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Exhibit 10.7
VEEVA SYSTEMS INC.  
2013 EQUITY INCENTIVE PLAN 
ADOPTED AUGUST 21, 2013

VEEVA SYSTEMS INC.  
2013 EQUITY INCENTIVE PLAN 

ARTICLE 1.   INTRODUCTION. 
The Board adopted the Plan to become effective immediately, although no Awards may be granted prior to the IPO Date.  The purpose of the Plan is to promote the long-term success of the Company and the creation of stockholder value by (a) encouraging Service Providers to focus on critical long-range corporate objectives, (b) encouraging the attraction and retention of Service Providers with exceptional qualifications and (c) linking Service Providers directly to stockholder interests through increased stock ownership.  The Plan seeks to achieve this purpose by providing for Awards in the form of Options (which may constitute ISOs or NSOs), SARs, Restricted Shares, Stock Units and Performance Cash Awards.  
ARTICLE 2.   ADMINISTRATION. 
2.1 General.  The Plan may be administered by the Board or one or more Committees.  Each Committee shall have the authority and be responsible for such functions as have been assigned to it. 
2.2 Section 162(m).  To the extent an Award is intended to qualify as “performance-based compensation” within the meaning of Code Section 162(m), the Plan will be administered by a Committee of two or more “outside directors” within the meaning of Code Section 162(m).   
2.3 Section 16.  To the extent desirable to qualify transactions hereunder as exempt under Exchange Act Rule 16b-3, the transactions contemplated hereunder will be approved by the entire Board or a Committee of two or more “non-employee directors” within the meaning of Exchange Act Rule 16b-3. 
2.4 Powers of Administrator.  Subject to the terms of the Plan, and in the case of a Committee, subject to the specific duties delegated to the Committee, the Administrator shall have the authority to (a) select the Service Providers who are to receive Awards under the Plan, (b) determine the type, number, vesting requirements and other features and conditions of such Awards, (c) determine whether and to what extent any Performance Goals have been attained, (d) interpret the Plan and Awards granted under the Plan, (e) make, amend and rescind rules relating to the Plan and Awards granted under the Plan, including rules relating to sub-plans established for the purposes of satisfying applicable foreign laws or for qualifying for favorable tax treatment under applicable foreign laws, (f) impose such restrictions, conditions or limitations as it determines appropriate as to the timing and manner of any resales by a Participant of any Common Shares issued pursuant to an Award, including restrictions under an insider trading policy and restrictions as to the use of a specified brokerage firm for such resales, and (g) make all other decisions relating to the operation of the Plan and Awards granted under the Plan.   
2.5 Effect of Administrator’s Decisions.  The Administrator’s decisions, determinations and interpretations shall be final and binding on all Participants and any other holders of Awards. 
2.6 Governing Law.  The Plan shall be governed by, and construed in accordance with, the laws of the State of Delaware (except its choice-of-law provisions).   
ARTICLE 3.   SHARES AVAILABLE FOR GRANTS. 
3.1 Basic Limitation.  Common Shares issued pursuant to the Plan may be authorized but unissued shares or treasury shares.  The aggregate number of Common Shares issued under the Plan shall not exceed the sum of (a)  the number of Common Shares reserved under the Company’s 2012 Equity Incentive Plan (the “2012 Plan”) that are not issued or subject to outstanding awards under the 2012 Plan on the IPO Date, (b) any Common Shares subject to outstanding options under the 2012 Plan and the Company’s 2007 Stock Plan (collectively, the “Predecessor Plans”) on the IPO Date that subsequently expire or lapse unexercised and Common Shares issued pursuant to awards granted under the Predecessor Plans that are outstanding on the IPO Date and that are subsequently forfeited to or repurchased by the Company and (c) the additional Common Shares described in Sections 3.2 and 3.3; provided, however, that no more than 30,789,290 Common Shares, in the aggregate, shall be added to the Plan pursuant to clauses (a) and (b).  The number of Common Shares that are subject to Stock Awards outstanding at any time under the Plan may not exceed the number of Common Shares that then remain available for issuance under the Plan.  The numerical limitations in this Section 3.1 shall be subject to adjustment pursuant to Article 9. 
3.2 Annual Increase in Shares.  As of the first business day of each fiscal year of the Company during the term of the Plan, commencing on February 1, 2014, the aggregate number of Common Shares that may be issued under the Plan shall automatically increase by a number equal to the least of (a) 5% of the total number of 
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shares of all classes of the Company’s common stock actually issued and outstanding on the last business day of the prior fiscal year (excluding any rights to purchase Common Shares that may be outstanding, such as options or warrants), (b) 13,750,000 Common Shares (subject to adjustment pursuant to Article 9), or (c) a number of Common Shares determined by the Board. 
3.3 Shares Returned to Reserve.  To the extent that Options, SARs or Stock Units are forfeited or expire for any other reason before being exercised or settled in full, the Common Shares subject to such Options, SARs or Stock Units shall again become available for issuance under the Plan.  If SARs are exercised or Stock Units are settled, then only the number of Common Shares (if any) actually issued to the Participant upon exercise of such SARs or settlement of such Stock Units, as applicable, shall reduce the number available under Section 3.1 and the balance shall again become available for issuance under the Plan.  If Restricted Shares or Common Shares issued upon the exercise of Options are reacquired by the Company pursuant to a forfeiture provision, repurchase right or for any other reason, then such Common Shares shall again become available for issuance under the Plan.  Common Shares applied to pay the Exercise Price of Options or to satisfy tax withholding obligations related to any Award shall again become available for issuance under the Plan.  To the extent that an Award is settled in cash rather than Common Shares, the cash settlement shall not reduce the number of Shares available for issuance under the Plan.   
3.4 Awards Not Reducing Share Reserve in Section 3.1.  Any dividend equivalents paid or credited under the Plan with respect to Stock Units shall not be applied against the number of Common Shares that may be issued under the Plan, whether or not such dividend equivalents are converted into Stock Units.  In addition, Common Shares subject to Substitute Awards granted by the Company shall not reduce the number of Common Shares that may be issued under Section 3.1, nor shall shares subject to Substitute Awards again be available for Awards under the Plan in the event of any forfeiture, expiration or cash settlement of such Substitute Awards. 
3.5 Code Section 162(m) and 422 Limits.  Subject to adjustment in accordance with Article 9:   
(a)The aggregate number of Common Shares subject to Options and SARs that may be granted under this Plan during any fiscal year to any one Participant shall not exceed 6,800,000;  
(b)The aggregate number of Common Shares subject to Restricted Share awards and Stock Units that may be granted under this Plan during any fiscal year to any one Participant shall not exceed 3,500,000;  
(c)No Participant shall be paid more than $2,000,000 in cash in any fiscal year pursuant to Performance Cash Awards granted under the Plan; and  
(d)No more than 30,789,290 Common Shares plus the additional Common Shares described in Section 3.2 may be issued under the Plan upon the exercise of ISOs. 
ARTICLE 4.   ELIGIBILITY. 
4.1 Incentive Stock Options.  Only Employees who are common-law employees of the Company, a Parent or a Subsidiary shall be eligible for the grant of ISOs.  In addition, an Employee who owns more than 10% of the total combined voting power of all classes of outstanding stock of the Company or any of its Parents or Subsidiaries shall not be eligible for the grant of an ISO unless the additional requirements set forth in Code Section 422(c)(5) are satisfied. 
4.2 Other Awards.  Awards other than ISOs may only be granted to Service Providers. 
ARTICLE 5.   OPTIONS. 
5.1 Stock Option Agreement.  Each grant of an Option under the Plan shall be evidenced by a Stock Option Agreement between the Optionee and the Company.  Such Option shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan.  The Stock Option Agreement shall specify whether the Option is intended to be an ISO or an NSO.  The provisions of the various Stock Option Agreements entered into under the Plan need not be identical.   
5.2 Number of Shares.  Each Stock Option Agreement shall specify the number of Common Shares subject to the Option, which number shall adjust in accordance with Article 9.   
5.3 Exercise Price.  Each Stock Option Agreement shall specify the Exercise Price, which shall not be less than 100% of the Fair Market Value of a Common Share on the date of grant.  The preceding sentence shall not apply to an Option that is a Substitute Award granted in a manner that would satisfy the requirements of Code Section 409A and, if applicable, Code Section 424(a). 
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5.4 Exercisability and Term.  Each Stock Option Agreement shall specify the date or event when all or any installment of the Option is to become vested and/or exercisable.  The Stock Option Agreement shall also specify the term of the Option; provided that, except to the extent necessary to comply with applicable foreign law, the term of an Option shall in no event exceed 10 years from the date of grant.  A Stock Option Agreement may provide for accelerated vesting and/or exercisability upon certain specified events and may provide for expiration prior to the end of its term in the event of the termination of the Optionee’s Service.   
5.5 Death of Optionee.  After an Optionee’s death, any vested and exercisable Options held by such Optionee may be exercised by his or her beneficiary or beneficiaries.  Each Optionee may designate one or more beneficiaries for this purpose by filing the prescribed form with the Company.  A beneficiary designation may be changed by filing the prescribed form with the Company at any time before the Optionee’s death.  If no beneficiary was designated or if no designated beneficiary survives the Optionee, then any vested and exercisable Options held by the Optionee may be exercised by his or her estate.   
5.6 Modification or Assumption of Options.  Within the limitations of the Plan, the Administrator may modify, reprice, extend or assume outstanding options or may accept the cancellation of outstanding options (whether granted by the Company or by another issuer) in return for the grant of new Options for the same or a different number of shares and at the same or a different exercise price or in return for the grant of a different type of Award.  The foregoing notwithstanding, no modification of an Option shall, without the consent of the Optionee, impair his or her rights or obligations under such Option. 
5.7 Buyout Provisions.  The Administrator may at any time (a) offer to buy out for a payment in cash or cash equivalents an Option previously granted or (b) authorize an Optionee to elect to cash out an Option previously granted, in either case at such time and based upon such terms and conditions as the Administrator shall establish. 
5.8 Payment for Option Shares.  The entire Exercise Price of Common Shares issued upon exercise of Options shall be payable in cash or cash equivalents at the time when such Common Shares are purchased.  In addition, the Administrator may, in its sole discretion and to the extent permitted by applicable law, accept payment of all or a portion of the Exercise Price through any one or a combination of the following forms or methods: 
(a)Subject to any conditions or limitations established by the Administrator, by surrendering, or attesting to the ownership of, Common Shares that are already owned by the Optionee with a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Common Shares as to which such Option will be exercised; 
(b)By delivering (on a form prescribed by the Company) an irrevocable direction to a securities broker approved by the Company to sell all or part of the Common Shares being purchased under the Plan and to deliver all or part of the sales proceeds to the Company;   
(c)Subject to such conditions and requirements as the Administrator may impose from time to time, through a net exercise procedure; or 
(d)Through any other form or method consistent with applicable laws, regulations and rules. 
ARTICLE 6.   STOCK APPRECIATION RIGHTS. 
6.1 SAR Agreement.  Each grant of a SAR under the Plan shall be evidenced by a SAR Agreement between the Optionee and the Company.  Such SAR shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan.  The provisions of the various SAR Agreements entered into under the Plan need not be identical.   
6.2 Number of Shares.  Each SAR Agreement shall specify the number of Common Shares to which the SAR pertains, which number shall adjust in accordance with Article 9.   
6.3 Exercise Price.  Each SAR Agreement shall specify the Exercise Price, which shall in no event be less than 100% of the Fair Market Value of a Common Share on the date of grant.  The preceding sentence shall not apply to a SAR that is a Substitute Award granted in a manner that would satisfy the requirements of Code Section 409A. 
6.4 Exercisability and Term.  Each SAR Agreement shall specify the date when all or any installment of the SAR is to become vested and exercisable.  The SAR Agreement shall also specify the term of the SAR; provided that except to the extent necessary to comply with applicable foreign law, the term of a SAR shall not exceed 10 years from the date of grant.  A SAR Agreement may provide for accelerated vesting and exercisability 
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upon certain specified events and may provide for expiration prior to the end of its term in the event of the termination of the Optionee’s Service.   
6.5 Exercise of SARs.  Upon exercise of a SAR, the Optionee (or any person having the right to exercise the SAR after his or her death) shall receive from the Company (a) Common Shares, (b) cash or (c) a combination of Common Shares and cash, as the Administrator shall determine.  The amount of cash and/or the Fair Market Value of Common Shares received upon exercise of SARs shall, in the aggregate, not exceed the amount by which the Fair Market Value (on the date of surrender) of the Common Shares subject to the SARs exceeds the Exercise Price.  If, on the date when a SAR expires, the Exercise Price is less than the Fair Market Value on such date but any portion of such SAR has not been exercised or surrendered, then such SAR shall automatically be deemed to be exercised as of such date with respect to such portion.  A SAR Agreement may also provide for an automatic exercise of the SAR on an earlier date. 
6.6 Death of Optionee.  After an Optionee’s death, any vested and exercisable SARs held by such Optionee may be exercised by his or her beneficiary or beneficiaries.  Each Optionee may designate one or more beneficiaries for this purpose by filing the prescribed form with the Company.  A beneficiary designation may be changed by filing the prescribed form with the Company at any time before the Optionee’s death.  If no beneficiary was designated or if no designated beneficiary survives the Optionee, then any vested and exercisable SARs held by the Optionee at the time of his or her death may be exercised by his or her estate. 
6.7 Modification or Assumption of SARs.  Within the limitations of the Plan, the Administrator may modify, reprice, extend or assume outstanding SARs or may accept the cancellation of outstanding SARs (whether granted by the Company or by another issuer) in return for the grant of new SARs for the same or a different number of shares and at the same or a different exercise price or in return for the grant of a different type of Award.  The foregoing notwithstanding, no modification of a SAR shall, without the consent of the Optionee, impair his or her rights or obligations under such SAR. 
ARTICLE 7.   RESTRICTED SHARES. 
7.1 Restricted Stock Agreement.  Each grant of Restricted Shares under the Plan shall be evidenced by a Restricted Stock Agreement between the recipient and the Company.  Such Restricted Shares shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan.  The provisions of the various Restricted Stock Agreements entered into under the Plan need not be identical. 
7.2 Payment for Awards.  Restricted Shares may be sold or awarded under the Plan for such consideration as the Administrator may determine, including (without limitation) cash, cash equivalents, property, cancellation of other equity awards, fullrecourse promissory notes, past services and future services, and such other methods of payment as are permitted by applicable law.   
7.3 Vesting Conditions.  Each Award of Restricted Shares may or may not be subject to vesting and/or other conditions as the Administrator may determine.  Vesting shall occur, in full or in installments, upon satisfaction of the conditions specified in the Restricted Stock Agreement.  Such conditions, at the Administrator’s discretion, may include one or more Performance Goals.  A Restricted Stock Agreement may provide for accelerated vesting upon certain specified events. 
7.4 Voting and Dividend Rights.  The holders of Restricted Shares awarded under the Plan shall have the same voting, dividend and other rights as the Company’s other stockholders, unless the Administrator otherwise provides.  A Restricted Stock Agreement, however, may require that any cash dividends paid on Restricted Shares (a) be accumulated and paid when such Restricted Shares vest, or (b) be invested in additional Restricted Shares.  Such additional Restricted Shares shall be subject to the same conditions and restrictions as the shares subject to the Stock Award with respect to which the dividends were paid.  In addition, unless the Administrator provides otherwise, if any dividends or other distributions are paid in Common Shares, such Common Shares shall be subject to the same restrictions on transferability and forfeitability as the Restricted Shares with respect to which they were paid. 
ARTICLE 8.   STOCK UNITS. 
8.1 Stock Unit Agreement.  Each grant of Stock Units under the Plan shall be evidenced by a Stock Unit Agreement between the recipient and the Company.  Such Stock Units shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan.  The provisions of the various Stock Unit Agreements entered into under the Plan need not be identical.   
8.2 Payment for Awards.  To the extent that an Award is granted in the form of Stock Units, no cash consideration shall be required of the Award recipients. 
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8.3 Vesting Conditions.  Each Award of Stock Units may or may not be subject to vesting, as determined by the Administrator.  Vesting shall occur, in full or in installments, upon satisfaction of the conditions specified in the Stock Unit Agreement.  Such conditions, at the Administrator’s discretion, may include one or more Performance Goals.  A Stock Unit Agreement may provide for accelerated vesting upon certain specified events.   
8.4 Voting and Dividend Rights.  The holders of Stock Units shall have no voting rights.  Prior to settlement or forfeiture, Stock Units awarded under the Plan may, at the Administrator’s discretion, provide for a right to dividend equivalents.  Such right entitles the holder to be credited with an amount equal to all cash dividends paid on one Common Share while the Stock Unit is outstanding.  Dividend equivalents may be converted into additional Stock Units.  Settlement of dividend equivalents may be made in the form of cash, in the form of Common Shares, or in a combination of both.  Prior to distribution, any dividend equivalents shall be subject to the same conditions and restrictions as the Stock Units to which they attach. 
8.5 Form and Time of Settlement of Stock Units.  Settlement of vested Stock Units may be made in the form of (a) Common Shares, (b) cash or (c) any combination of both, as determined by the Administrator.  The actual number of Stock Units eligible for settlement may be larger or smaller than the number included in the original Award, based on predetermined performance factors, including Performance Goals.  Methods of converting Stock Units into cash may include (without limitation) a method based on the average Fair Market Value of Common Shares over a series of trading days.  Vested Stock Units shall be settled in such manner and at such time(s) as specified in the Stock Unit Agreement.  Until an Award of Stock Units is settled, the number of such Stock Units shall be subject to adjustment pursuant to Article 9. 
8.6 Death of Recipient.  Any Stock Units that become payable after the recipient’s death shall be distributed to the recipient’s beneficiary or beneficiaries.  Each recipient of Stock Units under the Plan may designate one or more beneficiaries for this purpose by filing the prescribed form with the Company.  A beneficiary designation may be changed by filing the prescribed form with the Company at any time before the Award recipient’s death.  If no beneficiary was designated or if no designated beneficiary survives the Award recipient, then any Stock Units that become payable after the recipient’s death shall be distributed to the recipient’s estate. 
8.7 Modification or Assumption of Stock Units.  Within the limitations of the Plan, the Administrator may modify or assume outstanding stock units or may accept the cancellation of outstanding stock units (whether granted by the Company or by another issuer) in return for the grant of new Stock Units for the same or a different number of shares or in return for the grant of a different type of Award.  The foregoing notwithstanding, no modification of a Stock Unit shall, without the consent of the Participant, impair his or her rights or obligations under such Stock Unit. 
8.8 Creditors’ Rights.  A holder of Stock Units shall have no rights other than those of a general creditor of the Company.  Stock Units represent an unfunded and unsecured obligation of the Company, subject to the terms and conditions of the applicable Stock Unit Agreement. 
ARTICLE 9.   ADJUSTMENTS; DISSOLUTIONS AND LIQUIDATIONS; CORPORATE TRANSACTIONS. 
9.1 Adjustments.  In the event of a subdivision of the outstanding Common Shares, a declaration of a dividend payable in Common Shares, a combination or consolidation of the outstanding Common Shares (by reclassification or otherwise) into a lesser number of Common Shares or any other increase or decrease in the number of issued Common Shares effected without receipt of consideration by the Company, proportionate adjustments shall automatically be made to the following: 
(a)The number and kind of shares available for issuance under Article 3, including the numerical share limits in Sections 3.1, 3.2 and 3.5; 
(b)The number and kind of shares covered by each outstanding Option, SAR and Stock Unit; or 
(c)The Exercise Price applicable to each outstanding Option and SAR, and the repurchase price, if any, applicable to Restricted Shares. 
In the event of a declaration of an extraordinary dividend payable in a form other than Common Shares in an amount that has a material effect on the price of Common Shares, a recapitalization, a spin-off or a similar occurrence, the Administrator may make such adjustments as it, in its sole discretion, deems appropriate to the foregoing.   
Any adjustment in the number of shares subject to an Award under this Article 9 shall be rounded down to the nearest whole share, although the Administrator in its sole discretion may make a cash payment in lieu of a fractional share.  Except as provided in this Article 9, a Participant shall have no rights by reason of any issuance 
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by the Company of stock of any class or securities convertible into stock of any class, any subdivision or consolidation of shares of stock of any class, the payment of any stock dividend or any other increase or decrease in the number of shares of stock of any class. 
9.2 Dissolution or Liquidation.  To the extent not previously exercised or settled, Options, SARs and Stock Units shall terminate immediately prior to the dissolution or liquidation of the Company. 
