed
or conveyance, will become vested with all the rights, powers, trusts and duties hereunder of the retiring Trustee; but, on the
request of the Company or such successor Trustee, such retiring Trustee, upon payment of its charges, will execute and deliver
an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and, subject to
Section 903, will duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring
Trustee hereunder, subject nevertheless to its claim, if any, provided for in Section 507.

 

(2)           Upon
the appointment hereunder of any successor Trustee with respect to the Subordinated Notes, the Company, the retiring Trustee and
such successor Trustee will execute and deliver an indenture supplemental hereto wherein each successor Trustee will accept such
appointment and which (i) will contain such provisions as will be necessary or desirable to transfer and confirm to, and to
vest in. such successor Trustee all the rights, powers, trusts and duties of the retiring Trustee with respect to the Subordinated
Notes, (ii) if the retiring Trustee is not retiring with respect to all Subordinated Notes, will contain such provisions as
will be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring Trustee with respect
to the Subordinated Notes will continue to be vested in the retiring Trustee, and (iii) will add to or change any of the provisions
of this Indenture as will be necessary to provide for or facilitate the administration of the trusts hereunder by more than one
Trustee, it being understood that nothing herein or in such supplemental indenture will constitute such Trustees co-trustees of
the same trust, that each such Trustee will be trustee of a trust or trusts hereunder separate and apart from any trust or trusts
hereunder administered by any other such Trustee and that no Trustee will be responsible for any notice given to, or received by,
or any act or failure to act on the part of any other Trustee hereunder, and, upon the execution and delivery of such supplemental
indenture, the resignation or removal of the retiring Trustee will become effective to the extent provided therein, such retiring
Trustee will have no further responsibility for the exercise of rights and powers or for the performance of the duties and obligations
vested in the Trustee under this Indenture with respect to the Subordinated Notes other than as hereinafter expressly set forth,
and such successor Trustee, without any further act, deed or conveyance, will become vested with all the rights, powers, trusts
and duties of the retiring Trustee with respect to the Subordinated Notes; but, on request of the Company or such successor Trustee,
such retiring Trustee, upon payment of its charges with respect to the Subordinated Notes and subject to Section 903 will
duly assign, transfer and deliver to such successor Trustee, to the extent contemplated by such supplemental indenture, the property
and money held by such retiring Trustee hereunder with respect to the Subordinated Notes, subject to its claim, if any, provided
for in Section 507.

 

    50

     

    

 

(3)           Upon
request of any Person appointed hereunder as a successor Trustee, the Company will execute any and all instruments for more fully
and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts referred to in paragraph (1) or
(2) of this Section, as the case may be.

 

(4)           No
Person will accept its appointment hereunder as a successor Trustee unless at the time of such acceptance such successor Person
will be qualified and eligible under this Article. No resigning or removed Trustee shall have any liability or responsibility for
the action or inaction of any successor Trustee.

 

Section 511      Merger,
Conversion, Consolidation or Succession to Business.

 

Any corporation into
which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee will be a party, or any corporation succeeding to all or substantially all of
the corporate trust business of the Trustee, will be the successor of the Trustee hereunder (provided that such corporation will
otherwise be qualified and eligible under this Article), without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Subordinated Notes will have been authenticated but not delivered by the Trustee
then in office, any such successor to such authenticating Trustee may adopt such authentication and deliver the Subordinated Notes
so authenticated with the same effect as if such successor Trustee had itself authenticated such Subordinated Notes. In case any
Subordinated Notes will not have been authenticated by such predecessor Trustee, any such successor Trustee may authenticate and
deliver such Subordinated Notes in either its own name or that of its predecessor Trustee.

 

Section 512      Appointment
of Authenticating Agent.

 

The Trustee may appoint
one or more Authenticating Agents acceptable to the Company with respect to the Subordinated Notes which will be authorized to
act on behalf of the Trustee to authenticate Subordinated Notes issued upon original issue, exchange, registration of transfer,
partial redemption, partial repayment, or in accordance with Section 209, and Subordinated Notes so authenticated will be
entitled to the benefits of this Indenture and will be valid and obligatory for all purposes as if authenticated by the Trustee
hereunder. Wherever reference is made in this Indenture to the authentication and delivery of Subordinated Notes by the Trustee
or the Trustee’s certificate of authentication, such reference will be deemed to include authentication and delivery on behalf
of the Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of the Trustee by an Authenticating
Agent.

 

    51

     

    

 

Each Authenticating
Agent will be reasonably acceptable to the Company and, except as provided in or under this Indenture, will at all times be a
corporation that would be permitted by the Trust Indenture Act to act as trustee under an indenture qualified under the Trust
Indenture Act, is authorized under applicable law and by its charter to act as an Authenticating Agent and has a combined capital
and surplus (computed in accordance with Section 310(a)(2) of the Trust Indenture Act) of at least $50,000,000 and is
subject to supervision or examination by federal or state authority. If at any time an Authenticating Agent will cease to be eligible
in accordance with the provisions of this Section, it will resign immediately in the manner and with the effect specified in this
Section.

 

Any corporation into
which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from
any merger, conversion or consolidation to which such Authenticating Agent will be a party, or any corporation succeeding to all
or substantially all of the corporate agency or corporate trust business of an Authenticating Agent, will be the successor of such
Authenticating Agent hereunder, provided such corporation will be otherwise eligible under this Section, without the execution
or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent.

 

An Authenticating Agent
may resign at any time by giving written notice thereof to the Trustee and the Company. The Trustee may at any time terminate the
agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and the Company. Upon receiving
such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent will cease to be eligible
in accordance with the provisions of this Section, the Trustee may appoint a successor Authenticating Agent that will be acceptable
to the Company and will deliver written notice of such appointment by first-class mail, postage prepaid, to all Holders with respect
to which such Authenticating Agent will serve, as their names and addresses appear in the Subordinated Note Register. Any successor
Authenticating Agent, upon acceptance of its appointment hereunder, will become vested with all the rights, powers and duties of
its predecessor hereunder, with like effect as if originally named as an Authenticating Agent No successor Authenticating Agent
will be appointed unless eligible under the provisions of this Section 512.

 

The Company agrees
to pay each Authenticating Agent from time to time reasonable compensation for its services under this Section. If the Trustee
makes such payments, it will be entitled to be reimbursed for such payments, subject to the provisions of Section 507.

 

The provisions of Section 211,
Section 504 and Section 505 will be applicable to each Authenticating Agent.

 

If an Authenticating
Agent is appointed under this Section, the Subordinated Notes may have endorsed thereon, in addition to or in lieu of the Trustee’s
certificate of authentication, an alternate certificate of authentication in substantially the following form:

 

This is one of the
Subordinated Notes designated herein referred to in the within-mentioned Indenture.

 

	 	 
	 	As Trustee
	 	 
	 	By:	 

 

    52

     

    

 

	 	 	As Authenticating Agent
	 
	 	By:	 
	 	Name:	 
	 	Title:	 

 

Section
513      Preferred
Collection of Claims against Company.

 

If and when the Trustee
will be or become a creditor of the Company (or any other obligor upon the Subordinated Notes), the Trustee will be subject to
the provisions of the Trust Indenture Act regarding the collection of claims against the Company (or any such other obligor).

 

ARTICLE VI

HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY

 

Section
601      Holder
Lists.

 

The Trustee will preserve
in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of the Holders.
If the Trustee is not the Registrar, the Company will cause to be furnished to the Trustee at least semiannually on January 1
and July 1 a listing of the Holders dated within 10 days of the date on which the list is furnished and at such other times
as the Trustee may request in writing a list in such form and as of such date as the Trustee may reasonably require of the names
and addresses of the Holders.

 

Section
602      Preservation
of Information; Communications to Holders.

 

The Trustee will comply
with the obligations imposed upon it in accordance with Section 312 of the Trust Indenture Act.

 

Every Holder of Subordinated
Notes, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company, the Trustee, any Paying
Agent or any Registrar will be held accountable by reason of the disclosure of any such information as to the names and addresses
of the Holders of Subordinated Notes in accordance with Section 312(c) of the Trust Indenture Act, regardless of the
source from which such information was derived, and that the Trustee will not be held accountable by reason of delivering any material
in accordance with a request made under Section 312(b) of the Trust Indenture Act.

 

Section
603      Reports
by Trustee.

 

(1)            Within
60 days after July 15 of each year commencing with the first July 15 following the date of this Indenture, if required
by Section 313(a) of the Trust Indenture Act, the Trustee will transmit, in accordance with Section 313(c) of
the Trust Indenture Act, a brief report dated as of such July 15 with respect to any of the events specified in said Section 313(a) and
Section 313(b)(2) that may have occurred since the later of the immediately preceding July 15 and the date of this
Indenture.

 

    53

     

    

 

(2)           The
Trustee will transmit the reports required by Section 313(a) of the Trust Indenture Act at the times specified therein.

 

(3)           The
Trustee shall comply with Sections 313(b) and 313(c) of the Trust Indenture Act.

 

(4)           Reports
under this Section will be transmitted in the manner and to the Persons required by Section 313(c) and Section 313(d) of
the Trust Indenture Act.

 

Section
604      Reports
by Company.

 

(1)          The
Company, in accordance with Section 314(a) of the Trust Indenture

Act, will:

 

(a)           file
with the Trustee, within 15 days after the Company files the same with the Commission, copies of the annual reports and of the
information, documents and other reports (or copies of such portions of any of the foregoing as the Commission may from time to
time by rules and regulations prescribe) that the Company may be required to file with the Commission in accordance with Section 13
or Section 15(d) of the Exchange Act; or, if the Company is not required to file information, documents or reports in
accordance with either of said Sections, then it will file with the Trustee and the Commission, in accordance with rules and
regulations prescribed from time to time by the Commission, such of the supplementary and periodic information, documents and reports
that may be required in accordance with Section 13 of the Exchange Act in respect of a security listed and registered on a
national securities exchange as may be prescribed from time to time in such rules and regulations;

 

(b)           file
with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission,
such additional certificates, information, documents and reports with respect to compliance by the Company, with the conditions
and covenants of this Indenture as may be required from time to time by such rules and regulations; and

 

(c)           transmit
to the Holders within 30 days after the filing thereof with the Trustee, in the manner and to the extent provided in Section 313(c) of
the Trust Indenture Act, such summaries of any information, documents and reports required to be filed by the Company in accordance
with paragraphs (1) and (2) of this Section as may be required by rules and regulations prescribed from time
to time by the Commission. Delivery of such reports, information and documents to the Trustee is for informational purposes only
and the Trustee’s receipt of such will not constitute constructive notice of any information contained therein or determinable
from information contained therein, including the Company’s compliance with any of its covenants hereunder (as to which the
Trustee is entitled to rely exclusively on Officers’ Certificates).

 

    54

     

    

 

(2)           The
Company intends to file the reports referred to in Section 604(1) with the Commission in electronic form in accordance
with Regulation S-T of the Commission using the Commission’s Electronic Data Gathering, Analysis and Retrieval system. Compliance
with the foregoing, or any successor electronic system approved by the Commission, will constitute delivery by the Company of
such reports to the Trustee and Holders in compliance with the provision of Section 604(1) and Trust Indenture Act Section 314(a).
Notwithstanding anything to the contrary herein, the Trustee will have no duty to search for or obtain any electronic or other
filings that the Company makes with the Commission, regardless of whether such filings are periodic, supplemental or otherwise.
Delivery of the reports, information and documents to the Trustee in accordance with this Section 604(2) will be solely
for the purposes of compliance with this Section 604(2) and with Trust Indenture Act Section 314(a). The Trustee’s
receipt of such reports, information and documents is for informational purposes only and the Trustee’s receipt of such
will not constitute constructive notice of any information contained therein or determinable from information contained therein,
including the Company’s compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively
on Officers’ Certificates). The Trustee shall have no liability or responsibility for the filing, content or timeliness
of any report hereunder aside from any report reported under Section 603 hereof.

 

ARTICLE
VII
 SUCCESSORS

 

Section
701      Merger,
Consolidation or Sale of All or Substantially All Assets.

 

The Company will not,
in any transaction or series of related transactions, consolidate with or merge into any Person or sell, assign, transfer, lease
or otherwise convey all or substantially all its properties and assets to any Person, unless:

 

(1)           either
the Company will be the continuing Person (in the case of a merger), or the successor Person (if other than the Company) formed
by such consolidation or into which the Company is merged or which acquires by sale, assignment, transfer, lease or other conveyance
all or substantially all the properties and assets of the Company will be a corporation organized and existing under the laws of
the United States, any state thereof or the District of Columbia and will expressly assume, by an indenture (or indentures, if
at such time there is more than one Trustee) supplemental hereto, executed by such successor corporation and delivered to the Trustee,
in form satisfactory to the Trustee, the due and punctual payment of the principal of, and interest on, all the Outstanding Subordinated
Notes and the due and punctual performance and observance of every obligation in this Indenture and the Outstanding Subordinated
Notes on the part of the Company to be performed or observed;

 

(2)           immediately
after giving effect to such transaction and treating any indebtedness that becomes an obligation of the Company or any Subsidiary
as a result of that transaction as having been incurred by the Company or any Subsidiary at the time of the transaction, no Event
of Default, and no event which, after notice or lapse of time, or both, would become an Event of Default, will have occurred and
be continuing; and

 

(3)           either
the Company or the successor Person will have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel,
each stating that such consolidation, merger, sale, assignment, transfer, lease or other conveyance and, if a supplemental indenture
is required in connection with such transaction, such supplemental indenture comply with this Article VII and that all conditions
precedent herein provided for relating to such transaction have been complied with.

 

    55

     

    

 

 

For purposes of the
foregoing, any sale, assignment, transfer. lease or other conveyance of all or any of the properties and assets of one or more
Subsidiaries of the Company (other than to the Company or another Subsidiary), which, if such properties and assets were directly
owned by the Company, would constitute all or substantially all of the Company’s properties and assets, will be deemed to
be the transfer of all or substantially all of the properties and assets of the Company.

 

Section 702     Successor
Person Substituted for Company.

