Document:

SEC Connect

 

Exhibit
10.1

 

EMPLOYMENT AGREEMENT

 

This
Employment Agreement (the “Agreement”) is entered into
by and between Rauly Gutierrez (“you” or
“your”) and Innovus Pharmaceuticals, Inc., a Nevada
corporation (the “Company”). This Agreement has an
effective date of September 23, 2016 (the “Effective
Date”).

 

In
consideration of the mutual covenants and promises made in this
Agreement, you and the Company agree as follows:

 

1. Position and
Responsibilities. As of the
Effective Date, you will be employed by the Company as the
Company’s Vice President of Finance (“VP
Finance”). As Vice President of Finance, you shall report
directly to the Company’s Executive Vice President and Chief
Financial Officer (the “CFO”). Your office will be
located at the Company’s headquarters at 9171 Towne Centre
Drive, Suite 440, San Diego, CA 92122.

 

Nothing
herein shall preclude you from (i) serving, with the prior
written consent of the Company as a member of the board of
directors or advisory boards (or their equivalents in the case of a
non-corporate entity) of non-competing businesses and charitable
organizations, (ii) engaging in charitable activities and
community affairs, and (iii) managing your personal
investments and affairs. The Company hereby acknowledges your
ownership of (or relationship with) the entities identified in
Exhibit A and
consents to such ownership or relationship for so long as such
entities continue to be a non-competing business with the
Company.

 

2. Term.
Your employment with the Company is at-will and either you or the
Company may terminate your employment at any time and for any
reason, with or without Cause/Good Reason (as each are defined
below), in each case subject to the terms and provisions of this
Agreement.

 

3. Salary,
Bonus, Equity Incentives, Benefits and
Indemnification. For avoidance of
doubt, the Company’s Board of Directors (the
“Board”) may delegate its authority and
responsibilities under this Section 3 to a committee of
members of the Board.

 

(a) Base Salary. Commencing on the Effective
Date, you will be paid an annual base salary of two hundred
thousand dollars ($200,000.00) (the “Base Salary”) for
your services as VP Finance, payable in the time and manner that
the Company customarily pays its employees provided that you will
receive pro-rata payments of Base Salary at least once each
calendar month. Your Base Salary will be reviewed periodically by
the Board and may be increased (but not decreased) by the
Board.

 

(b) Bonuses. You will be eligible to earn an
annual cash bonus based on personal performance objectives
reasonably established by the Board [which will be communicated in
writing to you within the first 75 days of the applicable fiscal
year]. Your annual target cash bonus amount will be equal to 25% of
your then annual Base Salary rate (with such rate determined as of
the day after the applicable anniversary of the Effective Date for
such fiscal year). The actual amount of the annual bonus paid to
you, if any, shall be determined by the Board in its sole
discretion and may be more or less than the target amount. If your
employment ends during any given fiscal year for any reason and
whether or not you execute the Mutual Release described in Section
6(e), you will be paid a pro-rata amount of the target bonus
determined by the percentage of time you were employed during the
fiscal year. The annual bonus, if any, will be paid to you in cash
by March 1 of the following fiscal year, the payment of which is
conditioned upon your continued employment to and through the date
of payment.

 

(c) Compensatory Equity. Subject to approval
by the Board, the Company will grant you Restricted Stock Units
(“RSU”) covering one million two hundred fifty thousand
(1,250,000) shares of the Company’s common stock (the
“Initial RSU Grant”). Three hundred and twelve thousand
five hundred (312,500) shares of the Initial RSU Grant shall be
vested after one (1) year of employment. Subject to your continued
Service, the remaining shares of the Initial RSU shall vest in
eight (8) pro-rata equal installments on a quarterly basis over the
following two (2) years. In addition to the Initial RSU Grant, you
will be eligible for annual grants of either RSU or stock options
at the elections of the Board. These additional grants may occur
more frequently than annually at the election of the
Board.

 

For
purposes of this Agreement, the RSU Grant and any other Company
compensatory equity grants issued to you shall be collectively
referred to herein as “Compensatory Equity”. To the
extent you receive any stock options, stock appreciation rights or
similar derivative securities, you shall be entitled to according
to the applicable plan in place. In connection with any award of
Compensatory Equity (including the RSU Grant), you shall be
permitted at your election to satisfy the applicable exercise price
and/or tax withholding obligations via share withholding with the
shares that are surrendered to the Company valued at their then
fair market value as of the applicable vesting or settlement
date(s).

 

You
shall be eligible for additional grants of Compensatory Equity in
order to ensure that you have competitive equity compensation. All
grants of Compensatory Equity shall be issued pursuant to: (i) a
Board-approved employee stock incentive plan (the
“Plan”) and (ii) an effective registration statement
filed (and maintained) by the Company with the Securities and
Exchange Commission in accordance with the Securities Act of 1933,
as amended.

 

 

 

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Additionally, all
outstanding unvested Compensatory Equity awards shall fully vest
and become exercisable (to the extent exercise is required) upon a
Change in Control occurring during your Service (as defined below).
You may also elect to establish a trading plan for Company
securities in accordance with Rule 10b5-1 of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”).
For purposes of this Agreement and your Compensatory Equity,
“Service” shall mean service by you as an employee,
director and/or consultant of the Company (or any subsidiary or
parent or affiliated entity of the Company).

 

(d) Benefits. Commencing with the Effective
Date, you will be entitled to participate in all Company employee
benefit plans and programs at the time or thereafter made available
to Company senior executive officers including, without limitation
and to the extent available, major medical and dental coverage for
you and your dependents, group life insurance, any savings or
profit sharing plans (such as a 401K plan), deferred compensation
plans, stock option incentive plans, long-term disability
insurance, holidays, vacation, sick time, and other employee
benefit programs sponsored by the Company. The Company intends to
instate some of the foregoing plans and benefits in September
2016.

 

Notwithstanding the
foregoing, commencing with the Effective Date and thereafter on
each anniversary of the Effective Date, you shall incrementally
accrue 20 days of paid vacation time, three (3) sick days, and two
(2) floating holidays. Such accrued vacation and sick time will be
subject to any maximum accrual limits under the Company’s
policies. Any unused portion shall be paid to you upon termination
of your employment with the Company in accordance with applicable
state and federal law

 

(e) Indemnification. In the event that you
are made a party or threatened to be made a party to any action,
suit, or proceeding, whether civil, criminal, administrative, or
investigative (a “Proceeding”), by reason of your
employment with, or serving as an officer or director of, the
Company, the Company shall indemnify and hold you harmless, and
defend you to the fullest extent authorized by the laws of the
state in which the Company is incorporated, as the same exist and
may hereafter be amended, against any and all claims, demands,
suits, judgments, assessments, and settlements (collectively the
“Claims”), including all expenses incurred or suffered
by you in connection therewith and such indemnification shall
continue as to you even after you are no longer providing Service,
and shall inure to the benefit of your heirs, executors, and
administrators. The Company shall have the right to undertake, with
counsel or other representatives of its own choosing, the defense
or settlement of any Claims. In the event that the Company shall
fail to notify you, within ten (10) days of its receipt of your
written notice, that the Company has elected to undertake such
defense or settlement, or if at any time the Company shall
otherwise fail to diligently defend or pursue settlement of such
Claims, then you shall have the right to undertake the defense,
compromise, or settlement of such Claims, in which event the
Company shall hold you harmless from any legal fees incurred by you
for your counsel. Neither you nor the Company shall settle any
Claims without the prior written consent of the other, which
consent shall not be unreasonably withheld or delayed. Regardless
of which party is conducting the defense of any such Claims, the
other party, with counsel or other representatives of its own
choosing and at its sole cost and expense, shall have the right to
consult with the party conducting the defense of such Claims and
its counsel or other representatives concerning such Claims and you
and the respective counsel or other representatives shall cooperate
with respect to such Claims. The party conducting the defense of
any such Claims and its counsel shall in any case keep the other
party and its counsel (if any) fully informed as to the status of
such Claims and any matters relating thereto. You and the Company
shall provide to the other such records, books, documents, and
other materials as shall reasonably be necessary for each to
conduct or evaluate the defense of any Claims, and will generally
cooperate with respect to any matters relating thereto. This
Section 3(e) shall remain in effect after this Agreement is
terminated, regardless of the reasons for such termination. The
indemnification provided to you pursuant to this Section 3(e) shall
not supersede or reduce any indemnification provided to you under
any separate agreement, or the By-Laws of the Company; in this
regard, it is intended that this Agreement shall expand and extend
your rights to receive indemnification. The Company shall maintain
a directors and officers’ liability insurance policy
(including coverage through the sixth anniversary of cessation of
all of your services to the Company) covering you in your capacity
as an officer and director of the Company and any Company
affiliate.

 

4. Expense
Reimbursement. You are
authorized to incur on behalf of the Company only such reasonable
expenses (including travel and entertainment) in connection with
the business of the Company as are in conformity with the
Company’s published guidelines. The Company shall reimburse
you for all such reasonable expenses incurred in connection with
the business of the Company upon the presentation by you, from time
to time, of an itemized account of such expenditures and receipts,
which account shall be in form and substance in conformity with the
rules and regulations of the Internal Revenue Service.

 

 

 

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5. Change
in Control

 

(a)  Definition. For
purposes of this Agreement, “Change in Control” shall
mean a “change in control event” as defined under
Treasury Regulation Section 1.409A-3(i)(5)) as in effect on the
Effective Date or any change in control definition provided by the
Plan.

 

(a)           Code
Section 280G. In the event that it is determined that any
payment or distribution of any type to or for your benefit made by
the Company, by any of its affiliates, by any person who acquires
ownership or effective control or ownership of a substantial
portion of the Company’s assets (within the meaning of
Section 280G of the Code or by any affiliate of such person,
whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise (the “Total
Payments”), would be subject to the excise tax imposed by
Section 4999 of the Code or any interest or penalties with respect
to such excise tax (such excise tax, together with any such
interest or penalties, are collectively referred to as the
“Excise Tax”), then such payments or distributions or
benefits shall be payable either:

 

(i) in full;
or

 

(ii)  
as to the maximum
value of such lesser amount which would result in no portion of
such payments or distributions or benefits being subject to the
Excise Tax.

 

You
shall receive the greater, on an after-tax basis, of (i) or (ii)
above.

 

If the
Total Payments must be reduced as provided in the previous
paragraph, the reduction shall occur in the following order: (1)
reduction of cash payments for which the full amount is treated as
a "parachute payment" (as defined under Code Section 280G and its
regulations); (2) cancellation of accelerated vesting (or, if
necessary, payment) of cash awards for which the full amount in not
treated as a parachute payment; (3) reduction of any continued
employee benefits and (4) cancellation of any accelerated vesting
of equity awards. In selecting the equity awards (if any) for which
vesting will be reduced under clause (4) of the preceding sentence,
awards shall be selected in a manner that maximizes the after-tax
aggregate amount of reduced Total Payments provided to you,
provided that if (and only if) necessary in order to avoid the
imposition of an additional tax under Section 409A of the Code,
awards instead shall be selected in the reverse order of the date
of grant. For the avoidance of doubt, for purposes of measuring an
equity compensation award's value to you when performing the
determinations under the preceding paragraph, such award's value
shall equal the then aggregate fair market value of the vested
shares underlying the award less any aggregate exercise price less
applicable taxes. Also, if two or more equity awards are granted on
the same date, each award will be reduced on a pro-rata
basis.

 

All
mathematical determinations and all determinations of whether any
of the Total Payments are parachute payments that are required to
be made under this Section 5(a), shall be made by a nationally
recognized independent audit firm selected by the Company (the
“Accountants”), who shall provide their determination,
together with detailed supporting calculations regarding the amount
of any relevant matters, both to the Company and to you. Unless you
consent in writing, the Accountants may not be an audit firm that
is then providing services in any capacity to the person or entity
that is acquiring the Company. Such determinations shall be made by
the Accountants using reasonable good faith interpretations of the
Code. As expressly permitted by Treasury Regulations section
1.280G-1 Q/A-32, with respect to performing any present value
calculations that are required in connection with this Section
5(a), you and the Company each affirmatively elect to utilize the
Applicable Federal Rates ("AFR") that are in effect as of the
Effective Date and the Accountants shall therefore use such AFRs in
their determinations and calculations. If the Accountants determine
that no excise tax under Section 4999 of the Code is payable with
respect to a Total Payment, it shall furnish the Company and you
with an opinion reasonably acceptable to you that no such excise
tax under Section 4999 of the Code will be imposed with respect to
such Total Payments. The Company shall pay the fees and costs of
the Accountants which are incurred in connection with this Section
5(a).

 

6. Consequences
of Termination of Employment. For purposes of
this Agreement, your last day of employment with the Company is the
“Termination Date”. Upon termination of your employment
for any reason, you shall receive payment or benefits from the
Company covering the following: (i) all unpaid salary and
unpaid vacation accrued through the Termination Date, (ii) any
payments/benefits to which you are entitled under the express terms
of any applicable Company employee benefit plan, (iii) any
unreimbursed valid business expenses for which you have submitted
properly documented reimbursement requests and (iv) your then
outstanding Compensatory Equity as governed by their applicable
plan (collectively, (i) through (v) are the
“Accrued Pay”).