9.3 Corporate Transactions.  In the event that the Company is a party to a merger, consolidation, or a Change in Control (other than one described in Section 14.5(d)), all Common Shares acquired under the Plan and all Awards outstanding on the effective date of the transaction shall be treated in the manner described in the definitive transaction agreement (or, in the event the transaction does not entail a definitive agreement to which the Company is party, in the manner determined by the Administrator, with such determination having final and binding effect on all parties), which agreement or determination need not treat all Awards (or portions thereof) in an identical manner. Unless an Award Agreement provides otherwise, the treatment specified in the transaction agreement or by the Administrator may include (without limitation) one or more of the following with respect to each outstanding Award: 
(a)The continuation of such outstanding Award by the Company (if the Company is the surviving entity); 
(b)The assumption of such outstanding Award by the surviving entity or its parent, provided that the assumption of an Option or a SAR shall comply with applicable tax requirements; 
(c)The substitution by the surviving entity or its parent of an equivalent  award for such outstanding Award (including, but not limited to, an award to acquire the same consideration paid to the holders of Common Shares in the transaction), provided that the substitution of an Option or a SAR shall comply with applicable tax requirements; 
(d)The cancellation of the unvested portion (after taking into account any vesting occurring at or prior to the effective time of the transaction) of any such outstanding Award without payment of any consideration; 
(e)The cancellation of such Award and a payment to the Participant with respect to each share subject to the portion of the Award that is vested or becomes vested as of the effective time of the transaction equal to the excess of (A) the value, as determined by the Administrator in its absolute discretion, of the property (including cash) received by the holder of a Common Share as a result of the transaction, over (if applicable) (B) the per-share Exercise Price of such Award (such excess, if any, the “Spread”).  Such payment shall be made in the form of cash, cash equivalents, or securities of the surviving entity or its parent having a value equal to the Spread.  In addition, any escrow, holdback, earn-out or similar provisions in the transaction agreement may apply to such payment to the same extent and in the same manner as such provisions apply to the holders of Common Shares, but only to the extent the application of such provisions does not adversely affect the status of the Award as exempt from Code Section 409A.  If the Spread applicable to an Award (whether or not vested) is zero or a negative number, then the Award may be cancelled without making a payment to the Participant. In the event that a Stock Unit is subject to Code Section 409A, the payment described in this clause (e) shall be made on the settlement date specified in the applicable Stock Unit Agreement, provided that settlement may be accelerated in accordance with Treasury Regulation Section 1.409A-3(j)(4); or 
(f)The assignment of any reacquisition or repurchase rights held by the Company in respect of an Award of Restricted Shares to the surviving entity or its parent, with corresponding proportionate adjustments made to the price per share to be paid upon exercise of any such reacquisition or repurchase rights. 
If (I) the Company is subject to a transaction described in this Section 9.3 before a Participant’s continuous Service terminates and (II) an outstanding Award is not continued, assumed or substituted in accordance with clause (a), (b) or (c) above, then a Participant who is entitled under an Award agreement, employment agreement or Company policy to vesting acceleration (a “Vesting Arrangement”) that could be triggered as of a date following the effective time of the transaction as a result of a qualifying termination of Service shall be deemed to be vested, to the extent provided in the relevant Vesting Arrangement, as if all triggering events had occurred as of the effective time of the transaction with respect to any such unvested Award that would otherwise terminate at or immediately prior to the effective time irrespective of whether or not a qualifying Service termination has occurred.  It is intended that the previous sentence shall apply to Participants whose Vesting Arrangement provides for “double trigger” vesting acceleration and such Participants could be subjected to a Service 
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termination triggering the acceleration after closing of the transaction at a time when the unvested portion of an Award will no longer exist.   
Any action taken under this Section 9.3 shall either preserve an Award’s status as exempt from Code Section 409A or comply with Code Section 409A. 
ARTICLE 10.   OTHER AWARDS. 
10.1 Performance Cash Awards.  A Performance Cash Award is a cash award that may be granted subject to the attainment of specified Performance Goals during a Performance Period.  A Performance Cash Award may also require the completion of a specified period of continuous Service.  The length of the Performance Period, the Performance Goals to be attained during the Performance Period, and the degree to which the Performance Goals have been attained shall be determined conclusively by the Administrator.  Each Performance Cash Award shall be set forth in a written agreement or in a resolution duly adopted by the Administrator which shall contain provisions determined by the Administrator and not inconsistent with the Plan.  The terms of various Performance Cash Awards need not be identical.   
10.2 Awards Under Other Plans.  The Company may grant awards under other plans or programs.  Such awards may be settled in the form of Common Shares issued under this Plan.  Such Common Shares shall be treated for all purposes under the Plan like Common Shares issued in settlement of Stock Units and shall, when issued, reduce the number of Common Shares available under Article 3. 
ARTICLE 11.   LIMITATION ON RIGHTS. 
11.1 Retention Rights.  Neither the Plan nor any Award granted under the Plan shall be deemed to give any individual a right to remain a Service Provider.  The Company and its Parents and Subsidiaries reserve the right to terminate the Service of any Service Provider at any time, with or without cause, subject to applicable laws, the Company’s certificate of incorporation and by-laws and a written employment agreement (if any). 
11.2 Stockholders’ Rights.  Except as set forth in Sections 7.4 or 8.4 above, a Participant shall have no dividend rights, voting rights or other rights as a stockholder with respect to any Common Shares covered by his or her Award prior to the time when a stock certificate for such Common Shares is issued or, if applicable, the time when he or she becomes entitled to receive such Common Shares by filing any required notice of exercise and paying any required Exercise Price.  No adjustment shall be made for cash dividends or other rights for which the record date is prior to such time, except as expressly provided in the Plan. 
11.3 Regulatory Requirements.  Any other provision of the Plan notwithstanding, the obligation of the Company to issue Common Shares under the Plan shall be subject to all applicable laws, rules and regulations and such approval by any regulatory body as may be required.  The Company reserves the right to restrict, in whole or in part, the delivery of Common Shares pursuant to any Award prior to the satisfaction of all legal requirements relating to the issuance of such Common Shares, to their registration, qualification or listing or to an exemption from registration, qualification or listing.  The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed necessary by the Company’s counsel to be necessary to the lawful issuance and sale of any Common Shares hereunder, will relieve the Company of any liability in respect of the failure to issue or sell such Common Shares as to which such requisite authority will not have been obtained. 
11.4 Transferability of Awards.   The Administrator may, in its sole discretion, permit transfer of an Award in a manner consistent with applicable law.  Unless otherwise determined by the Administrator, Awards shall be transferable by a Participant only by (a) beneficiary designation, (b) a will or (c) the laws of descent and distribution.  An ISO may only be transferred by will or by the laws of descent and distribution and may be exercised during the lifetime of the Optionee only by the Optionee or by the Optionee’s guardian or legal representative.   
11.5 Other Conditions and Restrictions on Common Shares.  Any Common Shares issued under the Plan shall be subject to such forfeiture conditions, rights of repurchase, rights of first refusal, other transfer restrictions and such other terms and conditions as the Administrator may determine.  Such conditions and restrictions shall be set forth in the applicable Award Agreement and shall apply in addition to any restrictions that may apply to holders of Common Shares generally.  In addition, Common Shares issued under the Plan shall be subject to such conditions and restrictions imposed either by applicable law or by Company policy, as adopted from time to time, designed to ensure compliance with applicable law or laws with which the Company determines in its sole discretion to comply including in order to maintain any statutory, regulatory or tax advantage. 
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ARTICLE 12.   TAXES. 
12.1 General.  It is a condition to each Award under the Plan that a Participant or his or her successor shall make arrangements satisfactory to the Company for the satisfaction of any federal, state, local or foreign withholding tax obligations that arise in connection with any Award granted under the Plan.  The Company shall not be required to issue any Common Shares or make any cash payment under the Plan unless such obligations are satisfied. 
12.2 Share Withholding.  To the extent that applicable law subjects a Participant to tax withholding obligations, the Administrator may permit such Participant to satisfy all or part of such obligations by having the Company withhold all or a portion of any Common Shares that otherwise would be issued to him or her or by surrendering all or a portion of any Common Shares that he or she previously acquired.  Such Common Shares shall be valued on the date when they are withheld or surrendered.  Any payment of taxes by assigning Common Shares to the Company may be subject to restrictions including any restrictions required by SEC, accounting or other rules. 
12.3 Section 162(m) Matters  The Administrator, in its sole discretion, may determine whether an Award is intended to qualify as “performance-based compensation” within the meaning of Code Section 162(m).  The Administrator may grant Awards that are based on Performance Goals but that are not intended to qualify as performance-based compensation.  With respect to any Award that is intended to qualify as performance-based compensation, the Administrator shall designate the Performance Goal(s) applicable to, and the formula for calculating the amount payable under, an Award within 90 days following commencement of the applicable Performance Period (or such earlier time as may be required under Code Section 162(m)), and in any event at a time when achievement of the applicable Performance Goal(s) remains substantially uncertain.  Prior to the payment of any Award that is intended to constitute performance-based compensation, the Administrator shall certify in writing whether and the extent to which the Performance Goal(s) were achieved for such Performance Period.  The Administrator shall have the right to reduce or eliminate (but not to increase) the amount payable under an Award that is intended to constitute performance-based compensation. 
12.4 Section 409A Matters.  Except as otherwise expressly set forth in an Award Agreement, it is intended that Awards granted under the Plan either be exempt from, or comply with, the requirements of Code Section 409A.  To the extent an Award is subject to Code Section 409A (a “409A Award”), the terms of the Plan, the Award and any written agreement governing the Award shall be interpreted to comply with the requirements of Code Section 409A so that the Award is not subject to additional tax or interest under Code Section 409A, unless the Administrator expressly provides otherwise.  A 409A Award shall be subject to such additional rules and requirements as specified by the Administrator from time to time in order for it to comply with the requirements of Code Section 409A.  In this regard, if any amount under a 409A Award is payable upon a “separation from service” to an individual who is considered a “specified employee” (as each term is defined under Code Section 409A), then no such payment shall be made prior to the date that is the earlier of (i) six months and one day after the Participant’s separation from service or (ii) the Participant’s death, but only to the extent such delay is necessary to prevent such payment from being subject to Code Section 409A(a)(1).   
12.5 Limitation on Liability.  Neither the Company nor any person serving as Administrator shall have any liability to a Participant in the event an Award held by the Participant fails to achieve its intended characterization under applicable tax law. 
ARTICLE 13.   FUTURE OF THE PLAN. 
13.1 Term of the Plan.  The Plan, as set forth herein, shall become effective on the date of its adoption by the Board, subject to approval of the Company’s stockholders under Section 13.3 below.  The Plan shall terminate automatically 10 years after the later of (a) the date when the Board adopted the Plan or (b) the date when the Board approved the most recent increase in the number of Common Shares reserved under Article 3 that was also approved by the Company’s stockholders.   
13.2 Amendment or Termination.  The Board may, at any time and for any reason, amend or terminate the Plan.  No Awards shall be granted under the Plan after the termination thereof.  The termination of the Plan, or any amendment thereof, shall not affect any Award previously granted under the Plan. 
13.3 Stockholder Approval.  To the extent required by applicable law, the Plan will be subject to the approval of the Company’s stockholders within 12 months of its adoption date.  An amendment of the Plan shall be subject to the approval of the Company’s stockholders only to the extent required by applicable laws, regulations or rules.   
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ARTICLE 14.   DEFINITIONS. 
14.1 “Administrator” means the Board or any Committee administering the Plan in accordance with Article 2. 
14.2 “Award” means any award granted under the Plan, including as an Option, a SAR, a Restricted Share, a Stock Unit or a Performance Cash Award. 
14.3 “Award Agreement” means a Stock Option Agreement, an SAR Agreement, a Restricted Stock Agreement, a Stock Unit Agreement or such other agreement evidencing an Award granted under the Plan. 
14.4 “Board” means the Company’s Board of Directors, as constituted from time to time. 
14.5 “Change in Control” means: 
(a)Any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the total voting power represented by the Company’s then-outstanding voting securities;  
(b)The consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets;  
(c)The consummation of a merger or consolidation of the Company with or into any other entity, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) more than fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation; or 
(d)Individuals who are members of the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the members of the Board over a period of 12 months; provided, however, that if the appointment or election (or nomination for election) of any new Board member was approved or recommended by a majority vote of the members of the Incumbent Board then still in office, such new member shall, for purposes of this Plan, be considered as a member of the Incumbent Board. 
A transaction shall not constitute a Change in Control if its sole purpose is to change the state of the Company’s incorporation or to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction.  In addition, if a Change in Control constitutes a payment event with respect to any Award which provides for a deferral of compensation and is subject to Code Section 409A, then notwithstanding anything to the contrary in the Plan or applicable Award Agreement the transaction with respect to such Award must also constitute a “change in control event” as defined in Treasury Regulation Section 1.409A-3(i)(5) to the extent required by Code Section 409A.   
14.6 “Code” means the Internal Revenue Code of 1986, as amended. 
14.7 “Committee” means a committee of one or more members of the Board, or of other individuals satisfying applicable laws, appointed by the Board to administer the Plan.
14.8 “Common Share” means one share of the Class A common stock of the Company.  For purposes of Section 3.1, the Common Shares that may be added to the Plan from the Predecessor Plans shall refer to shares of Class B common stock remaining available under the Predecessor Plans or subject to awards granted under the Predecessor Plans; provided, however, that such shares of Class B common stock will become shares of Class A common stock for purposes of Awards granted pursuant to the Plan and that no Awards in respect of Class B common stock shall be granted under this Plan. 
14.9 “Company” means Veeva Systems Inc., a Delaware corporation. 
14.10 “Consultant” means a consultant or adviser who provides bona fide services to the Company, a Parent or a Subsidiary as an independent contractor and who qualifies as a consultant or advisor under Instruction A.1.(a)(1) of Form S-8 under the Securities Act. 
14.11 “Employee” means a common-law employee of the Company, a Parent or a Subsidiary. 
14.12 “Exchange Act” means the Securities Exchange Act of 1934, as amended. 
14.13 “Exercise Price,” in the case of an Option, means the amount for which one Common Share may be purchased upon exercise of such Option, as specified in the applicable Stock Option Agreement.  “Exercise 
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Price,” in the case of a SAR, means an amount, as specified in the applicable SAR Agreement, which is subtracted from the Fair Market Value of one Common Share in determining the amount payable upon exercise of such SAR. 
14.14 “Fair Market Value” means the closing price of a Common Share on any established stock exchange or a national market system on the applicable date or, if the applicable date is not a trading day, on the last trading day prior to the applicable date, as reported in a source that the Administrator deems reliable.  If Common Shares are not traded on an established stock exchange or a national market system, the Fair Market Value shall be determined by the Administrator in good faith on such basis as it deems appropriate.  The Administrator’s determination shall be conclusive and binding on all persons. 
14.15 “IPO Date” means the effective date of the registration statement filed by the Company with the Securities and Exchange Commission for its initial offering of Common Shares to the public. 
14.16 “ISO” means an incentive stock option described in Code Section 422(b). 
14.17 “NSO” means a stock option not described in Code Sections 422 or 423. 
14.18 “Option” means an ISO or NSO granted under the Plan and entitling the holder to purchase Common Shares. 
14.19 “Optionee” means an individual or estate holding an Option or SAR. 
14.20 “Outside Director” means a member of the Board who is not an Employee. 
14.21 “Parent” means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company, if each of the corporations other than the Company owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.  A corporation that attains the status of a Parent on a date after the adoption of the Plan shall be considered a Parent commencing as of such date. 
14.22 “Participant” means an individual or estate holding an Award. 
14.23 “Performance Cash Award” means an award of cash granted under Section 10.1 of the Plan. 
14.24 “Performance Goal” means a goal established by the Administrator for the applicable Performance Period based on one or more of the performance criteria set forth in Appendix A.  Depending on the performance criteria used, a Performance Goal may be expressed in terms of overall Company performance or the performance of a business unit, division, Subsidiary or an individual.  A Performance Goal may be measured either in absolute terms or relative to the performance of one or more comparable companies or one or more relevant indices.  The Administrator may adjust the results under any performance criterion to exclude any of the following events that occurs during a Performance Period: (a) asset writedowns, (b) litigation, claims, judgments or settlements, (c) the effect of changes in tax laws, accounting principles or other laws or provisions affecting reported results, (d) accruals for reorganization and restructuring programs, (e) extraordinary, unusual or non-recurring items, (f) exchange rate effects for non-U.S. dollar denominated net sales and operating earnings, or (g) statutory adjustments to corporate tax rates; provided, however, that if an Award is intended to qualify as “performance-based compensation” within the meaning of Code Section 162(m), such adjustment(s) shall only be made to the extent consistent with Code Section 162(m). 
14.25 “Performance Period” means a period of time selected by the Administrator over which the attainment of one or more Performance Goals will be measured for the purpose of determining a Participant’s right to a Performance Cash Award or an Award of Restricted Shares or Stock Units that vests based on the achievement of Performance Goals.  Performance Periods may be of varying and overlapping duration, at the discretion of the Administrator. 
14.26 “Plan” means this Veeva Systems Inc. 2013 Equity Incentive Plan, as amended from time to time. 
14.27 “Restricted Share” means a Common Share awarded under the Plan. 
14.28 “Restricted Stock Agreement” means the agreement between the Company and the recipient of a Restricted Share that contains the terms, conditions and restrictions pertaining to such Restricted Share. 
14.29 “SAR” means a stock appreciation right granted under the Plan. 
14.30 “SAR Agreement” means the agreement between the Company and an Optionee that contains the terms, conditions and restrictions pertaining to his or her SAR. 
14.31 “Securities Act” means the Securities Act of 1933, as amended. 
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14.32 “Service” means service as an Employee, Outside Director or Consultant. 
14.33 “Service Provider” means any individual who is an Employee, Outside Director or Consultant. 
14.34 “Stock Award” means any award of an Option, a SAR, a Restricted Share or a Stock Unit under the Plan. 
14.35 “Stock Option Agreement” means the agreement between the Company and an Optionee that contains the terms, conditions and restrictions pertaining to his or her Option. 
14.36 “Stock Unit” means a bookkeeping entry representing the equivalent of one Common Share, as awarded under the Plan. 
14.37 “Stock Unit Agreement” means the agreement between the Company and the recipient of a Stock Unit that contains the terms, conditions and restrictions pertaining to such Stock Unit. 
14.38 “Subsidiary” means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company, if each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.  A corporation that attains the status of a Subsidiary on a date after the adoption of the Plan shall be considered a Subsidiary commencing as of such date 
14.39 “Substitute Awards” means Awards or Common Shares issued by the Company in assumption of, or substitution or exchange for, Awards previously granted, or the right or obligation to make future awards, in each case by a corporation acquired by the Company with which the Company combines to the extent permitted by NASDAQ Marketplace Rule 5635 or any successor thereto. 
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APPENDIX A 
PERFORMANCE CRITERIA 
The  Administrator  may  establish  Performance  Goals  derived  from  one  or  more  of  the following  criteria  when  it  makes  Awards  of  Restricted  Shares  or  Stock  Units  that  vest entirely  or  in  part on the  basis  of  performance  or  when  it  makes  Performance  Cash Awards: 
						
