Document:

EMPLOYMENT
AGREEMENT

 

This
Employment Agreement (“Agreement”) is effective as of October 7, 2019 (“Effective Date”),
by and between Xtant Medical Holdings, Inc., a Delaware corporation (the “Company”), and Sean E. Browne, an
individual (“Employee”). The Company and Employee are sometimes referred to as the “Parties”
or “Party” in this Agreement, and the Company may designate a subsidiary to be the employer of the Employee.

 

In
consideration of the mutual promises, covenants and agreements contained in this Agreement, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

 

1.
EMPLOYMENT AND DUTIES.

 

A.
Job Title and Responsibilities and Place of Employment. The Company hereby employs Employee, and Employee hereby agrees
to be employed, as President and Chief Executive Officer reporting to the Company’s Board of Directors. If Employee’s
title and responsibilities change during the course of Employee’s employment with Employer, the terms of this Agreement shall
remain in full force and effect regardless of any change in Employee’s title or responsibilities. The Employee’s principal
place of employment shall be the Company’s operational center in Belgrade, Montana, and the position will require extensive
travel.

 

B.
Full-Time Best Efforts. Employee agrees to devote Employee’s full professional time and attention to the business
of the Company (and its subsidiaries, affiliates, or related entities) and the performance of Employee’s obligations under
this Agreement, and will at all times faithfully, industriously and to the best of Employee’s ability, experience and talent,
perform all of Employee’s obligations hereunder. Employee shall not, at any time during Employee’s employment by the
Company, directly or indirectly, act as a partner, officer, director, consultant or employee, or provide services in any other
capacity to any other business enterprise that conflicts with the Company’s business or Employee’s duty of loyalty
to the Company. Employee shall seek the written consent of the Company prior to accepting any outside board positions. The Company
understands, acknowledges and agrees that Employee serves on the board of directors of Bridge Lacrosse as of the date of this
Agreement and consents to Employee’s continued service in such role.

 

C.
Duty of Loyalty. Employee acknowledges that during Employee’s employment with the Company, Employee has participated
in and will participate in relationships with existing and prospective clients, customers, partners, suppliers, service providers
and vendors of the Company that are essential elements of the Company’s goodwill. The parties acknowledge that Employee
owes the Company a fiduciary duty to conduct all affairs of the Company in accordance with all applicable laws and the highest
standards of good faith, trust, confidence and candor, and to endeavor, to the best of Employee’s ability, to promote the
best interests of the Company.

 

D.
Conflict of Interest. Employee agrees that while employed by the Company, and except with the advance written consent of
the Company’s Board of Directors (the “Board”), Employee will not enter into, on behalf of the Company,
or cause the Company or any of its affiliates to enter into, directly or indirectly, any transactions with any business organization
in which Employee or any member of Employee’s immediate family may be interested as a shareholder, partner, member, trustee,
director, officer, employee, consultant, lender or guarantor or otherwise; provided, however, that nothing in this
Agreement shall restrict transactions between the Company and any company whose stock is listed on a national securities exchange
or actively traded in the over-the-counter market and over which Employee does not have the ability to control or significantly
influence policy decisions.

 

    	 	 	 

    	 

    

 

2.
COMPENSATION. 

 

A.
Base Pay. The Company agrees to pay Employee gross annual compensation of $600,000 (“Base Salary”),
less usual and customary withholdings, which shall be payable in arrears in accordance with the Company’s customary payroll
practices. The Base Salary will be subject to normal periodic review, and such review will consider Employee’s contributions
to the Company and the Company’s overall performance.

 

B.
Bonus and Incentive Compensation. Employee shall be eligible for bonus and incentive-based compensation approved by the
Board (or a committee thereof) from time to time. The target bonus compensation will be 100% of Employee’s Base Salary,
except that for the 2019 calendar year, Employee shall only be eligible to receive a pro-rated bonus, with such proration based
on Employee’s start date, and which bonus shall be contingent upon the achievement of performance objectives as established
mutually by the Board (or a committee thereof) and Employee. All bonus and incentive compensation shall be less all tax withholdings
and other applicable deductions the Company reasonably determines are required to be made and shall be paid in accordance with
the bonus and incentive compensation plan documents adopted by the Company; provided, however, that any earned annual bonus shall
be paid no later than as soon as reasonably practicable after the filing of the Company’s Annual Report on Form 10-K with
the Securities and Exchange Commission (the “SEC”). Employee must remain continuously employed by the Company
through the date bonus compensation is paid to be eligible to receive such bonus compensation.