 

After
termination of your employment by the Company without cause or by
you for Good Reason, and whether or not the Mutual Release
described in Section 6(e) is executed by you, the Company shall pay
the entire premiums for your Company group medical, dental and
vision insurance coverage for you and your dependents for 6 months
after the Termination Date with coverage no less favorable than as
of immediately before your Termination Date (the “Continuing
Health Coverage”). If it becomes unreasonable for the Company
to continue to pay for this Continuing Health Coverage for you (or
imposes adverse tax consequences on you) because of changes in
applicable law then the Company shall make the premium payments to
you on an after-tax basis.

 

 

 

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You
will also be paid all other post-employment payments and benefits
as provided in this Agreement including without limitation any
unpaid bonus amounts described in Section 3(b), which will be paid
over six (6) months. Within no later than 90 days after the later
of your Termination Date or the date that you are not considered to
be a ten percent (10%) shareholder under Section 16 of the Exchange
Act, you shall no longer be considered a Company affiliate and the
Company shall use commercially reasonable efforts to facilitate the
timely removal of any restrictive legends on any shares of Company
common stock then held by you.

 

(a) For Cause. For purposes of this
Agreement, your employment may be terminated by the Company for
“Cause” as a result of the occurrence of one (1) or
more of the following:

 

(i) Your commission of
fraud or other unlawful conduct in or that affects your performance
of duties for the Company;

 

(ii) Your
conviction of, or a plea of “guilty” or “no
contest" to, a felony under the laws of the United States or any
state thereof, if such felony either is work-related or materially
impairs your ability to perform services for the Company;
or

 

(iii) Your
willful material breach of this Agreement For purposes of the
foregoing, no act, or failure to act, on your part shall be
considered “willful” unless done, or omitted to be
done, by you other than in good faith, and without reasonable
belief that your action or omission was in furtherance of the
interests of the Company. The foregoing shall is an exclusive list
of the acts or omissions that shall be considered
“Cause” for the termination of your employment by the
Company. The Board shall provide you with 30 days advance written
notice specifically detailing the basis (and factual circumstances)
for the termination of your employment for Cause. During the 30 day
period after you have received such notice, you shall have an
opportunity to cure or remedy such alleged Cause events and to
present your case to the full Board (with the assistance of your
own counsel). A termination shall be deemed for Cause only if,
following such 30 day period, at least 75% of the group consisting
of the members of the Board vote affirmatively that your
termination is for Cause. You shall continue to receive all of the
compensation and benefits provided by this Agreement during the 30
day cure/remedy period.

 

(b) Without Cause or for Good Reason or Death or
Disability. The Company may terminate your employment
without Cause or for Disability at any time with 30 days advance
written notice or you may resign your employment for Good Reason
(as defined below in Section 6(b)(iii)) with 30 days advanced
written notice or your employment may also be terminated due to
your death or by you due to your Disability (each of the foregoing,
a “Qualifying Termination”). Any notice of termination
by the Company that is not covered by Section 6(a) must specify
whether it was a termination without Cause or due to your
Disability. Without your prior written consent, once the Company
has provided you with such a notice of termination under this
Section 6(b) then it may not rescind such notice nor may it modify
the terms of your severance benefits described in this Agreement.
For purposes of this Agreement, “Disability” is defined
to occur when you are unable to engage in any substantial gainful
activity for 30 or more consecutive days, or 60 or more days within
a 120 day period 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 twelve (12) months. If your employment is
terminated due to a Qualifying Termination, then you will receive
the following benefits subject to your timely compliance with
Section 6(e) and further provided that no payments for
such Qualifying Termination shall be made until on or after the
date of a “separation from service” within the meaning
of Code Section 409A:

 

(i) The Company shall
provide you with a cash payment equal to six (6) months of your
then annual Base Salary and your annual target bonus amount (the
“Severance Payment”). The Severance Payment shall be
paid to you in six (6) equal installments after the effective date
of the Mutual Release described in Section 6(e).

 

(ii) The
Company shall provide the Continuing Health Coverage (or coverage
no less favorable to you than the Continuing Health Coverage) for 6
months after the Termination Date. If it becomes unreasonable for
the Company to continue to pay for this Continuing Health Coverage
for you (or it imposes adverse tax consequences on you) because of
changes in applicable law then the Company shall make the premium
payments to you on an after-tax basis. Additionally, all
outstanding unvested Compensatory Equity awards shall fully vest
and become exercisable (to the extent exercise is required) as of
your Termination Date.

 

(iii) For
purposes of this Agreement, you may resign your employment from the
Company for “Good Reason” within one (1) year after the
date that any one of the following events described in
subparts (1) through (5) (any one of which will constitute
“Good Reason”) has first occurred without your written
consent. Your resignation for Good Reason will only be effective if
the Company has not cured or remedied the Good Reason event within
30 days after its receipt of your written notice of the Good Reason
event. Such notice of your intention to resign for Good Reason must
be provided to the Company within 90 days of the initial existence
of a Good Reason event. This “Good Reason” definition
and process is intended to comply with the safe harbor provided
under Treasury Regulation Section 1.409A-1(n)(2)(ii) and shall be
interpreted accordingly.

 

(1)

You have incurred a
material diminution in your responsibilities, duties or authority
or you are no longer the VP Finance of the Company (or if the
Company has a parent entity, then you must be its VP Finance of the
Company’s ultimate parent entity);

 

(2)

Your workplace has
been relocated to a new location that is more than 100 miles away
from your work location that is specified in
Section 1;

 

(3)

Any material
reduction of your Base Salary.

 

 

 

-4-

 

 

(c) Voluntary Termination. In the event you
voluntarily terminate your employment with the Company without Good
Reason and not due to Disability, you will not be entitled to the
Severance Payment but will receive your Accrued Pay plus the other
post-termination payments that are not predicated on a Qualifying
Termination. You agree to use your best efforts to provide the
Company with at least 14 days advance written notice of your
intention to resign without Good Reason.

 

(d) Change of Control. If, within six (6)
months following a Change in Control, your employment is terminated
pursuant to 6(b) or 6(c) (a “Change in Control
Termination”), then you will receive the following benefits
subject to your timely compliance with Section 6(e) and
further provided that no payments for such Change in Control
Termination shall be made until on or after the date of a
“separation from service” within the meaning of Code
Section 409A:

 

(i) The Company shall
provide you with a cash payment equal to six (6) months of your
then annual Base Salary and your annual target bonus amount (the
“Severance Payment”). The Severance Payment shall be
paid to you in six (6) equal installments after the effective date
of the Mutual Release described in Section 6(e).

 

(ii) The
Company shall provide the Continuing Health Coverage (or coverage
no less favorable to you than the Continuing Health Coverage) for 6
months after the Termination Date. If it becomes unreasonable for
the Company to continue to pay for this Continuing Health Coverage
for you (or it imposes adverse tax consequences on you) because of
changes in applicable law then the Company shall make the premium
payments to you on an after-tax basis. Additionally, all
outstanding unvested Compensatory Equity awards shall fully vest
and become exercisable (to the extent exercise is required) as of
your Termination Date.

 

(iii) All
of your unvested RSUs and options granted prior to, on, or after
the date hereof (but only (i) such RSUs and options as have been
granted to you by Company as of the date of the Change in control
or (ii) such RSUs and options as have been assumed by an acquiring
company at the time of a Change in Control or such new RSUs and
options that have been substituted by an acquiring company for RSUs
and options existing at the time of a Change in Control, each
pursuant to the terms of a company option plan) shall automatically
become fully vested as of the Termination Date. The parties hereto
acknowledge that the terms of this Agreement are intended to modify
the terms of Employee's existing RSU and option agreements and to
be a supplement to future RSU and options agreements.

 

(e) Mutual Release of Claims. Subject to the
next sentence, as a condition to receiving (and continuing to
receive) the payments and benefits provided in Section 6(b),
not later than forty-five (45) days after your Termination Date,
you execute (and not revoke) and deliver to the Company a Mutual
Release Of All Claims And Covenant Not To Sue agreement (the
“Mutual Release”) in the form attached as Exhibit B
hereto. Payment of the forgoing may be deferred or delayed until
expiration of the revocation period. However, this requirement for
you to provide an executed Mutual Release shall not be applicable
if your employment was terminated due to your death or Disability.
The Company shall have the obligation to prepare and execute said
Mutual Release and tender such Company-executed Mutual Release to
you on or before your Termination Date.

 

7. Proprietary
Information and Inventions Agreement;
Confidentiality. You will be
required, as a condition of your employment with the Company, to
execute the Company’s form of proprietary information and
inventions agreement (“Confidentiality
Agreement”).

 

8. Assignability;
Binding Nature. Commencing on the
Effective Date, this Agreement will be binding upon you and the
Company and the parties’ respective successors, heirs, and
assigns. This Agreement may not be assigned by you except that your
rights to compensation and benefits hereunder, subject to the
limitations of this Agreement, may be transferred by will or
operation of law. No rights or obligations of the Company under
this Agreement may be assigned or transferred except in the event
of a merger or consolidation in which the Company is not the
continuing entity, or the sale or liquidation of all or
substantially all of the assets of the Company provided that the
assignee or transferee is the successor to all or substantially all
of the assets of the Company and expressly in writing assumes the
Company’s obligations under this Agreement. The Company will
require any such purchaser, successor or assignee to expressly
assume and agree to perform this Agreement in the same manner and
to the same extent that the Company would be required to perform if
no such purchase, succession or assignment had taken place. Your
rights and obligations under this Agreement shall not be
transferable by you by assignment or otherwise provided, however,
that if you die, all amounts then payable to you hereunder shall be
paid in accordance with the terms of this Agreement to your
devisee, legatee or other designee or, if there be no such
designee, to your estate.

 

 

 

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9. Governing
Law; Arbitration. This Agreement
will be deemed a contract made under, and for all purposes shall be
construed in accordance with, the laws of California, without
regard to its conflicts of law provisions.

 

Except
as may be permitted below on this Section 9, the parties agree that
any dispute between the parties arising out of or relating to the
negotiation, execution or performance of this Agreement shall be
settled by expedited binding arbitration in accordance with the
Employment Arbitration Rules and Mediation Procedures of the
American Arbitration Association. The location for the arbitration
shall be San Diego, California. The arbitration award shall be made
within sixty (60) days of the filing of the notice of intention to
arbitrate (demand), and the arbitrator(s) shall agree to comply
with this schedule before accepting appointment. Any award made by
such arbitrator(s) shall be final, binding and conclusive on the
parties for all purposes, and judgment upon the award rendered by
the arbitrators may be entered in any court having jurisdiction
thereof. The parties each agree that the arbitration provisions of
this Agreement shall provide each party with its exclusive remedy,
and each party expressly waives any right it might have to seek
redress in any other forum, except as otherwise expressly provided
in this Agreement. By electing arbitration as the means for final
settlement of all claims, the parties hereby waive their respective
rights to, and agree not to, sue each other in any action in a
Federal, State or local court with respect to such claims, but may
seek to enforce in court an arbitration award rendered pursuant to
this Agreement. The parties specifically agree to waive their
respective rights to a trial by jury, and further agree that no
demand, request or motion will be made for trial by jury. In the
event that either party brings an action under Section 9 to enforce
or effect its rights under or relating to this Agreement (a
“Proceeding”), the prevailing party shall be entitled
to recover its costs and expenses, including the costs of
mediation, arbitration, litigation, court fees, and reasonable
attorneys’ fees incurred in connection with such an action.
The Company shall pay for all arbitration-specific costs, including
but not limited to the arbitration filing fee.

 

If you
are determined by the arbitrator to be the prevailing party in any
Proceeding where the Company was found to have materially breached
this Agreement, then, in addition to being awarded your costs and
expenses, you shall be entitled to: (i) interest on any late
payments, calculated at a rate equal to the statutory rate,
compounded daily, and (ii) the acceleration of payment for all
remaining payments owed to you, so that the unpaid balance
(including accrued interest) shall be paid in a single lump sum
within ten (10) business days of the issuance of the
arbitrator’s award. You may also be awarded any economic
damages arising from the Company’s breach, as may be
determined in the arbitrator in the Proceeding.

 

In
addition to the remedies set forth above, the parties hereby agree
that they shall be entitled to enforce their rights under this
Agreement specifically. All such rights and remedies shall be
cumulative and non-exclusive, and may be exercised singularly or
concurrently. The parties agree that irreparable harm would occur
in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise
breached. Each party agrees that, in the event of any breach or
threatened breach by any other party of any covenant or obligation
contained in this Agreement, the non-breaching party shall be
entitled to seek and obtain: (i) a decree or order of specific
performance to enforce the observance and performance of such
covenant or obligation, and (ii) an injunction restraining such
breach or threatened breach.