	•     Annual contract subscription fee value (net of associated third party royalties/payments or gross)
	•     Annual contract subscription fee value  
	•  Bookings (annual or total contract value	•   Cash flow and free cash flow  
	•    Calculated bookings (i.e., revenue plus change in short-term deferred value)
	•   Cash position
	•    Cash margin 	•   Committed annual recurring revenue (CARR)
	•    Collections 	•   Cost of goods sold
	•    Consulting utilization rates 	•    Customer renewals (measured in terms of   revenue or customer count)      

	•   Customer retention rates from an  acquired accompany, business unit or division
	•   Customer satisfaction or customer referenceability   
	•   DSO	•   Deferred revenue
	•   Earnings per share	•   Gross margin
	•   Headcount	•   Internal rate of return
	•   Market share 	•   Margin contribution
	•   Net income before interest and tax 	•   Net income
	•   Operating cash flow 	•   Net income before interest, tax,                                               depreciation and amortization
	•   Operating income      	•   Operating expenses
	•   Operating margin	•   Personnel retention or personnel hiring measures
	•   Product release timelines  	•   Product defect measures
	• Product or research and development related measures 	 • Return on capital 
	•   Return on investment and cash flow return on investment 	•   Return on assets
	•   Return on equity	•   Return on sales  
	•   Revenue	•   Revenue conversion from an acquired company, business unit or division
	•   Revenue backlog	•   Revenue per employee
	•   Sales results	•   Technical support incident measures 
	•   Technical system performance measures (e.g., system availability)	•   Total stockholder return 
	•    Working  capital	
	•   To the extent that an Award is not intended to comply with Code Section 162(m), other measures of performance selected by the Administrator	

                                                         
Any criteria used may be:
•   Measured in absolute terms or on a per share basis
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•   Measured in terms of growth or as a percentage or percentage change
•   Compared to another company or companies (including relative to a per group or index)
•   Measured against the market as a whole and/or according to applicable market indices
•   Measured against the performance of the Company as a whole or a segment of the Company or a particular product line, line of business or geography
•   Measured on a pre-tax or post-tax basis (if applicable)
•   Measured on a GAAP or non-GAAP basis, as established by the administrator in advance. 
The  attainment  of  performance  goals  may  be  measured  solely  on  a  corporate, subsidiary  or  business  unit  basis,  or  a  combination  thereof.    Performance  criteria  may reflect absolute entity performance or a relative comparison of entity performance to the performance  of  a  peer  group  of  entities  or  other  external  measure  of  the  selected performance   criteria.    To   the   extent   consistent   with   Code   Section162(m),   the Administrator may adjust the results under any performance criterion to exclude any of the  following  events  that  occurs  during  a  performance  measurement  period:  (a)asset write-downs, (b)litigation, claims, judgments or settlements, (c)the effect of changes in tax law, accounting principles or other such laws or provisions affecting reported results, (d)accruals  for  reorganization  and  restructuring  programs  and  (e)any  extraordinary, unusual or non-recurring items.
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VEEVA SYSTEMS INC. 
2013 EQUITY INCENTIVE PLAN 
NOTICE OF STOCK OPTION GRANT 
You have been granted the following option to purchase shares of the Class A common stock of Veeva Systems Inc. (the “Company”):  

						
	Name of Optionee:	FIRST NAME /  MIDDLE NAME / LAST NAME
	Grant Number:	OPTION NUMBER

	Total Number of Shares:	TOTAL SHARES GRANTED,(999,999,999)

	Type of Option:	OPTION TYPE LONG

	Exercise Price per Share	OPTION PRICE,($999,999,999.99)

	Date of Grant:	OPTION DATE (Month DD/YYYY)

	Vesting Commencement Date:	VEST BASE DATE, (Month DD/YYYY)

	Vesting Schedule:	This option vests and becomes exercisable with respect to the first 25% of the shares subject to this option when you complete 12 months of continuous “Service” (as defined in the Plan) from the Vesting Commencement Date.  Thereafter, this option vests and becomes exercisable with respect to an additional 25% of the shares subject to this option when you complete each additional 12 months of continuous Service.  

	Expiration Date:	EXPIRE DATE PERIOD 1,(Month DD/YYYY).
This option expires earlier if your Service terminates earlier, as described in the Stock Option Agreement, and may terminate earlier in connection with certain corporate transactions as described in Article 9 of the Plan. 

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Veeva Systems Inc.
2013 Equity Incentive Plan
Stock Option Agreement

									
	1.	Grant of Option
	Subject to all of the terms and conditions set forth in the Notice of Option Stock Option Grant (the “Grant Notice”), this Stock Option Agreement (the “Agreement”) and the Company’s 2013 Equity Incentive Plan (the “Plan”), the Company has granted you an option to purchase up to the total number of shares of the Company’s Class A common stock specified in the Grant Notice at the exercise price indicated in the Grant Notice.  
As a condition of the grant of this option, you hereby agree to all of the terms and conditions described herein and in the Plan.  
All capitalized terms used in this Agreement shall have the meanings assigned to them in this Agreement, the Grant Notice or the Plan.

	2.	Tax Treatment
	This option is intended to be an incentive stock option under Section 422 of the Code or a nonstatutory stock option, as provided in the Grant Notice.  However, even if this option is designated as an incentive stock option in the Grant Notice, it shall be deemed to be a nonstatutory stock option to the extent it does not qualify as an incentive stock option under federal tax law, including under the $100,000 annual limitation under Section 422(d) of the Code.
	3.	Vesting
	This option vests and becomes exercisable in accordance with the vesting schedule set forth in the Grant Notice.  
In no event will this option vest or become exercisable for additional shares after your Service has terminated for any reason, as further described in Section 5 below.

	4.	Term of Option
	This option expires in any event at the close of business at Company headquarters on the day before the 10th anniversary of the Date of Grant, as shown in the Grant Notice.  (This option will expire earlier if your Service terminates earlier, as described below, and this option may be terminated earlier as provided in Article 9 of the Plan.)
	5.	Termination of Service
	If your Service terminates for any reason, this option will expire immediately to the extent this option is unvested as of your termination date and does not vest as a result of your termination of Service. The Company determines when your Service terminates for all purposes of this option.
	6.	Regular Termination
	If your Service terminates for any reason except death or total and permanent disability, then this option, to the extent vested as of your termination date, will expire at the close of business at Company headquarters on the date three months after your termination date.
	7.	Death
	If you die before your Service terminates, then this option will expire at the close of business at Company headquarters on the date 12 months after the date of death.

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	8.	Disability
	If your Service terminates because of your total and permanent disability, then this option will expire at the close of business at Company headquarters on the date six months after your termination date. 
For all purposes under this Agreement, “total and permanent disability” means that you are unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted, or can be expected to last, for a continuous period of not less than one year.

	9.	Leaves of Absence and Part-Time Work
	For purposes of this option, your Service does not terminate when you go on a military leave, a sick leave or another bona fide leave of absence, if the leave was approved by the Company in writing and if continued crediting of Service is required by applicable law, the Company’s leave of absence policy, or the terms of your leave.  However, your Service terminates when the approved leave ends, unless you immediately return to active work; provided, however, if reemployment upon expiration of the approved leave is not guaranteed by statute or contract, then any incentive stock option shall cease to be treated as such and shall instead be treated as a nonstatutory stock option beginning six months following the first day of such leave. 
If you go on a leave of absence, then the vesting schedule specified in the Grant Notice may be adjusted in accordance with the Company’s leave of absence policy or the terms of your leave.  If you commence working on a part-time basis, the Company may adjust the vesting schedule so that the rate of vesting is commensurate with your reduced work schedule.

	10.	Restrictions on Exercise
	The Company will not permit you to exercise this option if the issuance of shares at that time would violate any law or regulation.
	11.	Notice of Exercise
	When you wish to exercise this option, you must notify the Company or its designated agent, including E*TRADE Financial Corporate Services, Inc. (“E*TRADE”).  Your notice must specify how many shares you wish to purchase.  The notice will be effective when the Company receives it. 
However, if you wish to exercise this option by executing a same day sale (as described below), you must follow the instructions of the Company and the broker who will execute the sale. 
If someone else wants to exercise this option after your death, that person must prove to the Company’s satisfaction that he or she is entitled to do so. 
You may only exercise your option for whole shares.

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	12.	Form of Payment
	When you submit your Notice of Exercise, you must make arrangements for the payment of the aggregate exercise price for the shares that you are purchasing.  To the extent permitted by applicable law, payment may be made in one (or a combination of two or more) of the following forms: 
•By delivering to the Company your personal check, a cashier’s check or a money order, or arranging for a wire transfer. 

•If permitted by the Administrator, by surrendering, or attesting to the ownership of, shares of Company stock that you already own with a fair market value on the date of surrender equal to the aggregate exercise price of the shares to which the option is exercised.  

•If permitted by the Administrator, by a “net exercise” arrangement, pursuant to which the Company will subtract from the shares issuable to you a number of shares equal to the largest whole number of shares with a fair market value that does not exceed the aggregate exercise price.
  
•By giving to a securities broker approved by the Company irrevocable directions to sell all or part of your option shares and to deliver to the Company, from the sale proceeds, an amount sufficient to pay the aggregate exercise price and any withholding taxes.  (The balance of the sale proceeds, if any, will be delivered to you.)  The directions must be given in accordance with the instructions of the Company and the broker.  This exercise method is sometimes called a “same-day sale.”

4

									
	13.	Withholding Taxes
	You will not be allowed to exercise this option unless you make arrangements acceptable to the Company to pay any withholding taxes that may be due as a result of the option exercise (the “Tax Withholding Obligation”). As a condition of the grant of this option, you authorize the Company, at its discretion, to satisfy the Tax Withholding Obligation by one or a combination of the following: (a) withholding from your wages or other cash compensation payable to you by the Company, (b) withholding shares of Class A common stock that otherwise would be issued to you, (c) payment from the proceeds of the sale of shares acquired upon exercise either through a voluntary sale or through a mandatory sale arranged by the Company (on your behalf pursuant to this authorization without further consent), (d) requiring you to make a payment in a form acceptable to the Company, or (e) any other method of withholding determined by the Company and permitted by applicable law. 

If the Tax Withholding Obligation is satisfied by a mandatory sale pursuant to method (c) above, you are deemed to instruct and authorize the Company and a brokerage firm determined acceptable to the Company for such purpose to sell on your behalf a number of whole shares of Class A common stock from the shares that are issuable upon exercise hereof as are necessary to generate cash proceeds determined by the Company to be sufficient to satisfy the Tax Withholding Obligation. Such shares will be sold on the date on which the Tax Withholding Obligation arises or as soon thereafter as practicable. You acknowledge and agree that the Company is under no obligation to arrange for such sale at any particular price, that you are responsible for all fees and other costs of sale, that you are hereby agreeing to indemnify and hold the Company harmless from any losses, costs, damages or expenses relating to any such sale, and that the proceeds of any such sale may not be sufficient to satisfy your Tax Withholding Obligation. 

5

									
			The Company may account for the Tax Withholding Obligation by considering statutory or other withholding rates, including applicable maximum rates. In the event of over-withholding, you may receive a refund of any over-withheld amount in cash (with no entitlement to the equivalent in common stock) from the Company or the Employer; otherwise, you may be able to seek a refund from the applicable tax authority. In the event of under-withholding, you may be required to pay any additional taxes directly to the applicable tax authority. If the Tax Withholding Obligation is satisfied by withholding shares of the Company’s Class A common stock, for tax purposes, you shall be deemed to have been issued the full number of shares subject to the exercised option, notwithstanding that a number of the shares is held back solely for the purpose of satisfying the Tax Withholding Obligation. 

You agree to pay to the Company any amount of Tax Withholding Obligation that cannot be satisfied by the means described above. 

To the extent you fail to make satisfactory arrangements for the payment of any required withholding taxes, you will permanently forfeit the applicable option.
	14.	Restrictions on Resale
	You agree not to sell any shares at a time when applicable laws, Company policies or an agreement between the Company and its underwriters prohibit a sale. This restriction will apply as long as your Service continues and for such period of time after the termination of your Service as the Company may specify.

Specifically, you agree to comply with the Company’s Securities Trading Policy when selling shares of the Company’s Class A common stock.
	15.	Transfer of Option
	Prior to your death, only you may exercise this option. You cannot transfer or assign this option. For instance, you may not sell this option or use it as security for a loan. If you attempt to do any of these things, this option will immediately become invalid. You may, however, dispose of this option in your will or by means of a written beneficiary designation; provided, however, that your beneficiary or a representative of your estate acknowledges and agrees in writing in a form reasonably acceptable to the Company, to be bound by the provisions of this Agreement and the Plan as if such beneficiary or the estate were you.

Regardless of any marital property settlement agreement, the Company is not obligated to honor a notice of exercise from your former spouse, nor is the Company obligated to recognize your former spouse’s interest in your option in any other way.
	16.	Retention Rights
	Your option or this Agreement does not give you the right to be retained by the Company, a Parent or a Subsidiary in any capacity. The Company and its Parents and Subsidiaries reserve the right to terminate your Service at any time, with or without cause.

6

									
	17.	Stockholder Rights
	You (or your beneficiary or estate) have no rights as a stockholder of the Company until you (or your beneficiary or estate) have exercised this option by giving the required Notice of Exercise to the Company, paying the exercise price, and satisfying any applicable Tax-Withholding Obligations. No adjustments are made for dividends or other rights if the applicable record date occurs before you exercise this option, except as described in the Plan.
	18	Recoupment Policy
	This option, and the shares acquired upon exercise of this option, shall be subject to any Company recoupment policy in effect from time to time.
	19.	Adjustments
	In the event of a stock split, a stock dividend or a similar change in Company stock, the number of shares covered by this option and the exercise price per share will be adjusted pursuant to the Plan.
	20.	Effect of Significant Corporate Transactions
	If the Company is a party to a merger, consolidation, or certain change in control transactions, then this option will be subject to the applicable provisions of Article 9 of the Plan.
	21.	Notice
	You agree to accept by email all documents relating to this option, the Agreement, or the Plan (including, without limitation, prospectuses required by the Securities and Exchange Commission) and all other documents that the Company is required to deliver to its security holders (including, without limitation, annual reports and proxy statements).  You also agree that the Company may deliver these documents by posting them on a website maintained by the Company or by a third party under contract with the Company.  If the Company posts these documents on a website, it will notify you by email.
	22.	Applicable Law
	This Agreement will be interpreted and enforced under the laws of the State of Delaware (without regard to its choice-of-law provisions).
	23.	Electronic Delivery and Participation
	The Company, may in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means.  You hereby consent to receive such documents by electronic delivery and agree to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company, including E*TRADE.
	24.	Deemed Acceptance of Grant
	If you did not indicate your online acceptance of this option and its terms and conditions (as set forth in the Grant Notice, this Agreement and the Plan) and you did not otherwise agree to the terms of this option, you will be deemed to have agreed to the terms of this option (as set forth in the Grant Notice, this Agreement and the Plan), unless you provide the Company with a written notice to the contrary within 60 days of receipt of the Grant Notice and this Agreement.  Any such notice may be addressed to the Company at the following email address: equity@veeva.com.
	25.	The Plan and Other Agreements
	The text of the Plan is incorporated in this Agreement by reference.   
This Plan, this Agreement and the Grant Notice constitute the entire understanding between you and the Company regarding this option.  Any prior agreements, commitments or negotiations concerning this option are superseded.  This Agreement may be amended only by another written agreement between the parties.

7

Veeva Systems Inc.
2013 Equity Incentive Plan
Notice of Restricted Stock Unit Award

You have been granted restricted stock units representing shares of the Class A common stock of Veeva Systems Inc. (the “Company”) on the following terms:
						
	Name of Recipient:	«Name»
	Grant Number:	«GrantNo»
	Total Number of Stock Units Granted:	«TotalUnits»
	Date of Grant:	«DateGrant»
	Vesting Commencement Date:	«VestDay»
	Vesting Schedule:	The first 25% of the restricted stock units subject to this award will vest when you complete 3 months of continuous Service (as defined in the Plan) after the Vesting Commencement Date.  Thereafter, an additional 25% of the restricted stock units subject to this award will vest when you complete each additional 3-month period of continuous Service.

    
    
    
    
    
    
    

Veeva Systems Inc.
2013 Equity Incentive Plan
Restricted Stock Unit Agreement
									
	1.	Grant of Units	Subject to all of the terms and conditions set forth in the Notice of Restricted Stock Unit Award (the “Grant Notice”), this Restricted Stock Unit Agreement (the “Agreement”) and the Company’s 2013 Equity Incentive Plan (the “Plan”), the Company has granted to you the number of restricted stock units set forth in the Grant Notice.  
You and the Company agree that these restricted stock units are granted under and governed by the terms and conditions described herein and in the Plan. 
All capitalized terms used in this Agreement shall have the meanings assigned to them in this Agreement, the Grant Notice or the Plan.

	2.	Payment for Units	No payment is required for the restricted stock units that you are receiving.
	3.	Vesting	The restricted stock units vest in accordance with the vesting schedule set forth in the Grant Notice.  No additional restricted stock units vest after your Service has terminated for any reason.
	4.	Forfeiture	If your Service terminates for any reason, then your restricted stock units will be forfeited to the extent that they have not vested before the termination date and do not vest as a result of the termination of your Service.  This means that any restricted stock units that have not vested under this Agreement will be cancelled immediately.  You receive no payment for restricted stock units that are forfeited.  The Company determines when your Service terminates for all purposes of your restricted stock units.
	5.	Leaves of Absence and Part-Time Work	For purposes of this award, your Service does not terminate when you go on a military leave, a sick leave or another bona fide leave of absence, if the leave was approved by the Company in writing and if continued crediting of Service is required by applicable law, the Company’s leave of absence policy, or the terms of your leave.  However, your Service terminates when the approved leave ends, unless you immediately return to active work.
If you go on a leave of absence, then the vesting schedule specified in the Grant Notice may be adjusted in accordance with the Company’s leave of absence policy or the terms of your leave.  If you commence working on a part-time basis, the Company may adjust the vesting schedule so that the rate of vesting is commensurate with your reduced work schedule.  

1

									
	6.	Settlement of Restricted Stock Units	Each restricted stock unit will be settled on the day on which the restricted stock unit vests or as soon thereafter as is administratively practicable.  However, each restricted stock unit must be settled not later than March 15th of the calendar year following the calendar year in which the restricted stock unit vests.
At the time of settlement, you will receive one share of the Company’s Class A common stock for each vested restricted stock unit.  But the Company, at its sole discretion, may substitute an equivalent amount of cash if the distribution of stock is not reasonably practicable due to the requirements of applicable law.  The amount of cash will be determined on the basis of the market value of the Company’s Class A common stock at the time of settlement.
No fractional shares will be issued upon settlement.  

	7.	Section 409A	This paragraph applies only if the Company determines that you are a “specified employee,” as defined in the regulations under Code Section 409A at the time of your “separation from service,” as defined in Treasury Regulation Section 1.409A-1(h) and it is determined that settlement of these restricted stock units is not exempt from Code Section 409A.  If this paragraph applies, then any restricted stock units that otherwise would have been settled during the first six months following your “separation from service” will instead be settled on the first business day following the earlier of (i) the six-month anniversary of your separation from service or (ii) your death, unless the event triggering vesting is an event other than your separation from service. 
Each installment of restricted stock units that vests is hereby designated as a separate payment for purposes of Code Section 409A.