 

C.
Equity Awards. Subject to approval by the Board, the Company agrees to grant Employee, effective as of October 15, 2019
(the “Grant Date”), under the Xtant Medical Holdings, Inc. 2018 Equity Incentive Plan (the “Plan”),
a Non-Statutory Stock Option (as defined in the Plan) (the “Option”) to purchase 329,044 shares of Common Stock
(as defined in the Plan) at a per share exercise price equal to 100% of the Fair Market Value (as defined in the Plan) of a share
of Common Stock on the Grant Date and 329,044 Restricted Stock Units (as defined in the Plan) (the “RSUs”).
The Option and RSUs (i) shall vest with respect to 20% of the shares of Common Stock purchasable thereunder on each of the one-year,
two-year, three-year, four-year, and five-year anniversaries of the Grant Date, contingent upon Employee having continuously served
as an employee of the Company or one of its subsidiaries from the Grant Date until the respective vesting date; (ii) shall be
subject to all of the terms and conditions of the Plan; and (iii) shall be evidenced by an appropriate individual award agreement,
in substantially the form as previously approved by the Board. If OrbiMed Advisors LLC (including its affiliates) converts any
of the outstanding indebtedness of the Company into equity of the Company within five (5) years of the Effective Date, the Company
agrees to grant Employee additional equity, 50% of which would be in the form of additional Restricted Stock Units and 50% of
which would be in the form of Non-Statutory Stock Options, such that Employee’s total equity in the Company, including the
Option and RSUs and any other then prior grants, equals 5% of the Company’s shares outstanding (calculated on converted
debt only and not including shares issued to employees, directors or consultants after October 7, 2019 or any additional equity
issued through additional investments in the Company). Any additional equity awards made to Employee will be in the sole discretion
of the Board. The treatment of the Option, RSUs and any other equity award upon a termination of employment of the Employee or
in the event of a Change in Control will be governed by the terms of the award agreement evidencing such Option, RSUs and other
equity award and the Plan. Copies of the award agreements which will evidence the Option and RSUs have been provided to Employee
prior to the execution of this Agreement.

 

D.
Benefits. During Employee’s employment, Employee will be eligible to participate in the Company’s benefit programs,
as summarized and as governed by any plan documents concerning such benefits. Employee acknowledges that the Company may amend,
modify or terminate any of its benefit plans or programs at any time and for any reason. Employee will be eligible for 25 days
of paid vacation per year, subject to the Company’s carryover policy for unused vacation in effect from time to time. The
Company will also provide Employee with a disability insurance policy.

 

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E.
Reimbursement of Expenses. The Company will reimburse Employee’s reasonable travel and business expenses in accordance
with the Company’s policies.

 

F.
Clawback. Employee agrees that any compensation or benefits provided by the Company under this Agreement or otherwise will
be subject to recoupment or clawback by the Company under any applicable clawback or recoupment policy of the Company as may be
in effect from time-to-time or as required by applicable law, regulation or stock exchange listing requirement.

 

G.
Indemnification. The Company shall indemnify Employee as provided in the Company’s standard form of indemnification
agreement.

 

3.
CONFIDENTIAL INFORMATION.

 

A.
Employee understands that during Employee’s employment relationship with the Company, the Company intends to provide Employee
with information, including Confidential Information (as defined herein), without which Employee would not be able to perform
Employee’s duties to the Company. Employee agrees, at all times during the term of Employee’s employment relationship
and thereafter, to hold in strictest confidence, and not to use or disclose, except for the benefit of the Company to the extent
necessary to perform Employee’s obligations to the Company, any Confidential Information that Employee obtains, accesses
or creates during the term of the relationship, whether or not during working hours, until such Confidential Information becomes
publicly and widely known and made generally available through no wrongful act of Employee or of others under confidentiality
obligations as to the information involved. Employee understands that “Confidential Information” means information
and physical material not generally known or available outside the Company and information and physical material entrusted to
the Company by third parties under an obligation of non-disclosure or non-use or both. “Confidential Information”
includes, without limitation, inventions, technical data, trade secrets, clinical data, regulatory information and strategies,
marketing ideas or plans, research, product or service ideas or plans, business strategies, investments, investment opportunities,
potential investments, market studies, industry studies, historical financial data, financial information and results, budgets,
identity of customers, forecasts (financial or otherwise), possible or pending transactions, customer lists and domain names,
price lists, and pricing methodologies.