 

Upon any consolidation
by the Company with or merger of the Company into any other Person or any sale, assignment, transfer, lease or conveyance of all
or substantially all of the properties and assets of the Company to any Person in accordance with Section 701, the successor
Person formed by such consolidation or into which the Company is merged or to which such sale, assignment, transfer, lease or other
conveyance is made will succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture
with the same effect as if such successor Person had been named as the Company herein; and thereafter, except in the case of a
lease, the predecessor Person will be released from all obligations and covenants under this Indenture and the Subordinated Notes.

 

ARTICLE VIII

SUPPLEMENTAL INDENTURES

 

Section 801     Supplemental
Indentures without Consent of Holders.

 

Without the consent
of any Holders of Subordinated Notes, the Company (when authorized by or in accordance with a Board Resolution) and the Trustee,
at any time and from time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to the Trustee,
for any of the following purposes:

 

(1)            to
evidence the succession of another Person to the Company, and the assumption by any such successor of the covenants of the Company
contained herein and in the Subordinated Notes;

 

(2)            to
add to the covenants of the Company for the benefit of the Holders (as will be specified in such supplemental indenture or indentures)
or to surrender any right or power herein conferred upon the Company with respect to the Subordinated Notes issued under this Indenture
(as will be specified in such supplemental indenture or indentures);

 

(3)            to
permit or facilitate the issuance of Subordinated Notes in uncertificated or global form, provided any such action will not adversely
affect the interests of the Holders;

 

(4)            to
evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Subordinated Notes
and to add to or change any of the provisions of this Indenture as will be necessary to provide for or facilitate the administration
of the trusts hereunder by more than one Trustee, in accordance with the requirements of Section 510;

 

(5)            to
cure any ambiguity or to correct or supplement any provision herein that may be defective or that may be inconsistent with any
other provision herein;

 

    56

     

    

 

(6)            to
make any other provisions with respect to matters or questions arising under this Indenture that will not adversely affect the
interests of the Holders of then Outstanding Subordinated Notes;

 

(7)            to
add any additional Events of Default (as will be specified in such supplemental indenture);

 

(8)            to
supplement any of the provisions of this Indenture to such extent as will be necessary to permit or facilitate the Legal Defeasance,
Covenant Defeasance and/or satisfaction and discharge of the Subordinated Notes in accordance with Article III, provided that
any such action will not adversely affect the interests of any Holder;

 

(9)            to
provide for the issuance of Exchange Notes;

 

(10)          to
conform any provision in this Indenture to the requirements of the Trust Indenture Act; or

 

(11)          to
make any change that does not adversely affect the legal rights under this Indenture of any Holder.

 

Section 802     Supplemental
Indentures with Consent of Holders.

 

With the consent of
the Holders of not less than a majority in principal amount of the Outstanding Subordinated Notes, by Act of said Holders delivered
to the Company and the Trustee, the Company (when authorized by or in accordance with a Board Resolution), and the Trustee may
enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner
or eliminating any of the provisions of this Indenture or of the Subordinated Notes or of modifying in any manner the rights of
the Holders under this Indenture; provided, that no such supplemental indenture, without the consent of the Holder of each Outstanding
Subordinated Note affected thereby, will

 

(1)            reduce
the rate of or change the time for payment of interest, including Defaulted Interest, on any Subordinated Notes;

 

(2)            reduce
the principal of or change the Stated Maturity of any Subordinated Notes, or change the date on which any Subordinated Notes may
be subject to redemption or reduce the Redemption Price therefore;

 

(3)            make
any Subordinated Note payable in money other than Dollars;

 

(4)            make
any change in provisions of this Indenture protecting the right of each Holder to receive payment of principal of and interest
on such Subordinated Note on or after the due date thereof or to bring suit to enforce such payment,

 

(5)            reduce
the percentage in principal amount of the Outstanding Subordinated Notes, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for any waiver (of compliance with certain provisions of this
Indenture or certain defaults hereunder and their consequences) provided for in Section 412 or Section 906 of this Indenture,
or

 

    57

     

    

 

(6)            modify
any of the provisions of this Section 802, Section 412 or Section 906, except to increase any such percentage or
to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each
Outstanding Subordinated Note affected thereby.

 

It will not be necessary
for any Act of Holders under this Section 802 to approve the particular form of any proposed supplemental indenture, but it
will be sufficient if such Act will approve the substance thereof.

 

Section 803     Execution
of Supplemental Indentures.

 

As a condition to executing,
or accepting the additional trusts created by, any supplemental indenture permitted by this Article VIII or the modifications
thereby of the trust created by this Indenture, the Trustee will be entitled to receive, and (subject to Section 501) will
be fully protected in relying upon, an Officers’ Certificate and an Opinion of Counsel to the effect that the execution of
such supplemental indenture is authorized or permitted by this Indenture and that such supplemental indenture has been duly authorized,
executed and delivered by, and is a valid, binding and enforceable obligation of, the Company, subject to customary exceptions,
and to the extent applicable pursuant to Section 801, that such supplemental indenture does not adversely affects the interests
of the Holders. The Trustee shall execute any such supplemental indenture except that the Trustee may, but will not be obligated
to, enter into any such supplemental indenture which affects the Trustee’s own rights, duties or immunities under this Indenture
or otherwise.

 

Section 804     Effect
of Supplemental Indentures.

 

Upon the execution
of any supplemental indenture under this Article VIII, this Indenture will be modified in accordance therewith, and such supplemental
indenture will form a part of this Indenture for all purposes; and every Holder theretofore or thereafter authenticated and delivered
hereunder.

 

Section 805     Reference
in Subordinated Notes to Supplemental Indentures.

 

Subordinated Notes
authenticated and delivered after the execution of any supplemental indenture in accordance with this Article VIII may, and
will if required by the Company, bear a notation in form approved by the Company as to any matter provided for in such supplemental
indenture. If the Company will so determine, new Subordinated Notes so modified as to conform, in the opinion of the Company, to
any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange
for Outstanding Subordinated Notes.

 

Section 806     Effect
on Senior Indebtedness.

 

No supplemental indenture
will directly or indirectly modify or eliminate the Subordination Provisions or the definition of “Senior Indebtedness”
applicable with respect to the Subordinated Notes in any manner that might terminate or impair the subordination of such Subordinated
Notes to such Senior Indebtedness without the prior written consent of each of the holders of such Senior Indebtedness,

 

    58

     

    

 

Section 807     Conformity
with Trust Indenture Act.

 

Every supplemental
indenture executed in accordance with this Article will conform to the requirements of the Trust Indenture Act as then in
effect.

 

ARTICLE IX

COVENANTS

 

Section 901     Payment
of Principal and Interest.

 

The Company covenants
and agrees for the benefit of the Holders that it will duly and punctually pay the principal of, and interest on, the Subordinated
Notes, in accordance with the terms thereof and this Indenture. Principal and interest will be considered paid on the date due
if the Paying Agent, if other than the Company or a Subsidiary thereof, holds as of 11:00 a.m., New York, New York time, on any
Interest Payment Date, an amount in immediately available funds provided by the Company that is designated for and sufficient to
pay all principal and interest then due. The Company will pay all Additional Interest, if any, on the dates and in the amounts
set forth in the Registration Rights Agreement.

 

If Additional Interest
is payable by the Company in accordance with the Registration Rights Agreement, the Company will deliver to the Trustee a certificate
to that effect stating (i) the amount of such Additional Interest that is payable and (ii) the date on which such Additional
Interest is payable. Unless and until a Responsible Officer of the Trustee receives such a certificate or instruction or direction
from the Holders in accordance with the terms of this Indenture, the Trustee may assume without inquiry that no Additional Interest
is payable. The foregoing will not prejudice the rights of the Holders with respect to their entitlement to Additional Interest
as otherwise set forth in this Indenture or the Subordinated Notes and pursuing any action against the Company directly or otherwise
directing the Trustee to take such action in accordance with the terms of this Indenture and the Subordinated Notes. If the Company
has paid Additional Interest directly to persons entitled to it, the Company will deliver to the Trustee a certificate setting
forth the particulars of such payment.

 

Section 902     Maintenance
of Office.

 

The Company will maintain
an office or agency in the City of Easton, Maryland (which may be an office of the Trustee or an Affiliate of the Trustee or Registrar)
where Subordinated Notes may be surrendered for registration of transfer or for exchange and where notices and demands to or upon
the Company in respect of the Subordinated Notes and this Indenture may be served. The Company will give prompt written notice
to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company fails to maintain
any such required office or agency or fails to furnish the Trustee with the address thereof, such presentations, surrenders, notices
and demands may be made or served at the Corporate Trust Office of the Trustee.

 

The Company may also
from time to time designate one or more other offices or agencies where the Subordinated Notes may be presented or surrendered
for any or all such purposes and may from time to time rescind such designations; provided that no such designation or rescission
will in any manner relieve the Company of its obligation to maintain an office or agency in the City of Easton, Maryland. The Company
will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such
other office or agency.

 

    59

     

    

 

The Company hereby
designates the Corporate Trust Office of the Trustee as one such office or agency of the Company in accordance with Section 902.

 

Section 903     Money
for Subordinated Notes Payments to Be Held in Trust.

 

If the Company will
at any time act as its own Paying Agent, it will, on or before each due date of the principal of, or interest on, any of the Subordinated
Notes, segregate and hold in trust for the benefit of the Persons entitled thereto a sum in Dollars sufficient to pay the principal
and interest, as the case may be, so becoming due until such sums will be paid to such Persons or otherwise disposed of as herein
provided, and will promptly notify the Trustee of its action or failure so to act.

 

Whenever the Company
will have one or more Paying Agents, it will, on or prior to each due date of the principal of, or interest on. any Subordinated
Notes, deposit with any Paying Agent a sum in Dollars sufficient to pay the principal and interest, as the case may be, so becoming
due, such sum to be held in trust for the benefit of the Persons entitled thereto, and (unless such Paying Agent is the Trustee)
the Company will promptly notify the Trustee of its action or failure so to act.

 

The Company will cause
each Paying Agent other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent will agree
with the Trustee, subject to the provisions of this Section that such Paying Agent will:

 

(1)            hold
all sums held by it for the payment of the principal of, or interest on, the Subordinated Notes in trust for the benefit of the
Persons entitled thereto until such sums will be paid to such Persons or otherwise disposed of as provided in or under this Indenture;

 

(2)            give
the Trustee notice of any default by the Company in the making of any payment of principal, or interest on, the Subordinated Notes;
and

 

(3)            at
any time during the continuance of any such default, upon the written request of the Trustee, pay to the Trustee all sums so held
in trust by such Paying Agent.

 

The Company may at
any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be
held by the Trustee upon the same terms as those upon which such sums were held by the Company or such Paying Agent; and, upon
such payment by any Paying Agent to the Trustee, such Paying Agent will be released from all further liability with respect to
such sums.

 

    60

     

    

 

Any money deposited
with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of, or interest on,
any Subordinated Note and remaining unclaimed for two years after such principal or interest will have become due and payable will
be paid to the Company upon a Company Request, or (if then held by the Company) will be discharged from such trust; and the Holder
of such Subordinated Note will thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and
all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee
thereof, will thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such
repayment, may, not later than 30 days after the Company’s request for such repayment, at the expense of the Company cause
to be published once, in an Authorized Newspaper in each Place of Payment or to be delivered to such Holders of Subordinated Notes,
or both, notice that such money remains unclaimed and that, after a date specified therein, which will not be less than 30 days
from the date of such publication or delivery nor will it be earlier than two years after such principal and or interest will have
become due and payable, any unclaimed balance of such money then remaining will be repaid to the Company.

 

Section 904     Corporate
Existence.

 

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

 

Section 905     Maintenance
of Properties.

 

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

 

Section 906     Waiver
of Certain Covenants.

 

The Company may omit
in any particular instance to comply with any term, provision or condition set forth in Section 902 to Section 905, inclusive,
with respect to the Subordinated Notes if before the time for such compliance the Holders of at least a majority in principal amount
of the Outstanding Subordinated Notes, by Act of such Holders, either will waive such compliance in such instance or generally
will have waived compliance with such term, provision or condition, but no such waiver will extend to or affect such term, provision
or condition except to the extent so expressly waived, and, until such waiver will become effective, the obligations of the Company
and the duties of the Trustee in respect of any such term, provision or condition will remain in full force and effect.

 

    61

     

    

 

Section 907     Company
Statement as to Compliance.

 

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

 

Section 908     Tier
2 Capital.

 

If all or any portion
of the Subordinated Notes ceases to be deemed to be Tier 2 Capital, other than due to the limitation imposed on the capital treatment
of subordinated debt during the five (5) years immediately preceding the Maturity Date of the Subordinated Notes, Company
will immediately notify the Trustee and the Holders, and thereafter Company shall request, subject to the terms hereof, that the
Trustee and the Holders execute and deliver all agreements as reasonably necessary in order to restructure the applicable portions
of the obligations evidenced by the Subordinated Notes to qualify as Tier 2 Capital; provided, however, that nothing contained
in this Section 908 shall limit the Company’s right to redeem the Subordinated Notes upon the occurrence of a Tier 2
Capital Event pursuant to Section 1001(3) hereof.

 

ARTICLE X

REDEMPTION OF SECURITIES

 

Section 1001     Applicability
of Article.

 

(1)            Except
as provided in this Section 1001, the Subordinated Notes are not subject to redemption at the option of the Company. The Subordinated
Notes are not subject to redemption at the option of the Holders.

 

(2)            Subject
to the receipt of any required regulatory approvals, with corresponding written notice to the Trustee, the Company at any time
or from time to time on or after September 1, 2025 may redeem all or a portion of the Subordinated Notes.

 

(3)            Subject
to the receipt of any required regulatory approvals, the Company may, at its option, redeem all or a portion of the Outstanding
Subordinated Notes at any time upon an Investment Company Event, a Tax Event or a Tier 2 Capital Event.

 

(4)            The
Redemption Price with respect to any redemption permitted under this Indenture will be equal to 100% of the principal amount of
the Subordinated Notes to be redeemed, plus accrued but unpaid interest and Additional Interest, if any, thereon to, but excluding,
the Redemption Date.

 

    62

     

    

 

Section 1002     Election
to Redeem; Notice to Trustee.

 

The election of the
Company to redeem any Subordinated Notes will be evidenced by a Company Order. In case of any redemption of less than all of the
Subordinated Notes, the Company will, at least 60 days prior to the Redemption Date fixed by the Company (unless a shorter notice
will be satisfactory to the Trustee, but in any event not less than 45 days prior to the Redemption Date), notify the Trustee,
of such Redemption Date and of the principal amount of Subordinated Notes to be redeemed.