	8.	Nature of Units	Your restricted stock units are mere bookkeeping entries.  They represent only the Company’s unfunded and unsecured promise to issue shares of Class A common stock (or distribute cash) on a future date.  As a holder of restricted stock units, you have no rights other than the rights of a general creditor of the Company.
	9.	No Voting Rights or Dividends	Your restricted stock units carry neither voting rights nor rights to cash dividends.  You have no rights as a stockholder of the Company unless and until your restricted stock units are settled by issuing shares of the Company’s Class A common stock.
	10.	Units Nontransferable	You may not sell, transfer, assign, pledge or otherwise dispose of any restricted stock units.  For instance, you may not use your restricted stock units as security for a loan.
	11.	Beneficiary Designation	You may dispose of your restricted stock units in a written beneficiary designation.  A beneficiary designation must be filed with the Company on the proper form.  It will be recognized only if it has been received at the Company’s headquarters before your death.  If you file no beneficiary designation or if none of your designated beneficiaries survives you, then your estate will receive any vested restricted stock units that you hold at the time of your death.

2

									
	12.	Withholding Taxes	No settlement of this award will occur, and no stock certificates will be distributed to you, unless you have made arrangements satisfactory to the Company for the payment of any withholding taxes that are due as a result of the vesting or settlement of this award (the “Tax Withholding Obligation”). As a condition of the grant of this award, you authorize the Company, at its discretion, to satisfy the Tax Withholding Obligation by one or a combination of the following: (i) withholding from your wages or other cash compensation payable to you by the Company, (ii) withholding shares to be issued to you upon settlement of the restricted stock units; (iii) withholding from proceeds of the sale of shares of the Company’s Class A common stock acquired upon settlement of the restricted stock units either through a voluntary sale or through a mandatory sale arranged by the Company (on your behalf pursuant to this authorization without further consent), (iv) requiring you to make a payment in a form acceptable to the Company, or (v) any other method of withholding determined by the Company and permitted by applicable law; provided, however, that if you are a Section 16 officer of the Company under the Exchange Act, then the Company will satisfy the Tax Withholding Obligation only through method (ii) once it implements the necessary mechanisms, unless the use of such withholding method is problematic under applicable law, in which case the Tax Withholding Obligation may be satisfied by one of the other methods set forth above. 

If the Tax Withholding Obligation is satisfied by a mandatory sale pursuant to method (iii) above, you are deemed to instruct and authorize the Company and a brokerage firm determined acceptable to the Company for such purpose to sell on your behalf a number of whole shares of Class A common stock from the shares that are issuable upon settlement hereof as are necessary to generate cash proceeds determined by the Company to be sufficient to satisfy the Tax Withholding Obligation. Such shares will be sold on the date on which the Tax Withholding Obligation arises or as soon thereafter as practicable. You acknowledge and agree that the Company is under no obligation to arrange for such sale at any particular price, that you are responsible for all fees and other costs of sale, that you are hereby agreeing to indemnify and hold the Company harmless from any losses, costs, damages or expenses relating to any such sale, and that the proceeds of any such sale may not be sufficient to satisfy your Tax Withholding Obligation. 

3

									
			The Company may account for the Tax Withholding Obligation by considering statutory or other withholding rates, including applicable maximum rates. In the event of over-withholding, you may receive a refund of any over-withheld amount in cash (with no entitlement to the equivalent in common stock) from the Company or the Employer; otherwise, you may be able to seek a refund from the applicable tax authority. In the event of under-withholding, you may be required to pay any additional taxes directly to the applicable tax authority. If the Tax Withholding Obligation is satisfied by withholding shares of the Company’s Class A common stock, for tax purposes, you shall be deemed to have been issued the full number of shares subject to the vested restricted stock units, notwithstanding that a number of the shares is held back solely for the purpose of satisfying the Tax Withholding Obligation. 

You agree to pay to the Company any amount of Tax Withholding Obligation that cannot be satisfied by the means described above. If cash is to be distributed pursuant to this award instead of shares, the Company will withhold from the cash deliverable to you an amount necessary to satisfy the Tax Withholding Obligation. 

To the extent you fail to make satisfactory arrangements for the payment of any required withholding taxes, you will permanently forfeit the applicable restricted stock units.

4

									
	14.	Rule 10b5-1 Plan	You acknowledge that the instruction to the broker to sell in the foregoing section is intended to comply with the requirements of Rule 10b5-1(c)(1)(i)(B) under the Securities Exchange Act of 1934 (the “Exchange Act”), and that this Agreement is intended to constitute a “binding contract” (a “10b5-1 Plan”) under, and is to be interpreted to comply with the requirements of, such rule.  This 10b5-1 Plan is being adopted to permit you to sell a number of shares to be issued upon the vesting/settlement of this award sufficient to pay the Tax Withholding Obligation that becomes due as a result of such event.  It is adopted to be effective on the Date of Grant of this award; provided that if you are in possession of material nonpublic information about the Company as of such date, then it shall be effective as of the first date thereafter on which you are not in possession of material nonpublic information.  This 10b5-1 Plan will become operational on the first date on which a Tax Withholding Obligation arises.  You hereby appoint the Company as your agent and attorney-in-fact to instruct the broker with respect to the number of shares to be sold under this 10b5-1 Plan.  
You hereby authorize the broker to sell the number of shares of the Company’s Class A common stock determined as set forth above and acknowledge that the broker is under no obligation to arrange for such sale at any particular price. You acknowledge that the broker may aggregate your sales with sales occurring on the same day that are effected on behalf of other Company employees pursuant to sales of shares vesting under Company options, restricted share awards or restricted stock unit awards and your proceeds will be based on a blended price for all such sales. You acknowledge that it may not be possible to sell shares of the Company’s common stock during the term of this 10b5-1 Plan due to (a) a legal or contractual restriction applicable to you or to the broker, (b) a market disruption, (c) rules governing order execution priority on the New York Stock Exchange, (d) a sale effected pursuant to this 10b5-1 Plan failing to comply (or in the reasonable opinion of the broker’s counsel is likely not to comply) with Rule 144 under the Securities Act of 1933, if applicable, or (e) if the Company determines that sales may not be effected under this 10b5-1 Plan.  You acknowledge that this 10b5-1 Plan is subject to the terms of any policy adopted now or hereafter by the Company governing the adoption and operation of 10b5-1 plans.

	15.	Restrictions on Resale	You agree not to sell any shares at a time when applicable laws, Company policies or an agreement between the Company and its underwriters prohibit a sale.  This restriction will apply as long as your Service continues and for such period of time after the termination of your Service as the Company may specify.
Specifically, you agree to comply with the Company’s Securities Trading Policy when selling shares of the Company’s Class A common stock.  

5

									
	16.	Retention Rights	Your award or this Agreement does not give you the right to be retained by the Company, a Parent or a Subsidiary in any capacity.  The Company and its Parents and Subsidiaries reserve the right to terminate your Service at any time, with or without cause.
	17.	Adjustments	In the event of a stock split, a stock dividend or a similar change in Company stock, the number of your restricted stock units will be adjusted accordingly, as the Company may determine pursuant to the Plan.
	18.	Effect of Significant Corporate Transactions	If the Company is a party to a merger, consolidation, or certain change in control transactions, then your restricted stock units will be subject to the applicable provisions of Article 9 of the Plan, provided that any action taken must either (a) preserve the exemption of your restricted stock units from Code Section 409A or (b) comply with Code Section 409A.
	19.	Recoupment Policy	This award, and the shares acquired upon settlement of this award, shall be subject to any Company recoupment policy in effect from time to time.
	20.	Notice	You agree to accept by email all documents relating to this award, the Agreement, or the Plan (including, without limitation, prospectuses required by the Securities and Exchange Commission) and all other documents that the Company is required to deliver to its security holders (including, without limitation, annual reports and proxy statements).  You also agree that the Company may deliver these documents by posting them on a website maintained by the Company or by a third party under contract with the Company.  If the Company posts these documents on a website, it will notify you by email.
	21.	Applicable Law	This Agreement will be interpreted and enforced under the laws of the State of Delaware (without regard to its choice-of-law provisions).

	22.	Electronic Delivery and Participation	The Company, may in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means.  You hereby consent to receive such documents by electronic delivery and agree to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company, including E*Trade Financial Services, Inc.

6

									
	23.	Deemed Acceptance of Grant	If you do not sign the Grant Notice and do not otherwise agree to the terms and conditions of the restricted stock units (as set forth in the Grant Notice, this Agreement and the Plan), you will be deemed to have agreed to the terms and conditions of the restricted stock units (as set forth in the Grant Notice, this Agreement and the Plan), unless you provide the Company with a written notice to the contrary within 60 days of receipt of the Grant Notice and this Agreement.  Any such notice may be addressed to the Company at the following email address: equity@veeva.com.
	24.	The Plan and Other Agreements	The text of the Plan is incorporated in this Agreement by reference.  
The Plan, this Agreement and the Grant Notice constitute the entire understanding between you and the Company regarding this award.  Any prior agreements, commitments or negotiations concerning this award are superseded.  This Agreement may be amended only by another written agreement between the parties.

7Exhibit 10.1

 

SUBORDINATED
NOTE PURCHASE AGREEMENT

 

This SUBORDINATED NOTE PURCHASE
AGREEMENT (this “Agreement”) is dated as of March 30, 2021, and is made by and among ACNB Corporation (“Company”),
and each of the noteholders named on Schedule I hereto (each a “Noteholder” and together, the “Noteholders”).
Capitalized terms that are not otherwise defined shall have the meanings set forth in Section 1 hereof.

 

RECITALS:

 

WHEREAS,
Company is a Pennsylvania corporation and the parent company of ACNB Bank (the “Bank”), a Pennsylvania chartered bank
and trust company;

 

WHEREAS,
Company wishes to sell unsecured subordinated notes up to $15,000,000.00 in aggregate principal amount in substantially the form attached
to this Agreement as Exhibit A (individually, a “Subordinated Note” and collectively, the “Subordinated
Notes”), which aggregate amount is intended to qualify as Tier 2 Capital;

 

WHEREAS,
Company has engaged Boenning & Scattergood, Inc., 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(a)(1)-(3), (7) or
(9) of Regulation D (“Regulation D”) under the Securities Act of 1933, as amended (the “Securities Act”),
or a “qualified institutional buyer” as such term is defined in Rule 144A under the Securities Act;

 

WHEREAS,
Company and each Noteholder is executing and delivering this Agreement in reliance upon the exemption from securities registration afforded
by Section 4(a)(2) of the Securities Act, and Rule 506(b) of Regulation D as promulgated by the United States Securities
and Exchange Commission under the Securities Act; and

 

WHEREAS,
each Noteholder, severally and not jointly, wishes to purchase from Company a Subordinated Note in the principal amount set forth next
to its name in Schedule I attached 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.

 

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

 

     

     

    

 

AGREEMENT:

 

1.            DEFINITIONS.

 

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

 

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

 

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

 

“Anti-Money Laundering
Laws” has the meaning set forth in Section 4.6.7.

 

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

 

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

 

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

 

“Closing Date”
means March 30, 2021.

 

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

 

“Company’s
Liabilities” means Company’s obligations under this Agreement and the Subordinated Notes.

 

“Company’s
Reports” means (i) the audited consolidated financial statements of the Company for the year ended December 31, 2020,
(ii) the Company’s Parent Only Financial Statements for Small Holding Companies (FR Y-SP) as of and for the twelve month period
ended December 31, 2020 filed with the Federal Reserve, (iii) the Bank’s consolidated reports of condition and income
filed (or call report) with the FDIC as of and for the period ended December 31, 2020 and (iv) such other reports, schedules,
forms, statements and other documents (including exhibits and other information incorporated therein) that have been filed or furnished
by the Company with the SEC under the Securities Act, Exchange Act or regulations thereunder as of the Closing Date.

 

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

 

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

 

    	 	2	 

     

    

 

“Economic Sanctions”
has the meaning set forth in Section 4.6.8.3.

 

“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.

 

“Federal Reserve”
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 with jurisdiction over Company or the Bank.

 

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

 

“Government Lists”
has the meaning set forth in Section 4.6.8.1.

 

“Hazardous Materials”
means oil, flammable explosives, asbestos, urea formaldehyde insulation, polychlorinated biphenyls, radioactive materials, hazardous
wastes, and toxic or hazardous substances, including, without limitation, any substances which are “hazardous substances,”
“hazardous wastes,” “hazardous materials” or “toxic substances” under the Hazardous Materials Laws.

 

“Hazardous Materials
Laws” mean any laws, regulations, permits or licenses pertaining to the protection, preservation, conservation or regulation
of the environment which relates to real property, including without limitation: 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 Environment 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 laws, orders and regulations.

 

“Indebtedness”
means and includes: (i) all items arising from the borrowing of money that, according to GAAP as in effect from time to time, would
be included in determining total liabilities as shown on the consolidated balance sheet of Company or any Subsidiary of Company; and
(ii) all obligations secured by any lien on Property owned by Company 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 business of Company or any Subsidiary of Company (including, without limitation, federal funds purchased, advances from any Federal
Home Loan Bank, secured deposits of municipalities, letters of credit issued by Company and repurchase arrangements) and consistent with
customary banking practices and applicable laws and regulations.

 

    	 	3	 

     

    

 

“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 expected to be material
and adverse to the financial position, results of operations, or business of such Person, or (ii) would materially impair the ability
of any Person to perform its respective obligations under this Agreement or the Subordinated Notes, or otherwise materially impede the
consummation of the transactions contemplated hereby; provided, however, that “Material Adverse Effect” shall
not be deemed to include the impact of (1) changes in banking and similar laws, rules or regulations of general applicability
or interpretations thereof by Governmental Agencies, (2) changes in GAAP or regulatory accounting requirements applicable to financial
institutions and their holding companies generally, (3) changes after the date of this Agreement in general economic, employment
or capital market conditions in the United States, including interest rates, economic or capital market conditions affecting insured
depository institutions and their respective holding companies or the market prices for their issued and outstanding securities generally
and not specifically related to Company or the Noteholders, (4) changes in national or international political or social conditions
including the engagement by the United States in hostilities, whether or not pursuant to the declaration of a national emergency or war,
or the occurrence of any military or terrorist attack upon or within the United States, or any of its territories, possessions or diplomatic
or consular offices or upon any military installation, equipment or personnel of the United States, declarations of any national or global
epidemic, pandemic or disease outbreak (including the COVID-19 virus), including all measures taken to protect the health, safety and
welfare of the general population of the United States or any state or territory of the United States or political subdivision thereof,
the effects of any declaration of a state of civil emergency by the government of the United States or of any state or territory of the
United States or political subdivision thereof, or the material worsening of such conditions threatened or existing as of the date of
this Agreement, (5) direct effects of compliance with this Agreement on the operating performance of Company or Noteholders, including
expenses incurred by Company or the Noteholders in consummating the transactions contemplated by this Agreement, and (6) the effects
of any action or omission taken by Company with the prior written consent of the Noteholders, and vice versa, or as otherwise contemplated
by this Agreement and the Subordinated Notes.

 

“Maturity Date”
means March 31, 2031.

 

    	 	4	 

     

    

 

“Noteholder”
or “Noteholders” has the meaning set forth in the preamble hereto.

  

“OFAC”
has the meaning set forth in Section 4.6.8.1.

 

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

 

"Placement
Agent" has the meaning set forth in the Recitals.

 

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

 

“SEC”
means the United States Securities and Exchange Commission.

 

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

 

“Subordinated Note”
or “Subordinated Notes” has the meaning set forth in the Recitals, 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 in which a majority of the outstanding Equity Interest is directly or indirectly
owned by such Person.

 

“Tax”
and “Taxes” mean all federal, state, local or foreign income, gross income, gains, gross receipts, sales, use, ad
valorem, goods and services, capital, production, transfer, franchise, windfall profits, license, withholding, payroll, employment, disability,
employer health, excise, estimated, severance, stamp, occupation, property, environmental, custom duties, unemployment or other taxes
of any kind whatsoever, together with any interest, additions or penalties thereto and any interest in respect of such interest and penalties.

 

“Tax
Returns” means any return, declaration or other report (including elections, declarations, schedules, estimates and
information returns) with respect to any Taxes.

 

“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, without giving effect to the applicability to the Company of the Small Bank
Holding Company and Savings and Loan Holding Company Policy Statement, as set forth at 12 C.F.R. Part 225, Appendix C, as amended,
modified and supplemented and in effect from time to time or any replacement thereof.

 

“USA PATRIOT Act”
has the meaning set forth in Section 4.6.7.

 

    	 	5	 

     

    

 

1.2.
Interpretation; Construction. The foregoing definitions are equally applicable to both the singular and plural forms
of the terms defined. The words “hereof,” “herein” and “hereunder” and words of like import when
used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The word “including”
when used in this Agreement without the phrase “without limitation,” shall mean “including, without limitation.”
All references to time of day herein are references to Eastern Time unless otherwise specifically provided. All references to the Agreement
and Subordinated Notes shall be deemed to be to such documents as amended, modified, supplemented or restated from time to time. With
respect to any reference in this Agreement to any defined term, (a) 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 (b) if such defined term refers to
a document, instrument or agreement, then it shall also include any replacement, extension, supplement or other modification thereof.
No rule of construction against the draftsperson of the Agreement shall be applied in connection with the interpretation and enforcement
of the Agreement.

  

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

 

2.            SUBORDINATED
DEBT.

 

2.1.
General Matters.

 

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

 

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

 

2.1.3.
No Trust Indenture. The Subordinated Notes will not be issued pursuant to, or be the subject of, a trust indenture.

 

2.1.4.
No Credit Rating. The Subordinated Notes will not be rated by a nationally recognized statistical rating organization.

 

    	 	6	 

     

    

 

2.1.5.
No Convertibility.     The
Subordinated Notes are not convertible into or exchangeable for any Equity Interests, other securities or assets of the Company or a
Company Subsidiary.

  

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

 

2.3.
Unsecured Obligations. The obligations of Company to the Noteholders under the Subordinated Notes shall be unsecured.

 

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

 

2.5.
Payments.

 

2.5.1.
Company agrees that matters concerning prepayments, payments and application of payments shall be as set forth in this Agreement
and in the Subordinated Notes.

 

2.5.2.
Company, with prior written notice to the Noteholders, shall have the right to appoint a payment agent in order to make any payments
due pursuant to this Agreement and the Subordinated Notes.

 

2.6.
Right of Offset. Noteholders hereby expressly waive any right of offset they may have against Company.

 

2.7.
Right to Repurchase. Subject to any required federal and state regulatory approvals and the terms and conditions
of the Subordinated Notes, the Company has the right to purchase any of the issued and outstanding Subordinated Notes at any time in
the open market, private transactions or otherwise and, in its discretion, may hold, resell or cancel any of the purchased Subordinated
Notes, provided that such Subordinated Notes held by the Company will not qualify as Tier 2 Capital.

 

3.            DISBURSEMENT
AND CONDITIONS TO COMPANY’S OBLIGATIONS.

 

3.1.
Disbursement. On the Closing Date, assuming all of the terms and conditions set forth in Section 3.2
have been satisfied by Company or waived by the applicable Noteholder and Company has executed and delivered or caused to be executed
and delivered to each Noteholder this Agreement and a Subordinated Note and any other related documents, certificates and opinions, each
in form and substance reasonably satisfactory to the Noteholders, each Noteholder shall disburse in immediately available funds the Subordinated
Note Amount to Company in exchange for a Subordinated Note (the “Disbursement”). The Company will deliver to the respective
Noteholder one or more Subordinated Notes in definitive form (or provide evidence of the same with the original to be delivered by the
Company by overnight delivery on the next Business Day in accordance with the delivery instructions of the Noteholder), registered in
such names and denominations as such Noteholders may request.