 

10. Taxes.
All compensation paid by the Company hereunder to you or your
estate or beneficiaries will be subject to tax withholding pursuant
to any applicable laws or regulations. This Agreement and its
payments are intended to be exempt from or comply with the
requirements of Code Section 409A and the Company shall use its
best efforts to ensure that there are no violations of Code Section
409A. If any taxes under Code Section 409A are imposed on you, then
the Company shall within thirty days of the determination that
there would be an imposition of such taxes provide you with a
payment that will cover the costs of any Code Section 409A taxes,
excise taxes, penalties and interest along with any taxes imposed
on such payment so that you will on an after-tax basis (applying
the then highest aggregate marginal tax rates) be no worse off than
if no Code Section 409A taxes, excise taxes, penalties or interest
had been imposed. Notwithstanding any provision in the Agreement to
the contrary, if upon your “separation from service”
within the meaning of Code Section 409A, you are then a
“specified employee” (as defined in Code Section 409A),
then to the extent necessary to comply with Code Section 409A and
avoid the imposition of taxes under Code Section 409A, the Company
shall defer payment of “nonqualified deferred
compensation” subject to Code Section 409A payable as a
result of and within six (6) months following such
“separation from service” under this Agreement until
the earlier of (i) the first business day of the seventh month
following your “separation from service,” or (ii) ten
(10) days after the Company receives notification of your death.
Additionally, the reimbursement of expenses or in-kind benefits
provided pursuant to this Agreement shall be subject to the
following conditions: (1) the expenses eligible for reimbursement
or in-kind benefits in one taxable year shall not affect the
expenses eligible for reimbursement or in-kind benefits in any
other taxable year; (2) the reimbursement of eligible expenses or
in-kind benefits shall be made promptly, subject to the
Company’s applicable policies, but in no event later than the
end of the year after the year in which such expense was incurred;
and (3) the right to reimbursement or in-kind benefits shall not be
subject to liquidation or exchange for another benefit. The
provisions of this Section 10 shall survive any termination of this
Agreement or your employment.

 

11. Entire
Agreement. Except as
otherwise specifically provided in this Agreement, this Agreement
contains all the legally binding understandings and agreements
between you and the Company pertaining to the subject matter of
this Agreement and supersedes all such agreements, whether oral or
in writing, previously entered into between the parties. In the
event of any conflict in terms between this Agreement and any other
agreement executed by and between you and the Company or any
Company plan or policy, the terms of this Agreement shall prevail
and govern.

 

 

 

-6-

 

 

12. No
Offset or Mitigation. No severance or
other payments or benefits made to you under this Agreement may be
offset by the Company or by any other party. You shall have no duty
of mitigation with respect to any severance or other payments or
benefits made to you under this Agreement.

 

13. Notice.
Any notice that the Company is required to or may desire to give
you shall be given by personal delivery, recognized overnight
courier service, email, telecopy or registered or certified mail,
return receipt requested, addressed to you at your address of
record with the Company, or at such other place as you may from
time to time designate in writing. Any notice that you are required
or may desire to give to the Company hereunder shall be given by
personal delivery, recognized overnight courier service, email,
telecopy or by registered or certified mail, return receipt
requested, addressed to the Company’s General Counsel at its
principal office, or at such other office as the Company may from
time to time designate in writing. The date of actual delivery of
any notice under this Section 13 shall be deemed to be the
date of delivery thereof.

 

14. Waiver;
Severability. No provision of
this Agreement may be amended or waived unless such amendment or
waiver is agreed to by you and the Company in a writing that
specifically references this Section 14. No waiver by you or the
Company of the breach of any condition or provision of this
Agreement will be deemed a waiver of a similar or dissimilar
provision or condition at the same or any prior or subsequent time.
Except as expressly provided herein to the contrary, failure or
delay on the part of either party hereto to enforce any right,
power, or privilege hereunder will not be deemed to constitute a
waiver thereof. In the event any portion of this Agreement is
determined to be invalid or unenforceable for any reason, the
remaining portions shall be unaffected thereby and will remain in
full force and effect to the fullest extent permitted by
law.

 

15. Voluntary
Agreement, Nondisparagement. Each party
represents that it has the power and authority to enter into this
Agreement. Each party acknowledges that it has been advised to
review this Agreement with its own legal counsel and other advisors
of its choosing and that prior to entering into this Agreement,
each has had the opportunity to review this Agreement with its
attorney and other advisors and have not asked (or relied upon) the
other party or other party’s counsel to represent it in this
matter. Each party further represents that each has carefully read
and understands the scope and effect of the provisions of this
Agreement and that each is fully aware of the legal and binding
effect of this Agreement. This Agreement is executed voluntarily by
each party and without any duress or undue influence on the part or
behalf of the other party. The Company agrees that the Board and
its executive officers will not make (or direct the Company or any
of its affiliates, employees or agents to make) any written or oral
communications that could reasonably be considered to be
disparaging of you (or your family members) in any respect
including, but not limited to, your personal performance, abilities
or reputation.

 

 

 

-7-

 

 

Please
acknowledge your acceptance and understanding of this Agreement by
signing and returning it to the undersigned. A copy of this signed
Agreement will be sent to you for your records.

 

 

	

ACKNOWLEDGED AND AGREED:

	
 

	
 

	
 

	
 

	
 

	

INNOVUS PHARMACEUTICALS, INC.

	

RAULY GUTIERREZ

	
 

	
 

	

/s/ BASSAM
DAMAJ 

	

/s/ RAULY
GUTIERREZ 

	

BY:
Bassam Damaj, Ph.D.

	
 

	

TITLE:
President and CEO

	
 

 

 

 

-8-

 

 

EXHIBIT A

 

 

 

 

 

A-1

 

 

EXHIBIT B

 

MUTUAL RELEASE OF ALL CLAIMS AND COVENANT NOT TO SUE
PURSUANT

 

TO
AGREEMENT

 

1. PARTIES. The
parties to this Agreement and Release are Rauly Gutierrez
(“Executive”) and Innovus Pharmaceuticals, Inc., a
Nevada corporation, (the “Company”).

 

2. RECITALS.
This Release is made with reference to the following
facts:

 

Executive
and Company are parties to an Employment Agreement dated September
23, 2016. That Employment Agreement provides that the Executive
must execute a mutual general release and covenant not to sue not
later than forty-five (45) days after Executive’s Termination
Date (as defined in the Employment Agreement) in order for
Executive to receive the severance payment and benefits under the
Employment Agreement. This Release is the mutual general release
and covenant not to sue required by the Employment
Agreement.

 

3. EXECUTIVE’S
PROMISES. In consideration for the promises and payments
contained in the Employment Agreement, each party agrees as
follows:

 

3.1 Executive hereby
covenants not to sue and also waives, releases and forever
discharges Company, its parent company, divisions, subsidiaries,
officers, directors, agents, employees, stockholders, affiliates
and successors from any and all claims, causes of action, damages
or costs of any type Executive may have against Company or its
current and former parent company, divisions, subsidiaries,
officers, directors, employees, agents, stockholders, successors or
affiliates (the “Released Parties”), and the Released
Parties similarly covenant not to sue and also waive, release and
forever discharge Executive from any and all claims, causes of
action, damages or costs of any type that the Released Parties may
have against Executive, including without limitation those arising
out of or relating to Executive’s employment with Company, or
Executive’s separation of employment. This waiver and release
includes, but is not limited to, claims, causes of action, damages
or costs arising under or in relation to Company’s employee
handbook and personnel policies, or any oral or written
representations or statements made by officers, directors,
employees or agents of Company, or under any state or federal law
regulating wages, hours, compensation or employment, or any claim
for breach of contract or breach of the implied covenant of good
faith and fair dealing, or any claim for stock, stock options,
warrants, or phantom stock or equity of any kind or any claim for
wrongful termination, or any discrimination claim on the basis of
race, sex, sexual orientation, gender, age, religion, marital
status, national origin, physical or mental disability, medical
condition, or any claim arising under the federal Age
Discrimination in Employment Act, the Equal Pay Act, the California
Family Rights Act, the Pregnancy Discrimination Act, the Family
Medical Leave Act, the California Labor Code, the California Wage
Orders, Title VII of the Civil Rights Act, the Fair Employment and
Housing Act, the California Labor Code Private Attorneys General
Act of 2004, the California Wage Orders, and Business and
Professions Code Section 17200, et seq.

 

Notwithstanding the
foregoing, with respect to Executive’s release, this Release
does not release (a) claims that cannot be released as a matter of
law, (b) claims arising after the effective date of this
Release including those under the Employment Agreement, (c) claims
to enforce any of Executive’s rights to post-termination
benefits provided by the Employment Agreement, (d) claims for
indemnification or coverage under a directors and officers
liability insurance policy as provided in the Employment Agreement
or under any other contract or under applicable law, (e) claims to
enforce any of Executive’s vested benefits under any employee
benefit plan of the Company including without limitation his
Compensatory Equity (as defined in the Employment Agreement), (f)
Executive’s right to file a charge, testify, assist, or
cooperate with the EEOC or to file a claim under the Fair Labor
Standards Act, or (g) Executive’s rights arising solely as a
shareholder of the Company.

 

3.2 The waiver and
release set forth in paragraph 3.1 applies to claims of which
either party does not currently have knowledge and each party
specifically waives the benefit of the provisions of Section 1542
of the Civil Code of the State of California which reads as
follows: “A general release does not extend to claims which
the creditor does not know or suspect to exist in his or her favor
at the time of executing the release, which if known by him or her
must have materially affected his or her settlement with the
debtor.”

 

4. CONSULTATION,
REVIEW, AND REVOCATION. In accordance with the Age
Discrimination in Employment Act of 1967 (“ADEA”) as
amended by the Older Workers Benefit Protection Act, Executive is
advised to consult with an attorney before signing this Release.
Executive is given a period of 45 days in which to consider whether
to enter into this Release. Executive does not have to utilize the
entire 45 day period before signing this Release, and may waive
this right. If Executive does enter into this Release, Executive
may revoke the Release within 7 days after the execution of the
Release. Any revocation must be in writing and must be received by
the Company no later than midnight of the seventh day after
execution by Executive. The Release is not effective or enforceable
until after this 7-day period has passed without
revocation.

 

 

 

B-1

 

 

5. MISCELLANEOUS.

 

5.1 This Release shall
be deemed to have been executed and delivered within the State of
California, and the rights and obligations of the parties hereunder
shall be construed and enforced in accordance with, and governed
by, the laws of the State of California.

 

5.2 This Release is the
entire agreement between the parties with respect to the subject
matter hereof and supersedes all prior and contemporaneous oral and
written agreements and discussions. This Release may be amended
only by an agreement in a writing signed by the
parties.

 

5.3 This Release is
binding upon and shall inure to the benefit of the parties hereof,
their respective agents, employees, representatives, officers,
directors, divisions, subsidiaries, affiliates, parent company,
assigns, heirs, partners, successors in interest and stockholders,
including any successor company of the Company.

 

5.4 Each party agrees
that it has read this Release and has had the opportunity to ask
questions, seek counsel and time to consider the terms of the
Release. Each party has entered into this Release freely and
voluntarily.

 

5.5 The parties agree
that any dispute or controversy arising from or related to this
Release shall be decided by final and binding arbitration as
provided in the Employment Agreement.

 

 

 

	

RAULY GUTIERREZ (“Executive”)

 

_______________________________

 

Date:___________________________

 

	

INNOVUS PHARMACEUTICALS INC.
(“Company”)

 

By:            ___________________________________

Its:            President
& CEO

Date:            ___________________________________

 

 

 

 

 

 

 

 

 

 

 

 

B-2Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT
(this “Agreement”) is made and entered into as of April 14, 2017 (the “Effective Date”) by
and among Joseph J. Thomas, a resident of the Commonwealth of Virginia (“Employee”), Bay Bank, FSB, a federally
chartered savings bank (the “Bank”), and Bay Bancorp, Inc., a Maryland corporation and the parent company of
Employer (“Parent” and, collectively with the Bank, the “Employer”). Employee and Employer
are each sometimes referred to herein as a “Party” and are collectively sometimes referred to herein as the “Parties”.

 

WITNESSETH

 

WHEREAS, effective
December 5, 2014, Employee was appointed to serve as the President and Chief Executive Officer of Employer (the “CEO”)
of both Bank and Parent.

 

WHEREAS, by entering
into this Agreement, the Parties desire to memorialize the terms and conditions upon which Employee will continue to serve as the
President and CEO of the Employer.

 

NOW, THEREFORE, in
consideration of the continued employment of Employee by Employer and of the Parties’ promises and covenants contained herein,
and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending
to be legally bound, agree as follows:

 

A G R E E M E N T

 

1.                 
Employment and Duties. Bank and Parent hereby employ Employee to serve
as their respective Presidents and CEOs. In such capacities, during the Term (as defined in Section 2 hereof), Employee
shall report directly to the boards of directors of Bank and Parent and shall (a) render administrative and management services
to Employer such as are customarily performed by persons situated in similar executive capacities, (b) promote, by entertainment
or otherwise, as and to the extent permitted by law, the business of Employer, and (c) perform such other duties as the boards
of directors of Bank and Parent may from time to time reasonably direct, including normal duties of an officer of Employer (all
of the foregoing are collectively referred to herein as the “Duties”). During
the Term, Employee (x) will devote his full time and efforts to performing the Duties, primarily from Employer’s office located
at 7151 Columbia Gateway Drive, Suite A, Columbia, Maryland 21046 or at such other location as Employer may from time to time establish
as its headquarters office (the “Employment Location”), and (y) will
not be engaged in any other activity, whether for compensation or otherwise, that interferes with the performance of the Duties;
provided, however, that Employee may engage in any activity disclosed to Employer in his most recent annual reporting form
submitted pursuant to Bank’s Policy for Transactions with Affiliates and Regulation W, a copy of which is attached hereto
as Exhibit A, without breaching this Section.