 

In the case of any
redemption of Subordinated Notes (i) prior to the expiration of any restriction on such redemption provided in the terms of
such Subordinated Notes or elsewhere in this Indenture or (ii) in accordance with an election of the Company that is subject
to a condition specified in the terms of such Subordinated Notes or elsewhere in this Indenture, the Company will furnish to the
Trustee an Officers’ Certificate evidencing compliance with such restriction or condition.

 

Section 1003     Selection
by Trustee of Subordinated Notes to be Redeemed.

 

If less than all of
the Subordinated Notes are to be redeemed, the Subordinated Notes will be redeemed on a pro rata basis as to the Holders, and if
the Subordinated Notes are represented by Global Subordinated Notes held by the Depositary and such redemption is processed through
the Depositary, such redemption will be made on a “Pro Rata Pass-Through Distribution of Principal” basis in accordance
with the procedures of the Depositary. In the event a pro rata redemption as provided in the preceding sentence is not permitted
under applicable law or applicable requirements of the Depositary, the Subordinated Notes to be redeemed will be selected by lot
or such method as the Trustee will deem fair and appropriate.

 

The Trustee will promptly
notify the Company and the Registrar (if other than itself) in writing of the Subordinated Notes selected for redemption and, in
the case of any Subordinated Notes selected for partial redemption, the principal amount thereof to be redeemed.

 

For all purposes of
this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Subordinated Notes will relate,
in the case of any Subordinated Notes redeemed or to be redeemed only in part, to the portion of the principal of such Subordinated
Notes which has been or is to be redeemed.

 

Section 1004     Notice
of Redemption.

 

Notice of redemption
will be given in the manner provided in Section 105, not less than 30 nor more than 60 days prior to the Redemption Date to
the Holders of Subordinated Notes to be redeemed. Failure to give notice by delivering in the manner herein provided to the Holder
of any Subordinated Notes designated for redemption as a whole or in part, or any defect in the notice to any such Holder, will
not affect the validity of the proceedings for the redemption of any other Subordinated Notes or portions thereof.

 

Any notice that is
delivered to the Holder of any Subordinated Notes in the manner herein provided will be conclusively presumed to have been duly
given, whether or not such Holder receives the notice.

 

    63

     

    

 

All notices of redemption
will state:

 

(1)            the
Redemption Date,

 

(2)            the
Redemption Price,

 

(3)            if
less than all Outstanding Subordinated Notes are to be redeemed, the identification (and, in the case of partial redemption, the
principal amount) of the particular Subordinated Note or Subordinated Notes to be redeemed,

 

(4)            that,
in case any Subordinated Note is to be redeemed in part only, on and after the Redemption Date, upon surrender of such Subordinated
Note, the Holder of such Subordinated Note will receive, without charge, a new Subordinated Note or Subordinated Notes of authorized
denominations for the principal amount thereof remaining unredeemed,

 

(5)            that,
on the Redemption Date, the Redemption Price will become due and payable upon each such Subordinated Note or portion thereof to
be redeemed, together (if applicable) with accrued and unpaid interest and Additional Interest, if any, thereon (subject, if applicable,
to the provisos to the first paragraph of Section 1006), and, if applicable, that interest thereon will cease to accrue on
and after said date,

 

(6)            the
place or places where such Subordinated Notes are to be surrendered for payment of the Redemption Price and any accrued interest
pertaining thereto, and

 

(7)            the
section hereunder providing for such redemption.

 

The notice of redemption
shall include the CUSIP number reference numbers of such Subordinated Notes, if any (or any other numbers used by a Depositary
to identify such Subordinated Notes).

 

Notice of redemption
of Subordinated Notes to be redeemed at the election of the Company will be given by the Company or, at the Company’s request
delivered at least 10 days before the date such notice is to be given (unless a shorter period will be acceptable to the Trustee),
by the Trustee in the name and at the expense of the Company.

 

Section 1005     Deposit
of Redemption Price.

 

On or prior to 11:00
am., New York, New York time, on any Redemption Date, the Company will deposit, with respect to the Subordinated Notes called for
redemption in accordance with Section 1004, with the Trustee or with a Paying Agent (or, if the Company is acting as its own
Paying Agent, segregate and hold in trust as provided in Section 903) an amount sufficient to pay the Redemption Price of,
and (except if the Redemption Date will be an Interest Payment Date) any accrued interest on, all such Subordinated Notes or portions
thereof which are to be redeemed on that date.

 

    64

     

    

 

Section 1006     Subordinated
Notes Payable on Redemption Date.

 

Notice of redemption
having been given as provided above, the Subordinated Notes so to be redeemed will, on the Redemption Date, become due and payable
at the Redemption Price therein specified, together with accrued and unpaid interest and Additional Interest, if any, thereon and
from and after such date (unless the Company will default in the payment of the Redemption Price and accrued interest, if any)
such Subordinated Notes will cease to bear interest. Upon surrender of any such Subordinated Note for redemption in accordance
with said notice, such Subordinated Note will be paid by the Company at the Redemption Price, together with any accrued and unpaid
interest and Additional Interest, if any, thereon to but excluding the Redemption Date; provided, however, that installments of
interest on Subordinated Notes whose Stated Maturity is on or prior to the Redemption Date will be payable to the Holders of such
Subordinated Notes registered as such at the close of business on the Regular Record Dates therefor according to their terms and
the provisions of Section 210.

 

If any Subordinated
Note called for redemption will not be so paid upon surrender thereof for redemption, the principal, until paid, will bear interest
from the Redemption Date at the rate prescribed therefor in the Subordinated Note or, if no rate is prescribed therefor in the
Subordinated Note, at the rate of interest, if any, borne by such Subordinated Note.

 

Section 1007     Subordinated
Notes Redeemed in Part.

 

Any Subordinated Note
which is to be redeemed only in part will be surrendered at any office or agency for such Subordinated Note (with, if the Company
or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the
Trustee duly executed by, the Holder thereof or his attorney duly authorized in writing) and the Company will execute and the Trustee
will authenticate and deliver to the Holder of such Subordinated Note without service charge, a new Subordinated Note or Subordinated
Notes, containing identical terms and provisions, of any authorized denomination as requested by such Holder in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of the Subordinated Note so surrendered. If a Global
Subordinated Note is so surrendered, the Company will execute, and the Trustee will authenticate and deliver to the Depositary
for such Global Subordinated Note as will be specified in the Company Order with respect thereto to the Trustee, without service
charge, a new Global Subordinated Note in a denomination equal to and in exchange for the unredeemed portion of the principal of
the Global Subordinated Note so surrendered.

 

Upon surrender of a
Subordinated Note that is redeemed in part, the Company will issue and the Trustee will authenticate for the Holder at the expense
of the Company a new Subordinated Note equal in principal amount to the unredeemed portion of the Subordinated Note surrendered
representing the same indebtedness to the extent not redeemed. Notwithstanding anything in this Indenture to the contrary, only
a Company Order and not an Opinion of Counsel or an Officers’ Certificate of the Company is required for the Trustee to authenticate
such new Subordinated Note.

 

ARTICLE XI

SUBORDINATION OF SECURITIES

 

Section 1101     Agreement
to Subordinate.

 

The Company, for itself,
its successors and assigns, covenants and agrees, and each Holder of Subordinated Notes by the Holder’s acceptance thereof,
likewise covenants and agrees, that the payment of the principal of and interest on each and all of the Subordinated Notes is and
will be expressly subordinated in right of payment to the prior payment in full of all Senior Indebtedness.

 

    65

     

    

 

Section 1102     Distribution
of Assets.

 

(1)            Upon
any distribution of assets of the Company upon any termination, winding up. liquidation or reorganization of the Company, whether
in bankruptcy, insolvency, reorganization or receivership proceedings or upon an assignment for the benefit of creditors or any
other marshalling of the assets and liabilities of the Company or otherwise (subject to the power of a court of competent jurisdiction
to make other equitable provision reflecting the rights conferred upon the Senior Indebtedness and the holders thereof with respect
to the Subordinated Notes and the Holders thereof by a lawful plan of reorganization under applicable Bankruptcy Law):

 

(a)            holders
of all Senior Indebtedness will first be entitled to receive payment in full in accordance with the terms of such Senior Indebtedness
of the principal thereof, premium, if any, and the interest due thereon (including interest accruing subsequent to the commencement
of any proceeding for the bankruptcy or reorganization of the Company under any applicable bankruptcy, insolvency or similar law
now or hereafter in effect) before the Holders of the Subordinated Notes are entitled to receive any payment upon the principal
of or interest on indebtedness evidenced by the Subordinated Notes;

 

(b)            any
payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to which the
Holders would be entitled except for the provisions of this Article XI, including any such payment or distribution that may
be payable or deliverable by reason of the payment of any other indebtedness of the Company being subordinated to the payment of
the Subordinated Notes, will be paid by the liquidating trustee or agent or other Person making such payment or distribution, whether
a trustee in bankruptcy, a receiver or liquidating trustee or otherwise, directly to the holders of Senior Indebtedness or their
representative or representatives or to the trustee or trustees under any indenture under which any instruments evidencing any
of such Senior Indebtedness may have been issued, in accordance with the priorities then existing among holders of Senior Indebtedness
for payment of the aggregate amounts remaining unpaid on account of the principal, premium, if any, and interest (including interest
accruing subsequent to the commencement of any proceeding for the bankruptcy or reorganization of the Company under any applicable
bankruptcy, insolvency or similar law now or hereafter in effect) on the Senior Indebtedness held or represented by each, to the
extent necessary to make payment in full of all Senior Indebtedness remaining unpaid, after giving effect to any concurrent payment
or distribution to the holders of such Senior Indebtedness; it being understood that if the Holders fail to file a proper claim
in the form required by any proceeding referred to in this Section 1102(1)(b) prior to 30 days before the expiration
of the time to file such claim or claims, then the holders of Senior Indebtedness are hereby authorized to file an appropriate
claim or claims for and on behalf of the Holders, in the form required in any such proceeding; and

 

(c)            in
the event that, notwithstanding the foregoing, any payment or distribution of assets of the Company of any kind or character, whether
in cash, property or securities, including any such payment or distribution that may be payable or deliverable by reason of the
payment of any other indebtedness of the Company being subordinate to the payment of the Subordinated Notes will be received by
the Trustee or the Holders before all Senior Indebtedness is paid in full, such payment or distribution will be paid over to the
trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee, agent or other Person making payment of assets of the
Company for all Senior Indebtedness remaining unpaid until all such Senior Indebtedness will have been paid in full, after giving
effect to any concurrent payment or distribution to the holders of such Senior Indebtedness,

 

    66

     

    

 

(2)            Subject
to the payment in full of all Senior Indebtedness, the Holders will be subrogated to the rights of the holders of Senior Indebtedness
to receive payments or distributions of cash, property or securities of the Company applicable to the Senior Indebtedness until
the principal of and interest on the Subordinated Notes will be paid in full and no such payments or distributions to holders of
such Senior Indebtedness to which the Holders would be entitled except for the provisions hereof of cash, property or securities
otherwise distributable to the holders of Senior Indebtedness will, as between the Company, its creditors, other than the holders
of Senior Indebtedness, and the Holders, be deemed to be a payment by the Company to or on account of the Senior Indebtedness.
It is understood that the provisions of this Article XI are intended solely for the purpose of defining the relative rights
of the Holders of the Subordinated Notes, on the one hand, and the holders of Senior Indebtedness, on the other hand. Nothing contained
in this Article XI or elsewhere in this Indenture or any supplemental indenture issued in accordance with Article VIII
of this Indenture or in the Subordinated Notes is intended to or will impair, as between the Company, its creditors, other than
the holders of Senior Indebtedness, and the Holders, the obligation of the Company, which is unconditional and absolute, to pay
to the Holders the principal of and interest on the Subordinated Notes as and when the same will become due and payable in accordance
with their terms or to affect the relative rights of the Holders and creditors of the Company, other than the holders of the Senior
Indebtedness, nor, except as otherwise expressly provided in this Indenture and the Subordinated Notes with respect to the limitation
on the rights of the Trustee and the Holders, to accelerate the Maturity of the Subordinated Notes and pursue remedies upon such
an acceleration, will anything herein or in the Subordinated Notes prevent the Trustee or any Holder from exercising all remedies
otherwise permitted by applicable law upon any Event of Default under the Indenture occurring, subject to the rights, if any, under
this Article XI of the holders of Senior Indebtedness, in respect of cash, property or securities of the Company received
upon the exercise of any such remedy. Upon any payment or distribution of assets of the Company referred to in this Article XI,
the Trustee and the Holders will be entitled to rely upon any order or decree of a court of competent jurisdiction in which such
termination, winding up, liquidation or reorganization proceeding is pending or upon a certificate of the liquidating trustee or
agent or other Person making any distribution to the Trustee or to the Holders for the purpose of ascertaining the Persons entitled
to participate in such distribution, the holders of the Senior Indebtedness and other indebtedness of the Company, the amount hereof
or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article XI.
In the absence of any such liquidating trustee, agent or other person, the Trustee will be entitled to rely upon a written notice
by a Person representing itself to be a holder of Senior Indebtedness (or a trustee or representative on behalf of such holder)
as evidence that such Person is a holder of Senior Indebtedness (or is such a trustee or representative). If the Trustee determines,
in good faith, that further evidence is required with respect to the right of any Person, as a holder of Senior Indebtedness, to
participate in any payment or distribution in accordance with this Article XI, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness held by such Person, as to the extent
to which such Person is entitled to participation in such payment or distribution, and as to other facts pertinent to the rights
of such Person under this Article XI, and if such evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such payment.

 

    67

     

    

 

With respect to the
holders of Senior Indebtedness, the Trustee undertakes to perform or to observe only such of its covenants and obligations as are
specifically set forth in this Indenture, and no implied covenants or obligations with respect to the holders of Senior Indebtedness
will be read into this Indenture against the Trustee. The Trustee, however, will not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness by reason of the execution of this Indenture, or any other supplemental indenture entered into in
accordance with Article VIII of this Indenture, and will not be liable to any such holders if it will in good faith mistakenly
pay over or distribute to or on behalf of the Holders or the Company moneys or assets to which any holders of Senior Indebtedness
will be entitled by virtue of this Article XI or otherwise.