 

    	 	7	 

     

    

 

3.2.
Conditions Precedent to Disbursement. The obligation of each Noteholder to consummate the purchase of the Subordinated
Notes to be purchased by them at Closing and to effect Disbursement is subject to the fulfillment of, or delivery by, or at the direction
of the Company to such Noteholder, on or prior to the Closing Date of each of the following (or written waiver of such delivery by such
Noteholder prior to the Closing):

 

3.2.1.
Transaction Documents. This Agreement and a Subordinated Note, each duly authorized and executed by the Company.

 

3.2.2.
Authority Documents. The Company may meet its obligation of delivery of the following documents to the Noteholders
by delivery to the Placement Agent on behalf of the Noteholders.

 

		(a)	A
                                            copy, certified by the Secretary or Assistant Secretary of the Company, of the Articles of
                                            Incorporation of the Company and all amendments thereto which are true, complete and correct
                                            copies of such documents as in effect as of the Closing Date;

 

		(b)	A
                                            certificate of good standing of the Company issued by the Secretary of the Commonwealth of
                                            the Commonwealth of Pennsylvania;

 

		(c)	A
                                            certificate of subsistence of the Bank issued by the Department of Banking and Securities
                                            of the Commonwealth of Pennsylvania;

 

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

 

		(e)	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 execution,
                                            delivery and performance of the Agreement and the Subordinated Notes;

 

		(f)	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 this Agreement, the
                                            Subordinated Notes and the other documents provided for in this Agreement, together with
                                            a sample of the true signature of each such officer;

 

		(g)	The
                                            opinion of Bybel Rutledge LLP, special counsel to the Company, dated as of the Closing Date,
                                            substantially in the form set forth at Exhibit B attached hereto addressed to
                                            the Noteholders and the Placement Agent; and

 

    	 	8	 

     

    

 

		(h)	A
                                            confirmation of registered status of the Company issued by the Federal Reserve Bank of Philadelphia.

 

3.3.
Other Documents. The Company shall provide such other certificates, affidavits, schedules, resolutions, opinions,
notes and/or other documents as the Noteholders may reasonably request.

 

3.4.
Conditions to the Company’s Obligation. The obligation of the Company to consummate the Closing with respect
to a given Noteholder is subject to the satisfaction or waiver by the Company of the following conditions at or prior to Closing:

 

3.4.1.
Since the date of this Agreement, there has not been any action taken, or any law, rule or regulation enacted, entered, enforced
or deemed applicable to the Company or the Bank or the transactions contemplated by this Agreement by an Governmental Agency which imposes
any restriction or condition that the Company determines, in its reasonable good faith judgment, is materially and unreasonably burdensome
on the Company’s business or would materially reduce the economic benefits of the transactions contemplated by this Agreement to
the Company to such a degree that the Company would not have entered into this Agreement had such condition or restriction been know
to it on the date hereof.

 

3.4.2.
With respect to the Noteholder, such Noteholder shall have delivered to the Company a duly authorized and executed signature page to
this Agreement.

 

3.4.3.
The representations and warranties made by the Noteholders in Section 6 hereof shall have been true and correct as of the
date of this Agreement, and shall be true and correct on the Closing Date, except where the failure to be so true and correct (without
regard to any materiality qualifications contained therein) would not reasonably be expected to materially adversely affect the ability
of the Noteholder to perform the Noteholder’s obligations hereunder (and except that representations and warranties made as of
specified date need only be so true and correct as of such date).

 

3.4.4.
All covenants and agreements contained in this Agreement to be performed by that Noteholder on or prior to the Closing Date shall
have been performed or complied with in all material respects.

 

    	 	9	 

     

    

 

4.            REPRESENTATIONS
AND WARRANTIES OF COMPANY.

 

Company hereby represents
and warrants to the Noteholders as follows:

 

4.1.
Organization and Authority.

 

4.1.1.     
Organization Matters.

 

4.1.1.1.        Company
is presently subsisting as a corporation in good standing under the laws of the Commonwealth of Pennsylvania and is duly registered under
the Bank Holding Company Act of 1956, as amended. Company has full corporate power and authority to carry on its business as now conducted.
Company is duly licensed or qualified to do business in the States of the United States and foreign jurisdictions where its ownership
or leasing of Property or the conduct of its business requires such qualification, except where the failure to so qualify would not reasonably
be expected to result in a Material Adverse Effect.

  

4.1.1.2           The
Bank is a Pennsylvania chartered bank and trust company. The deposit accounts of the Bank are insured by the FDIC to the fullest extent
permitted by law. Neither Company nor the Bank has 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.

 

4.1.1.2
        Subsidiaries. Each Subsidiary of Company is validly existing
and in good standing under the laws of its jurisdiction of organization, and each Subsidiary has all requisite power and authority, corporate
or otherwise, and possesses all material licenses necessary, to conduct its business and own its properties as presently conducted.

 

4.1.13            Capital
Stock and Related Matters. All of the outstanding capital stock of Company has been duly authorized and validly issued and is
fully paid and non-assessable. There are, as of the date hereof, no outstanding options, rights, warrants or other agreements or instruments
obligating Company to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of the capital stock of Company
or obligating Company to grant, extend or enter into any such agreement or commitment to any Person other than Company, except pursuant
to employment arrangements, agreements or understandings, or Company’s equity incentive plans (including any dividend reinvestment
and stock purchase plan) adopted by Company’s Board of Directors.

 

4.2.
No Impediment to Transactions.

 

4.2.1.
    Transaction is Legal and Authorized. The issuance of the Subordinated Notes, the borrowing of the Subordinated Note
Amounts, the execution of this Agreement and the Subordinated Notes, and the performance by Company of its obligations under this Agreement
and the Subordinated Notes are within the corporate and other powers of Company. This Agreement and the Subordinated Notes have been
duly authorized, executed and delivered, and, assuming due authorization, execution and delivery by the other parties thereto, are the
legal, valid and binding obligations of Company, enforceable in accordance with their terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights generally and subject
to general principles of equity (regardless of whether enforceability is considered in a proceeding in law or in equity).

 

    	 	10	 

     

    

 

4.2.2.
     No Defaults or Restrictions. Neither the execution and delivery of this Agreement or the Subordinated Notes nor
compliance with their terms and conditions will (a) violate, conflict with or result in a breach of, or constitute a default under:
(i) the Articles of Incorporation or the Bylaws of Company or any Subsidiary of Company, in each case, as amended; (ii) any
of the terms, obligations, covenants, conditions or provisions of any corporate restriction or of any contract, agreement, indenture,
mortgage, deed of trust, pledge, bank loan or credit agreement, or any other agreement or instrument to which Company or any Subsidiary
of Company is now a party or by which any of them or any of their properties may be bound or affected; (iii) any judgment, order,
writ, injunction, decree or demand of any court, arbitrator, grand jury, or Governmental Agency; or (iv) any statute, rule or
regulation applicable to Company, except, in the case of items (ii), (iii) or (iv), for such violations and conflicts that would
not reasonably be expected to have, singularly or in the aggregate, a Material Adverse Effect on Company, or (b) result in the creation
or imposition of any lien, charge or encumbrance of any nature whatsoever upon any property or asset of Company or any Subsidiary of
Company. None of Company or any Subsidiary of Company 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 other agreement or instrument to which Company or any Subsidiary
of Company is a party or by which Company or any such Subsidiary of Company or their respective properties may be bound or affected,
except, in each case, only such defaults that would not reasonably be expected to have, singularly or in the aggregate, a Material Adverse
Effect on Company.

  

4.2.3.
     Governmental Consent. Other than those required under the securities or blue sky laws of the various states, no
governmental orders, permissions, consents, approvals or authorizations are required to be obtained by Company that have not been obtained,
and no registrations or declarations are required to be filed by Company that have not been filed in connection with, or, contemplation
of the execution and delivery of, and performance under, this Agreement and the Subordinated Notes.

 

4.2.4.     
Exemption from Registration.   Neither 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 Noteholder set forth in this Agreement, the Subordinated Notes will be issued in a transaction exempt from the registration requirements
of the Securities Act.

 

None of the Company, any predecessor
of the Company, any of its directors, executive officers, other officers participating in the Offering, or beneficial owners (as that
term is defined in Rule 13d-3 under the Exchange Act) of 20% or more of the Company’s outstanding voting equity securities,
calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under the Securities Act) connected
with the Company in any capacity (each, a “Company Covered Person” and, together, “Company Covered Persons”)
is subject to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the
Securities Act (a “Disqualification Event”), except for a Disqualification Event covered by Rule 506(d)(2) or
(d)(3) under the Securities Act. The Company has exercised reasonable care to determine whether any Company Covered Person is subject
to a Disqualification Event. The Company has complied and agrees to comply, to the extent applicable, with its disclosure obligations
under Rule 506(e) of the Securities Act.

  

    	 	11	 

     

    

  

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

 

4.4.
Financial Condition.

 

4.4.1.      
Company Financial Statements. The consolidated financial statements of Company included in Company’s Reports
(including the related notes, where applicable) (i) have been prepared from, and are in accordance with, the books and records of
Company; (ii) fairly present in all material respects the consolidated results of operations, cash flows, changes in stockholders’
equity and consolidated financial position of Company, 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); (iii) complied
as to form, as of their respective dates of filing in all material respects with applicable accounting and banking requirements as applicable,
with respect thereto; and (iv) have been prepared in accordance with GAAP consistently applied during the periods involved, except,
in each case, as indicated in such statements or in the notes thereto and Regulation S-X promulgated under the Securities Act. The books
and records of Company have been, and are being, maintained in all material respects in accordance with GAAP and any other applicable
legal and accounting requirements. 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 Company contained in Company’s Reports for Company’s most recently completed quarterly or annual
fiscal period, as applicable, and for liabilities incurred in the ordinary course of business consistent with past practice or in connection
with this Agreement and the transactions contemplated hereby.

 

    	 	12	 

     

    

 

4.4.2.     
Absence of Default. Since the date of the latest audited financial statements included in Company’s Reports,
no event has occurred that either of itself or with the lapse of time or the giving of notice or both, would give any creditor of Company
the right to accelerate the maturity of any material Indebtedness of Company. Company is not in default under any other lease, agreement
or instrument, or any law, rule, regulation, order, writ, injunction, decree, determination or award, non-compliance with which could
reasonably be expected to result in a Material Adverse Effect on Company.

  

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

 

4.5.
No Material Adverse Change. Since the date of the latest audited financial statements included in Company’s
Reports, there has been no development or event which has had or could reasonably be expected to have a Material Adverse Effect on Company
or any Subsidiary of Company.

 

4.6.
Legal Matters.

 

4.6.1.      
Compliance with Law. Company and each of its Subsidiaries (i) have complied with and (ii) to Company’s
knowledge, are not under investigation with respect to, and have not been threatened to be charged with or given any notice of any material
violation of any applicable statutes, rules, regulations, orders and restrictions of any domestic or foreign government, or any instrumentality
or agency thereof, having jurisdiction over the conduct of their respective businesses or the ownership of their respective properties,
except where any such failure to comply or violation would not reasonably be expected to have a Material Adverse Effect on Company or
any such Subsidiary.

 

4.6.2.     
Regulatory Enforcement Actions. None of Company, any Subsidiary of Company, or any of their respective officers
or directors is now operating under any restrictions, agreements, memoranda, or commitments (other than restrictions of general application)
imposed by any Governmental Agency, nor are, to Company’s knowledge, (a) any such restrictions threatened or (b) any
agreements, memoranda or commitments being sought by any Governmental Agency.

 

4.6.3.    
Pending Litigation. There are no material actions, suits, proceedings or written agreements pending, or, to Company’s
knowledge, threatened or proposed, against Company or any Subsidiary of Company 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 affect the issuance of, or payment on, the Subordinated Notes; and none of Company
or any Subsidiary of Company 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, would
reasonably be expected to have a Material Adverse Effect on Company.

 

    	 	13	 

     

    

 

4.6.4.
     Environmental. Except as would not, singularly or in the aggregate, reasonably be expected to result in a Material
Adverse Effect on Company: (i) no Property is or, to Company’s knowledge, has been a site for the use, generation, manufacture,
storage, treatment, release, discharge, disposal or transportation of any Hazardous Materials, and neither Company nor any Subsidiary
of Company has engaged in such activities; (ii) each Property, and Company and each such Subsidiary, are in compliance with all
Hazardous Materials Laws; and (iii) there are no claims or actions pending or, to Company’s knowledge, threatened against
Company or any Company Subsidiary or any Property by any Governmental Agency or by any other Person relating to any Hazardous Materials
or pursuant to any Hazardous Materials Law.

 

4.6.5.     
Brokerage Commissions. Neither Company nor any Subsidiary of Company is obligated to pay any brokerage commission
or finder’s fee to any Person in connection with the transactions contemplated by this Agreement except to the Placement Agent.

 

4.6.6.
     Intentionally omitted.

 

4.6.7.     
Anti-Money Laundering. Company and its Subsidiaries are in compliance in all material respects with the applicable
financial recordkeeping and reporting requirements of the Currency and Foreign Transaction Reporting Act of 1970, as amended, including
as amended by the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act (the
“USA PATRIOT Act”) and the rules and regulations thereunder and any other applicable anti-money laundering statute,
rule, or regulation (the “Anti-Money Laundering Laws”). Company and its Subsidiaries have established compliance programs
to ensure compliance with the requirements of the Anti-Money Laundering Laws. There is no charge, investigation, action, suit or proceeding
before any court, regulatory authority or governmental agency or body pending or, to the best knowledge of Company and its Subsidiaries,
threatened regarding the compliance by Company and its Subsidiaries with any applicable Anti-Money Laundering Laws, rule or regulation.

 

4.6.8.      
Compliance with Economic Sanctions.

 

4.6.8.1.         Neither
the Company nor any of its Subsidiaries is acting or has acted at any time, directly or indirectly, on behalf of any persons or entities
whose name appears on the Annex to the Executive Order No. 13224 (Blocking Property and Prohibiting Transactions with Persons Who
Commit, Threaten to Commit, or Support Terrorism) or are included on any relevant lists maintained by the Office of Foreign Assets Control
(“OFAC”) of U.S. Department of Treasury, including the Specially Designated Nationals and Blocked Persons List, the
Foreign Sanctions Evaders List, and the Sectoral Sanctions Identifications List, and any similar list maintained by the U.S. Department
of State, or other U.S. government agencies, all as may be amended from time to time (such lists, collectively, the “Government
Lists”).

 

    	 	14	 

     

    

 

4.6.8.2.          Neither
the Company nor any of its Subsidiaries engages, or has engaged, in business activities or transactions with or for the benefit of any
persons or countries subject to any sanctions administered by OFAC, including any persons in Cuba, Iran, Sudan, Syria or North Korea,
or any person on any relevant lists maintained by OFAC, the U.S. Department of State or other U.S. government agencies, including the
Government Lists.

 

4.6.8.3.         The
operations of the Company and its Subsidiaries are not in contravention of, and since January 1, 2016 have not violated, any applicable
economic sanctions laws and any executive order or regulations issued pursuant to any such laws (collectively, “Economic Sanctions”).
No proceeding before any government authority involving the Company or its Subsidiaries with respect to Economic Sanctions is pending
or, to the Company’s knowledge, is threatened, nor have there been any such proceedings within the past five years.

 

4.6.9.   
Taxes. Company and its Subsidiaries have filed all Tax Returns that they were required to file under applicable
laws and regulations, other than Tax Returns that are not yet due or for which a request for extension was filed. All such Tax Returns
were correct and complete in all material respects and have been prepared in substantial compliance with all applicable laws and regulations.
All Taxes due and owing by and Company and its Subsidiaries (whether or not shown on any Tax Return) have been paid other than Taxes
that have been reserved or accrued on the balance sheet of Company and which Company is contesting in good faith.

 

4.6.10.   
Title to Property. Company and its Subsidiaries have good and sufficient title to their respective Property except
for assets sold, collected or otherwise disposed of in the ordinary course of Company’s business. All material Leases are valid
and subsisting and are in full force and effect in all material respects.

 

4.6.11.   
Use of Proceeds. At the discretion of the Board of Directors of the Company, the Company may use the proceeds from
the sale of the Subordinated Notes to retire outstanding debt of the Company, repurchase issued and outstanding shares of common stock
of the Company, support general corporate purposes, underwrite growth opportunities, create an interest reserve for the Subordinated
Notes and downstream proceeds to the Bank to continue to meet regulatory capital requirements, increase the regulatory lending ability
of the Bank and support the Bank’s organic growth initiatives. The use of such proceeds does not and will not violate Section 7
of the Exchange Act or any regulations issued pursuant thereto.

 

    	 	15	 

     

    

 

4.7.
Company Status.

 

4.7.1.     
Investment Company Act. Company is not an “investment company” or a company “controlled”
by an “investment company,” within the meaning of the Investment Company Act of 1940, as amended.

  

4.7.2.
     Foreign Qualifications. Each of Company and the Subsidiaries of Company is duly qualified as a foreign corporation
to transact business and each 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 to so qualify or be in good standing would
not reasonably be expected to result in any Material Adverse Effect on Company and the other Subsidiaries of Company, considered as one
enterprise.

 

4.8.
Reporting Compliance. Company is subject to, and is in compliance in all material respects with, the reporting requirements
of Section 13 and Section 15(d), as applicable, of the Exchange Act. Company’s Reports at the time they were or hereafter
are filed with the SEC, complied and will comply in all material respects with the requirements of the Exchange Act and did not and do
not include any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made,
in light of the circumstances under which they were or are made, not misleading.

 

4.9.
Internal Control Over Financial Reporting. Company and its Subsidiaries maintain systems of “internal control
over financial reporting” (as defined in Rule 13a-15(f) of the Exchange Act) that comply with the requirements of the
Exchange Act and have been designed by, or under the supervision of, their respective principal executive and principal financial officers,
or persons performing similar functions, to provide reasonable assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with GAAP, including, but not limited to, a system of accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management’s general or
specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity
with GAAP and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management’s
general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. Since the end of Company’s most recent audited fiscal
year, (y) Company has no knowledge of (i) any material weakness in Company’s internal control over financial reporting
(whether or not remediated) or (ii) any fraud, whether or not material, that involves management or other employees who have a significant
role in Company’s internal controls and (z) there has been no change in Company’s internal control over financial reporting
that has materially affected, or is reasonably likely to materially affect, Company’s internal control over financial reporting.

 

4.10.
Disclosure Controls and Procedures. Company and its Subsidiaries maintain an effective system of disclosure controls
and procedures (as defined in Rule 13a-15 and Rule 15d-15 of the Exchange Act), that (i) are designed to ensure that information
required to be disclosed by Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized
and reported within the time periods specified in the SEC’s rules and forms and that material information relating to Company
and its Subsidiaries is made known to Company’s principal executive officer and principal financial officer by others within Company
and its Subsidiaries to allow timely decisions regarding disclosure, and (ii) are effective in all material respects to perform
the functions for which they were established. As of the date hereof, Company has no knowledge that would reasonably cause it to believe
that the evaluation to be conducted of the effectiveness of Company’s disclosure controls and procedures for the most recently
ended fiscal quarter period will result in a finding that such disclosure controls and procedures are ineffective for such quarter ended.
Based on the evaluation of Company’s and each Subsidiary’s disclosure controls and procedures described above, Company is
not aware of (1) any significant deficiency in the design or operation of internal controls which could adversely affect Company’s
ability to record, process, summarize and report financial data or any material weaknesses in internal controls or (2) any fraud,
whether or not material, that involves management or other employees who have a significant role in Company’s internal controls.
Since the most recent evaluation of Company’s disclosure controls and procedures described above, there have been no significant
changes in internal controls or in other factors that could significantly affect internal controls.

 

    	 	16	 

     

    

 

4.11.
Representations and Warranties Generally. All representations, warranties, covenants and agreements made in
this Agreement or in any certificate or other document delivered to the Noteholders by or on behalf of Company pursuant to or in connection
with this Agreement shall be deemed to have been relied upon by the Noteholders in the purchase of the Subordinated Notes.