 

2.                 
Term. The initial term of Employee’s employment under this Agreement
shall commence on the Effective Date and, subject to Section 10 hereof, shall expire on the first anniversary of the Effective
Date (the “Initial Term”). After the expiration of the Initial Term, Employee’s term of employment under
this Agreement shall, subject to Section 10 hereof, be renewed for successive one-year periods (each, a “Renewal
Term”; the Initial Term and each Renewal Term are each sometimes referred to herein as a “Term”) without
further action by the Parties, unless either Party has provided the other Party with written notice at least 90 days prior to the
commencement of a Renewal Term of such Party’s decision not to renew Employee’s employment under this Agreement for
such Renewal Term. 

 

    1 

     

    

3.                 
Compensation and Benefits. During the Term, Employee shall be entitled to receive the salary and other
benefits set forth in this Section 3 as compensation for all services to be rendered by the Employee under this Agreement.

 

(a)               
Base Salary. Employee shall receive a base salary (“Base Salary”) at the rate of $315,000
per year (the “Base Salary Rate”). The Base Salary shall be paid by Bank in semi-annual installments or pursuant
to such other compensation payment schedule as may be adopted by Bank for its full-time employees. The Base Salary Rate shall be
periodically reviewed, at least annually, by Bank’s board of directors for the purpose of determining whether an adjustment
is appropriate.

 

(b)              
Bonuses and Similar Compensation. Employee shall be eligible to participate in such equity compensation, bonus,
incentive and other executive compensation programs as may be made available to senior management of Employer from time to time.

 

(c)               
Vehicle and Travel Allowance. Employee shall receive a monthly allowance for vehicle and travel expense totaling
$1,500 per month on a net basis after adjusting for taxes. The amount will be subject to periodic review by Bank’s board
of directors for the purpose of determining whether an adjustment is appropriate.

 

(d)              
Employee Benefits.

 

(i)                
Employee shall be entitled to four weeks of paid leave/vacation per year. The use of accrued leave or vacation must
be pre-approved by Bank’s board of directors, and Employee may not use more than two continuous weeks of vacation. If any
leave/vacation days accrued in a calendar year remain unused by Employee at the end of such year, then Employee may carry over
a maximum of five unused leave/vacation days into the immediately subsequent calendar year.

 

(ii)              
Bank will provide Employee with a minimum of $315,000 in group term life insurance coverage.

 

(iii)            
In addition to the paid leave/vacation and group term life insurance benefits discussed above, Employee shall be
entitled to such other employee benefits as may be made available from time to time for similarly-situated executive officers of
Employer or for Employee individually, to the extent the provisions, rules, and regulations of the applicable benefit plan, program
or policy make Employee eligible for participation therein, including, without limitation, any plan of Employer relating to pension,
profit sharing or other retirement benefits and any health and/or dental coverage or reimbursement plans that Employer may adopt
for the benefit of its employees and executive officers.

 

4.                 
Reimbursement of Expenses. Employer shall reimburse Employee for reasonable, actual expenses, against presentation
of vouchers, receipts or other documentation satisfactory to Employer, for expenses that are properly incurred by him during the
Term in the performance of the Duties (“Reimbursable Expenses”); provided, however, that all Reimbursable
Expenses must be pre-approved by Bank or Parent, as applicable. Bank or Parent may agree to reimburse such additional expenses
as may be pre-approved in writing by Bank or Parent, including, without limitation, Employee’s professional license fees,
continuing education costs, and initiation fees and membership dues for professional and civic associations.

 

    2 

     

    

5.                 
Confidentiality. 

 

(a)               
Covenant of Confidentiality. In Employee’s position as an officer and employee of Employer, Employee
has had and will have access to Confidential Information, Trade Secrets and other proprietary information of vital importance to
Employer and has and will also develop relationships with customers, employees and others who deal with Employer which are of value
to Employer. Employee agrees and acknowledges that Employer may entrust Employee with highly sensitive, confidential, restricted
and proprietary information, including, without limitation, Trade Secrets, Confidential Information, customer lists, and information
concerning Business Opportunities and personnel matters (the “Protected Information”). Employee acknowledges
that he shall bear a fiduciary responsibility to Employer, both during and after the Term, to protect the Protected Information
from unauthorized use or disclosure, and he agrees that he will not use or disclose Protected Information unless authorized by
Employer and except as may be necessary for him to perform the Duties.

 

(b)              
Definitions. As used in this Agreement:

 

(i)                
“Trade Secret” shall mean the identity and addresses of customers of Employer and any other information,
without regard to form, including, but not limited to, any technical or nontechnical data, any formula, pattern, compilation, program,
device, method, technique, drawing, process, financial data, financial plans, and product plans, that (A) is valuable and secret
(in the sense that it is not generally known by or available to competitors of Employer) and (B) otherwise qualifies as a “trade
secret” under Maryland law pursuant to the Maryland Trade Secrets Act of 1990, as amended.

 

(ii)              
“Confidential Information” shall mean all “non-public Personal Information,” as defined
in Title V of The Gramm-Leach-Bliley Act (15 U.S.C. §§ 680 et seq.) and its implementing regulations (collectively, the
“GLB Act”) that concerns any of the Employer’s “customers and/or consumers”, as defined by
the GLB Act, and any data or information, other than Trade Secrets, which is material to Employer and not generally known by or
available to the public. Confidential Information shall include, but not be limited to, Business Opportunities (as hereinafter
defined) of Employer, the details of this Agreement, Employer’s business plans and financial statements and projections,
information as to the capabilities of Employer’s employees, their respective salaries and benefits and any other terms of
their employment and the costs of the services Employer may offer or provide to the customers it serves, and any list of actual
or active prospective customers, to the extent such information is material to Employer and not generally known by or available
to the public.

 

(iii)            
“Business Opportunities” shall mean any specialized information or plans of Employer not disclosed
or available to the public concerning the provision of financial services to a Person, together with all related information concerning
the specifics of any contemplated financial services regardless of whether Employer has contacted or communicated with such Person.

 

    3 

     

    

(iv)            
“Person” shall mean any individual, corporation, partnership, limited liability company, joint
venture, trust, unincorporated organization, any other legal or commercial entity, or two or more of any of the foregoing having
a joint or common interest.

 

(v)              
“Affiliate”, with respect to a specified Person, shall mean a Person that directly, or indirectly
through one or more intermediaries, controls or is controlled by, or is under common control with, the specified Person.

 

(c)               
Exceptions. Notwithstanding the definitions of Trade Secrets, Confidential Information, and Business Opportunities
set forth in Section 5(b) of this Agreement, the terms Trade Secrets, Confidential Information and Business Opportunities
shall not include any information:

 

(i)                
that is or becomes generally available to the public other than as a result of disclosure by the Employee in violation
of this Agreement;

 

(ii)              
that is developed by Employee after the termination of his employment with Employer through entirely independent
efforts;

 

(iii)            
that Employee obtains on a non-confidential basis from a source other than Employer or its Affiliates so long as
such source is not bound by a confidentiality agreement with, or other contractual, legal, or fiduciary obligation of secrecy or
confidentiality to, Employer or any other Person with respect to such information;

 

(iv)            
that is required to be disclosed by law, except to the extent eligible for special treatment under an appropriate
protective order; or

 

(v)              
that Employer’s Board of Directors approves for release.

 

6.                 
Observance of Security Measures. During Employee’s employment with Employer, Employee shall observe
all security measures adopted by Employer to protect Protected Information.

 

7.                 
Covenants to Protect the Company’s Business. As used in this Section 7, the term “Employer”
means, individually and collectively, Bay Bank, FSB and its Affiliates.

 

(a)               
Restrictive Covenants. For so long as Employee is employed by Employer and thereafter for a period of one
year from the date on which Employee’s employment with Employer is terminated (the “Restricted Period”),
Employee shall not, directly or indirectly, as owner, partner, director, officer, employee, agent, consultant, advisor, contractor
or otherwise, whether for consideration or without consideration, for the benefit of any Person other than Employer, take any of
the following actions:

 

(i)                
Compete with Employer or otherwise engage in the sale of any products or the performance of any services which are
the same as or substantially similar to, or which are intended to substitute for, products or services offered or provided by Employer
during the Term (the “Competing Products and Services”) from or at any place in the State of Maryland that is
located within 60 miles of the Employment Location.

 

    4 

     

    

(ii)              
Solicit any Business Relation to purchase, or sell or otherwise provide banking products and services to such Business
Relation;

 

(iii)            
Employ, engage or solicit for employment or for engagement as an independent contractor or consultant, any Person
who was employed by, or any Person who was engaged as an independent contractor by, Employer within the 12-month period immediately
preceding any employment, engagement, or solicitation by the Employer; urge any such Person to reduce his or her employment with
or provision of services to Employer or assist any such Person with any such reduction; or arrange to have any other Person employ
or engage such Person; or

 

(iv)            
Urge any Person to reduce its business with Employer or assist any Person with any such reduction.

 

Provided, however,
that: (A) the ownership by Employee of up to a five percent (5%) interest in the securities of a Person that are registered under
Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), shall not constitute a breach
of Section 9(a); and (B) a general solicitation through a public medium not specifically directed toward any Person shall not be
considered a breach of this Section 7(a).

 

(b)              
Definition of Business Relation. As used in this Agreement, the term “Business Relation”
shall mean any Person other than Employer who, at any time during the Employee’s term of employment with Employer, was a
Person (i) who is or was a customer of Employer or a prospective customer of Employer, or (ii) who had entered into any contract
or other arrangement with Employer for the provision of services or the sale of products, or (iii) to whom Employer had furnished
or planned to furnish a proposal for the performance of services or the sale of products, or (iv) with whom Employer entered or
agreed to enter into any other business relationship such as a joint venture, collaborative agreement, joint development agreement,
teaming arrangement or agreement, or similar arrangement or understanding for the provision of services or sale of products.

 

(c)               
No Disparagement. During the Restricted Period, except as required by applicable law or the rules or regulations
of any governmental or self-regulatory organization having jurisdiction over Employer and/or Employee, Employee will not make any
statements or comments of a disparaging nature to any Person regarding Employer or its stockholders, directors, officers, personnel,
products or services.

 

(d)              
Acknowledgement. Employee hereby acknowledges and agrees that the covenants and restrictions contained in
this Section 7 regarding geographical scope, length of term and types of activities restricted are reasonable.

 

8.                 
Return of Materials; No Access. Upon the request of Employer and, in any event, upon the termination of Employee’s
employment with Employer and its Affiliates, Employee shall deliver to Employer all memoranda, notes, records, manuals or other
documents, including all copies of such materials containing Trade Secrets or Confidential Information, whether made or compiled
by Employee or furnished to him from any source by virtue of his employment with Employer and its Affiliates (“Property”).
After the termination of Employee’s employment with Employer and its Affiliates, Employee shall not take any action to preserve
or regain access to any Property through any means, including, without limitation, access to the facilities of Employer or its
Affiliates or through a computer or other digital or electronic means.

 

    5 

     

    

9.                 
Remedies; Waiver.

 

(a)               
Violation of Business Protection Covenants. Employee acknowledges that a violation by him of any provision
of Section 5 through Section 8, inclusive, of this Agreement (the “Business Protection Covenants”)
may cause irreparable injury to Employer, and that there may be no adequate remedy at law for such violation. Therefore, Employee
agrees that, in addition to any other remedies for his violation of the Business Protection Covenants available to Employer, which
shall include the recovery of all damages incurred, as well as reasonable attorney’s fees and other costs, Employer shall
have the right, in the event of the breach or threatened breach of any provision of the Business Protection Covenants, to seek
an injunction and/or temporary restraining order against such breach or threatened breach and/or to specifically enforce the Business
Protection Covenants, and, in the case of a breach of Section 7 hereof, the duration of the Restricted Period shall be extended
by the period of the breach and any litigation with respect thereto.

 

(b)              
Remedies in General. The remedies provided in this Agreement are not exclusive, and the Party suffering from
a breach or default of this Agreement may pursue all other remedies, both legal and equitable, alternatively or cumulatively as
permitted by law. The prevailing Party in any action, suit or proceeding arising out of or relating to this Agreement shall be
entitled to recover all costs and reasonable attorneys’ fees from the non-prevailing Party. The failure of a Party to fully
enforce any provision of this Agreement shall not be deemed to be a waiver of such provision or any part thereof, and the waiver
by a Party of any provision of this Agreement shall not be deemed to be a waiver of any other provision of this Agreement or a
waiver with respect to any other incidence of non-compliance therewith. No waiver shall be effective unless in writing and signed
by the Party so waiving.

 

10.             
Termination.

 

(a)               
Termination Prior to the Expiration of a Term. During a Term, Employee’s
employment with Employer: (i) may be terminated at the election of Employer for Cause, upon Employer’s delivery of notice
thereof to Employee; (ii) may be terminated at the election of Employer without Cause at any time, upon Employer’s delivery
of notice thereof to Employee; (iii) may be terminated at the election of Employee for Good Reason, upon Employee’s delivery
of notice thereof to Employer; (iv) may be terminated at the election of Employee without Good Reason, upon
Employee’s delivery of notice thereof to Employer; (v) shall be terminated upon Employee’s death; or (vi) may be terminated
at the election of either Party if Employee suffers a disability resulting in an inability to perform the Duties as set forth in
Section 1 hereof for a period of 180 consecutive days, upon either Party’s delivery of notice of such election to the other
Party. Any termination of Employee’s employment by Employer pursuant to this Section 10(a) shall be approved by a
majority of Employer’s Board of Directors, excluding the vote of Employee if he is then a director, before such termination
will be effective.