 

Section 1103     Default
With Respect to Senior Indebtedness.

 

In the event and during
the continuation of any default in the payment of principal of, or premium, if any, or interest on, any Senior Indebtedness, beyond
any applicable grace period, or if any event of default with respect to any Senior Indebtedness will have occurred and be continuing,
or would occur as a result of the payment referred to hereinafter, permitting the holders of such Senior Indebtedness (or a trustee
on behalf of the holders thereof) to accelerate the maturity thereof, then, unless and until such default or event of default will
have been cured or waived or will have ceased to exist, no payment or principal of or interest on the Subordinated Notes, or in
respect of any retirement, purchase or other acquisition of any of the Subordinated Notes, will be made by the Company.

 

Section 1104     No
Impairment.

 

Nothing contained in
this Indenture, any other supplemental indenture entered into in accordance with Article VIII of this Indenture, or in any
of the Subordinated Notes will: (i) impair, as between the Company and the Holders, the obligations of the Company, to make,
or prevent the Company from making, at any time except as provided in Section 1102 and Section 1103, payments of principal
of, or interest (including interest accruing subsequent to the commencement of any proceeding for the bankruptcy or reorganization
of the Company under any applicable bankruptcy, insolvency, or similar law now or hereafter in effect) on, the Subordinated Notes,
as and when the same will become due and payable in accordance with the terms of the Subordinated Notes; (ii) affect the relative
rights of the Holders and creditors of the Company other than the holders of the Senior Indebtedness; (iii) except as otherwise
expressly provided in this Indenture and the Subordinated Notes with respect to the limitation on the rights of the Trustee and
the Holders, to accelerate the Maturity of the Subordinated Notes and pursue remedies upon such an acceleration, prevent the Holder
of any Subordinated Notes or the Trustee from exercising all remedies otherwise permitted by applicable law upon default thereunder,
subject to the rights, if any, under this Article XI of the holders of Senior Indebtedness in respect of cash, property or
securities of the Company received upon the exercise of such remedy; or (iv) prevent the application by the Trustee or any
Paying Agent of any moneys deposited with it hereunder to the payment of or on account of the principal of, or interest on, the
Subordinated Notes or prevent the receipt by the Trustee or any Paying Agent of such moneys, if, prior to the third Business Day
prior to such deposit, the Trustee or such Paying Agent did not have written notice of any event prohibiting the making of such
deposit by the Company.

 

    68

     

    

 

Section 1105     Effectuation
of Subordination Provisions.

 

Each Holder by his
acceptance of any Notes authorizes and expressly directs the Trustee on such Holder’s behalf to take such action as may be
necessary or appropriate to effectuate the Subordination Provisions, and appoints the Trustee such Holder’s attorney-in-fact
for such purposes, including, in the event of any termination, winding up, liquidation or reorganization of the Company (whether
in bankruptcy, insolvency, receivership, reorganization or similar proceedings or upon an assignment for the benefit of creditors
by the Company, a marshalling of the assets and liabilities of the Company or otherwise) tending toward the liquidation of the
property and assets of the Company, the filing of a claim for the unpaid balance of the Subordinated Notes in the form required
in those proceedings.

 

Section 1106     Notice
to Trustee.

 

The Company will give
prompt written notice to the Trustee of any fact known to the Company that would prohibit the Company from making any payment to
or by the Trustee in respect of the Subordinated Notes in accordance with the provisions of this Article XI. The Trustee will
not be charged with the knowledge of the existence of any default or event of default with respect to any Senior Indebtedness or
of any other facts that would prohibit the making of any payment to or by the Trustee or any Paying Agent unless and until the
Trustee will have received notice in writing at its Corporate Trust Office to that effect signed by an Authorized Officer, or by
a holder of Senior Indebtedness or a Trustee or agent thereof; and prior to the receipt of any such written notice, the Trustee
will, subject to Article V of this Indenture, be entitled to assume that no such facts exist; provided that, if the Trustee
will not have received the notice provided for in this Section 1106 at least two Business Days prior to the date upon which,
by the terms of the Indenture, any monies will become payable for any purpose (including, without limitation, the payment of the
principal of or interest on any Subordinated Note), then, notwithstanding anything herein to the contrary, the Trustee will have
full power and authority to receive any monies from the Company and to apply the same to the purpose for which they were received,
and will not be affected by any notice to the contrary that may be received by it on or after such prior date except for an acceleration
of the Subordinated Notes prior to such application. The foregoing will not apply if the Paying Agent is the Company. The Trustee
will be entitled to rely on the delivery to it of a written notice by a Person representing himself or itself to be a holder of
any Senior Indebtedness (or a trustee on behalf of, or agent of, such holder) to establish that such notice has been given by a
holder of such Senior Indebtedness or a trustee or agent on behalf of any such holder.

 

In the event that the
Trustee determines in good faith that any evidence is required with respect to the right of any Person as a holder of Senior Indebtedness
to participate in any payment or distribution in accordance with this Article XI, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness held by such Person, the extent
to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of
such Person under this Article XI and, if such evidence is not furnished to the Trustee, the Trustee may defer any payment
to such Person pending such evidence being furnished to the Trustee or a judicial determination that such Person has the right
to receive such payment.

 

    69

     

    

 

Section 1107     Trustee
Knowledge of Senior Indebtedness.

 

Notwithstanding the
provisions of this Article XI or any other provisions of this Indenture or any other supplemental indenture issued in accordance
with Article VIII of this Indenture, neither the Trustee nor any Paying Agent will be charged with knowledge of the existence
of any Senior Indebtedness or of any event that would prohibit the making of any payment of moneys to or by the Trustee or such
Paying Agent, unless and until a Responsible Officer of the Trustee or such Paying Agent will have received written notice thereof
from the Company or from the holder of any Senior Indebtedness or from the representative of any such holder.

 

Section 1108     Senior
Indebtedness to Trustee.

 

The Trustee will be
entitled to all of the rights set forth in this Article XI in respect of any Senior Indebtedness at any time held by it in
its individual capacity to the same extent as any other holder of such Senior Indebtedness, and nothing in this Indenture or any
other supplemental indenture issued in accordance with Article VIII of this Indenture will be construed to deprive the Trustee
of any of its rights as such holder.

 

Section 1109     Subordination
Not Applicable to Trustee Compensation.

 

Nothing contained in
this Article XI will apply to the claims of, or payments to, the Trustee under Section 507 of this Indenture.

 

The Trustee hereby
accepts the trusts in this Indenture upon the terms and conditions set forth herein.

 

[Signature Page Follows]

 

    70

     

    

 

IN WITNESS WHEREOF,
the parties hereto have caused this Indenture to be duly signed as of the date first written above.

 

	 	SHORE BANCSHARES, INC.
	 
	 
	 	By:	 
	 	Name:	Lloyd L. Beatty, Jr.
	 	Title:	President and CEO
	 	 	 
	 
	 	UMB BANK NATIONAL ASSOCIATION
	 	As Trustee
	 
	 
	 	By:	 
	 	Name:	 
	 	Title:	 

 

    	 		 

     

    

 

EXHIBIT A-l

 

(FORM OF DEFINITIVE SUBORDINATED
NOTE)

 

SHORE BANCSHARES, INC.

 

5.375%
FIXED TO FLOATING Subordinated Note due September 1, 2030

 

THE SECURITIES EVIDENCED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT’) OR UNDER ANY APPLICABLE
STATE SECURITIES LAW. THESE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE
OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OR (B) AN AVAILABLE EXEMPTION
FROM, INCLUDING (BUT NOT LIMITED TO) IN ACCORDANCE AND IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS OR
BLUE SKY LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY, IF REQUESTED, OR (II) UNLESS
SOLD IN ACCORDANCE WITH RULE 144 UNDER SAID ACT.

 

THIS SECURITY AND THE OBLIGATIONS OF THE
COMPANY (AS DEFINED HEREIN) AS EVIDENCED HEREBY (1) ARE NOT DEPOSITS WITH OR HELD BY THE COMPANY AND ARE NOT INSURED OR GUARANTEED
BY ANY FEDERAL AGENCY OR INSTRUMENTALITY, INCLUDING, WITHOUT LIMITATION, THE FEDERAL DEPOSIT INSURANCE CORPORATION AND (2) ARE
SUBORDINATE IN THE RIGHT OF PAYMENT TO ALL SENIOR INDEBTEDNESS (AS DEFINED IN THE INDENTURE IDENTIFIED HEREIN).

 

    	 	A-1-1	 

     

    

 

CERTAIN ERISA CONSIDERATIONS:

 

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

 

ANY FIDUCIARY OF ANY PLAN WHO IS CONSIDERING THE ACQUISITION
OF ANY OF THE SECURITIES SHOULD CONSULT WITH HIS OR HER LEGAL COUNSEL PRIOR TO ACQUIRING SUCH SECURITIES.

 

    	 	A-1-2	 

     

    

 

	No. [•]	 	CUSIP/ISIN Accredited Investors: 825107 AB1 / US825107AB17
	 	 	 CUSIP/ISIN
QIBs: 825107 AA3 / US825107AA34

 

SHORE BANCSHARES, INC.

 

5.375% FIXED TO FLOATING RATE SUBORDINATED
NOTE DUE SEPTEMBER 1, 2030

 

1.            Indenture;
Holders. This note is one of a duly authorized issue of notes of Shore Bancshares, Inc., a Maryland corporation (the “Company”),
designated as the “5.375% Fixed to Floating Rate Subordinated Notes due 2030” (the “Subordinated Notes”)
in an aggregate principal amount of $25 million and initially issued on August 25, 2020. The Company has issued this Subordinated
Note under that certain Indenture dated as of August 25, 2020, as the same may be amended or supplemented from time to time
(“Indenture”), between the Company and UMB Bank National Association, as Trustee. All capitalized terms not
otherwise defined herein this Subordinated Note will have the meanings assigned to them in the Indenture. The terms of this Subordinated
Note includes those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act, This
Subordinated Note is subject to all such terms, and the Holder (as defined below) is referred to the Indenture and the Trust Indenture
Act for a statement of such terms. To the extent any provision of this Subordinated Note irreconcilably conflicts with the express
provisions of the Indenture, the provisions of the Indenture will govern and be controlling.

 

2.            Payment.
The Company, for value received, promises to pay to [•], or its registered assigns, the principal sum of [•] Dollars
(U.S.) ($[•],000,000), plus accrued but unpaid interest on September 1, 2030 (the “Maturity Date”)
and to pay interest thereon (i) from and including the original issue date of the Subordinated Notes to but excluding September 1,
2025 or the earlier redemption date contemplated by Section 4 (Redemption) of this Subordinated Note (the “Fixed
Rate Period”), at the rate of 5.375% per annum, computed on the basis of a 360-day year consisting of twelve 30-day months
and payable semi-annually in arrears on March 1 and September 1 of each year (each payment date, a “Fixed Interest
Payment Date”), beginning March 1, 2021, and (ii) from and including September 1, 2025 to but excluding
the Maturity Date or earlier redemption date contemplated by Section 4 (Redemption) of this Subordinated Note (the
“Floating Rate Period”), at the rate per annum, reset quarterly, equal to the Floating Interest Rate (as defined
below) determined on the Floating Interest Determination Date (as defined below) of the applicable interest period plus 526.5 basis
points, computed on the basis of a 360-day year and the actual number of days elapsed and payable quarterly in arrears (each quarterly
period a “Floating Interest Period”) on March 1, June 1, September 1 and December 1 of each
year (each payment date, a “Floating Interest Payment Date”). Dollar amounts resulting from this calculation
shall be rounded to the nearest cent, with one-half cent being rounded up. The term “Floating Interest Determination Date”
means the date upon which the Floating Interest Rate is determined by the Calculation Agent pursuant to the Three-Month Term SOFR
Conventions. Notwithstanding anything to the contrary, (i) in the event the Three-Month Term SOFR (as defined below) is less
than zero, the Three-Month Term SOFR shall be deemed to be zero, and (ii) if a Benchmark Transition Event (as defined below)
and its related Benchmark Replacement Date (as defined below) have occurred and the Benchmark Replacement (as defined below) is
less than zero, then the Benchmark Replacement shall be deemed to be zero.

 

    	 	A-1-1	 

     

    

 

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

 

(b)            The
“Floating Interest Rate” means:

 

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

 

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

 

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

 

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

 

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

 

(c)            Effect
of Benchmark Transition Event.

 

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

 

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

 

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

 

    	 	A-1-2	 

     

    

 

 

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

 

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

 

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

 

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

 

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

 

(xiii)         As
used in this Subordinated Note:

 

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

 

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

 

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

 

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

 

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

 

    A-1-3

     

    

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

    A-1-4

     

    

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(7)            “Calculation
Agent” means such bank or other entity (which may be the Company or an affiliate of the Company) as may be appointed
by the Company to act as Calculation Agent for the Subordinated Notes during the Floating Rate Period.

 

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

 

    A-1-5

     

    

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

    A-1-6

     

    

 

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

 

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

 

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

 

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

 

(22)          “Three-Month
Term SOFR” means the rate for Term SOFR for a tenor of three months that is published by the Term SOFR Administrator
at the Reference Time for any Floating Interest Period, as determined by the Calculation Agent after giving effect to the Three-Month
Term SOFR Conventions.

 

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

 

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

 

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

 

    A-1-7

     

    

 

The Company will pay
interest on this Subordinated Note to the Person who is the registered Holder at the close of business on the first calendar day
of the month in which the Interest Payment Date occurs, except as provided in Section 210 of the Indenture with respect to
Defaulted Interest. This Subordinated Note will be payable as to principal and interest at the office or agency of the Paying Agent,
or, at the option of the Company, payment of interest may be made by check delivered to the Holder at its address set forth in
the Subordinated Note Register or by wire transfer to an account appropriately designated by the Person entitled to payment; provided,
that the Paying Agent will have received written notice of such account designation at least five Business Days prior to the
date of such payment (subject to surrender of this Subordinated Note in the case of a payment of interest at Maturity).