 

5.            GENERAL
COVENANTS, CONDITIONS AND AGREEMENTS.

 

Company hereby further covenants
and agrees with each Noteholder as follows, for as long as there remains unperformed any obligations to the Noteholders hereunder or
under the Subordinated Notes:

 

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

 

5.2.
Affiliate Transactions. Company shall not itself, nor shall it cause, permit or allow any of its Subsidiaries to
enter into any transaction, including, the purchase, sale or exchange of property or the rendering of any service, with any Affiliate
of Company except in the ordinary course of business and pursuant to the reasonable requirements of Company’s or such Affiliate’s
business and upon terms consistent with applicable laws and regulations and reasonably found by the appropriate board(s) of directors
to be fair and reasonable and no less favorable to Company or such Affiliate than would be obtained in a comparable arm’s length
transaction with a Person not an Affiliate. Notwithstanding the foregoing, nothing herein shall restrict the Company from providing capital
or financial support or serving as a source of strength to the Bank.

 

5.3.
Compliance with Laws.

 

5.3.1.
     Generally. Company shall comply and cause each Subsidiary of Company to comply in all material respects with all
applicable statutes, rules, regulations, orders and restrictions in respect of the conduct of their respective businesses and the ownership
of their respective Properties, except, in each case, where such noncompliance would not reasonably be expected to have a Material Adverse
Effect on Company or such Subsidiary.

  

    	 	17	 

     

    

 

5.3.2.     
Regulated Activities. Company shall not itself, nor shall it cause, permit or allow any Subsidiary of Company to
engage in any business or activity that, to its knowledge, is not permitted by all applicable laws and regulations.

 

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

 

5.3.4.     
Environmental Matters. Except as would not, singularly or in the aggregate, reasonably be expected to result in
a Material Adverse Effect on Company or any Subsidiary of Company, Company shall: (i) exercise, and cause each such Subsidiary to
exercise, due diligence in order to comply in all material respects with all Hazardous Materials Laws; and (ii) promptly take any
and all remedial action required of Company in connection with any Condition or Release or threatened Condition or Release on, under
or about any Property in order to comply in all material respects with all applicable Hazardous Materials Laws; provided, however,
that Company shall not be deemed to be in breach of the foregoing covenant if and to the extent it has not taken such remedial actions
due to (x) its diligent pursuit of an available statutory or administrative exemption from compliance with the relevant Hazardous
Materials Law from the appropriate Governmental Agency (and no material penalties for non-compliance with the relevant Hazardous Materials
Law(s) shall accrue as a result of such non-compliance, without rebate or waiver if such exemption or waiver is granted), or (y) is
actively and diligently contesting in good faith any Governmental Agency’s order, determination or decree with respect to the applicability
or interpretation of any such relevant Hazardous Materials Law and/or the actions required under such laws or regulations in respect
of such Condition or Release. In the event Company or any other Subsidiary of Company undertakes any remedial action with respect to
such Hazardous Material on, under or about any Property, Company or such Subsidiary shall conduct and complete such remedial action in
compliance in all material respects with all applicable Hazardous Materials Laws and in accordance with the binding and applicable policies,
orders and directives of all Governmental Agencies.

 

5.3.5.     
Corporate Existence. Company shall do or cause to be done all things reasonably necessary to maintain, preserve
and renew its corporate existence and that of all Subsidiaries of Company and its and their rights and franchises, and comply in all
material respects with all related laws applicable to Company or such Subsidiaries; provided, however, that Company may:
(i) consummate a merger in which (y) Company is the surviving entity; or (z) if Company is not the surviving entity, the
surviving entity assumes, by operation of law or otherwise, all of the obligations of Company under the Subordinated Notes; or (ii) cease
the operations and/or discontinue the corporate existence of a Subsidiary, other than the Bank; provided, however, that the cessation
of such operations or discontinuance of such corporate existence would not reasonably be expected to be material and adverse to the financial
position, results of operations, or business of Company and its other Subsidiaries, taken as a whole.

 

    	 	18	 

     

    

  

5.4.
Dividends, Payments, and Guarantees During Event of Default. During the continuance of an Event of Default, 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 Company’s capital stock, (b) make any payment of principal or interest or premium, if any, on or repay,
repurchase or redeem any debt securities of Company that rank equal with or junior to the Subordinated Notes, or (c) make any payments
under any guarantee that ranks equal with or junior to the Subordinated Notes, other than (i) any dividends or distributions in
shares of, or options, warrants or rights to subscribe for or purchase shares of, any class of Company’s common stock, (ii) any
declaration of a noncash dividend in connection with the implementation of a stockholders’ rights plan, or the issuance of stock
under any such plan in the future, or the redemption or repurchase of any such rights pursuant thereto, (iii) as a result of a reclassification
of Company’s capital stock or the exchange or conversion of one class or series of Company’s capital stock for another class
or series of Company’s capital stock, (iv) the purchase of fractional interests in shares of Company’s capital stock
pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged, or (v) purchases
of any class of Company’s common stock related to the issuance of common stock or rights under any benefit plans for Company’s
directors, officers or employees or any of Company’s dividend reinvestment and stock purchase plans (including, without limitation,
any repurchases or acquisitions in connection with the forfeiture of any stock award, cashless or net exercise of any option, or acceptance
of common stock in lieu of an award recipient’s tax obligations under any equity award).

 

5.5.
Tier 2 Capital. If all or any portion of the Subordinated Notes ceases to be deemed to be Tier 2 Capital under
the risk-based capital rules of the Federal Reserve as in effect as of the date of this Agreement, 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 Noteholders, and thereafter Company and the Noteholders will work together in good faith to
execute and deliver all agreements as reasonably necessary in order to restructure the applicable portions of the obligations evidenced
by the Subordinated Notes to qualify as Tier 2 Capital.

 

5.6.
Absence of Control. It is the intent of the parties to this Agreement that in no event shall the Noteholders, by
reason of any of the transaction documents, be deemed to control, directly or indirectly, Company or Company Subsidiary, and the Noteholders
shall not exercise, or be deemed to exercise, directly or indirectly, a controlling influence over the management or policies of Company
or Company Subsidiary.

 

    	 	19	 

     

    

 

6.            REPRESENTATIONS,
WARRANTIES AND COVENANTS OF THE NOTEHOLDERS.

  

Each Noteholder hereby represents
and warrants to 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, assuming that the representations of Company contained in this Agreement are true and correct, to consummate
the transactions contemplated hereby. If it is an entity, it is an entity validly existing under the laws of its jurisdiction of organization.

 

6.2.
The Agreement. This Agreement has been duly and validly authorized, executed and delivered by it and, assuming due
authorization, execution and delivery by the other parties thereto, is the legal, valid and binding obligation of such Noteholder, enforceable
in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws relating
to or affecting creditors’ rights generally and subject to general principles of equity (regardless of whether enforceability is
considered in a proceeding in law or in equity).

 

6.3.
No Conflicts. Neither the execution, delivery or performance of this Agreement nor the consummation of any of the
transactions contemplated hereby will conflict with, violate, constitute a breach of or a default (with the passage of time or otherwise)
under (i) its organizational documents, (ii) the terms, obligations, covenants, conditions or provisions of any agreement to
which it is party, (iii) any law applicable to it, or (iv) any order, writ, judgment, injunction, decree, determination or
award binding upon or affecting it; except, in the case of items (ii), (iii) or (iv), for such violations and conflicts that would
not reasonably be expected to have, singularly or in the aggregate, a Material Adverse Effect on the Noteholder.

 

6.4.
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), (7) and
(9) of Rule 501(a) of Regulation D or (ii) or a “qualified institutional buyer” as such term is defined
in Rule 144A under the Securities Act.

 

6.5.
Purchase for Own Account. It is purchasing the Subordinated Note(s) for its own account, for investment or
as a loan transaction in its normal course of business, and not with a view to, or for offer or sale in connection with, any distribution
thereof in violation of the Securities Act or other applicable securities laws, or pursuant to an exemption therefrom or in a transaction
not subject thereto.

 

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, tax, financial, investment, accounting or other advisors with regard to the legal,
financial, tax and other considerations involved in deciding to invest in, or lend money as evidenced by, the Subordinated Notes.

 

    	 	20	 

     

    

 

6.7.
Private Placement; No Registration of Securities. It understands and acknowledges that the Subordinated Notes are
being sold by Company without registration under the Securities Act in reliance on the exemption from federal and state registration
set forth in, respectively, Rule 506(b) of Regulation D 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 further understands and acknowledges
that Company will not be obligated in the future to register the Subordinated Notes under the Securities Act, the Exchange Act, or under
any state securities laws. 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 is attached as Exhibit A to this
Agreement. Company has not made nor is Company making any representation, warranty or covenant, express or implied, as to any applicable
state securities laws for the resale, pledge or other transfer of the Subordinated Notes, or that the Subordinated Note(s) purchased
by the Noteholder will ever be able to be lawfully resold, pledged or otherwise transferred.

  

6.8.
Ability to Bear Economic Risk of Investment/Loan. It recognizes that an investment in, or a loan made pursuant to
the purchase of, the Subordinated Notes involves substantial risk. It has the ability to bear the economic risk of the prospective investment
in, or loan made pursuant to the purchase of, 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 or loan.

 

6.9.
No Offering Memorandum. 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 memorandum, offering circular or prospectus prepared in connection with the offer and sale of the Subordinated Notes; (ii) it
has conducted its own examination of Company, the Subsidiaries of Company and the terms of the Subordinated Notes to the extent it deems
necessary to make its decision to purchase the Subordinated Notes; and (iii) it has availed itself of public access to financial
and other information concerning Company and its Subsidiaries to the extent it deems necessary to make its decision to purchase the Subordinated
Notes.

 

6.10.
Information. It acknowledges that it and its advisors have been furnished with all materials relating to the business,
finances and operations of Company and its Subsidiaries 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 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.

 

6.11.
Investment/Lending Decision. It has made its own investment/lending 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. Neither such
inquiries nor any other due diligence investigations conducted by it or its advisors or representatives, if any, shall modify, amend
or affect its right to rely on Company’s representations and warranties contained herein. It is not relying upon, and has not relied
upon, any advice, statement, representation or warranty made by any Person by or on behalf of Company, except for the express statements,
representations and warranties of Company made or contained in this Agreement. Furthermore, it acknowledges that nothing in this Agreement
or any other materials presented by or on behalf of Company to it in connection with the purchase of the Subordinated Notes constitutes
legal, tax or investment advice.

 

    	 	21	 

     

    

 

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

 

6.13.
Accuracy of Representations. It understands that Company will rely upon the truth and accuracy of the foregoing
representations, acknowledgements and agreements in connection with the transactions contemplated by this Agreement.

 

6.14.
No Government Consent. No governmental orders, permissions, consents, approvals or authorizations are required to
be obtained by the Noteholder that have not been obtained, and no registrations or declarations are required to be filed by Noteholder
that have not been filed in connection with, or, contemplation of the execution and delivery of, and performance under this Agreement.

 

6.15.
Pending Litigation. There are no material actions, suits, proceedings or written agreements pending, or, to Noteholder’s
knowledge, threatened or proposed, against the Noteholder 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 prevent the Noteholder from purchasing the Subordinated Notes and making the Disbursement of the Subordinated
Note Amount on the Closing Date.

 

7.            MISCELLANEOUS.

 

7.1.
Prohibition on Assignment. Company may not assign, transfer or delegate any of its rights under this Agreement or
the Subordinated Notes without the prior written consent of the Noteholders.

 

7.2.
Waiver or Amendment. No waiver or amendment of any term, provision, condition, covenant or agreement contained in
this Agreement or the Subordinated Notes shall be effective except with the consent of the holders of more than 50% in aggregate principal
amount (excluding any Subordinated Notes held by Company or any of parent corporations or subsidiaries) of the Subordinated Notes at
the time outstanding; provided, however, that any amendment to this Section 7.2 and any amendment that would decrease the
rate of interest applicable to the Subordinated Notes, change the Maturity Date or the date of any interest payment due on the Subordinated
Notes, change the priority of the Subordinated Notes as to the right to payment, or change the currency in which the principal of and
interest on the Subordinated Notes is to be paid shall only be effective with the consent of the holders of all of the Subordinated Notes
then outstanding. No failure to exercise or delay in exercising, by a Noteholder, of any right, power or privilege hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege preclude any other or further exercise
thereof, or the exercise of any other right or remedy provided by law. The rights and remedies provided in this Agreement are cumulative
and not exclusive of any right or remedy provided by law or equity. No notice or demand on Company in any case shall, in itself, entitle
Company to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of Noteholder
to any other or further action in any circumstances without notice or demand. No consent or waiver, expressed or implied, by Noteholder
to or of any breach or default by Company in the performance of its obligations hereunder shall be deemed or construed to be a consent
or waiver to or of any other breach or default in the performance of the same or any other obligations of Company hereunder. Failure
on the part of Noteholder to complain of any acts or failure to act or to declare an Event of Default, irrespective of how long such
failure continues, shall not constitute a waiver by Noteholder of its rights hereunder or impair any rights, powers or remedies on account
of any breach or default by Company.

 

    	 	22	 

     

    

 

7.3.
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.

 

7.4.
Usury; Revival of Liabilities. All agreements between Company and the Noteholders (including, without limitation,
this Agreement and the Subordinated Notes) are expressly limited so that in no event whatsoever shall the amount paid or agreed to be
paid to the Noteholders exceed the highest lawful rate of interest permissible under the laws of the Commonwealth of Pennsylvania. If
the Noteholders shall ever receive as interest an amount which would be deemed unlawful, such interest shall be applied to the payment
of the principal of the Subordinated Note (whether or not then due and payable) and not to the payment of interest. To the extent that
the Noteholders receive any payment on account of Company’s Liabilities and any such payment(s) and/or proceeds or any part
thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, subordinated and/or required to be repaid
to a trustee, receiver or any other Person under any bankruptcy act, state or federal law, common law or equitable cause, then to the
extent of such payment(s) or proceeds received, Company’s Liabilities or part thereof intended to be satisfied shall be revived
and continue in full force and effect, as if such payment(s) and/or proceeds had not been received by the Noteholders and applied
on account of Company’s Liabilities; provided, however, if the Noteholders successfully contest any such invalidation, declaration,
set aside, subordination or other order to pay any such payment and/or proceeds to any third party, the revived Company’s Liabilities
shall be deemed satisfied.

 

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 nationally recognized commercial courier (such as Federal Express), addressed:

 

    	 	23	 

     

    

 

	If
    to Company:	ACNB Corporation

    16 Lincoln Square

    Gettysburg, PA 17325

    Attention: David W. Cathell, Chief Financial
    Officer

     

	With
    a copy to (which shall not constitute notice):	Bybel Rutledge LLP

    1017 Mumma Road, Suite 302

    Lemoyne, PA 17043

    Attention: Nicholas Bybel, Jr., Esq.

     

	If
    to the Noteholder:	At the Noteholder’s address as set
    forth on Schedule I

     

 

or to such other address or addresses as the
party to be given notice may have furnished in writing to the party seeking or desiring to give notice, as a place for the giving of
notice, provided that no change in address shall be effective until seven (7)  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, five (5) 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 that next business day delivery was requested.

 

7.6.
Successors and Assigns. This Agreement shall inure to the benefit of the parties and their respective successors
and assigns except that, unless the Noteholder consents in writing, no assignment made by Company in violation of this Agreement shall
be effective or confer any rights on any purported assignee of Company.

 

7.7.
No Joint Venture or Fiduciary Duty. Nothing contained herein or in any document executed pursuant hereto and no
action or inaction whatsoever on the part of the Noteholder, shall be deemed to make the Noteholder a partner or joint venturer with
Company nor give rise to a fiduciary relationship between the Company and any Noteholder.

 

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

 

7.9.
Entire Agreement. This Agreement and the Subordinated Notes along with the exhibits thereto constitute the entire
agreement between the parties hereto with respect to the subject matter hereof and may not be modified or amended in any manner other
than by supplemental written agreement executed by the parties hereto. No party, in entering into this Agreement, has relied upon any
representation, warranty, covenant, condition or other term that is not set forth in this Agreement or in the Subordinated Notes.

 

    	 	24	 

     

    

 

7.10.
Choice of Law. This Agreement shall be governed by and construed in accordance with applicable federal law of the
United States of America and the laws of the Commonwealth of Pennsylvania, without giving effect to its laws or principles of conflict
of laws that would result in the application of the laws of another jurisdiction. Each of the parties hereto (a) consents to submit
itself to the personal jurisdiction of a federal court sitting in Adams County, Pennsylvania or a state court sitting in Gettysburg,
Pennsylvania, in any action or proceeding arising out of or relating to this Agreement or any of the transactions contemplated by this
Agreement, (b) agrees that all claims in respect of such action or proceeding shall be heard and determined exclusively in any such
court, and (c) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave
from any such court. Each of the parties hereto waives any defense or inconvenient forum to the maintenance of any action or proceeding
so brought and waives any bond, surety or other security that might be required of any other party with respect thereto. To the extent
permitted by applicable law, any party hereto may make service on another party by sending or delivering a copy of the process to the
party to be served at the address and in the manner provided for the giving of notices in Section 7.5. Nothing in this Section 7.10,
however, shall affect the right of any party to serve legal process in any other manner permitted by law. Nothing herein shall be deemed
to limit any rights, powers or privileges which Noteholder 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 the Noteholder which is lawful pursuant to, or which is permitted by, any of the foregoing.

 

7.11.
No Third Party Beneficiary. This Agreement is made for the sole benefit of Company and each Noteholder, and no other
person shall be deemed to have any privity of contract hereunder nor any right to rely hereon to any extent or for any purpose whatsoever,
nor shall any other person have any right of action of any kind hereon or be deemed to be a third party beneficiary hereunder.

 

7.12.
Legal Tender of United States. All payments hereunder shall be made in coin or currency which at the time of payment
is legal tender in the United States of America for public and private debts.

 

7.13.
Captions; Counterparts. Captions contained in this Agreement in no way define, limit or extend the scope or intent
of their respective provisions. This Agreement may be executed in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute
but one and the same instrument. In the event that any signature is delivered by facsimile transmission, or by e-mail delivery of a “.pdf”
format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature
is executed) with the same force and effect as if such facsimile signature page were an original thereof.

 

7.14.
Knowledge; Discretion. All references herein to the Noteholder’s or Company’s knowledge shall be deemed
to mean the knowledge of such party based on commercially reasonable inquiry. All references herein to Company’s knowledge shall
be deemed to refer to the knowledge of Company and each Subsidiary of Company. Unless specified to the contrary herein, all references
herein to an exercise of discretion or judgment by the Noteholder, to the making of a determination or designation by the Noteholder,
to the application of the Noteholder’s discretion or opinion, to the granting or withholding of the Noteholder’s consent
or approval, to the consideration of whether a matter or thing is satisfactory or acceptable to the Noteholder, or otherwise involving
the decision making of the Noteholder, shall be deemed to mean that such the Noteholder shall decide using the reasonable discretion
or judgment of a prudent lender.

 

    	 	25	 

     

    

 

7.15.
Waiver Of Right To Jury Trial. TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, COMPANY AND THE NOTEHOLDER HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT THAT EACH MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION ARISING IN ANY WAY IN CONNECTION
WITH THIS AGREEMENT OR THE SUBORDINATED NOTES, OR ANY OTHER STATEMENTS OR ACTIONS OF COMPANY OR THE NOTEHOLDER. COMPANY AND NOTEHOLDER
ACKNOWLEDGE THAT EACH HAS BEEN REPRESENTED IN THE SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL
SELECTED OF ITS OWN FREE WILL. COMPANY AND NOTEHOLDER FURTHER ACKNOWLEDGE THAT (a) EACH HAS READ AND UNDERSTANDS THE MEANING AND
RAMIFICATIONS OF THIS WAIVER, (b) THIS WAIVER HAS BEEN REVIEWED BY COMPANY AND NOTEHOLDER AND THEIR RESPECTIVE COUNSEL AND IS A
MATERIAL INDUCEMENT FOR COMPANY AND NOTEHOLDER TO ENTER INTO THIS AGREEMENT TO PURCHASE THE SUBORDINATED NOTES AND (c) 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.