 

 

    6 

     

    

(b)              
Definitions. As used in this Agreement:

 

(i)                
“Cause” means: (A) conduct by Employee that amounts to fraud, personal dishonesty, breach of fiduciary
duty involving personal profit, gross negligence or willful misconduct in the performance of or intentional failure to perform
his stated Duties; (B) Employee’s conviction (from which no appeal may be, or is, timely taken) of a felony or willful violation
of any law, rule or regulation (other than traffic violations or similar offenses); (C) any federal or state regulatory authorities
acting under lawful authority pursuant to provisions of federal or state law or regulation which may be in effect from time to
time exercises any power granted to it by law or regulation to remove, prohibit or suspend Employee from participating in the conduct
of Employer’s affairs; (D) willful violation of any final cease-and-desist order; (E) a knowing violation by Employee of
federal or state banking laws or regulations which is likely to have a material adverse effect on Employer, as determined by the
Board of Directors; (F) Employee’s material breach of any of Employer’s written policies; (G) Employee’s refusal
to timely perform a reasonable and duly authorized directive of Employer’s Board of Directors that has been clearly communicated
to Employee and that is consistent with the scope of the Duties unless Employee in good faith believes that such act would cause
Employee to breach his fiduciary duties to Employer or that such act would be in violation of any federal or state law or regulation;
(H) any representation or warranty made by Employee in this Agreement, or in any certificate, document or instrument executed and
delivered to Employer by Employee in connection with this Agreement, is or becomes inaccurate or untrue; or (I) a material breach
by Employee of any promise, covenant or other provision contained in this Agreement.

 

(ii)              
“Good Reason” means the satisfaction of both of the following requirements:

 

(A)            
The facts and circumstances that shall constitute Good Reason are as follows: (1) without Employee’s consent,
Employer diminishes Employee’s then-current Base Salary Rate by 10% or more, other than a diminution made pursuant to a salary
reduction program applicable to all executive officers of Employer that is adopted by the Board of Directors; (2) without Employee’s
consent, Employer materially diminishes Employee’s management authority; (3) without Employee’s consent, Employer requires
Employee to perform his Duties primarily from an Employment Location that is more than 60 miles from Employee’s most recently-designated
Employment Location; or (4) Employer breaches any material provision of this Agreement; and

 

(B)             
Employee shall have given Employer written notice within 30 days of his knowledge or reason to know of the existence
of any fact or circumstance constituting Good Reason, and Employer shall failed to cure or eliminate such fact(s) or circumstance(s)
within 30 days of its receipt of such notice.

 

11.             
Payments Upon Termination of Employment.

 

(a)               
General. If a Termination of Employment occurs, then Employee shall receive all unpaid compensation and monetary
benefits that have accrued through the date of such termination, which shall be paid in one lump-sum cash payment as soon as is
reasonably practicable following the date on which the Termination of Employment occurs (but in no event later than five business
days following such date). In addition, to the extent that the requirements of Section 11(b), Section 11(c) or Section
11(d) hereof are satisfied, Employee shall also receive the payments and/or benefits described in those Sections, as applicable;
provided, however, that Employee’s receipt of payments and benefits under Section 11(b) shall render Employee
ineligible for payments and/or benefits under Section 11(c) and Section 11(d), Employee’s receipt of payments
and benefits under Section 11(c)(i) shall render Employee ineligible for the payments and/or benefits under Section 11(b),
Section 11(c)(ii) and Section 11(d), Employee’s receipt of payments and benefits under Section 11(c)(ii)
shall render Employee ineligible for the payments and/or benefits under Section 11(b), Section 11(c)(i) and Section
11(d), and Employee’s receipt of payments and benefits under Section 11(d) shall render Employee ineligible for
the payments and/or benefits under Section 11(b) or Section 11(c).

 

    7 

     

    

(b)              
Additional Payments Upon Termination Due to Death or Disability. If there is a Termination of Employment pursuant
to Section 10(a)(v) hereof due to Employee’s death or pursuant to Section 10(a)(vi) hereof due to Employee’s
disability, then, in either case, Bank shall, subject to the conditions contained in this Section 11(b), pay the following
additional amounts to Employee:

 

(i)                
the cash value of any unused vacation that has accrued through the date of termination, computed on a daily basis;
and

 

(ii)              
an amount of cash determined by multiplying (A) the amount of any performance-based cash compensation that Employee
would have received for the calendar year in which the Termination of Employment occurs had his employment not been terminated
due to his death or disability by (B) a fraction, the numerator of which is the number of calendar days that Employee was employed
during the calendar year in which the Termination of Employment occurs and the denominator of which is 365 (the “Pro-Rated
Bonus”).

 

The cash value of accrued
but unused vacation shall be paid in one lump sum as follows: (x) in the case of a Termination of Employment due to Employee’s
death, to Employee’s estate within 10 business days after Employer receives written notice of such death; and (y) in the
case of a Termination of Employment due to Employee’s disability, to Employee within 10 business days after the date of such
termination. The Pro-Rated Bonus, if earned, shall be paid to Employee or his estate, as applicable, in one lump-sum payment on
April 15th of the calendar year immediately following the calendar year in which the Termination of Employment occurs
(the “Bonus Payment Date”); provided, however, that, in the case of a Termination of Employment due to
Employee’s disability, the Pro-Rated Bonus shall be paid only if Employee has signed, not revoked and complies with the Employer’s
separation agreement, in substantially the form attached as Exhibit B hereto (a “Separation Agreement”),
and such Separation Agreement has become effective and irrevocable on or before the Bonus Payment Date. If such Separation Agreement
has not been executed and delivered and become effective and irrevocable on or before the Bonus Payment Date, or if Employee fails
to comply with such Separation Agreement, then Employee will forfeit any right to the Pro-Rated Bonus.

 

(c)               
Additional Payments Upon Termination Without Cause or for Good Reason.

 

(i)                
Termination in Connection With a Change in Control. If there is: (A) a Termination
of Employment by Employer without Cause pursuant to Section 10(a)(ii) hereof; (B) a Termination of Employment by Employee
for Good Reason pursuant to Section 10(a)(iii) hereof; or (C) an Employer Non-Renewal (as defined in Section 11(d)
below); that, in the case of any of the foregoing, occurs within three months before or 12 months after a Change in Control (the
“Change in Control Protection Period”), then, subject to the terms and conditions set forth in Section 12
hereof, Bank shall pay Employee the following additional amounts and/or benefits:

 

    8 

     

    

(A)            
Unreduced Payments and Other Benefits.

 

(1)              
A lump sum cash payment of the value of any unused vacation that has accrued through
the date of the Termination of Employment, computed on a daily basis, which shall be paid within 10 days after the Separation
Agreement becomes effective and irrevocable; 

 

(2)              
A lump sum cash payment (the “Change in Control Payment”) in an
amount equal to 2.0 times Employee’s then-applicable Base Salary Rate, which shall be paid within 10 days after the
Separation Agreement becomes effective and irrevocable

 

(3)              
Employee may elect to continue his participation in Employer’s medical and
dental plan(s) pursuant to the federal Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”),
in which case, for 12 months following the date on which the Termination of Employment occurs, Bank will reimburse Employee for
the costs of such election less any amounts that Employee would have paid for such coverages had he remained an active employee
of Employer;

 

(4)              
For 12 months following the date on which the Termination of Employment occurs, Employee
may continue to participate in Employer’s life insurance benefits plan(s) on the same terms and conditions that apply to
Employer’s President and CEO positions; provided, however, that if any such life insurance benefits plan prohibits
continued coverage of Employee due to his Termination of Employment with Employer, then Bank will pay the portion of the premium
due upon conversion of Employee’s coverage to an individual life insurance policy that relates to the period during which
the Change in Control Payment is paid; and

 

(5)              
Subject to the terms and conditions of the equity compensation plan(s) of Employer
and of the awards granted thereunder but notwithstanding any provisions thereof with respect to vesting, all unvested awards granted
to Employee under such equity compensation plan(s) that have not expired or been forfeited pursuant to their terms shall immediately
vest and become fully exercisable or payable, as the case may be, and Employer shall take or cause to be taken all actions necessary,
consistent with the terms and conditions of such equity plan(s), to effect such acceleration. 

 

(B)             
Reduction of Termination Payments Upon Certain Changes in Control.

 

(1)              
If it is determined that the aggregate present value of (i) such portion of Employee’s
Change in Control Payment that is considered Contingent Payments and (ii) all other Contingent Payments payable to Employee exceeds
2.99 times Employee’s Base Amount such that the excise tax under Section 4999 of the Internal Revenue Code of 1986, as amended
(the “Code”), would otherwise be triggered, then the Change in Control Payment shall be reduced to the extent
necessary so that the aggregate present value of all Contingent Payments (including the Change in Control Payment) payable following
such reduction does not exceed 2.99 times Employee’s Base Amount.

 

    9 

     

    

(2)              
The determination that the aggregate present value of all Contingent Payments exceeds
2.99 times his Base Amount, and the calculation of the amount of any reduction, shall be made, at Bank’s discretion, by Bank’s
outside auditing firm or by a nationally-recognized accounting or benefits consulting firm appointed by Bank. The firm’s
expenses shall be paid by Bank.

 

(3)              
If the determination is made that the Change in Control Payment must be reduced in
accordance with this Section 11(c)(i)(B), then the amount of the Change in Control Payment that is actually paid to Employee
pursuant to Section 11(c)(i) will be the amount determined under this Section 11(c)(i)(B) (the “Reduced
Payment”), which will be paid at the same time and in the same form otherwise specified in Section 11(c)(i)(A).

 

(ii)              
Termination Not Within 12 Months of Change in Control. If
there is a Termination of Employment by Employer without Cause pursuant to Section 10(a)(ii) hereof or by Employee for Good
Reason pursuant to Section 10(a)(iii) hereof that, in either case, does not occur during the Change in Control Protection
Period, then, subject to the terms and conditions set forth in Section 12 hereof, Bank shall pay Employee the following
additional amounts and/or benefits:

 

(A)            
The cash value of any unused vacation that has accrued through the date of termination,
computed on a daily basis, which shall be paid in a lump sum within 10 days after the Separation Agreement becomes effective and
irrevocable;

 

(B)             
A severance payment (“Severance”) in an amount equal to one year’s
Base Salary, calculated based on Employee’s then-applicable Base Salary Rate, which shall be paid in 12 equal monthly installments
commencing within 10 days of the date that the Separation Agreement becomes effective and irrevocable;

 

(C)             
During the period that the Severance is paid, Employee may elect to continue his
participation in Employer’s medical and dental plan(s) pursuant to COBRA, in which case Bank will reimburse Employee
for the costs of such election less any amounts that Employee would have paid for such coverages had he remained an active employee
of Employer;

 

(D)            
During the period that the Severance is paid, Employer may continue to participate
in Employer’s life insurance benefits plan(s) on the same terms and conditions that apply to Employer’s President and
CEO positions; provided, however, that if any life insurance benefits plan prohibits continued coverage of Employee due
to his Termination of Employment with Employer, then Bank will pay the portion of the premium due upon conversion of Employee’s
coverage to an individual life insurance policy that relates to the period during which the Change in Control Payment is paid;
and

 

(E)             
Subject to the terms and conditions of the equity compensation plan(s) of Employer
and of the awards granted thereunder but notwithstanding any provisions thereof with respect to vesting, all unvested awards granted
to Employee under such equity plan(s) that have not expired or been forfeited pursuant to their terms shall immediately vest and
become fully exercisable or payable, as the case may be, and Employer shall take or cause to be taken all actions necessary, consistent
with the terms and conditions of such equity plan(s), to effect such acceleration. 

 

    10 

     

    

(d)              
Termination Upon Expiration of Term. Except when Section 11(c)(i)(C) of this Agreement applies, if
there is a Termination of Employment on the last day of a Term because Employer has notified Employee, pursuant to Section 2
hereof, that it has elected not to renew Employee’s employment for a Renewal Term (an “Employer Non-Renewal”),
then, subject to the terms and conditions set forth in Section 12 hereof, Employee
shall be entitled to receive continued Base Salary payments from Bank, calculated based on Employee’s then-current Base Salary
Rate, for three months following the date on which the Termination of Employment occurs (the “Expiration Payments”),
commencing within 10 days of the date that the Separation Agreement becomes effective and irrevocable. For the avoidance of doubt,
Employee shall not be entitled to receive the Expiration Payments if there is a Termination of Employment on the last day of a
Term because Employee chooses, pursuant to Section 2 hereof, not to renew his employment for a Renewal Term.

 

(e)               
Definitions. As used in this Agreement:

 

(i)                
“benefits”, when used in respect of amounts to be paid to Employee upon a Termination of Employment,
shall not include accrued but unused vacation.

 

(ii)              
“Change in Control” shall mean:

 

(A)            
any transaction, whether by merger, consolidation, asset sale, tender offer, reverse stock split, or otherwise, which
results in the acquisition or beneficial ownership (as such term is defined under rules and regulations promulgated under the Exchange
Act) by any Person or any group of Persons acting in concert, of 50% or more of the outstanding shares of common stock of Bank
or Parent;

 

(B)             
the sale of all or substantially all of the assets of Bank or Parent; or

 

(C)             
the liquidation of Bank or Parent.