 

3.            Paying
Agent and Registrar. UMB Bank, National Association, the Trustee (“Trustee”) under the Indenture, will act as the
initial Paying Agent and Registrar through its offices presently located at 1010 Grand Boulevard, Kansas City, MO 64106. The Company
may change any Paying Agent or Registrar without notice to any Holder. The Company or any of its Subsidiaries may act in any such
capacity.

 

4.            Subordination.
The indebtedness of the Company evidenced by this Subordinated Note, including the principal thereof and interest thereon, is,
to the extent and in the manner set forth in the Indenture, subordinate and junior in right of payment to obligations of the Company
constituting the Senior Indebtedness (as defined in the Indenture) on the terms and subject to the terms and conditions as provided
and set forth in Article XI of the Indenture and will rank pari passu in right of payment with all other Subordinated
Notes. Holder, by the acceptance of this Subordinated Note, agrees to and will be bound by such provisions of the Indenture and
authorizes and directs the Trustee on his behalf to take such actions as may be necessary or appropriate to effectuate the subordination
so provided.

 

5.            Redemption.
The Company may, at any time or from time to time on or after September 1, 2025, redeem this Subordinated Note, in whole or
in part, without premium or penalty, but in all cases in a principal amount with integral multiples of $1,000. In addition, the
Company may redeem all, but not a portion of the Subordinated Notes, at any time upon the occurrence of a Tier 2 Capital Event,
Tax Event or an Investment Company Event. Any redemption with respect to this Subordinated Note will be subject to any required
regulatory approvals. This Subordinated Note is not subject to redemption at the option of the Holder. The Redemption Price with
respect to any redemption permitted under this Indenture will be equal to 100% of the principal amount of this Subordinated Note,
or portion thereof, to be redeemed, plus accrued but unpaid interest and Additional Interest, if any, thereon to, but excluding,
the Redemption Date.

 

If all or any portion
of the Subordinated Notes ceases to be deemed to be Tier 2 Capital, other than due to the limitation imposed on the capital treatment
of subordinated debt during the five (5) years immediately preceding the Maturity Date of the Subordinated Notes, Company
will immediately notify the Trustee and the Holders, and thereafter Company shall request, subject to the terms hereof, that the
Trustee and the Holders execute and deliver all agreements as reasonably necessary in order to restructure the applicable portions
of the obligations evidenced by the Subordinated Notes to qualify as Tier 2 Capital; provided, however, that the foregoing shall
not limit the Company’s right to redeem the Subordinated Notes upon the occurrence of a Tier 2 Capital Event.

 

    A-1-8

     

    

 

If less than the then
outstanding principal amount of this Subordinated Note is redeemed, (i) a new note shall be issued representing the unredeemed
portion without charge to the Holder thereof and (ii) such redemption shall be effected on a pro rata basis as to the Holder,
and if the Subordinated Notes are represented by Global Subordinated Notes held by the Depositary and such redemption is processed
through the Depositary, such redemption will be made on a “Pro Rata Pass-Through Distribution of Principal” basis in
accordance with the procedures of the Depositary. In the event a pro rata redemption as provided in the preceding sentence is not
permitted under applicable law or applicable requirements of the Depositary, the Subordinated Notes to be redeemed will be selected
by lot or such method as the Trustee will deem fair and appropriate.

 

6.            Events
of Default; Acceleration. An “Event of Default” means any one of the events described in Section 401 of the
Indenture. If an Event of Default described in Section 401(1) or Section 401(2) of the Indenture occurs, then
the principal amount of all of the Outstanding Subordinated Notes, and accrued and unpaid interest, if any, on all Outstanding
Subordinated Notes will become and be immediately due and payable without any declaration or other act on the part of the Trustee
or the Holder, and the Company waives demand, presentment for payment, notice of nonpayment, notice of protest, and all other notices.
Notwithstanding the foregoing, because the Company will treat the Subordinated Notes as Tier 2 Capital, upon the occurrence of
an Event of Default other than an Event of Default described in Section 401(1) or Section 401(2) of the Indenture,
neither the Trustee nor the Holder may accelerate the Maturity of the Subordinated Notes and make the principal of, and any accrued
and unpaid interest on the Subordinated Notes, immediately due and payable. If any Event of Default occurs and is continuing, the
Trustee may also pursue any other available remedy to collect the payment of principal of, and interest on, the Subordinated Notes
or to enforce the performance of any provision of the Subordinated Notes or the Indenture.

 

7.            Failure
to Make Payments. If the Company fails to make any payment of interest on this Subordinated Note when such interest becomes
due and payable and such default continues for a period of 30 days, or if the Company fails to make any payment of the principal
of this Subordinated Note when such principal becomes due and payable, the Company will, upon demand of the Trustee, pay to the
Trustee, for the benefit of the Holder, the whole amount then due and payable with respect to this Subordinated Note, with interest
upon the overdue principal, any premium and, to the extent permitted by applicable law, upon any overdue installments of interest
at the rate or respective rates, as the case may be, provided for or with respect to this Subordinated Note or, if no such rate
or rates are so provided, at the rate or respective rates, as the case may be, of interest borne by this Subordinated Note.

 

    A-1-9

     

    

 

During the continuance
of a failure by the Company to make any required payment of principal of or interest on the Subordinated Notes, the Company may
not declare or pay any dividends or distributions on, or redeem, purchase, acquire, or make a liquidation payment with respect
to, any of the Company’s capital stock, make any payment of principal or interest or premium, if any, on or repay, repurchase
or redeem any debt securities of the Company that rank equal with or junior to this Subordinated Note, or make any payments under
any guarantee that ranks equal with or junior to this Subordinated Note, other than: (i) any dividends or distributions in
shares of, or options, warrants or rights to subscribe for or purchase shares of, any class of Company’s common stock; (ii) any
declaration of a dividend in connection with the implementation of a shareholders’ rights plan, or the issuance of stock
under any such plan in the future, or the redemption or repurchase of any such rights pursuant thereto; (iii) as a result
of a reclassification of Company’s capital stock or the exchange or conversion of one class or series of Company’s
capital stock for another class or series of Company’s capital stock; (iv) the purchase of fractional interests in shares
of Company’s capital stock in accordance with the conversion or exchange provisions of such capital stock or the security
being converted or exchanged; or (v) purchases of any class of Company’s common stock related to the issuance of common
stock or rights under any of benefit plans for Company’s directors, officers or employees or any of Company’s dividend
reinvestment plans.

 

8.            Denominations,
Transfer, Exchange. The Subordinated Notes are issuable only in registered form without interest coupons in minimum denominations
of $100,000 and integral multiples of $1,000 in excess thereof. The transfer of this Subordinated Note may be registered and this
Subordinated Note may be exchanged as provided in the Indenture. The Registrar may require the Holder, among other things, to furnish
appropriate endorsements and transfer documents and the Company may require the Holder to pay any taxes and fees required by law
or permitted by the Indenture.

 

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

 

10.            Persons
Deemed. Owners. The Company and the Trustee and any agent of the Company or the Trustee may treat the Person in whose name
this Subordinated Note is registered as the owner hereof for all purposes, whether or not this Subordinated Note is overdue, and
neither the Company, the Trustee nor any such agent will be affected by notice to the contrary.

 

11.            Amendments;
Waivers. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of
the rights and obligations of the Company and the rights of the Holders of the Subordinated Notes at any time by the Company and
the Trustee with the consent of the holders of a majority in principal amount of the then Outstanding Subordinated Notes. The Indenture
also contains provisions permitting the holders of specified percentages in principal amount of the then Outstanding Subordinated
Notes, on behalf of the holders of all Subordinated Notes, to waive certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Subordinated Note will be conclusive and binding upon such Holder and upon all
future holders of this Subordinated Note and of any Subordinated Note issued upon the registration of transfer hereof or in exchange
herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Subordinated Note.

 

12.            No
Impairment. No reference herein to the Indenture and no provision of this Subordinated Note or of the Indenture will alter
or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest (if any) and
Additional Interest on this Subordinated Note at the times, place and rate as herein prescribed.

 

    A-1-10

     

    

 

13.            Sinking
Fund; Convertibility. This Subordinated Note is not entitled to the benefit of any sinking fund. This Subordinated Note is
not convertible into or exchangeable for any of the equity securities, other securities or assets of the Company or any Subsidiary.

 

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

 

15.            Authentication.
This Subordinated Note will not be valid until authenticated by the manual signature of the Trustee or an Authenticating Agent.

 

16.            Abbreviations.
Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= custodian),
and U/G/M/A (= Uniform Gifts to Minors Act). Additional abbreviations may also be used though not in the above list.

 

17.            Available
Information. The Company will furnish to the Holder upon written request and without charge a copy of the Indenture. Requests
by Holders to the Company may be made to: Shore Bancshares, Inc., 28969 Information Lane, Easton, Maryland 21601, Attn: Chief
Financial Officer.

 

18.            Governing
Law. THIS SUBORDINATED NOTE WILL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK AND WILL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES THEREOF.

 

[Signature Page Follows]

 

    A-1-11

     

    

 

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

 

Dated:

 

	 	SHORE BANCSHARES, INC.
	 	 
	 	By:	                
	 	Name:	 
	 	Title:	 

 

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

 

This is one of the
Subordinated Notes of Shore Bancshares, Inc. referred to in the within-mentioned Indenture:

 

UMB BANK NATIONAL
ASSOCIATION

as Trustee

 

	By:	 	 
	Name:	 	 
	Title:	 	 
	 	 
	Dated:	 	 

 

    A-1-12

     

    

 

ASSIGNMENT FORM

 

To assign this Subordinated Note, fill
in the form below: (I) or (we) assign and transfer this Subordinated Note to:

 

 

(Print or type assignee’s name, address and zip code)

 

 

(Insert assignee’s social security or tax I.D. No.)

 

and irrevocably appoint _______________________ agent to transfer
this Subordinated Note on the books of the Company. The agent may substitute another to act for him.

 

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

 

	Signature Guarantee:	 

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

 

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

 

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

 

CHECK ONE BOX BELOW:

 

		 ̈	(1)     acquired for the undersigned’s own account, without transfer;

 

		 ̈	(2)     transferred to the Company;

 

		 ̈	(3)     transferred in accordance and in compliance with Rule 144A under the Securities Act
of 1933, as amended (the “Securities Act”);

 

		 ̈	(4)     transferred under an effective registration statement under the Securities Act;

 

		 ̈	(5)     transferred in accordance with and in compliance with Regulation S under the Securities
Act;

 

    A-1-13

     

    

 

		 ̈	(6)      	transferred to an institutional “accredited investor” (as defined in Rule 501(a)(1), (2), (3) or
(7) under the Securities Act) or an “accredited investor” (as defined in Rule 501(a)(4) under the Securities
Act), that has furnished a signed letter containing certain representation’s and agreements; or

 

		 ̈	(7)      transferred in accordance with another available exemption from the registration requirements
of the Securities Act of 1933, as amended.

 

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

 

	 	Signature:	 

 

	Signature Guarantee:	 

(Signatures must be guaranteed by an eligible guarantor institution
(banks, stockbroker’s, savings and loan associations and credit unions with membership in an approved signature guarantee
medallion program), pursuant to Exchange Act Rule 17Ad-l5).

 

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

 

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

 

	Date:	______________________________	 	Signature:	 

 

    A-1-14

     

    

 

EXHIBIT A-2

 

(FORM OF GLOBAL SUBORDINATED
NOTE)

 

THE SECURITIES EVIDENCED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT’) OR UNDER ANY APPLICABLE
STATE SECURITIES LAW. THESE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE
OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OR (B) AN AVAILABLE EXEMPTION
FROM, INCLUDING (BUT NOT LIMITED TO) IN ACCORDANCE AND IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS OR
BLUE SKY LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY, IF REQUESTED, OR (II) UNLESS
SOLD IN ACCORDANCE WITH RULE 144 UNDER SAID ACT.

 

THIS SUBORDINATED NOTE IS A GLOBAL SUBORDINATED
NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF CEDE & CO AS NOMINEE
OF THE DEPOSITORY TRUST COMPANY (“DTC”) OR A NOMINEE OF DTC. THIS SUBORDINATED NOTE IS EXCHANGEABLE FOR SUBORDINATED
NOTES REGISTERED IN THE NAME OF A PERSON OTHER THAN DTC OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE,
AND NO TRANSFER OF THIS SUBORDINATED NOTE (OTHER THAN A TRANSFER OF THIS SUBORDINATED NOTE AS A WHOLE BY DTC TO A NOMINEE OF DTC
OR BY A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES SPECIFIED IN THE
INDENTURE.

 

UNLESS THIS SUBORDINATED NOTE IS PRESENTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
SUBORDINATED NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO, OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENT ATI VB OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

 

TRANSFERS OF THIS SUBORDINATED NOTE WILL
BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE
AND TRANSFERS OF PORTIONS OF THIS SUBORDINATED NOTE WILL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH
IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.

 

    A-2-1

     

    

 

THIS SECURITY AND THE OBLIGATIONS OF THE
COMPANY (AS DEFINED HEREIN) AS EVIDENCED HEREBY (1) ARE NOT DEPOSITS WITH OR HELD BY THE COMPANY AND ARE NOT INSURED OR GUARANTEED
BY ANY FEDERAL AGENCY OR INSTRUMENTALITY, INCLUDING, WITHOUT LIMITATION, THE FEDERAL DEPOSIT INSURANCE CORPORATION AND (2) ARE
SUBORDINATE IN THE RIGHT OF PAYMENT TO ALL SENIOR INDEBTEDNESS (AS DEFINED IN THE INDENTURE IDENTIFIED HEREIN).

 

CERTAIN ERISA CONSIDERATIONS:

 

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

 

ANY FIDUCIARY OF ANY PLAN WHO IS CONSIDERING
THE ACQUISITION OF ANY OF THE SECURITIES SHOULD CONSULT WITH HIS OR HER LEGAL COUNSEL PRIOR TO ACQUIRING SUCH SECURITIES.

 

    A-2-2

     

    

 

	No. [•]	 	CUSIP/ISIN
Accredited Investors: 825107 AB1 / US825107AB17
	 	 	CUSIP/ISIN
QIBs: 825107 AA3 / US825107AA34

 

SHORE BANCSHARES, INC.