 

7.18.
Time of the Essence. Time is of the essence with respect to this Agreement.

 

[SIGNATURE PAGES FOLLOW]

 

    	 	26	 

     

    

 

IN WITNESS WHEREOF, the parties
hereto have caused this Subordinated Note Purchase Agreement to be executed by their duly authorized representatives as of the date first
above written.

 

		COMPANY:
	 	 
		ACNB Corporation
	 	 
		By:	 
		 	Name: David W, Cathell
	 	 	Title: Chief Financial Officer

  

[Company
Signature Page to Note Purchase Agreement]

 

    	 		 

     

    

 

		NOTEHOLDER:
	 	 
	 	 
		By:	 
		 	Name:
	 	 	Title:

  

[Noteholder
Signature Page to Note Purchase Agreement]

 

    	 		 

     

    

 

Schedule I

 

Schedule of Noteholders

 

	Name and Address	 	Principal Amount Purchased	 	Wire Instructions for 

Interest Payments
	[Name] 
[______________] 
[______________]	 	$	[_____________]	 	 
	[Name] 
[______________] 
[______________]	 	$	[_____________]	 	 
	Total	 	$	[________________]	 	 

 

    	 		 

     

    

 

EXHIBIT A

 

Form of Subordinated Note

  

    	 		 

    

 

FORM OF
SUBORDINATED NOTE

 

ACNB
CORPORATION

4.00%
FIXED-TO-FLOATING RATE SUBORDINATED NOTE

DUE
March 31, 2031

 

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

 

THIS
OBLIGATION IS SUBORDINATED AND JUNIOR IN RIGHT OF PAYMENT TO THE OBLIGATIONS OF ACNB CORPORATION (“COMPANY”)
TO ITS GENERAL AND SECURED CREDITORS AND IS UNSECURED. IT IS INELIGIBLE AS COLLATERAL FOR ANY EXTENSION OF CREDIT BY COMPANY OR ANY OF
ITS SUBSIDIARIES (“SUBSIDIARIES”).

 

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAWS.
NEITHER THIS NOTE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. THIS NOTE IS ISSUED SUBJECT TO THE RESTRICTIONS ON TRANSFER AND OTHER PROVISIONS OF A SUBORDINATED
NOTE PURCHASE AGREEMENT, DATED AS OF MARCH 30, 2021, BETWEEN COMPANY AND THE NOTEHOLDERS REFERRED TO THEREIN (THE “AGREEMENT”),
A COPY OF WHICH IS ON FILE WITH COMPANY. THE NOTE REPRESENTED BY THIS INSTRUMENT MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH
THE AGREEMENT. ANY SALE OR OTHER TRANSFER NOT IN COMPLIANCE WITH THE AGREEMENT WILL BE VOID.

 

THIS NOTE WILL BE ISSUED AND MAY BE TRANSFERRED
ONLY IN MINIMUM DENOMINATIONS OF $500,000 AND MULTIPLES OF $10,000 IN EXCESS THEREOF. ANY ATTEMPTED TRANSFER OF THIS NOTE IN A DENOMINATION
OF LESS THAN $500,000 SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. ANY SUCH PURPORTED TRANSFEREE SHALL BE DEEMED NOT
TO BE THE HOLDER OF THIS NOTE FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF PAYMENTS ON THIS NOTE, AND SUCH PURPORTED
TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN THIS NOTE.

 

    1

     

    

 

CERTAIN ERISA CONSIDERATIONS:

 

THE HOLDER OF THIS NOTE, OR ANY INTEREST HEREIN,
BY ITS ACCEPTANCE HEREOF OR THEREOF ALSO 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 WITHIN
THE MEANING OF THE REGULATIONS OF 29 C.F.R. SECTION 2510.3-101 AS MODIFIED BY SECTION 3(42) OF ERISA, AND NO PERSON INVESTING
“PLAN ASSETS” OF ANY PLAN MAY ACQUIRE OR HOLD THIS NOTE OR ANY INTEREST HEREIN, UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE
FOR THE EXEMPTIVE RELIEF AVAILABLE UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION 96-23, 95-60, 91-38, 90-1
OR 84-14 OR ANOTHER APPLICABLE EXEMPTION OR ITS PURCHASE AND HOLDING OF THIS NOTE, OR ANY INTEREST HEREIN, ARE NOT PROHIBITED BY SECTION 406
OF ERISA OR SECTION 4975 OF THE CODE WITH RESPECT TO SUCH PURCHASE AND HOLDING. ANY PURCHASER OR HOLDER OF THIS NOTE OR ANY INTEREST
HEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT PLAN
OR OTHER PLAN TO WHICH TITLE I OF ERISA OR SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF
ANY SUCH EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE “PLAN ASSETS” OF ANY SUCH EMPLOYEE BENEFIT
PLAN OR PLAN TO FINANCE SUCH PURCHASE, OR (ii) SUCH PURCHASE OR HOLDING WILL NOT RESULT IN A PROHIBITED TRANSACTION UNDER SECTION 406
OF ERISA OR SECTION 4975 OF THE CODE FOR WHICH FULL EXEMPTIVE RELIEF IS NOT AVAILABLE UNDER APPLICABLE STATUTORY OR ADMINISTRATIVE
EXEMPTION.

 

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

 

    2

     

    

 

 

 

THIS SUBORDINATED NOTE IS NOT A DEPOSIT AND
IT IS NOT INSURED

BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY OR FUND.

 

 

 

Certificate Number:

		$	March 30,
                                            2021

 

CUSIP (Accredited Investors)

 

CUSIP (QIB)

 

ACNB CORPORATION

 

 

4.00%
FIXED-TO-FLOATING RATE SUBORDINATED NOTE DUE March 31, 2031

 

1.
Subordinated Notes. This Subordinated Note is one of a duly authorized issue of unsecured, subordinated notes of ACNB Corporation,
a Pennsylvania corporation (the “Company”), designated as the “4.00% Fixed to Floating Rate Note Due March 31,
2031” (the “Subordinated Notes”) issued pursuant to that Subordinated Note Purchase Agreement, dated as of the
Issue Date (as defined herein), between the Company and the several purchasers of the Subordinated Notes identified on the signature
pages thereto (the “Agreement”), and initially limited in the aggregate principal amount to $15,000,000.00, but
subject to being increased as provided in Sections 17 and 21 below. The “Issue Date” of the Subordinated Notes is March 30,
2021.

 

2.
Payment. The Company, for value received, promises to pay to _______________, or its registered assigns, the principal
sum of [·] Dollars ($[·]), plus accrued but unpaid interest on March 31, 2031 (“Maturity Date”)
and to pay interest thereon (i) from and including the Issue Date of the Subordinated Notes to but excluding March 31, 2026
or the earlier redemption date contemplated by Section 7 of this Subordinated Note, at the rate of 4.00% per annum, computed on
the basis of a 360-day year consisting of twelve 30-day months and payable semiannually in arrears on June 30 and December 30
of each year (each, a “Fixed Interest Payment Date”), beginning June 30, 2021 and (ii) from and including
March 31, 2026, to but excluding the Maturity Date or the earlier redemption date contemplated by Section 7 of this Subordinated
Note, at the rate per annum (rounded to two decimal places when expressed as a percentage), reset quarterly, equal to the sum of (A) a
base rate equal to the then current 90-Day Average SOFR, determined on the Interest Determination Date (as defined below) of the applicable
interest period and (B) 329 basis points, computed on the basis of a 360-day year and the actual number of days elapsed and payable
quarterly in arrears on March 30, June 30, September 30 and December 30 of each year (each, a “Floating
Interest Payment Date”).

 

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

 

    3

     

    

 

(b) 
“90-Day Average SOFR” means the most recent 90-Day Average Secured Oversight Financing Rate for U.S. dollar
denominated loans and derivatives as published by the Federal Reserve Bank of New York at the Federal Reserve Bank of New York's Website
(as defined below) after 3:00 pm Eastern Time on the publication date most recently prior to the first day of the applicable floating
rate interest period (the “Interest Determination Date”).

 

(i)            If
the Company (or the calculation agent, if one has been appointed by the Company) reasonably determines in good faith on the relevant
Interest Determination Date that the 90-Day Average SOFR has been discontinued or is no longer being published by the Federal Reserve
Bank of New York, then the Company (or the calculation agent, if one has been appointed by the Company) will either (i) use a substitute
or successor base rate that it has determined, in its sole, reasonable discretion, is most comparable to the 90-Day Average SOFR or (ii) use
the 90-Day Average SOFR as published by an industry standard source. Notwithstanding the foregoing, if the Company (or the calculation
agent, if one has been appointed by the Company) reasonably determines in good faith that there is an industry-accepted substitute or
successor base rate, then the Company (or the calculation agent, if one has been appointed by the Company) shall use such substitute
or successor base rate (such rate, the “Alternative Rate”);

 

(ii)           If
the Company (or the calculation agent, if one has been appointed by the Company) has determined to utilize a substitute or successor
base rate in accordance with the foregoing, the Company (or the calculation agent, if one has been appointed by the Company) in its sole,
reasonable discretion may determine what business day convention to use, the definition of business day, the Interest Determination Date
to be used and any other relevant methodology for calculating such substitute or successor base rate, including any adjustment factor
needed to make such substitute or successor base rate comparable to the 90-Day Average SOFR base rate, in a manner that is consistent
with industry-accepted practices for such substitute or successor base rate;

 

(iii)          The
Company (or the calculation agent, if one has been appointed by the Company) shall provide each Noteholder (as defined herein) with notice
of its determination of an Alternative Rate promptly after such determination. Notwithstanding anything herein to the contrary, if the
Company has appointed a calculation agent for the Subordinated Notes, absent manifest error, the calculation agent's determination of
the Alternative Rate shall be binding and conclusive on the Noteholders and the Company. If the Company has determined the Alternative
Rate, and if, within five (5) Business Days (as defined herein) after providing such notice, the Company is notified in writing
by the Noteholders of at least a majority in principal amount of the outstanding Subordinated Notes that such Noteholders reasonably
believe that the determination of such Alternative Rate is not consistent with this Section 2, then the Company shall appoint a
calculation agent for the Subordinated Notes who shall determine the Alternative Rate and the calculation agent's determination of the
Alternative Rate shall be binding and conclusive on the Noteholders and the Company;

 

    4

     

    

 

(iv)          Notwithstanding
the foregoing, in the event that the 90-Day Average SOFR or Alternative Rate, as determined in accordance with this Section 2, is
less than zero, the 90-Day Average SOFR or Alternative Rate for such interest period shall be deemed to be zero;

 

(v)           By
issuing this Subordinated Note, the Company agrees, and the holder of this Subordinated Note, by its acceptance of this Subordinated
Note, acknowledges that the use of the 90-Day Average SOFR is subject to Terms of Use, as published by the Federal Reserve Bank of New
York, and such Terms of Use may be adopted and modified by the Federal Reserve Bank of New York and posted at the Federal Reserve Bank
of New York's Website from time to time; and

 

(vi)          “Federal
Reserve Bank of New York's Website” means the website of the Federal Reserve Bank of New York at http://www.newyorkfed.org,
or any successor source.

 

(c) 
The Company shall have the right, but not the obligation, except as expressly provided above, to appoint, in its sole discretion,
from time to time, an independent calculation agent for the Subordinated Notes. The independent calculation agent shall be a member firm
of the Financial Industry Regulatory Authority, Inc. or a successor self-regulatory organization or a bank (as defined in parts
(A) through (C) of Section 3(a)(6) of the Securities Exchange Act of 1934, as amended), in each case having total
equity capital of not less than $50 million and authorized by law to perform all the duties provided for it by this Section 2. If
the Company appoints a calculation agent, the Company shall promptly provide notice to the Noteholders of such appointment.

 

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

 

3.
Subordination. The indebtedness of Company evidenced by the Subordinated Notes, including the principal and interest on
this Note, shall be subordinate and junior in right of payment to the prior payment in full of all existing claims of creditors, whether
now outstanding or subsequently created, assumed or incurred (collectively, “Senior Indebtedness”), which shall consist
of principal of (and premium, if any) and interests, if any, on: (a) all indebtedness of Company for borrowed money, whether or
not evidenced by bonds, debentures, securities, notes or other written instruments; (b) any deferred obligations of Company for
the payment of the purchase price of property, goods, materials, assets or services purchased or acquired by Company and accrued liabilities
arising in the ordinary course of business; (c) all obligations, contingent or otherwise, of Company in respect of any letters of
credit, bankers’ acceptances, security purchase facilities and similar credit transactions; (d) any capital lease obligations
of Company; (e) all obligations of Company in respect of interest rate swap, cap or other agreements, interest rate future or option
contracts, currency swap agreements, currency future or option contacts, commodity contracts and other similar arrangements; (f) any
obligation of Company to its depositors or general creditors, as defined for purposes of the capital adequacy regulations of the Board
of Governors of the Federal Reserve System applicable to Company, as the same may be amended or modified from time to time (the “Capital
Adequacy Regulations”); (g) all obligations of the type referred to in clauses (a) through (f) of other persons
for the payment of which Company is responsible or liable as obligor, guarantor or otherwise; and (h) all obligations of the types
referred to in clauses (a) through (g) of other persons secured by a lien on any property or asset of Company; except
“Senior Indebtedness” does not include (i) the Subordinated Notes, (ii) any obligation that, by its terms, is on
parity with the Subordinated Notes, (iii) any indebtedness between Company and any of its Subsidiaries or Affiliates or (iv) the
Junior Subordinated Indebtedness (as defined below). This Subordinated Note is not secured by any assets of the Company or any other
Person (as such term is defined in the Purchase Agreement) or Affiliate of such Person.

 

    5

     

    

 

In the event of any insolvency,
dissolution, assignment for the benefit of creditors, reorganization, restructuring of debt, marshaling of assets and liabilities or
similar proceedings or any liquidation or winding up of or relating to Company, whether voluntary or involuntary, holders of Senior Indebtedness
shall be entitled to be paid in full before any payment shall be made on account of the principal of or interest on the Subordinated
Notes, including this Subordinated Note. In the event of any such proceeding, liquidation or winding up after payment in full of all
sums owing with respect to the Senior Indebtedness, the registered holders of the Subordinated Notes from time to time (collectively,
the “Noteholders”), together with the holders of any obligations of Company ranking on a parity with the Subordinated
Notes, shall be entitled to be paid from the remaining assets of Company the unpaid principal thereof and the unpaid interest thereon
before any payment or other distribution, whether in cash, property or otherwise, shall be made on account of any capital stock or any
present or future obligations of Company ranking junior to the Subordinated Notes (collectively, “Junior Subordinated Indebtedness”),
which includes any obligation that, by its terms, is subordinated to the Subordinated Notes.

 

If there shall have occurred
and be continuing (a) a default, beyond any applicable grace period, in any payment with respect to any Senior Indebtedness or (b) an
event of default, beyond any applicable grace period, with respect to any Senior Indebtedness as a result of which the maturity thereof
is accelerated, unless and until such payment default or event of default shall have been cured or waived or shall have ceased to exist,
no payment of principal or interest shall be made by Company with respect to this Subordinated Note. Company shall provide prompt written
notice to the Noteholder upon the occurrence of events described in clauses (a) and (b) of the proceeding sentence. The provisions
of this paragraph shall not apply to any payment with respect to which the immediately preceding paragraph of this Section 3 would
be applicable.

 

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

 

    6

     

    

 

4.
Merger and Sale of Assets. Company shall not consolidate or merge into another entity or convey, transfer or lease its
properties and assets substantially as an entirety to any person, unless:

 

(a) 
the continuing entity which results from such consolidation or merger, if not Company, or the person which acquires by conveyance
or transfer or which leases the properties and assets of Company substantially as an entirety shall be a corporation, association or
other legal entity organized and existing under the laws of the United States of America, any State thereof or the District of Columbia
and expressly assumes the due and punctual payment of the principal of and any premium and interest on the Subordinated Notes according
to their terms, and the due and punctual performance of all covenants and conditions hereof on the part of Company to be performed or
observed; provided, however, that no further express assumption is needed by any successor by merger to the Company to the extent such
legal successor assumes the Company’s obligations hereunder by operation of law; and

 

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

 

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 that,
if such properties and assets were directly owned by the Company, would constitute all or substantially all of the Company’s properties
and assets, shall be deemed to be the transfer of all or substantially all of the properties and assets of the Company.

 

5.
Events of Default; Acceleration. If any of the following events shall occur and be continuing (each an “Event
of Default”):

 

(a) 
Company or any major subsidiary depository institution (as defined for purposes of the Capital Adequacy Regulations, a “Major
Subsidiary Depository Institution”) of Company shall commence a voluntary case under any applicable bankruptcy, insolvency,
liquidation, reorganization or other similar law now or hereafter in effect, or Company shall consent to the appointment of a receiver,
liquidator, trustee or other similar official in any liquidation, insolvency or similar proceeding with respect to Company or all or
substantially all of its property, or shall make an assignment for the benefit of creditors; or

 

(b) 
a court or other governmental agency or body having jurisdiction shall enter a decree or order for the appointment of a receiver,
liquidator, trustee or other similar official in any liquidation, insolvency or similar proceeding with respect to Company or a Major
Subsidiary Depository Institution of Company or all or substantially all of the property of Company or a Major Subsidiary Depository
Institution of Company, or for the winding up of the affairs or business of Company or a Major Subsidiary Depository Institution, and
such decree or order shall have remained in force for sixty (60) calendar days; or

 

(c) 
Company is notified that it is considered an institution in “troubled condition” within the meaning of 12 U.S.C. Section 1831i
and the regulations promulgated thereunder; or

 

(d) 
Company (i) becomes insolvent or is unable to pay its debts as they mature, or (ii) admits in writing its inability
to pay its debts as they mature; or

 

(e) 
Company materially breaches any of the representations, warranties or covenants made by it in the Agreement; or

 

    7

     

    

 

(f) 
Company fails to make any required payment of principal or interest hereunder when due and payable (and, in the case of payment
of interest, such failure to pay shall have continued for thirty (30) calendar days);

 

then, in the case of an Event of Default described
in the foregoing clauses (a) or (b), unless the principal of this Subordinated Note already shall have become due and payable, the
Noteholder, by notice in writing to Company, may declare the principal amount of this Subordinated Note to be due and payable immediately
and, upon any such declaration, the same shall become and shall be immediately due and payable. Company waives demand, presentment for
payment, notice of nonpayment, notice of protest, and all other notices.

 

Company, within ninety (90)
calendar days after the receipt of written notice from the Noteholder or any other holder of the Subordinated Notes of the occurrence
of an Event of Default with respect to this Subordinated Note, shall mail to all the Noteholders, at their addresses shown on the Security
Register (as defined in Section 10 below), such written notice of Event of Default, unless such Event of Default shall have been
cured or waived before the giving of such notice, as certified by Company in writing.

 

6.
Failure to Make Payment. In the event of the occurrence of an Event of Default described in Section 5(f), Company
will, upon demand of the Noteholder, pay to the Noteholder the whole amount then due and payable on this Subordinated Note for principal
and interest (without acceleration), with interest on the overdue principal and interest at the rate borne by this Subordinated Note,
to the extent permitted by applicable law. If Company fails to pay such amount upon such demand, the Noteholder may, among other things,
institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final
decree and may enforce the same against Company and collect the amounts adjudged or decreed to be payable in the manner provided by law
out of the property of Company.