 

(iii)            
“Contingent Payments” means payments in the “nature of compensation” to (or for the
benefit) of Employee if such payment is “contingent on a change in the ownership or effective control of the corporation
or in the ownership of a substantial portion of the assets of the corporation,” as such terms are defined in Section 280G
of the Code and the Treasury Regulations promulgated thereunder.

 

(iv)            
“Base Amount” means Employee’s “annualized includible compensation for the base period,”
within the meaning of Sections 280G(d)(1) and (d)(2) of the Code and the Treasury Regulations promulgated thereunder.

 

(v)              
“Termination of Employment” means Employee’s “separation from service” with
Employer within the meaning of Section 409A of the Code and the Treasury Regulations promulgated thereunder.

 

    11 

     

    

12.             
Conditions to Employer’s Obligations.

 

(a)               
Payments in General. Notwithstanding anything in this Agreement to the contrary, any payments made to Employee
pursuant to this Agreement, or otherwise, are subject to and conditioned upon their compliance with Section 18(k) of the Federal
Deposit Insurance Act (12 U.S.C. § 1828(k)) and the regulations promulgated thereunder (including those contained in 12 C.F.R.
Part 359), as such statutory provision and regulations may be amended, superseded and/or replaced from time to time. In addition,
if a payment obligation under this Agreement arises on account of the Termination of Employment while Employee is a “specified
employee” (as defined under Section 409A of the Code and determined in good faith by Employer), any and all payments of “deferred
compensation” (as defined in Treasury Regulation Section 1.409A-1(b)(1), after giving effect to the exemptions in Treasury
Regulation Sections 1.409A-1(b)(3) through (b)(12)) that are scheduled to be paid within six months after such Termination of Employment
shall be paid in a lump sum within 15 days after the end of the six-month period beginning on the date of such Termination of Employment.
If Employee dies prior to the date payments are required to commence in accordance with the previous sentence, then payment shall
be made in a lump sum within 15 days after the appointment of the personal representative or executor of Employee’s estate
following his death. This Agreement and all payments hereunder are intended to comply with, or otherwise be exempt from, Section
409A of the Code and shall be administered, interpreted, and construed in a manner consistent with Section 409A(a)(1)(B) of the
Code. Should any provision of this Agreement be found not to comply with, or otherwise be exempt from, the provisions of Section
409A of the Code, such provision shall be modified and given effect (retroactively if necessary), in the sole discretion of Employer
and without Employee’s consent, in such manner as Employer determines to be necessary or appropriate to comply with, or to
effectuate an exemption from, Section 409A of the Code. Notwithstanding anything in this Agreement to the contrary, in no event
shall Employer exercise its discretion to accelerate the timing or settlement of any required payment hereunder where such payment
constitutes deferred compensation within the meaning of Section 409A of the Code unless, and solely to the extent that, such accelerated
payment or settlement is permissible under Treasury Regulation section 1.409A-3(j)(4) or any successor provision.

 

(b)              
Regulatory Matters. Notwithstanding anything in this Agreement to the contrary, this Agreement and the rights
and obligations of the Parties hereunder shall be subject to the following:

 

(i)                
If Employee is suspended and/or temporarily prohibited from participating in the conduct of Employer’s affairs
by a notice served under Section 8(e)(3) or (g)(1) of Federal Deposit Insurance Act (12 U.S.C. § 1818(e)(3) and (g)(1)), then
Employer’s obligations under this Agreement shall be suspended as of the date of service unless stayed by appropriate proceedings.
If the charges in the notice are dismissed, then Employer may in its discretion (A) pay Employee all or part of the compensation
withheld while its obligations hereunder were suspended, and (B) reinstate (in whole or in part) any of its obligations which were
suspended.

 

(ii)              
If Employee is removed and/or permanently prohibited from participating in the conduct of Employer’s affairs
by an order issued under Section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act (12 U.S.C. § 1818(e)(4) or (g)(1)),
then all obligations of Employer under this Agreement shall terminate as of the effective date of the order, but vested rights
of the Parties shall not be affected.

 

    12 

     

    

(iii)            
If Employer is in default, as defined in Section 3(x)(1) of the Federal Deposit Insurance Act (12 U.S.C. § 1813(x)(1)),
then all obligations under this Agreement shall terminate as of the date of default, but this paragraph (iii) shall not affect
any vested rights of the Parties.

 

(iv)            
All obligations under this Agreement shall be terminated, except to the extent determined that continuation of the
Agreement is necessary for the continued operation of Employer:

 

(A)            
By the applicable Regional Director (the “Director”) of the Federal Deposit Insurance Corporation (the
“FDIC”) or his or her designee, at the time the FDIC enters into an agreement to provide assistance to or on behalf
of Employer under the authority contained in 13(c) of the Federal Deposit Insurance Act; or

 

(B)             
By the Director or his or her designee, at the time the Director or his or her designee and any other federal banking
agency that supervises Employer approve a supervisory merger to resolve problems related to operation of Employer or when Employer
is determined by the Director and/or any other federal banking agency that supervises Employer to be in an unsafe or unsound condition.

 

Provided, however,
that any rights of the Parties that have already vested shall not be affected by such action.

 

(c)               
Separation Agreement a Condition for Receipt of Change in Control, Severance and Expiration Payments and Benefits.
Notwithstanding anything to the contrary contained in this Agreement, Employer shall have no obligation to pay or provide, or continue
to pay or provide, the compensation and benefits set forth in Section 11(c)(i), Section 11(c)(ii) or Section 11(d)
of this Agreement unless Employee: (i) has returned all Property to Employer; and (ii) signs, does not revoke and complies with
a Separation Agreement and such Separation Agreement becomes effective and irrevocable no later than 60 days following the date
of the Termination of Employment (such deadline, the “Deadline”). If such Separation Agreement does not become
effective and irrevocable by the Deadline or either of the conditions set forth in items (i) or (ii) above is otherwise not satisfied,
then Employee will forfeit any rights to the compensation and benefits set forth in Section 11(c)(i), Section 11(c)(ii)
or Section 11(d) of this Agreement. In no event will the compensation and benefits set forth in Section 11(c)(i),
Section 11(c)(ii) or Section 11(d) of this Agreement be paid or provided until such Separation Agreement becomes
effective and irrevocable on or before the Deadline.

 

13.             
Withholding of Taxes. All compensation and benefits payable to Employee under this Agreement shall be subject
to all applicable tax withholding requirements.

 

14.             
Employee’s Representations and Warranties.

 

(a)               
No Conflicting Agreements. Employee represents and warrants to Employer that he is not a party to or otherwise
subject to or bound by the terms of any contract, agreement or understanding which in any manner would limit or otherwise affect
his ability to provide the Duties hereunder, including, without limitation, any contract, agreement or understanding containing
terms and provisions similar in any manner to those contained in Section 7 of this Agreement.

 

    13 

     

    

(b)              
Third-Party Information. Employee represents, warrants and covenants to Employer that he will not disclose
to Employer or otherwise use, in the course of his employment with Employer, any confidential information that he is restricted
from disclosing or using pursuant to any other agreement or duty to any other Person.

 

15.             
Notices. Any notice or other communication required or permitted to be given to a Party shall be in
writing and addressed to such Party as set forth below. Notices shall be effective when actually delivered by any commercially
reasonable means, provided that if such delivery occurs on any day other than a business day or after the close of business on
any business day, the same shall be effective on the next business day. Further, notices sent by certified or registered mail,
return receipt requested, or by nationally recognized express courier service, shall be effective on the earlier of (a) actual
delivery or (b) refusal to accept delivery or on failure of delivery because the recipient address is not open to receive deliveries
between 9:00 am and 5:00 pm on any business day. Notices sent by facsimile or other electronic means shall be effective only if
also sent by nationally recognized express courier service for delivery on the next business day. All notices and other communications
shall be addressed as follows:

 

if to Employer:

 

Board of
Directors

Bay Bank,
FSB

7151 Columbia
Gateway Drive, Suite A

Columbia,
Maryland 21046; and

 

if to Employee:

 

Joseph J.
Thomas

6126 Woodmont
Road

Alexandria,
Virginia 22307.

 

16.             
Miscellaneous.

 

(a)               
Entire Agreement. This Agreement, together with Exhibit A, constitutes and expresses the entire agreement
of the Parties with respect to Employer’s employment of Employee, and there are no representations, inducements, promises,
agreements, arrangements, or undertakings oral or written, between the Parties other than those set forth herein and therein. Any
and all prior agreements or understandings with respect to such matters are hereby superseded. No modification or amendment of
this Agreement, nor waiver of any of its provisions, shall be valid or enforceable unless in writing and signed by both Parties.

 

(b)              
Governing Law; Waiver of Jury Trial; Venue and Jurisdiction. This Agreement has been made in and shall be
governed by and construed in accordance with the laws of the State of Maryland, exclusive of any conflicts of law principle which
would apply the law of another jurisdiction, and, to the extent applicable, the laws of the United States, whether as to its validity,
construction, capacity, performance or otherwise. THE PARTIES HEREBY WAIVE TRIAL BY JURY IN ANY ACTION ARISING UNDER THIS AGREEMENT.
Any judicial proceeding arising out of or relating to this Agreement (including any declaratory judgments) shall, if it is to be
filed in State court, be filed exclusively in the State courts located in Howard County, Maryland or, if is to be filed in Federal
court, be filed exclusively in the Federal courts located in Maryland, and each Party hereby consents to, and will submit to, the
personal and subject matter jurisdiction of such courts in any proceeding to enforce any of its obligations under this Agreement
and shall not contend that any such court is an improper or inconvenient venue. The foregoing shall not limit the right of any
Party to obtain execution of judgment in any other jurisdiction.

 

    14 

     

    

(c)               
Severability. It is the desire and intent of the Parties that the provisions contained in each Section of
this Agreement, and within the subsections of such Sections, especially (but in no way limited to) those provisions of Section
5 through Section 8, inclusive, hereof are intended to be separate and divisible, severable from every other contract
and course of business by and between the Parties, and shall be enforced to the fullest extent permissible under applicable laws
and public policies. Accordingly, if any portion of any provision of this Agreement shall be adjudicated by a court of competent
jurisdiction to be invalid or unenforceable, then (i) such portion shall not be held to affect the validity of any other provision
contained in this Agreement, and (ii) such portion shall be deemed amended either to conform to such restrictions as such court
may allow or to delete therefrom or reform the portion thus adjudicated to be invalid and unenforceable. The Parties hereby expressly
request and authorize any court of competent jurisdiction to modify any provision of this Agreement or portion thereof if necessary
to render it enforceable in such manner as to preserve as much as possible the Parties’ original intentions, as expressed
therein, with respect to the scope thereof. Without limiting the generality of the foregoing provisions of this Section 16(c),
the Parties agree that the existence of any claim, suit or action by Employee against Employer, whether predicated upon this Agreement
or any other agreement, shall not constitute a defense to Employer’s enforcement of any covenant made by Employee in Section
5 through Section 8, inclusive, of this Agreement.

 

(d)              
Time is of the Essence. Time is of the essence in this Agreement.

 

(e)               
Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Parties and their
successors and assigns. This Agreement shall not be assignable by Employee.

 

(f)               
Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original
and all of which taken together shall constitute but a single instrument. The exchange of copies of this Agreement and of signature
pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Agreement as to the Parties and
may be used in lieu of an original of this Agreement for all purposes. Signatures of the Parties transmitted by facsimile or PDF
transmission shall be deemed to be their original signatures for all purposes.

 

(g)              
Survival of Certain Provisions. The provisions of Sections 4, 5, 7, 8, 9, 10, 11, 12, 13, 15 and 16
of this Agreement shall survive a Termination of Employment under this Agreement and shall remain in full force and effect
until the Parties have fully performed their respective obligations under such Sections and, in any event, until the applicable
statute of limitations with respect thereto have expired.

 

    15 

     

    

(h)              
Headings; Construction. The headings of Sections and subsections contained in this Agreement are provided
for convenience only. They form no part of this Agreement and shall not affect its construction or interpretation. All references
to Sections, subsections, paragraphs, clauses or other subdivisions in this Agreement refer to the corresponding Sections, subsections,
paragraphs, clauses or other subdivisions of this Agreement. All words used in this Agreement shall be construed to be of such
gender or number as the circumstances require. Unless otherwise specifically noted, the words “herein”, “hereof”,
“hereby”, “hereunder” and words of similar import refer to this Agreement as a whole and
not to any particular Section, subsection, paragraph, clause or other subdivision of this Agreement.

 

[Signatures Appear on Next Page]

 

 

 

 

    16 

     

    

IN WITNESS WHEREOF,
the Parties have executed this Agreement as of the Effective Date.

 

	 	EMPLOYEE:
	 	 	 
	 	 	 
	 	/s/ Joseph J. Thomas
	 	Joseph J. Thomas
	 	 	 
	 	 	 
	 	BANK:
	 	 	 
	 	BAY BANK, FSB
	 	 	 
	 	 	 
	 	By:	/s/ Eric D. Hovde
	 	Name:	Eric D. Hovde
	 	Title:	Chairman of the Board
	 	 	 
	 	PARENT:
	 	 	 
	 	BAY BANCORP, INC.
	 	 	 