 

5.375% FIXED TO FLOATING RATE SUBORDINATED
NOTE DUE SEPTEMBER 1, 2030

 

1.            Indenture;
Holders. This note is one of a duly authorized issue of notes of Shore Bancshares, Inc., a Maryland corporation (the “Company”)
designated as the “5.375% Fixed to Floating Rate Subordinated Notes due 2030” (the “Subordinated Notes”)
in an aggregate principal amount of $25 million and initially issued on August 25, 2020. The Company has issued this Subordinated
Note under that certain Indenture dated as of 25, 2020, as the same may be amended or supplemented from time to time (“Indenture”),
between the Company and UMB Bank National Association, as Trustee. All capitalized terms not otherwise defined hereto this Subordinated
Note will have the meanings assigned to them in the Indenture. The terms of this Subordinated Note includes those stated in the
Indenture and those made part of the Indenture by reference to the Trust Indenture Act. This Subordinated Note is subject to all
such terms, and the Holder (as defined below) is referred to the Indenture and the Trust Indenture Act for a statement of such
terms. To the extent any provision of this Subordinated Note irreconcilably conflicts with the express provisions of the Indenture,
the provisions of the Indenture will govern and be controlling.

 

2.            Payment.
The Company, for value received, promises to pay to Cede & Co., or its registered assigns, the principal sum of Twenty-Five
Million Dollars (U.S.) ($25,000,000), plus accrued but unpaid interest on September 1, 2030 (the “Maturity Date”)
and to pay interest thereon (i) from and including the original issue date of the Subordinated Notes to but excluding September 1,
2025 or the earlier redemption date contemplated by Section 4 (Redemption) of this Subordinated Note (the “Fixed
Rate Period”), at the rate of 5.375% per annum, computed on the basis of a 360-day year consisting of twelve 30-day months
and payable semi-annually in arrears on March 1 and September 1 of each year (each payment date, a “Fixed Interest
Payment Date”), beginning March 1, 2021 and (ii) from and including September 1, 2025 to but excluding
the Maturity Date or earlier redemption date contemplated by Section 4 (Redemption) of this Subordinated Note (the
“Floating Rate Period”), at the rate per annum, reset quarterly, equal to the Floating Interest Rate (as defined
below) determined on the Floating Interest Determination Date (as defined below) of the applicable interest period plus 526.5 basis
points, computed on the basis of a 360-day year and the actual number of days elapsed and payable quarterly in arrears (each quarterly
period a “Floating Interest Period”) on March 1, June 1, September 1 and December 1 of each
year (each payment date, a “Floating Interest Payment Date”). Dollar amounts resulting from this calculation
shall be rounded to the nearest cent, with one-half cent being rounded up. The term “Floating Interest Determination Date”
means the date upon which the Floating Interest Rate is determined by the Calculation Agent pursuant to the Three-Month Term SOFR
Conventions. Notwithstanding anything to the contrary, (i) in the event the Three-Month Term SOFR (as defined below) is less
than zero, the Three-Month Term SOFR shall be deemed to be zero, and (ii) if a Benchmark Transition Event (as defined below)
and its related Benchmark Replacement Date (as defined below) have occurred and the Benchmark Replacement (as defined below) is
less than zero, then the Benchmark Replacement shall be deemed to be zero.

 

    A-2-3

     

    

 

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

 

(b)            The
“Floating Interest Rate” means:

 

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

 

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

 

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

 

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

 

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

 

(c)            Effect
of Benchmark Transition Event.

 

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

 

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

 

    A-2-4

     

    

 

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

 

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

 

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

 

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

 

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

 

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

 

(xxi)         As
used in this Subordinated Note:

 

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

 

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

 

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

 

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

 

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

 

    A-2-5

     

    

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

    A-2-6

     

    

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(7)            “Calculation
Agent” means such bank or other entity (which may be the Company or an affiliate of the Company) as may be appointed
by the Company to act as Calculation Agent for the Subordinated Notes during the Floating Rate Period.

 

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

 

    A-2-7

     

    

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

    A-2-8

     

    

 

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

 

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

 

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

 

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

 

(22)          “Three-Month
Term SOFR” means the rate for Term SOFR for a tenor of three months that is published by the Term SOFR Administrator
at the Reference Time for any Floating Interest Period, as determined by the Calculation Agent after giving effect to the Three-Month
Term SOFR Conventions.

 

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

 

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

 

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

 

    A-2-9

     

    

 

The Company will pay
interest on this Subordinated Note to the Person who is the registered Holder at the close of business on the first calendar day
of the month in which the Interest Payment Date occurs, except as provided in Section 210 of the Indenture with respect to
Defaulted Interest. This Subordinated Note will be payable as to principal and interest at the office or agency of the Paying Agent,
or, at the option of the Company, payment of interest may be made by check delivered to the Holder at its address set forth in
the Subordinated Note Register or by wire transfer to an account appropriately designated by the Person entitled to payment; provided,
that the Paying Agent will have received written notice of such account designation at least five Business Days prior to the
date of such payment (subject to surrender of this Subordinated Note in the case of a payment of interest at Maturity).

 

The
Company will pay interest on this Subordinated Note to the Person who is the registered Holder at the close of business on the
first calendar day of the month in which the Interest Payment Date occurs, except as provided in Section 210 of the Indenture
with respect to Defaulted Interest. This Subordinated Note will be payable as to principal and interest at the office or agency
of the Paying Agent, or, at the option of the Company, payment of interest may be made by check delivered to the Holder at its
address set forth in the Subordinated Note Register or by wire transfer to an account appropriately designated by the Person entitled
to payment; provided, that the Paying Agent will have received written notice of such account designation at least five
Business Days prior to the date of such payment (subject to surrender of this Subordinated Note in the case of a payment of interest
at Maturity).

 

3.            Paying
Agent and Registrar. UMB Bank National Association, the Trustee (“Trustee”) under the Indenture, will act as the
initial Paying Agent and Registrar through its offices presently located at 1010 Grand Boulevard, Kansas City, MO 64106. The Company
may change any Paying Agent or Registrar without notice to any Holder. The Company or any of its Subsidiaries may act in any such
capacity.

 

4.            Subordination.
The indebtedness of the Company evidenced by this Subordinated Note, including the principal thereof and interest thereon, is,
to the extent and in the manner set forth in the Indenture, subordinate and junior in right of payment to obligations of the Company
constituting the Senior Indebtedness (as defined in the Indenture) on the terms and subject to the terms and conditions as provided
and set forth in Article XI of the Indenture and will rank pari passu in right of payment with all other Subordinated Notes.
Holder, by the acceptance of this Subordinated Note, agrees to and will be bound by such provisions of the Indenture and authorizes
and directs the Trustee on his behalf to take such actions as may be necessary or appropriate to effectuate the subordination so
provided.

 

5.            Redemption.
The Company may, at any time or from time to time on or after September 1, 2025, redeem this Subordinated Note, in whole or
in part, without premium or penalty, but in all cases in a principal amount with integral multiples of $1,000. In addition, the
Company may redeem all, but not a portion of the Subordinated Notes, at any time upon the occurrence of a Tier 2 Capital Event,
Tax Event or an Investment Company Event. Any redemption with respect to this Subordinated Note will be subject to any required
regulatory approvals. This Subordinated Note is not subject to redemption at the option of the Holder. The Redemption Price with
respect to any redemption permitted under this Indenture will be equal to 100% of the principal amount of this Subordinated Note,
or portion thereof, to be redeemed, plus accrued but unpaid interest and Additional Interest, if any, thereon to, but excluding,
the Redemption Date.

 

    A-2-10

     

    

 

If all or any portion
of the Subordinated Notes ceases to be deemed to be Tier 2 Capital, other than due to the limitation imposed on the capital treatment
of subordinated debt during the five (5) years immediately preceding the Maturity Date of the Subordinated Notes, Company
will immediately notify the Trustee and the Holders, and thereafter Company shall request, subject to the terms hereof, that the
Trustee and the Holders execute and deliver all agreements as reasonably necessary in order to restructure the applicable portions
of the obligations evidenced by the Subordinated Notes to qualify as Tier 2 Capital; provided, however, that the foregoing shall
not limit the Company’s right to redeem the Subordinated Notes upon the occurrence of a Tier 2 Capital Event.

 

If less than the then
outstanding principal amount of this Subordinated Note is redeemed, (i) a new note shall be issued representing the unredeemed
portion without charge to the Holder thereof and (ii) such redemption shall be effected on a pro rata basis as to the Holder,
and if the Subordinated Notes are represented by Global Subordinated Notes held by DTC and such redemption is processed through
DTC, such redemption will be made on a “Pro Rata Pass-Through Distribution of Principal” basis in accordance with the
procedures of DTC. In the event a pro rata redemption as provided in the preceding sentence is not permitted under applicable law
or applicable requirements of DTC, the Subordinated Notes to be redeemed will be selected by lot or such method as the Trustee
will deem fair and appropriate.

 

6.            Events
of Default: Acceleration. An “Event of Default” means any one of the events described in Section 401 of the
Indenture. If an Event of Default described in Section 401(1) or Section 401(2) of the Indenture occurs, then
the principal amount of all of the Outstanding Subordinated Notes, and accrued and unpaid interest, if any, on all Outstanding
Subordinated Notes will become and be immediately due and payable without any declaration or other act on the part of the Trustee
or the Holder, and the Company waives demand, presentment for payment, notice of nonpayment, notice of protest, and all other notices.
Notwithstanding the foregoing, because the Company will treat the Subordinated Notes as Tier 2 Capital, upon the occurrence of
an Event of Default other than an Event of Default described in Section 401(1) or Section 401(2) of the Indenture,
neither the Trustee nor the Holder may accelerate the Maturity of the Subordinated Notes and make the principal of, and any accrued
and unpaid interest on, the Subordinated Notes, immediately due and payable. If any Event of Default occurs and is continuing,
the Trustee may also pursue any other available remedy to collect the payment of principal of, and interest on, the Subordinated
Notes or to enforce the performance of any provision of the Subordinated Notes or the Indenture.

 

7.            Failure
to Make Payments. If the Company fails to make any payment of interest on this Subordinated Note when such interest becomes
due and payable and such default continues for a period of 30 days, or if the Company fails to make any payment of the principal
of this Subordinated Note when such principal becomes due and payable, the Company will, upon demand of the Trustee, pay to the
Trustee, for the benefit of the Holder, the whole amount then due and payable with respect to this Subordinated Note, with interest
upon the overdue principal, any premium and, to the extent permitted by applicable law, upon any overdue installments of interest
at the rate or respective rates, as the case may be, provided for or with respect to this Subordinated Note or, if no such rate
or rates are so provided, at the rate or respective rates, as the case may be, of interest borne by this Subordinated Note.

 

    A-2-11

     

    

 

During the continuance
of a failure by the Company to make any required payment of principal of or interest on the Subordinated Notes, the Company may
not declare or pay any dividends or distributions on, or redeem, purchase, acquire, or make a liquidation payment with respect
to, any of the Company’s capital stock, make any payment of principal or interest or premium, if any, on or repay, repurchase
or redeem any debt securities of the Company that rank equal with or junior to this Subordinated Note, or make any payments under
any guarantee that ranks equal with or junior to this Subordinated Note, other than: (i) any dividends or distributions in
shares of, or options, warrants or rights to subscribe for or purchase shares of, any class of Company’s common stock; (ii) any
declaration of a dividend in connection with the implementation of a shareholders’ rights plan, or the issuance of stock
under any such plan in the future, or the redemption or repurchase of any such rights pursuant thereto; (iii) as a result
of a reclassification of Company’s capital stock or the exchange or conversion of one class or series of Company’s
capital stock for another class or series of Company’s capital stock; (iv) the purchase of fractional interests in shares
of Company’s capital stock in accordance with the conversion or exchange provisions of such capital stock or the security
being converted or exchanged; or (v) purchases of any class of Company’s common stock related to the issuance of common
stock or rights under any of benefit plans for Company’s directors, officers or employees or any of Company’s dividend
reinvestment plans.

 

8.            Denominations,
Transfer, Exchange. The Subordinated Notes are issuable only in registered form without interest coupons in minimum denominations
of $100,000 and integral multiples of $1,000 in excess thereof. The transfer of this Subordinated Note may be registered and this
Subordinated Note may be exchanged as provided in the Indenture, The Registrar may require the Holder, among other things, to furnish
appropriate endorsements and transfer documents and the Company may require the Holder to pay any taxes and fees required by law
or permitted by the Indenture,

 

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

 

10.            Persons
Deemed Owners. The Company and the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this
Subordinated Note is registered as the owner hereof for all purposes, whether or not this Subordinated Note is overdue, and neither
the Company, the Trustee nor any such agent will be affected by notice to the contrary.

 

11.            Amendments;
Waivers. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of
the rights and obligations of the Company and the rights of the Holders of the Subordinated Notes at any time by the Company and
the Trustee with the consent of the holders of a majority in principal amount of the then Outstanding Subordinated Notes. The Indenture
also contains provisions permitting the holders of specified percentages in principal amount of the then Outstanding Subordinated
Notes, on behalf of the holders of all Subordinated Notes, to waive certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Subordinated Note will be conclusive and binding upon such Holder and upon all
future holders of this Subordinated Note and of any Subordinated Note issued upon the registration of transfer hereof or in exchange
herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Subordinated Note.

 

    A-2-12

     

    

 

12.            No
Impairment. No reference herein to the Indenture and no provision of this Subordinated Note or of the Indenture will alter
or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest (if any) and
Additional Interest on this Subordinated Note at the times, place and rate as herein prescribed,

 

13.            Sinking
Fund: Convertibility. This Subordinated Note is not entitled to the benefit of any sinking fund. This Subordinated Note is
not convertible into or exchangeable for any of the equity securities, other securities or assets of the Company or any Subsidiary.

 

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

 

15.            Authentication.
This Subordinated Note will not be valid until authenticated by the manual signature of the Trustee or an Authenticating Agent

 

16.            Abbreviations.
Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= custodian),
and U/G/M/A (= Uniform Gifts to Minors Act). Additional abbreviations may also be used though not in the above list.

 

17.            Available
Information. The Company will furnish to the Holder upon written request and without charge a copy of the Indenture. Requests
by Holder to the Company may be made to: Shore Bancshares, Inc., 28969 Information Lane, Easton, Maryland 21601, Attn: Chief
Financial Officer.

 

18.            Governing
Law. THIS SUBORDINATED NOTE WILL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK AND WILL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES THEREOF.