 

Upon
the occurrence of a failure by the Company to make any required payment of principal or interest on this Subordinated Note or an Event
of Default, until such failure or Event of Default is cured by the Company or waived by the Noteholders in accordance with Section 16
hereof, 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 Company’s capital stock, (b) make any payment of principal or interest or premium, if any,
on or repay, repurchase or redeem any debt securities of Company that rank equal with or junior to the Subordinated Notes, or (c) make
any payments under any guarantee that ranks equal with or junior to the Subordinated Notes, other than (i) any dividends or distributions
in shares of, or options, warrants or rights to subscribe for or purchase shares of, any class of Company’s common stock, (ii) any
declaration of a noncash dividend in connection with the implementation of a stockholders’ rights plan, or the issuance of stock
under any such plan in the future, or the redemption or repurchase of any such rights pursuant thereto, (iii) as a result of a reclassification
of Company’s capital stock or the exchange or conversion of one class or series of Company’s capital stock for another class
or series of Company’s capital stock, (iv) the purchase of fractional interests in shares of Company’s capital stock
pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged, or (v) purchases
of any class of Company’s common stock related to the issuance of common stock or rights under any benefit plans for Company’s
directors, officers or employees or any of Company’s dividend reinvestment and stock purchase plans (including, without
limitation, any repurchases or acquisitions in connection with the forfeiture of any stock award, cashless or net exercise of any option,
or acceptance of Common Shares in lieu of an award recipient’s tax obligations under any equity award).

 

    8

     

    

 

7.
Redemption; Prepayment; Capital Treatment Event Redemption. The Subordinated Note is not subject to redemption at the option
of the Noteholder. The Company, however, in its discretion, may redeem or prepay any or all of the Subordinated Notes, including this
Subordinated Note, in whole or in part, without premium or penalty, at any time on or after March 31, 2026, and prior to the Maturity
Date, but in all cases in a principal amount with integral multiples of $10,000, on any Interest Payment Date at a price of 100% of the
principal amount of this Subordinated Note to be redeemed or prepaid on such date, plus interest accrued and unpaid to the date of redemption
or prepayment. If less than the entire amount of the Subordinated Note is to be redeemed or prepaid, the notice of redemption or prepayment
shall state the portion of the principal amount to be redeemed or prepaid and shall state that on and after the date fixed for redemption
or prepayment, upon surrender of such Subordinated Note, a new Subordinated Note, having the same terms and conditions of the Subordinated
Note, in principal amount equal to the unpaid portion thereof will be issued.

 

In addition, if all or any
portion of the Subordinated Notes cease to be deemed to be Tier 2 Capital, including due to a change in applicable capital regulations
(a “Capital Treatment Event”), the Company shall promptly notify the Noteholders thereof, and thereafter the Company
and the Noteholders shall work together in good faith to execute and deliver all agreements as reasonably necessary in order to restructure,
as agreed to by the Company and the Noteholders, 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 shall limit the Company’s right to redeem
the Subordinated Notes upon the occurrence of a Capital Treatment Event. In the event of a Capital Treatment Event, Company shall have
the right to redeem, on any Interest Payment Date, all or such portion of the Subordinated Notes at a price of 100% of the principal
amount of the Subordinated Notes to be redeemed, plus accrued but unpaid interest to the date of redemption.

 

Furthermore,
the Company shall have the right, at any time, to redeem the Subordinated Notes at a price of 100% of the principal amount of the Subordinated
Notes to be redeemed, plus accrued but unpaid interest to the date of redemption upon the occurrence of a Tax Event or an Investment
Company Event. A “Tax Event” means the receipt by the Company of an opinion of counsel to the Company that
as a result of any amendment to, or change (including any final and adopted (or enacted) prospective change) in, the laws (or any regulations
thereunder) of the United States or any political subdivision or taxing authority thereof or therein, or as a result of any official
administrative pronouncement or judicial decision interpreting or applying such laws or regulations, there exists a material risk that
interest payable by the Company on the Subordinated Notes is not, or within one hundred twenty (120) days after the receipt of such opinion
will not be, deductible by the Company, in whole or in part, for United States federal income tax purposes. An “Investment Company
Event” means the receipt by the Company of an opinion of counsel to the Company to the effect that there is a material risk
that the Company is or, within one hundred twenty (120) days after the receipt of such opinion will be, required to register as an investment
company pursuant to the Investment Company Act of 1940, as amended.

 

    9

     

    

 

In the case of any redemption
or prepayment of this Subordinated Note, Company will give the holders of the Subordinated Notes to be redeemed or prepaid notice not
less than thirty (30) nor more than forty-five (45) calendar days prior to the redemption or prepayment date as to the aggregate principal
amount to be redeemed or prepaid. In a case where Company is making a redemption or prepayment with respect to the Subordinated Notes
in an amount less than the aggregate amount of principal of the Subordinated Notes then outstanding, Company shall effect such partial
redemption on a pro rata basis; provided that in no case shall any Subordinated Notes held by any parent company or Subsidiary
of Company be deemed to be outstanding.

 

Any such redemption or prepayment
shall be subject to the prior approval of the Board of Governors of the Federal Reserve System (or its designee) or any successor agency
to the extent such approval shall then be required by law, regulation or policy.

 

8.
Repayment; Payment Procedures. Company shall repay the aggregate principal amount of the Subordinated Notes, plus all accrued
but unpaid interest thereon, in full on the Maturity Date. Payment of the principal and interest payable on the Maturity Date will be
made by check, or by wire transfer in immediately available funds to a bank account in the United States designated by the registered
Noteholder of this Subordinated Note if such Noteholder shall have previously provided wire instructions to Company, upon presentation
and surrender of this Subordinated Note at the Payment Office (as defined in Section 13 below) or at such other place or places
as Company shall designate by notice to the registered Noteholders as the Payment Office, provided that this Subordinated Note
is presented to Company in time for Company to make such payments in such funds in accordance with its normal procedures. Payments of
interest (other than interest payable on the Maturity Date) shall be made by wire transfer in immediately available funds (if such Noteholder
shall have previously provided wire transfer instructions to Company) or check mailed to the registered Noteholder as such person’s
address appears on the Security Register (as defined below). Interest payable on any Interest Payment Date shall be payable to the Noteholder
in whose name this Subordinated Note is registered at the close of business on the fifteenth (15th) calendar day prior to
the applicable Interest Payment Date. To the extent permitted by applicable law, interest shall accrue, at the rate at which interest
accrues on the principal of this Subordinated Note, on any amount of principal or interest on this Subordinated Note not paid when due.
All payments on this Subordinated Note shall be applied first to accrued interest and then the balance, if any, to principal. Protest,
notice of protest, presentment and surrender of this Subordinated Note are hereby waived by Company.

 

9.
Form of Payment. Payments of principal and interest on this Subordinated Note shall be made in such coin or currency
of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts.

 

10.
Registration of Transfer; Security Register. Except as otherwise provided herein, this Subordinated Note is transferable
in whole or in part, and may be exchanged for a like aggregate principal amount of Subordinated Notes of other authorized denominations,
by the Noteholder in person, or by its attorney duly authorized in writing, at the Payment Office (as defined in Section 13 below).
Company shall maintain a register providing for the registration of the Subordinated Notes and any exchange or transfer thereof (the
“Security Register”). Upon surrender or presentation of this Subordinated Note for exchange or registration of transfer,
Company shall execute and deliver in exchange therefor a Subordinated Note or Subordinated Notes in substantially the form hereof of
like aggregate principal amount, each in a minimum denomination of $100,000 or any amount in excess thereof which is an integral multiple
of $10,000 (and, in the absence of an opinion of counsel satisfactory to Company to the contrary, bearing the restrictive legend(s) set
forth hereinabove) and that is or are registered in such name or names requested by the Noteholder. Any Subordinated Note presented or
surrendered for registration of transfer or for exchange shall be duly endorsed and accompanied by a written instrument of transfer in
such form as is attached hereto and incorporated herein, duly executed by the Noteholder or his attorney duly authorized in writing,
with such tax identification number or other information for each person in whose name a Subordinated Note is to be issued, and accompanied
by evidence of compliance with any restrictive legend(s) appearing on such Subordinated Note or Subordinated Notes as Company may
reasonably request to comply with applicable law. No exchange or registration of transfer of this Subordinated Note shall be made during
the period on or after the fifteenth (15th) day immediately preceding the Maturity Date. This Subordinated Note is subject
to the restrictions on transfer contained in the Agreement, a copy of which is on file with Company.

 

    10

     

    

 

11.
Charges and Transfer Taxes. No service charge (other than any cost of delivery) shall be imposed for any exchange or registration
of transfer of this Subordinated Note, but Company may require the payment of a sum sufficient to cover any stamp or other tax or governmental
fee or charge that may be imposed in connection therewith (or presentation of evidence that such tax, charge or fee has been paid).

 

12.
Ownership. Prior to due presentment of this Subordinated Note for registration of transfer, Company may treat the Noteholder
in whose name this Subordinated Note is registered in the Security Register as the absolute owner of this Subordinated Note for receiving
payments of principal and interest on this Subordinated Note and for all other purposes whatsoever, whether or not this Subordinated
Note be overdue, and Company shall not be affected by any notice to the contrary.

 

13.
Notices. All notices to Company under this Subordinated Note shall be in writing and addressed to Company at ACNB Corporation,
16 Lincoln Square, Gettysburg, PA 17325, Attention: Chief Financial Officer, or to such other address as Company may notify to the Noteholder
(the “Payment Office”). All notices to the Noteholders shall be in writing and sent by first-class mail or recognized
commercial overnight courier to each Noteholder at the address as set forth in the Security Register.

 

14.
Denominations. The Subordinated Notes are issuable only as fully registered Subordinated Notes without interest coupons
in minimum denominations of $500,000 or any amount in excess thereof which is an integral multiple of $10,000.

 

15.
Absolute and Unconditional Obligation of Company. No provisions of this Subordinated Note shall alter or impair the obligation
of Company, which is absolute and unconditional, to pay the principal and interest on this Subordinated Note at the times, places and
rate, and in the coin or currency, herein prescribed.

 

16.
Waiver and Consent.

 

(a)            Any
consent or waiver given by the Noteholder of this Subordinated Note shall be conclusive and binding upon such Noteholder and upon all
future Noteholders of this Subordinated Note and of any Subordinated Note issued upon the registration of transfer hereof or in exchange
therefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Subordinated Note. No delay or omission
of the holder of this Subordinated Note to exercise any right or remedy accruing upon any Event of Default shall impair such right or
remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Each Noteholder, by its acceptance of such Subordinated
Note (or beneficial interest therein), shall be deemed to have waived any right of offset against the Company with respect to the indebtedness
evidenced thereby.

 

    11

     

    

 

No waiver or amendment of
any term, provision, condition, covenant or agreement in the Subordinated Notes shall be effective except with the consent of the holders
of more than fifty percent (50%) in aggregate principal amount (excluding any Subordinated Notes held by the Company or any of its Affiliates)
of the Subordinated Notes at the time outstanding; provided, however, that without the consent of each Noteholder of an
affected Subordinated Note, no such amendment or waiver may: (i) reduce the principal amount of any Subordinated Note; (ii) reduce
the rate of or change the time for payment of interest on any Subordinated Note; (iii) extend the maturity of any Subordinated Note;
(iv) change the currency in which payment of the obligations of the Company under the Subordinated Notes are to be made; (v) lower
the percentage of aggregate principal amount of outstanding Subordinated Notes required to approve any amendment of the Subordinated
Notes; (vi) make any changes to Section 7 (Redemption), Section 5 (Events of Default; Acceleration), Section 6 (Failure
to Make Payments), or Section 16 (Waiver and Consent) of the Subordinated Notes that adversely affects the rights of any Noteholder;
(vii) disproportionately affect the rights of any of the Noteholders of the then outstanding Subordinated Notes; (viii) permit
the Company to declare or pay any cash dividends while an Event of Default is continuing or; modify the terms of subordination of the
affected Subordinated Note in a manner adverse to the holder. Notwithstanding the foregoing, the Company may amend or supplement the
Subordinated Notes without the consent of the Noteholders to cure any ambiguity, defect or inconsistency or to provide for uncertificated
Subordinated Notes in addition to or in place of certificated Subordinated Notes, or to make any change that does not adversely affect
the rights of any Noteholder. No failure to exercise or delay in exercising, by any Noteholder of the Subordinated Notes, of any right,
power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege
preclude any other or further exercise thereof, or the exercise of any other right or remedy provided at law or in equity. The rights
and remedies provided in this Subordinated Note are cumulative and not exclusive of any right or remedy provided at law or in equity.
No notice or demand on the Company in any case shall, in itself, entitle the Company to any other or further notice or demand in similar
or other circumstances or constitute a waiver of the rights of Noteholders to any other or further action in any circumstances without
notice or demand. No consent or waiver, express or implied, by Noteholders to or of any breach or default by the Company in the performance
of its obligations hereunder shall be deemed or construed to be a consent or waiver to or of any other breach or default in the performance
of the same or any other obligations of the Company hereunder. Failure on the part of the Noteholders to complain of any acts or failure
to act or to declare an Event of Default, irrespective of how long such failure continues, shall not constitute a waiver by the Noteholders
of their rights hereunder or impair any rights, powers or remedies on account of any breach or default by the Company.

 

    12

     

    

 

17.
Further Issues. Company may create and issue additional notes having the same terms and conditions of the Subordinated
Notes (except for the issue date, interest rate, issue price, and maturity date) so that such further notes shall be consolidated and
form a single series with the Subordinated Notes. Any such issuance will either be registered or issued pursuant to an exemption from
registration under the Securities Act.

 

18.
No Sinking Fund; Trust Indenture or Credit Rating; Convertibility. This Subordinated Note is not entitled to the benefit
of any sinking fund. This subordinated Note is not being issued pursuant to, or is the subject of, any trust indenture. This Subordinated
Note is not subject to any rating by a nationally recognized statistical rating organization. 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.

 

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

 

20.
Governing Law; Interpretation. This Subordinated Note shall be governed by and construed in accordance with applicable
federal law of the United States of America and the laws of the Commonwealth of Pennsylvania, without regard to conflict of laws principles
of such state that would result in the application of the laws of another jurisdiction. This Subordinated Note is intended to meet the
criteria for qualification of the outstanding principal as Tier 2 Capital under the Capital Adequacy Regulations, and the terms hereof
shall be interpreted in a manner to satisfy such intent, subject 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.

 

21.
Priority. The Subordinated Notes rank pari passu among themselves and pari passu, in the event of any insolvency
proceeding, dissolution, assignment for the benefit of creditors, reorganization, restructuring of debt, marshaling of assets and liabilities
or similar proceeding or any liquidation or winding up of Company, with all other present or future unsecured subordinated debt obligations
of Company, except any unsecured subordinated debt that may be expressly stated to be senior to or subordinate to the Subordinated Notes.
Any Subordinated Notes held by the Company or Subsidiary Company shall not be deemed to be outstanding.

 

22.
Successors and Assigns. This Subordinated Note shall be binding upon the Company and its successors and permitted assigns,
and shall inure to the benefit of the Noteholder and its respective successors and permitted assigns. The Noteholder may assign all,
or any part of, or any interest in, the Noteholder’s rights and benefits hereunder only to the extent and in the manner permitted
in Agreement. To the extent of any such assignment, such assignee shall have the same rights and benefits against the Company and shall
agree to be bound by and to comply with the terms and conditions of such Agreement as it would have had if it were the Noteholder hereunder.

 

    13

     

    

 

23.
Purchase and Resale. Subject to any required federal and
state regulatory approvals and the provisions of this Subordinated Note, the Company shall have the right to purchase any of the Subordinated
Notes at any time in the open market, private transactions or otherwise. If the Company purchases any Subordinated Notes, it may, in
its discretion, hold, resell or cancel any of the purchased Subordinated Notes, with the understanding that Subordinated Notes held by
the Company will not qualify as Tier 2 Capital.

 

24.
Submission to Jurisdiction. Each Noteholder hereby irrevocably
submits to the exclusive jurisdiction of the Court of Common Pleas of Adams County, Pennsylvania and the U.S. District Court for the
Middle District of Pennsylvania over any action or proceeding arising out of or relating to this Subordinated Note and the transactions
related thereto, regardless of whether a claim sounds in contract, tort, or otherwise and regardless of whether a claim is at law or
in equity, and each Noteholder hereby irrevocably agrees that all claims in respect of such action or proceeding may be heard and determined
in such state or federal court. Each Noteholder on behalf of itself and its successors and assigns, hereby irrevocably waives, to
the fullest extent permitted by law, any objection it may now or hereafter have to the laying of venue in any action or proceeding in
any such court as well as any right it may now or hereafter have to remove such action or proceeding, once commenced, to another court
on the grounds of Forum Non Conveniens or otherwise. Each Noteholder agrees that a final, non-appealable judgment in any such
action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided
by law.

 

[SIGNATURE PAGE FOLLOWS]

 

    14

     

    

 

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

 

	ATTEST:	 	ACNB CORPORATION

 

		 	By:	 

	Name:	 	Name:	David W. Cathell
	Title:	 	Title:	Chief Financial Officer

 

    

     

    

 

ASSIGNMENT AGREEMENT

 

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 Company. The agent may substitute another to act for him.

 

	Date:	 	Your Signature:
	 	 	 

 

Signature Guarantee:

 

 

(Signature must be guaranteed)

 

 

 

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

 

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

 

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

 

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

 

    

     

    

 

CHECK ONE BOX BELOW:

 

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

 

		(2)	 ̈	transferred
                                            to Company; or

 

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

 

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

 

		(5)	 ̈	transferred
                                            pursuant to and in compliance with Regulation S under the Securities Act; or

 

		(6)	 ̈	transferred
                                            to an institutional “accredited investor” (as defined in Rule 501(a)(1),
                                            (2), (3), (7) or (9) under the Securities Act) or an “accredited investor”
                                            (as defined in Rule 501(a)(4) under the Securities Act), that has furnished a signed
                                            letter containing certain representations and agreements; or

 

		(7)	 ̈	transferred
                                            pursuant to another available exemption from the registration requirements of the Securities
                                            Act.

 

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

 

______________________________________________

Signature

 

Signature Guarantee:

 

	 	 	 
	_______	 	 
	(Signature must be
guaranteed)	 	Signature

 

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

 

    

     

    

 

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

 

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

 

Dated:_________________

 

    

     

    

 

EXHIBIT B

 

Form of Legal Opinion

 

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

 

2.       The
Company is a registered bank holding company under the Bank Holding Company Act of 1956, as amended. The Bank is duly formed as a commercial
bank and trust company under Pennsylvania law.

 

3.       The
Company has all necessary power and authority to execute, deliver and perform its obligations under each Subordinated Note Purchase Agreement
and Subordinated Note to which it is a party.

 

4.       The
Subordinated Note Purchase Agreements and the Subordinated Notes have been duly and validly authorized, executed and delivered by the
Company and they each constitute a legal, valid and binding obligation of the Company, enforceable against the Company in accordance
with its terms, except to the extent that enforceability may be limited by (i) bankruptcy, receivership, insolvency, reorganization,
moratorium, fraudulent transfer, or other similar laws now or hereafter in effect relating to creditors’ rights generally and (ii) rules of
law governing specific performance, injunctive relief, or other equitable principles or by other general equitable principles (regardless
of whether enforceability is considered in a proceeding at law or in equity).

 

5.       Assuming
the accuracy of the representations and warranties of each Purchaser set forth in the Subordinated Note Purchase Agreement and the issuance
of the Subordinated Notes in accordance with the terms and conditions of the Subordinated Note Purchase Agreement, the Subordinated Note
and the Placement Agency Agreement, the Subordinated Notes to be issued and sold by the Company to Purchasers pursuant to the Subordinated
Note Purchase Agreement will be issued in a transaction exempt from the registration requirements of the Securities Act.

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