	 	 	 
	 	By:	/s/ Eric D. Hovde
	 	Name:	Eric D. Hovde
	 	Title:	Chairman of the Board

 

 

 

    17 

     

    

EXHIBIT A

to Joseph J. Thomas Employment Agreement

 

Annual Reporting Form Under Policy for
Transactions with Affiliates and Regulation W

 

 

     

     

    

EXHIBIT B

to Joseph J. Thomas Employment Agreement

 

FORM
OF SEPARATION AGREEMENT

 

THIS SEPARATION AGREEMENT (this “Agreement”)
is made by and among ____________ (“Employee”), Bay Bank, FSB, a federal savings bank (“Bank”),
and Bay Bancshares, Inc., a Maryland corporation and parent company of Bank (“Parent” and, together with
Bank, the “Employer”). Employee, Bank and Parent are sometimes individually referred to herein as a “Party”
and are sometimes collectively referred to herein as the “Parties”. Capitalized terms used but not defined
herein shall have the meanings given such terms in the Employment Agreement (as defined below).

 

RECITALS

 

WHEREAS, Employee is employed by the Employer
as its President and Chief Executive Officer pursuant to an Employment Agreement, dated as of __________, ____, by and among Employee,
Bank and Parent (the “Employment Agreement”).

 

WHEREAS, Employee also serves as a director
of Bank and of Parent.

 

WHEREAS, Employee and the Employer desire
to terminate Employee’s relationships with the Employer and agree to the terms and conditions relating thereto.

 

NOW, THEREFORE, in consideration of the
covenants and other agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged by the Parties, the Parties agree as follows:

 

AGREEMENT

 

1.                 
Resignation. Employee hereby resigns as (a) the President and Chief Executive Officer and an employee of the
Employer, (b) a director of Bank and (c) a director of Parent, such resignations to be effective as of ___________, ____ (the “Resignation
Date”). Employee agrees and understands that after the Resignation Date, he is not authorized to perform any work
for, or to represent himself to others as an employee or other agent of, the Employer. The Employer hereby waives any prior notice
required to be given pursuant to the Employment Agreement by Employee in connection with his resignations.

 

2.                 
Commitments of the Employer.

 

(a)               
Payment of Accrued Amounts. Employee shall be entitled to receive (i) any reimbursable business expenses (as
provided in the Employment Agreement) that have been incurred by Employee but remain unreimbursed by the Employer as of the Resignation
Date, provided that Employee has accounted for such expenses in writing on or before the Resignation Date, and (ii) all unpaid
Base Salary and other compensation that has accrued through the Resignation Date (the amounts set forth in items (i) and
(ii) are collectively referred to herein as the “Accrued Amounts”). The Accrued Amounts, less
all applicable federal, state and local tax withholding and deductions, shall be paid as soon as is reasonably practicable following
the Resignation Date (but in no event later than five (5) business days following the Resignation Date).

 

     

     

    

(b)              
Payment of Severance and Additional Benefits. In full accord and satisfaction of all Released Claims (as defined
below in Section 4(a)(i) of this Agreement), and subject to Section 5 and Section 6 of this Agreement, Employee
shall be entitled to the following additional payments and benefits:

 

[INSERT SEVERANCE AND
OTHER POST-TERMINATION BENEFITS FROM APPLICABLE SECTION OF EMPLOYMENT AGREEMENT]

 

(c)               
No Other Payments or Benefits. Employee agrees that he is not entitled to any payments by or benefits from
the Employer other than (i) as set forth in this Section 2 or (ii) any monies properly payable to Employee for indemnification
or advancement by virtue of rights to which Employee may be entitled pursuant to the charter or bylaws of Bank or the Employer
or pursuant to any policy of insurance maintained by the Employer. Without limiting the generality of the foregoing, Employee acknowledges
and agrees that he is not be entitled to any payments or benefits pursuant to Section 13 of the Employment Agreement.

 

3.                 
Termination of Benefits. Except as provided otherwise in paragraphs (iii) and (iv) of Section
2(b), Employee’s coverage under the Employer’s employee benefit and insurance plans, programs and arrangements
will terminate on the Resignation Date (other than Employee’s right to elect to continue his health and dental insurance
at his sole cost and expense following the termination of his employment with Bank pursuant to COBRA to the extent that paragraph
(iii) of Section 2(b) does not apply).

 

4.                 
Commitments of Employee.

 

(a)               
General Release and Forbearance Agreement.

 

(i)                
Except as provided in Section 4(a)(ii) hereof, Employee releases and discharges the Employer, Affiliates,
their respective officers, directors, employees, agents, stockholders, and all employee benefit plans sponsored by the Employer
(the “Released Parties”), from any and all debts, demands, actions, complaints, charges, causes of action,
suits, covenants, contracts, wages, bonuses, damages and any and all claims, demands, liabilities and expenses (including attorneys’
fees and costs) whatsoever of any name or nature, both in law and in equity (“Claims”) which he had,
now has or hereafter may have, based on any act or omission which occurred through the Effective Date, other than those described
in Section 4(a)(ii) hereof (the “Released Claims”). Without limiting the generality of the foregoing,
this general release covers all Claims arising out of or related to Employee’s employment with the Employer, the termination
of his employment, the Employment Agreement, and/or any other relationship of any kind between Employee and a Released Party, including,
without limitation, (A) Claims for tort or contract, or relating to salary, wages, bonuses, severance, commissions, stock or stock
options, the breach of any oral or written contract or promise, misrepresentation, defamation, and interference with prospective
economic advantage, interference with contract, intentional and negligent infliction of emotional distress, negligence, breach
of the covenant of good faith and fair dealing, and medical, disability or other leave; (B) Claims arising out of, based on, or
connected with Employee’s employment by the Employer, including, without limitation, the terms and conditions of employment,
or with his service as a director of the Employer, and the termination of that employment or service, including, without limitation,
Claims arising under Section 806 of the Sarbanes-Oxley Act of 2002, and any other Claims alleging retaliation of any nature; (C)
for alleged securities violations by the Employer, including, without limitation, in any way related to the exercise or payment
of equity awards granted to Employee; and/or (D) for unlawful employment discrimination of any kind, including, without limitation,
discrimination due to age, sex, disability or handicap, including, without limitation, failure to offer reasonable accommodations,
race, color, religion, sexual orientation, national origin, or sexual or other unlawful harassment arising under or based on any
local, state or federal equal employment opportunity, anti-discrimination or similar law, policy, order, regulation or guidelines
affecting or relating to Claims or rights of employees. This general release is agreed to without reliance upon any statement or
representation by the Employer.

 

    2 

     

    

(ii)              
Notwithstanding Section 4(a)(i) hereof, this general release does not cover any Claims in respect of (A) rights
to indemnification and to be held harmless and be defended by the Employer pursuant to Bank’s charter or bylaws or Parent’s
charter or bylaws to the extent that Employee is entitled thereto, (B) directors and officers insurance rights to which Employee
may be entitled, (C) rights to contribution to which Employee may be entitled, (D) rights that Employee has in his capacity as
an equityholder of Parent, (E) rights under this Agreement, including in respect of Severance, or (F) rights to any vested benefits
under the Bay Bank, FSB 401(k) Savings Plan and Trust or the Equity Plans (collectively, the “Excluded Claims”).

 

(iii)            
Employee represents and warrants that he has not sued or filed any Claim against the Employer or any of the other
Released Parties in or with any local, state or federal court or administrative agency. Employee will not sue or bring any Released
Claim against the Employer or any of the other Released Parties with respect to any matters arising out of or relating to his employment
or service with the Employer, or any Released Claims that, as a matter of law, cannot be released, such as under workers’
compensation, for unemployment benefits or any Released Claims related to the Employer’s future involvement with, if any,
Employee’s retirement plans with the Employer. In the event that Employee, on his behalf, sues or brings any Released Claim
against the Employer or any of the other Released Parties in respect of any of the foregoing matters, that suit or Released Claim
shall be dismissed, if permitted by law, upon presentation of this Agreement and Employee will reimburse the Employer for all legal
fees and expenses incurred in defending such suit or Released Claim and obtaining its dismissal. Notwithstanding anything to the
contrary contained in this Section 4, nothing in this Agreement shall preclude Employee from filing a charge or complaint
of discrimination with the Equal Employment Opportunity Commission or any other administrative agency or from participating or
cooperating in any investigation or proceeding with respect to discrimination conducted by any of such agencies. However, in the
event that such a charge or complaint is filed with any administrative agency by Employee, or in the event of an authorized investigation,
charge or lawsuit filed by any administrative agency, Employee hereby expressly waives, and shall not accept, any monetary award,
damages, costs or attorneys’ fees or release of any sort against the Employer or any of the other Released Parties.

 

    3 

     

    

(b)              
Cooperation. Employee will respond to inquiries and otherwise assist the Employer with respect to matters
with which he had been involved while employed by the Employer. Without limiting the generality of the foregoing, Employee will
cooperate with the Employer in its investigation, defense or prosecution of any potential or actual claim, charge, grievance, or
suit by or against the Employer. Employee shall not communicate with any attorney or representation of any person who may be involved
in any claim, charge, grievance or suit that is adverse to the Employer, and will immediately notify the Employer of any such communication
or attempted communication.

 

(c)               
Return of Property.

 

(i)                
On or before the Effective Date, executive will:

 

(A)            
return to the Employer all originals and copies of Property of the Employer that is in Employee’s possession
or under his control; provided, however, that with respect to any Property the nature of which prevents its return,
Employee will permanently delete and/or destroy all such Property; and he will provide written certification to the Employee Chairman
of Bank within five days of the Effective Date that he has fully complied with his obligations under this paragraph (A);

 

(B)             
not take any action to preserve or regain access to Property by or through any means, including, without limitation,
access to the Employer’s facilities or through a computer or other digital or electronic means; and

 

(C)             
promptly pay all amounts due, owing or otherwise payable by Employee to the Employer. Employee expressly authorizes
the Employer to withhold any amounts payable to him, including for compensation, reimbursement and otherwise, until he has complied
with this paragraph (C).

 

(ii)              
Employee will promptly return any Property which may come into his possession or under his control in the future,
will not make any copy thereof, and will not, directly or indirectly, use, disclose, or transmit in any manner any of such Property.

 

(d)              
Intellectual Property.

 

(i)                
Employee agrees that any and all information, reports, other documents, domain names, and other works (whether in
an electronic format or otherwise) created for or on behalf of the Employer by Employee during his service with the Employer, whether
or not developed on Employer premises or equipment or during normal Employer business hours (the “Intellectual Property”),
are and shall remain works made for hire and the sole and exclusive property of the Employer. To the extent that such Intellectual
Property is not considered work made for hire, Employee hereby assigns to the Employer (or its nominee) any and all interest that
he may now or in the future have in the Intellectual Property. Upon request by the Employer, Employee shall execute and deliver
to the Employer any document or instrument that may be necessary to secure or perfect the Employer’s title to or interest
in any Intellectual Property so assigned.

 

    4 

     

    

(ii)              
On and after the Resignation Date, Employee will not, directly or indirectly, create, develop, adopt, license or
otherwise use any intellectual property of the Employer, including, without limitation, any copyright, trademark, service mark,
mark, brand or trade secret (or anything which is similar thereto and/or a derivative thereof) that the Employer has used or currently
uses or that Employee has reason to know is being contemplated for future use by the Employer, with such prohibited use including
use as a portion of or the entire design, brand, trademark, service mark, title, domain name, Facebook name or Twitter handle.
Employee agrees that all such intellectual property is owned by the Employer and the Employee waives all claims to such intellectual
property.

 

(e)               
Ongoing Obligations Under Employment Agreement. Employee acknowledges and agrees that his obligations under
the Business Protection Covenants (as defined in the Employment Agreement) are not affected by this Agreement and remain in full
force and effect. 

 

5.                 
Remedies in the Event of Breach.

 

(a)               
General. In the event that a Party breaches or threatens to breach any covenant, agreement, obligation, representation
or warranty made in this Agreement, such Party agrees to pay the non-breaching Party’s attorneys’ fees and other costs
and expenses incurred by the non-breaching Party in connection with such breach or threatened breach, including, without limitation,
the fees and costs incurred in seeking to obtain injunctive relief or other damages with respect to the breach or threatened breach.

 

(b)              
Breach by Employee. In addition to the remedies specified in Section 5(a), if Employee breaches or
threatens to breach (i) any covenant, agreement, obligation, representation or warranty made in this Agreement or (ii) any covenant,
agreement, obligation, representation or warranty made in the Employment Agreement which survives the termination of Employee’s
employment with the Employer, such as, without limitation, the Business Protection Covenants contained in the Employment Agreement,
then (x) the Employer’s obligations under Section 2(b) of this Agreement shall immediately terminate and the Employer
shall have the right to recover all payments made to or for the benefit of Employee under Section 2(b), but Employee’s
obligations under this Agreement shall remain in full force and effect; provided, however, that the foregoing shall
apply in the event of a breach or threatened breach of any covenant, agreement or obligation, representation or warranty that relates
to a claim under the Age Discrimination in Employment Act (the “ADEA”) only if and to the extent permitted
by the ADEA; and (y) the amendment to Section 9(a) of the Employment Agreement effected by Section 4(e) hereof shall be
null and void and the Restricted Period shall automatically revert, for all purposes, to the period stated in the original Section
9(a) of the Employment Agreement.

 

The foregoing remedies
shall be in addition to, and not in lieu of, any other remedy, at law or in equity, that the non-breaching Party may have in connection
with the breach or threatened breach.