 

    A-2-13

     

    

 

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

 

Dated:

 

	 	SHORE BANCSHARES, INC.
	 	 
	 	By:	               
	 	Name:	 
	 	Title:	 

 

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

 

This is one of the Subordinated Notes of
Shore Bancshares, Inc. referred to in the within-mentioned Indenture:

 

UMB BANK NATIONAL ASSOCIATION

as Trustee

 

	By:	 	 
	Name:	 	 
	Title:	 	 
	 	 
	Dated:	 	 

 

    A-2-14

     

    

 

ASSIGNMENT FORM

 

To assign this Subordinated Note, fill
in the form below: (I) or (we) assign and transfer this Subordinated Note to:

 

 

(Print or type assignee’s name, address and zip code)

 

 

(Insert assignee’s social security or tax I.D. No.)

 

and irrevocably appoint _______________________ agent to transfer
this Subordinated Note on the books of the Company. The agent may substitute another to act for him.

 

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

 

	Signature Guarantee:	 

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

 

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

 

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

 

CHECK ONE BOX BELOW:

 

		 ̈	(1)     acquired for the undersigned’s own account, without transfer;

 

		 ̈	(2)     transferred to the Company;

 

		 ̈	(3)     transferred in accordance and in compliance with Rule 144A under the Securities Act
of 1933, as amended (the “Securities Act”);

 

		 ̈	(4)     transferred under an effective registration statement under the Securities Act;

 

		 ̈	(5)     transferred in accordance with and in compliance with Regulation S under the Securities
Act;

 

    A-2-15

     

    

 

		 ̈	(6)     	transferred to an institutional “accredited investor” (as defined in Rule 501(a)(1), (2), (3) or (7) under
the Securities Act) or an “accredited investor” (as defined in Rule 501(a)(4) under the Securities Act),
that has furnished a signed letter containing certain representation’s and agreements; or

 

		 ̈	(7)     transferred in accordance with another available exemption from the registration requirements
of the Securities Act of 1933, as amended.

 

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

 

	 	Signature:	 

 

	Signature Guarantee:	 

(Signatures must be guaranteed by an eligible guarantor institution
(banks, stockbroker’s, savings and loan associations and credit unions with membership in an approved signature guarantee
medallion program), pursuant to Exchange Act Rule 17Ad-l5).

 

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

 

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

 

	Date:	______________________________	Signature:	 

 

    A-2-16Exhibit
10.1

 

SUBORDINATED NOTE PURCHASE AGREEMENT

 

This SUBORDINATED NOTE
PURCHASE AGREEMENT (this “Agreement”) is dated as of August 25, 2020, and is made by and among Shore Bancshares, Inc.,
a Maryland corporation (the “Company”), and the several purchasers of the Subordinated Notes (as defined herein)
identified on the signature pages hereto (each a “Purchaser” and collectively, the “Purchasers”).

 

RECITALS

 

WHEREAS, the
Company has requested that the Purchasers purchase from the Company up to $25 million in aggregate principal amount of Subordinated
Notes, which aggregate amount is intended to qualify as Tier 2 Capital (as defined herein).

 

WHEREAS, the
Company has engaged Piper Sandler & Co., as its exclusive placement agent (“Placement Agent”) for the
offering of the Subordinated Notes.

 

WHEREAS, each
of the Purchasers is an institutional “accredited investor” as such term is defined in Rule 501 of Regulation
D (“Regulation D”) promulgated under the Securities Act of 1933, as amended (the “Securities Act”)
or a QIB (as defined below).

 

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

 

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

 

WHEREAS, at
Closing, the Company and the Purchasers shall execute and deliver a Registration Rights Agreement, substantially in the form attached
hereto as Exhibit C (the “Registration Rights Agreement”), pursuant to which, among other things,
the Company will agree to provide certain registration rights with respect to the Securities under the Securities Act and the rules and
regulations promulgated thereunder and applicable state securities laws.

 

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

 

AGREEMENT

 

1.            DEFINITIONS.

 

1.1            Defined
Terms. The following capitalized terms used in this Agreement and in the Subordinated Notes have the meanings
defined or referenced below. Certain other capitalized terms used only in specific sections of this Agreement may be defined in
such sections. Terms used herein and not defined below shall have the meaning set forth in the Indenture.

 

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

 

    

     

    

 

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

 

“Bank”
means Shore United Bank, Maryland chartered bank, and wholly owned subsidiary of the Company.

 

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

 

“Bylaws”
means the Bylaws of the Company, as in effect on the Closing Date.

 

“Charter”
means the Certificate of Incorporation of the Company, as in effect on the Closing Date.

 

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

 

“Closing Date”
means August 25, 2020

 

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

 

“Company Covered
Person” has the meaning set forth in Section 4.2.4.

 

“Company’s
Reports” means (i) audited financial statements of the Company for the year ended December 31, 2019; (ii) the
unaudited financial statements of the Company for the period ended June 30, 2020 and (iii) the Company’s reports
for the year ended December 31, 2019 and the period ended June 30, 2020 as filed with the FRB as required by regulations
of the FRB.

 

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

 

“Disqualification
Event” has the meaning set forth in Section 4.2.4.

 

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

 

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

 

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

 

“Exchange
Act” means the Securities Exchange Act of 1934, as amended.

 

“FDIC”
means the Federal Deposit Insurance Corporation.

 

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

 

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

 

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

 

    2

     

    

 

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

 

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

 

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

 

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

 

“Indenture”
means the indenture, dated as of the date hereof, by and between the Company and UMB Bank, N.A., as trustee, substantially in the
form attached hereto as Exhibit A, as the same may be amended or supplemented from time to time in accordance with
the terms thereof.

 

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

 

“Material
Adverse Effect” means, with respect to any Person, any change or effect that (i) is or would be reasonably likely
to be material and adverse to the financial condition, results of operations or business of such Person, or (ii) would materially
impair the ability of such Person to perform its respective obligations under any of the Transaction Documents, or otherwise materially
impede the consummation of the transactions contemplated hereby; provided, however, that “Material Adverse
Effect” shall not be deemed to include the impact of (1) changes in banking and similar laws, rules or regulations
of general applicability or interpretations thereof by Governmental Agencies that do not disproportionately affect the operations
or business of the Company in comparison to other banking institutions with similar operations, (2) changes in GAAP or regulatory
accounting requirements applicable to financial institutions and their holding companies generally, (3) changes in general
economic or capital market conditions affecting financial institutions or their market prices generally and not specifically related
to the Company, the Bank or the Purchasers, (4) the effects of the COVID-19 pandemic that do not disproportionately affect
the operations or business of the Company in comparison to other banking institutions with similar operations, (5) direct
effects of compliance with this Agreement on the operating performance of the Company, the Bank or the Purchasers, including expenses
incurred by the Company, the Bank or the Purchasers in consummating the transactions contemplated by this Agreement, and (6) the
effects of any action or omission taken by the Company with the prior written consent of the Purchasers, and vice versa, or as
otherwise contemplated by this Agreement and the Subordinated Notes.

 

    3

     

    

 

“Maturity
Date” means September 1, 2030.

 

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

 

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

 

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

 

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

 

“QIB”
means a Qualified Institutional Buyer, as defined in Rule 144A under the Securities Act.

 

“Registration
Rights Agreement” has the meaning set forth in the Recitals.

 

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

 

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

 

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

 

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

 

“Subordinated
Note” means the Subordinated Note (or collectively, the “Subordinated Notes”) in the form attached
as an exhibit to the Indenture, as amended, restated, supplemented or modified from time to time, and each Subordinated Note delivered
in substitution or exchange for such Subordinated Note.

 

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

 

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

 

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

 

“Tier 2 Capital
Event” has the meaning set forth in the Indenture.

 

“Transaction
Documents” has the meaning set forth in Section 3.2.1.1.

 

    4

     

    

 

“Trustee”
means the trustee or successor in accordance with the applicable provisions of the Indenture.

 

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

 

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

 

2.            SUBORDINATED
DEBT.

 

2.1            Certain
Terms. Subject to the terms and conditions herein contained, the Company proposes to issue and sell to the Purchasers,
severally and not jointly, Subordinated Notes, which will be issued pursuant to Indenture, in an aggregate principal amount equal
to the aggregate of the Subordinated Note Amounts. The Purchasers, severally and not jointly, each agree to purchase the Subordinated
Notes from the Company on the Closing Date in accordance with the terms of, and subject to the conditions and provisions set forth
in, this Agreement, the Subordinated Notes and the Indenture. The Subordinated Note Amounts shall be disbursed in accordance with
Section 3.1.

 

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

 

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

 

2.4            Unsecured
Obligations. The obligations of the Company to the Purchasers under the Subordinated Notes shall be unsecured.

 

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

 

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

 

2.7            No
Right of Offset. Each Purchaser hereby expressly waives any right of offset it may have against the Company or any of its
Subsidiaries.

 

2.8            Use
of Proceeds. The Company shall use the net proceeds from the sale of Subordinated Notes for general corporate purposes,
organic growth and to support the Bank’s regulatory capital ratios.

 

    5

     

    

 

3.            DISBURSEMENT.

 

3.1            Disbursement.
On the Closing Date, assuming all of the terms and conditions set forth in Section 3.2 have been satisfied by the Company
and the Company has executed and delivered to each of the Purchasers this Agreement and any other related documents in form and
substance reasonably satisfactory to the Purchasers, each Purchaser shall disburse in immediately available funds the Subordinated
Note Amount set forth on each Purchaser’s respective signature page hereto to the Company in exchange for an electronic
securities entitlement through the facilities of the Depository Trust Company (“DTC”) with a principal amount equal
to such Subordinated Note Amount (the “Disbursement”). The Company will deliver to the Trustee a global certificate
(the “Global Note”) representing the Subordinated Notes, registered in the name of “Cede & Co.”
as nominee for DTC.

 

3.2            Conditions
Precedent to Disbursement.

 

3.2.1       Conditions
to the Purchasers’ Obligation. The obligation of each Purchaser to consummate the purchase of the Subordinated
Notes to be purchased by them at Closing and to effect the Disbursement is subject to delivery by or at the direction of the Company
to such Purchaser (or, with respect to the Indenture, the Trustee) each of the following (or written waiver by such Purchaser prior
to the Closing of such delivery):

 

3.2.1.1            Transaction
Documents. This Agreement and the Indenture, the Global Note and the Registration Rights Agreement (collectively, the “Transaction
Documents”), each duly authorized and executed by the Company, and delivery of written instructions to the Trustee (with
respect to the Indenture).

 

3.2.1.2            Authority
Documents.

 

(a)            A
copy, certified by the Secretary or Assistant Secretary of the Company, of the Charter of the Company;

 

(b)            A
certificate of existence of the Company issued by the Secretary of State of the State of Maryland.

 

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

 

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

 

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

 

(f)            The
opinion of Holland & Knight, counsel to the Company, dated as of the Closing Date, substantially in the form set forth
at Exhibit B attached hereto addressed to the Purchasers and Placement Agent.

 

    6

     

    

 

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

 

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

 

3.2.2       Conditions
to the Company’s Obligation. With respect to a given Purchaser, the obligation of the Company to consummate the sale
of the Subordinated Notes and to effect the Closing is subject to delivery by or at the direction of such Purchaser to the Company
of this Agreement, duly authorized and executed by such Purchaser.

 

4.            REPRESENTATIONS
AND WARRANTIES OF COMPANY.

 

The Company hereby
represents and warrants to each Purchaser as follows:

 

4.1            Organization
and Authority.

 

4.1.1       Organization
Matters of the Company and Its Subsidiaries.

 

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

 

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

 

4.1.1.3            The
deposit accounts of the Bank are insured by the FDIC up to applicable limits. The Bank has not received any notice or other information
indicating that the Bank is not an “insured depository institution” as defined in 12 U.S.C. Section 1813, nor
has any event occurred which could reasonably be expected to adversely affect the status of the Bank as an FDIC-insured institution.

 

    7

     

    

 

4.1.2       Capital
Stock and Related Matters. The Charter of the Company authorizes the Company to issue 35,000,000 shares of common stock.
As of the date of this Agreement, there are 12,526,708 shares of the Company’s common stock issued and outstanding. All of
the outstanding capital stock of the Company has been duly authorized and validly issued and is fully paid and non-assessable.
There are, as of the date hereof, no outstanding options, rights, warrants or other agreements or instruments obligating the Company
to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of the capital stock of the Company or obligating
the Company to grant, extend or enter into any such agreement or commitment to any Person other than the Company except pursuant
to the Company’s equity incentive plans duly adopted by the Company’s Board of Directors.

 

4.2            No
Impediment to Transactions.

 

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

 

4.2.2       Agreement,
Registration Rights Agreement and Indenture. This Agreement, the Registration Rights Agreement and the Indenture have been
duly authorized, executed and delivered by the Company, and, assuming due authorization, execution and delivery by the other parties
hereto, constitute the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with
their terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting creditors’ rights generally or by general equitable principles.

 

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

 

4.2.4       Exemption
from Registration. Neither the Company, nor any of its Subsidiaries or Affiliates, nor any Person acting on its or their
behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection
with the offer or sale of the Subordinated Notes. Assuming the accuracy of the representations and warranties of each Purchaser
set forth in this Agreement, the Subordinated Notes will be issued in a transaction exempt from the registration requirements of
the Securities Act. No “bad actor” disqualifying event described in Rule 506(d)(1)(i)-(viii) of the Securities
Act (a “Disqualification Event”) is applicable to the Company or, to the Company’s knowledge, any Person
described in Rule 506(d)(1) (each, a “Company Covered Person”). The Company has exercised reasonable
care to determine whether any Company Covered Person is subject to a Disqualification Event. The Company has complied, to the extent
applicable, with its disclosure obligations under Rule 506(e).