 

    5 

     

    

6.                 
Compliance with Law. Notwithstanding anything in this Agreement to the contrary, any payments made to Employee
pursuant to this Agreement, or otherwise, are subject to and conditioned upon their compliance with Section 18(k) of the Federal
Deposit Insurance Act (12 U.S.C. § 1828(k)) and the regulations promulgated thereunder, as such statutory provision and regulations
may be amended, superseded and/or replaced from time to time. If a payment due to Employee under this Agreement constitutes “deferred
compensation” (as defined in Treasury Regulation Section 1.409A-1(b)(1), after giving effect to the exemptions in Treasury
Regulation Sections 1.409A-1(b)(3) through (b)(12)) and such payment is scheduled to be paid within six months after the Resignation
Date, then such payment shall be paid within 15 calendar days after the end of the six-month period that begins on the Resignation
Date. If Employee dies prior to the date that payments are required to commence in accordance with the previous sentence, then
payment shall be made in a lump sum within 15 calendar days after the appointment of the personal representative or executor of
Employee’s estate following his death. This Agreement is intended to comply with, or otherwise be exempt from, Section 409A
of Internal Revenue Code of 1986, as amended (the “Code”), and any Treasury Regulations and guidance
promulgated thereunder. Should any provision of this Agreement be found not to comply with, or otherwise be exempt from, the provisions
of Section 409A of the Code, then such provision may be modified and given effect (retroactively if necessary), in the sole discretion
of the Employer and without Employee’s consent, in such manner as the Employer determines to be necessary or appropriate
to comply with, or to effectuate an exemption from, Section 409A of the Code. Notwithstanding anything in this Agreement to the
contrary: (a) in no event shall the Employer exercise its discretion to accelerate the timing or settlement of any required payment
hereunder where such payment constitutes deferred compensation within the meaning of Section 409A of the Code unless, and solely
to the extent that, such accelerated payment or settlement is permissible under Treasury Regulation section 1.409A-3(j)(4) or any
successor provision; and (b) the Employer shall have no liability to Employee, including, without limitation, for any taxes or
penalties that may be imposed on Employee, in the event that any provision of this Agreement is not compliant with, or exempt from,
Section 409A of the Code. As used in this Agreement, the terms “termination of employment”, “resignation”
and words of similar import mean, for purposes of any payments under this Agreement that are payments of deferred compensation
subject to Section 409A of the Code, Employee’s “separation from service” as defined in Section 409A of the Code.

 

7.                 
Miscellaneous.

 

(a)               
Taxes. Employee shall be liable for and shall pay all federal, state and local income or other similar taxes,
and all related interest, penalties or other liabilities and costs, that may be due in connection with the payments to be made
to Employee hereunder. The Employer shall have the right to withhold from any such payments all amounts necessary to satisfy its
withholding obligations with respect thereto. Employee acknowledges that the Employer has not made representations or warranties
of any kind regarding the tax consequence, if any, of any payments made hereunder.

 

(b)              
No Representations by the Employer. Employee acknowledges and agrees that the Employer has made no representations
or promises to him except as expressly set forth herein.

 

    6 

     

    

(c)               
Notices.

 

(i)                
All notices, requests, demands or other communications that are required or may be given under this Agreement shall
be in writing and shall be given by personal delivery, by certified or registered United States mail (postage prepaid, return receipt
requested), by a nationally recognized overnight delivery service for next day delivery, as follows (or to such other address as
any party may give in a notice given in accordance with the provisions hereof):

 

If to Bank or Parent:

 

Bay Bank, FSB

7151 Columbia Gateway Drive, Suite A

Columbia, Maryland 21046

Attn: Chairman of the Board

 

With a copy to:

 

Gordon Feinblatt LLC

233 East Redwood Street

Baltimore, Maryland 21202

Attn: Andrew Bulgin, Esquire

 

If to Employee:

 

 

 

 

With a copy to:

 

 

 

 

(ii)              
All notices, requests or other communications will be effective and deemed given only as follows: (A) if given by
personal delivery, upon such personal delivery; (B) if sent by certified or registered mail, on the fifth (5th) business
day after being deposited in the United States mail; or (C) if sent for next day delivery by overnight delivery service, on the
date of delivery as confirmed by written confirmation of delivery, except that if such confirmation is received after 5:00 p.m.
(in the recipient’s time zone) on a business day, or is received on a day that is not a business day, then such notice, request
or communication will not be deemed effective or given until the next succeeding business day. Notices, requests and other communications
sent in any other manner, including by electronic mail, will not be effective.

 

(d)              
No Admission. This Agreement is entered into by the Parties for settlement purposes only and does not constitute
an admission of wrongdoing of any kind.

 

(e)               
Governing Law; Jurisdiction; No Jury Trial.

 

(i)                
This Agreement has been made in and shall be governed by and construed in accordance with the laws of the State of
Maryland, exclusive of any conflicts of law principle which would apply the law of another jurisdiction, and, to the extent applicable,
the laws of the United States, whether as to its validity, construction, capacity, performance or otherwise.

 

    7 

     

    

(ii)              
Any judicial proceeding arising out of or relating to this Agreement (including any declaratory judgments) shall,
if it is to be filed in State court, be filed exclusively in the State courts located in Baltimore County, Maryland or, if is to
be filed in Federal court, be filed exclusively in the Federal courts located in Baltimore, Maryland, and each Party hereby consents
to, and will submit to, the personal and subject matter jurisdiction of such courts in any proceeding to enforce any of its obligations
under this Agreement and shall not contend that any such court is an improper or inconvenient venue. The foregoing shall not limit
the right of any Party to obtain execution of judgment in any other jurisdiction. Any service of process in any such action, suit,
proceeding, claim, dispute or controversy shall be by delivering the same or by mailing the same (by referred or certified mail,
return receipt requested) to the relevant addresses set forth in Section 7(c) hereof or to such other addresses as may have
been designated in writing.

 

(iii)            
EACH OF THE PARTIES HEREBY WAIVE TRIAL BY JURY IN ANY ACTION ARISING UNDER THIS AGREEMENT.

 

(f)               
Blue Pencil. It is the desire and intent of the Parties that the provisions contained in each Section
of this Agreement, and within the subsections of such Sections, especially (but in no way limited to) those provisions
of Sections 4 and 5, are intended to be separate and divisible and shall be enforced to the fullest extent permissible
under applicable laws and public policies. Accordingly, if any portion of any provision of this Agreement shall be adjudicated
by a court of competent jurisdiction to be invalid or unenforceable, then (i) such portion shall not be held to affect the validity
of any other provision contained in this Agreement, and (ii) such portion shall be deemed amended either to conform to such restrictions
as such court may allow, or to delete therefrom or reform the portion thus adjudicated to be invalid and unenforceable. The Parties
hereby expressly request and authorize any court of competent jurisdiction to modify any provision of this Agreement if necessary
to render it enforceable, in such manner as to preserve as much as possible the Parties’ original intentions, as expressed
therein, with respect to the scope thereof.

 

(g)              
Amendment. No provision in this Agreement may be amended unless such amendment is agreed to in writing and
signed by both Employee and an authorized officer of Bank and Parent.

 

(h)              
Waiver. The rights and remedies provided for herein are cumulative and not exclusive of any right or remedy
that may be available to any Party whether at law, in equity, or otherwise. No delay, forbearance, or neglect by any Party, whether
in one or more instances, in the exercise or any right, power, privilege, or remedy hereunder or in the enforcement of any term
or condition of this Agreement shall constitute or be construed as a waiver thereof. No waiver of any provision hereof, or consent
required hereunder, or any consent or departure from this Agreement, shall be valid or binding unless expressly and affirmatively
made in writing and duly executed by the Party to be charged with such waiver. No waiver shall constitute or be construed as a
continuing waiver or a waiver in respect of any subsequent breach or default, either of similar or different nature, unless expressly
so stated in such writing.

 

    8 

     

    

(i)                
Headings; Construction. The headings of the Sections and subsections of this Agreement are for
convenience of reference only, form no part of this Agreement, and shall not be deemed to alter or affect the meaning or interpretation
of any provision hereof. All references to Sections, subsections, paragraphs, items or other subdivisions
in this Agreement refer to the corresponding Sections, subsections, paragraphs, items or other subdivisions
of this Agreement. All words used in this Agreement shall be construed to be of such gender or number as the circumstances require.
Unless otherwise specifically noted, the words “herein”, “hereof”, “hereby”, “hereunder”
and words of similar import refer to this Agreement as a whole and not to any particular Section, subsection, paragraph,
item or other subdivision of this Agreement.

 

(j)                
Counterparts. This Agreement may be executed in any number of counterparts, each copy of which shall serve
as an original for all purposes, but all copies shall constitute but one and the same agreement. The exchange of copies of this
Agreement and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Agreement
as to the Parties and may be used in lieu of an original of this Agreement for all purposes. Signatures of the parties hereto transmitted
by facsimile or PDF transmission shall be deemed to be their original signatures for all purposes.

 

8.                 
Consideration and Revocation Period. 

 

YOU (EXECUTIVE) HAVE TWENTY-ONE (21) CALENDAR
DAYS FROM THE DATE OF YOUR RECEIPT OF THIS AGREEMENT TO CONSIDER THIS AGREEMENT BEFORE YOU SIGN IT. YOU MAY SIGN THIS AGREEMENT
EARLIER IF YOU WISH, BUT THE DECISION IS ENTIRELY YOURS. ONCE YOU SIGN THIS AGREEMENT, YOU HAVE SEVEN (7) CALENDAR DAYS AFTER SIGNING
TO REVOKE IT, AND THIS AGREEMENT SHALL NOT BECOME EFFECTIVE OR ENFORCEABLE UNTIL THE EXPIRATION OF THAT SEVEN (7) CALENDAR DAY
PERIOD.

 

TO REVOKE THIS AGREEMENT, YOU MUST DELIVER
YOUR WRITTEN REVOCATION TO THE EMPLOYER AS PROVIDED IN SECTION 7(c) OF THIS AGREEMENT DURING SUCH SEVEN (7) DAY PERIOD. YOU ARE
ADVISED TO CONSULT WITH AN ATTORNEY OF YOUR OWN CHOOSING AND AT YOUR OWN EXPENSE PRIOR TO EXECUTING THIS AGREEMENT. THE AGREEMENT,
AMONG OTHER THINGS, WAIVES RIGHTS THAT YOU MAY HAVE UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT. NOTHING IN THIS AGREEMENT WAIVES
RIGHTS OR CLAIMS UNDER THE ADEA THAT MAY ARISE AFTER THE DATE THAT THIS AGREEMENT IS EXECUTED. 

 

IN THE EVENT THAT YOU DO NOT ACCEPT THIS
AGREEMENT, BY YOUR SIGNATURE ON AND RETURN OF THE ENCLOSED COPY OF THIS AGREEMENT NOT LATER THAN TWENTY-ONE (21) CALENDAR DAYS
FROM THE DATE OF YOUR RECEIPT OF THIS AGREEMENT, OR, IN THE EVENT THAT YOU DO ACCEPT THIS AGREEMENT BUT SUBSEQUENTLY REVOKE IT
WITHIN SEVEN (7) CALENDAR DAYS AFTER SIGNING IT, THE EMPLOYER’S OFFER TO ENTER INTO THIS AGREEMENT WILL BE WITHDRAWN AND
WILL NOT BE REINSTATED, AND THIS AGREEMENT WILL NOT BECOME EFFECTIVE OR ENFORCEABLE.

 

    9 

     

    

YOU AGREE THAT ANY MODIFICATION, MATERIAL
OR OTHERWISE, MADE TO THIS AGREEMENT DOES NOT RESTART OR AFFECT IN ANY MANNER THE ORIGINAL TWENTY-ONE (21) CALENDAR DAY CONSIDERATION
PERIOD.

 

HAVING ELECTED TO EXECUTE THIS AGREEMENT,
TO FULFILL THE PROMISES AND TO RECEIVE THE SUMS AND BENEFITS STATED HEREIN, YOU FREELY AND KNOWINGLY, AND AFTER DUE CONSIDERATION,
ENTER INTO THIS AGREEMENT INTENDING TO WAIVE, SETTLE AND RELEASE ALL CLAIMS YOU HAVE OR MIGHT HAVE AGAINST THE EMPLOYER AND THE
RELEASED PARTIES AS PROVIDED HEREIN.

 

THIS AGREEMENT CONTAINS A RELEASE AND AN
AGREEMENT NOT TO SUE. PLEASE READ BEFORE SIGNING.

 

 

[Signatures Appear on Next Page]

 

 

 

 

    10 

     

    

[Signature Page]

 

 

IN WITNESS WHEREOF,
the parties have executed this Agreement as of the dates set forth below.

 

	WITNESS:	 	EMPLOYEE:
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	Date:	 
	 	 	 	 
	 	 	 	 
	ATTEST:	 	BAY BANK, FSB
	 	 	 	 
	 	 	 	 
	 	 	By:	 
	 	 	Name:	 
	 	 	Title:	 
	 	 	 	 
	 	 	Date:	 
	 	 	 	 
	 	 	 	 
	ATTEST:	 	BAY BANCORP, INC.
	 	 	 	 
	 	 	 	 
	 	 	By:	 
	 	 	Name:	
	 	 	Title:	
	 	 	 	 
	 	 	Date:	 

 

 

    11 

     

    

Schedule 1

Equity Awards

 

 

 

 

 

 

 

 

 

 

 

 

12

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