 

    8

     

    

 

4.2.5       No
Defaults or Restrictions. Neither the execution and delivery of the Transaction Documents nor compliance with their respective
terms and conditions will (whether with or without the giving of notice or lapse of time or both) (i) violate, conflict with
or result in a breach of, or constitute a default under: (1) the Charter or Bylaws of the Company; (2) any of the terms,
obligations, covenants, conditions or provisions of any corporate restriction or of any contract, agreement, indenture, mortgage,
deed of trust, pledge, bank loan or credit agreement, or any other agreement or instrument to which the Company or Bank, as applicable,
is now a party or by which it or any of its properties may be bound or affected; (3) any judgment, order, writ, injunction,
decree or demand of any court, arbitrator, grand jury, or Governmental Agency applicable to the Company or the Bank; or (4) any
statute, rule or regulation applicable to the Company, except, in the case of items (2), (3) or (4), for such violations
and conflicts that would not reasonably be expected to have, singularly or in the aggregate, a Material Adverse Effect on the Company
and its Subsidiaries taken as a whole, or (ii) result in the creation or imposition of any lien, charge or encumbrance of
any nature whatsoever upon any property or asset of the Company. Neither the Company nor the Bank is in default in the performance,
observance or fulfillment of any of the terms, obligations, covenants, conditions or provisions contained in any indenture or other
agreement creating, evidencing or securing Indebtedness of any kind or pursuant to which any such Indebtedness is issued, or any
other agreement or instrument to which the Company or the Bank, as applicable, is a party or by which the Company or the Bank,
as applicable, or any of its properties may be bound or affected, except, in each case, only such defaults that would not reasonably
be expected to have, singularly or in the aggregate, a Material Adverse Effect on the Company and its Subsidiaries taken as a whole.

 

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

 

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

 

4.4            Financial
Condition.

 

    9

     

    

 

4.4.1       Company
Financial Statements. The financial statements of the Company included in the Company’s Reports (including the related
notes, where applicable), which have been provided to the Purchasers (i) have been prepared from, and are in accordance with,
the books and records of the Company; (ii) fairly present in all material respects the results of operations, cash flows,
changes in stockholders’ equity and financial position of the Company and its consolidated Subsidiaries, for the respective
fiscal periods or as of the respective dates therein set forth (subject in the case of unaudited statements to recurring year-end
audit adjustments normal in nature and amount), as applicable; (iii) complied as to form, as of their respective dates of
filing in all material respects with applicable accounting and banking requirements as applicable, with respect thereto; and (iv) have
been prepared in accordance with GAAP consistently applied during the periods involved, except, in each case, (x) as indicated
in such statements or in the notes thereto, (y) for any statement therein or omission therefrom that was corrected, amended,
or supplemented or otherwise disclosed or updated in a subsequent Company’s Report, and (z) to the extent that any unaudited
interim financial statements do not contain the footnotes required by GAAP, and were or are subject to normal and recurring year-end
adjustments, which were not or are not expected to be material in amount, either individually or in the aggregate. The books and
records of the Company have been, and are being, maintained in all material respects in accordance with GAAP and any other applicable
legal and accounting requirements. The Company does not have any material liability of any nature whatsoever (whether absolute,
accrued, contingent or otherwise and whether due or to become due), except for those liabilities that are reflected or reserved
against on the consolidated balance sheet of the Company contained in the Company’s Reports for the Company’s most
recently completed quarterly or annual fiscal period, as applicable, and for liabilities incurred in the ordinary course of business
consistent with past practice or in connection with this Agreement and the transactions contemplated hereby.

 

4.4.2       Absence
of Default. Since December 31, 2019, no event has occurred which either of itself or with the lapse of time or the
giving of notice or both, would give any creditor of the Company the right to accelerate the maturity of any material Indebtedness
of the Company. The Company is not in default under any other Lease, agreement or instrument, or any law, rule, regulation, order,
writ, injunction, decree, determination or award, non-compliance with which could reasonably be expected to result in a Material
Adverse Effect on the Company and its Subsidiaries taken as a whole.

 

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

 

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

 

    10

     

    

 

4.5            No
Material Adverse Change. Since December 31, 2019, there has been no development or event which has had or could reasonably
be expected to have a Material Adverse Effect on the Company and its Subsidiaries taken as a whole.

 

4.6            Legal
Matters.

 

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

 

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

 

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

 

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

 

    11

     

    

 

4.6.5       Brokerage
Commissions. Except for commissions paid to the Placement Agent, neither the Company nor any Affiliate of the Company is
obligated to pay any brokerage commission or finder’s fee to any Person in connection with the transactions contemplated
by this Agreement.

 

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

 

4.7            No
Misstatement or Omission. None of the representations, warranties, covenants and agreements contained in this Agreement
or in any certificate or other document delivered to Purchaser by or on behalf of Company, Bank or any of their Subsidiaries pursuant
to or in connection with this Agreement contains any untrue statement of a material fact or omits to state a material fact necessary
to make the statements contained therein not misleading in light of the circumstances when made or furnished to Purchaser.

 

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

 

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

 

    12

     

    

 

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

 

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

 

5.            GENERAL
COVENANTS, CONDITIONS AND AGREEMENTS.

 

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

 

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

 

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

 

5.3            Compliance
with Laws; Additional Agreements.

 

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

 

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

 

    13

     

    

 

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

 

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

 

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

 

5.3.6       Tier
2 Capital. If all or any portion of the Subordinated Notes ceases to be deemed to be Tier 2 Capital, other than due to
the limitation imposed on the capital treatment of subordinated debt during the five (5) years immediately preceding the Maturity
Date of the Subordinated Notes, the Company will immediately notify the Holder, and thereafter, subject to the terms of the Indenture,
the Company and the Holder will work together in good faith to execute and deliver all agreements as reasonably necessary in order
to restructure the applicable portions of the obligations evidenced by the Subordinated Notes to qualify as Tier 2 Capital; provided,
however, that nothing contained in this Agreement shall limit the Company’s right to redeem the Subordinated Notes upon the
occurrence of a Tier 2 Capital Event as described in the Subordinated Notes and the Indenture.

 

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

 

    14

     

    

 

5.5            Secondary
Market Transactions. Each Purchaser shall have the right at any time and from time to time to securitize its Subordinated
Notes or any portion thereof in a single asset securitization or a pooled loan securitization of rated single or multi-class securities
secured by or evidencing ownership interests in the Subordinated Notes (each such securitization is referred to herein as a “Secondary
Market Transaction”). In connection with any such Secondary Market Transaction, the Company shall, at the Company’s
expense, cooperate with the Purchasers and otherwise reasonably assist the Purchasers in satisfying the market standards to which
Purchasers customarily adhere or which may be reasonably required in the marketplace or by applicable rating agencies in connection
with any such Secondary Market Transaction. Subject to any written confidentiality obligation, all information regarding the Company
may be furnished, without liability except in the case of gross negligence or willful misconduct, to any the Purchaser and to any
Person reasonably deemed necessary by Purchaser in connection with participation in such Secondary Market Transaction. All documents,
financial statements, appraisals and other data relevant to the Company or the Subordinated Notes may be retained by any such Person,
subject to the terms of any applicable confidentiality agreements.

 

5.6            Bloomberg.
The Company shall use commercially reasonable efforts to cause the Subordinated Notes to be quoted on Bloomberg.

 

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

 

5.8            NRSRO
Rating. The Company will use commercially reasonable efforts to maintain a rating by a nationally recognized statistical
rating organization (“NRSRO”) while any Subordinated Notes remain outstanding.

 

5.9            Resale
Registration Statement. Subject to the terms and conditions of this Agreement, the Company will provide to the Purchasers
the resale registration rights described in the Registration Rights Agreement.

 

6.            REPRESENTATIONS,
WARRANTIES AND COVENANTS OF THE PURCHASERS.

 

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

 

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

 

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

 

6.3            No
Conflicts. Neither the execution, delivery or performance of the Transaction Documents nor the consummation of any of the
transactions contemplated thereby will conflict with, violate, constitute a breach of or a default (whether with or without the
giving of notice or lapse of time or both) under (i) its organizational documents, (ii) any agreement to which it is
party, (iii) any law applicable to it or (iv) any order, writ, judgment, injunction, decree, determination or award binding
upon or affecting it.

 

    15

     

    

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

    16

     

    

 

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

 

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

 

6.13         Tier
2 Capital. If the Company provides notice as contemplated in Section 5.3.6 of the occurrence of the event contemplated
in such section, thereafter the Company and the Purchasers will work together in good faith to execute and deliver all agreements
as reasonably necessary in order to restructure the applicable portions of the obligations evidenced by the Subordinated Notes
to qualify as Tier 2 Capital; provided, however, that nothing contained in this Agreement shall limit the Company’s right
to redeem the Subordinated Notes upon the occurrence of a Tier 2 Capital Event as described in the Subordinated Notes.

 

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

 

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

 

    17

     

    

 

7.            MISCELLANEOUS.

 

7.1            Prohibition
on Assignment by the Company. Except as described in Article VII of the Indenture, the Company may not assign,
transfer or delegate any of its rights or obligations under this Agreement or the Subordinated Notes without the prior written
consent of all the Holders.

 

7.2            Time
of the Essence. Time is of the essence for this Agreement.

 

7.3            Waiver
or Amendment. No waiver or amendment of any term, provision, condition, covenant or agreement herein shall be effective
unless in writing and signed by the parties hereto. No failure to exercise or delay in exercising, by a Purchaser or any holder
of the Subordinated Notes, of any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or privilege preclude any other or further exercise thereof, or the exercise of any other
right or remedy provided by law. The rights and remedies provided in this Agreement are cumulative and not exclusive of any right
or remedy provided by law or equity.

 

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

 

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

 

	if to the Company:	
        Shore Bancshares, Inc.

        28969 Information Lane

        Easton, MD 21601

        Attention: President & Chief Executive Officer

	with a copy to:	
        Holland & Knight

        800 17th St., NW. Suite 1100

        Washington, DC 20006

        Attention: Kevin Houlihan

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

 

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

 

    18

     

    

 

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

 

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

 

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

 

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

 

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

 

7.11          No
Third Party Beneficiary. This Agreement is made for the sole benefit of the Company and the Purchasers, and no other Person
shall be deemed to have any privity of contract hereunder nor any right to rely hereon to any extent or for any purpose whatsoever,
nor shall any other Person have any right of action of any kind hereon or be deemed to be a third party beneficiary hereunder;
provided, that the Placement Agent may rely on the representations and warranties contained herein to the same extent as
if it were a party to this Agreement.

 

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

 

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

 

    19

     

    

 

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

 

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

 

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

 

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

 

[Signature Pages Follow]

 

    20

     

    

 

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

 

	 	COMPANY:
	 	 
	 	SHORE BANCSHARES, INC.
	 	 
	 	By:	 
	 	 	Name:	Lloyd L. Beatty, Jr.
	 	 	Title:	President and CEO

 

[Company Signature Page to Subordinated Note Purchase Agreement]

 

    

     

    

 

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

 

	 	PURCHASER:
	 	 
	 	[INSERT PURCHASER’S NAME]
	 	 
	 	By:	 
	 	 	Name:	[●]
	 	 	Title:	[●]
	 	 	 	 
	 	Address of Purchaser:
	 	 
	 	[●]	 
	 	 
	 	Principal Amount of Purchased Subordinated Note:
	 	 
	 	$[●]	 

 

    

     

    

 

SCHEDULE 4.1.1.2

 

Subsidiaries

 

The following entities comprise the direct and indirect subsidiaries
of the Company:

 

-Shore United Bank

 

The state of or jurisdiction of incorporation or organization
(unless otherwise noted) is Maryland.

 

    

     

    

 

EXHIBIT A

 

FORM OF INDENTURE (INCLUDING
FORM OF SUBORDINATED NOTE)

 

    24

     

    

 

EXHIBIT B

 

OPINION OF COUNSEL

 

1.              Each
of the Company and the Bank (i) has been organized or formed, as the case may be, is validly existing and is in good standing
under the laws of its jurisdiction of organization, (ii) has all requisite power and authority to carry on its business and
to own, lease and operate its properties and assets and (iii) is duly qualified or licensed to do business and is in good
standing as a foreign corporation, partnership or other entity as the case may be, authorized to do business in each jurisdiction
in which the nature of such businesses or the ownership or leasing of such properties requires such qualification, except where
the failure to be so qualified would not, individually or in the aggregate, have a Material Adverse Effect.

 

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

 

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

 

4.             The
Company has all necessary power and authority to execute, deliver and perform its obligations under the Transaction Documents to
which it is a party and to consummate the transactions contemplated by the Transaction Documents.

 

5.             The
Agreement and the Registration Rights Agreement have been duly and validly authorized, executed and delivered by the Company. The
Agreement and the Registration Rights Agreement each constitute a legal valid and binding obligation of Company, enforceable against
Company in accordance with its terms, except that the enforcement thereof may be subject to (i) bankruptcy, insolvency, reorganization,
receivership, moratorium, fraudulent conveyance, fraudulent transfer or other similar laws now or hereafter in effect relating
to creditors’ rights generally and (ii) general principles of equity (whether applied by a court of law or equity) and
the discretion of the court before which any proceeding therefor may be brought.

 

6.             The
execution and delivery by the Company of, and the performance by the Company of its agreements and obligations under, the Transaction
Documents do not (i) to such counsel’s knowledge, violate any applicable provisions of the Maryland General Corporation
Law, (ii) to such counsel’s knowledge, violate any court order or judgment of any agency or court of the State of Maryland
having jurisdiction over the Company and known to such counsel or (iii) violate the Charter or Bylaws, each as currently in
effect.

 

    25

     

    

 

7.            The
Subordinated Notes have been duly and validly authorized by the Company and when authenticated and delivered by the Trustee and
issued and paid for by the Purchasers in accordance with the terms of this Agreement and the Indenture, will have been duly executed,
authenticated, issued and delivered and will constitute legal, valid and binding obligations of the Company, and enforceable against
the Company in accordance with their terms, except that the enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, receivership, moratorium, fraudulent conveyance, fraudulent transfer or other similar laws now or hereafter in
effect relating to creditors’ rights generally and (ii) general principles of equity (whether applied by a court of
law or equity) and the discretion of the court before which any proceeding therefor may be brought and will be entitled to the
benefits of the Indenture.

 

8.            Assuming
the accuracy of the representations and warranties of each of the Purchasers set forth in the Agreement, the Subordinated Notes
to be issued and sold by the Company to Purchasers pursuant to the Agreement will be issued in a transaction exempt from the registration
requirements of the Securities Act.

 

    26

     

    

 

EXHIBIT C

 

REGISTRATION RIGHTS AGREEMENT

 

    27

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00313-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00313-of-00352.parquet"}]]