 

B.
At all times, both during Employee’s employment and after its termination, Employee will keep and hold all such Confidential
Information in strict confidence and trust. Employee will not use or disclose any Confidential Information without the prior written
consent of the Company, except as may be necessary to perform Employee’s duties as an employee of the Company for the benefit
of the Company. Employee may disclose information that Employee is required to disclose by valid order of a government agency
or court of competent jurisdiction, provided that Employee will:

 

1.
Notify the Company in writing immediately upon learning that such an order may be sought or issued,

 

2.
Cooperate with the Company as reasonably requested if the Company seeks to contest such order or to place protective restrictions
on the disclosure pursuant to such order, and

 

3.
Comply with any protective restrictions in such order, and disclose only the information specified in the order.

 

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C.
Upon termination of employment with the Company, Employee will promptly deliver to the Company all documents and materials of
any nature pertaining to Employee’s work with the Company.

 

D.
Employee agrees not to infringe the copyrights of the Company, its customers or third parties (including, without limitation,
Employee’s previous employer, customers, etc.) by unauthorized or unlawful copying, modifying or distributing of copyrighted
material, including plans, drawings, reports, financial analyses, market studies, computer software and the like.

 

4.
COVENANT NOT TO COMPETE.

 

A.
Non-competition Covenant. Employee agrees that during the Restricted Period (as defined below), without the prior written
consent of the Company, Employee shall not, directly or indirectly within the Territory (as defined below): (i) personally, by
agency, as an employee, independent contractor, consultant, officer, director, manager, agent, associate, investor (other than
as a passive investor holding less than five percent of the outstanding equity of an entity), or by any other artifice or device,
engage in any Competitive Business (as defined below), (ii) assist others, including but not limited to employees of the Company,
to engage in any Competitive Business, or (iii) own, purchase, finance, organize or take preparatory steps to own, purchase, finance,
or organize a Competitive Business.

 

B.
Definitions.

 

1.
“Competitive Business” means (i) any person, entity or organization which is engaged in or about to become
engaged in research on, consulting regarding, or development, production, marketing or selling of any product, process, technology,
device, invention or service which resembles, competes with or is intended to resemble or compete with a product, process, technology,
device, invention or service under research or development or being promoted, marketed, sold or serviced by the Company or any
subsidiary; or (ii) any other line of business that was conducted by the Company or any subsidiary or that Employee knows or should
reasonably know is actively preparing to pursue at any time during the term of Employee’s employment with the Company.

 

2.
“Territory” means the United States of America.

 

3.
“Restricted Period” means the period of Employee’s employment with the Company and for a period of twelve
(12) months following the termination of Employee’s employment.

 

5.
NON-SOLICITATION AND NON-INTERFERENCE COVENANTS.

 

A.
Non-solicitation of Employees and Others. During the Restricted Period, (i) Employee shall not, directly or indirectly,
solicit, recruit, or induce, or attempt to solicit, recruit or induce any employee, consultant, independent contractor, vendor,
supplier, or agent to terminate or otherwise adversely affect his or her employment or other business relationship (or prospective
employment or business relationship) with the Company, and (ii) Employee shall not, directly or indirectly, solicit, recruit,
or induce, or attempt to solicit, recruit or induce any employee to work for Employee or any other person or entity, other than
the Company or its affiliates or related entities.

 

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B.
Non-solicitation of Customers. During the Restricted Period, Employee shall not, directly or indirectly, solicit, recruit,
or induce any Customer (as defined below) for the purpose of (i) providing any goods or services related to a Competitive Business,
or (ii) interfering with or otherwise adversely affecting the contracts or relationships, or prospective contracts or relationships,
between the Company (including any related or affiliated entities) and such Customers. “Customer” means a person
or entity with which Employee had contact or about whom Employee gained information while an Employee of the Company, and to which
the Company was selling or providing products or services, was in active negotiations for the sale of its products or services,
or was otherwise doing business as of the date of the cessation of Employee’s employment with the Company or for whom the
Company had otherwise done business within the twelve (12) month period immediately preceding the cessation of Employee’s
employment with the Company.

 

6.
ACKNOWLEDGEMENTS. Employee acknowledges and agrees that:

 

A.
The geographic and duration restrictions contained in Paragraphs 4 and 5 of this Agreement are fair, reasonable, and necessary
to protect the Company’s legitimate business interests and trade secrets, given the geographic scope of the Company’s
business operations, the competitive nature of the Company’s business, and the nature of Employee’s position with
the Company;

 

B.
Employee’s employment creates a relationship of confidence and trust between Employee and the Company with respect to the
Confidential Information, and Employee will have access to Confidential Information (including but not limited to trade secrets)
that would be valuable or useful to the Company’s competitors;

 

C.
The Company’s Confidential Information is a valuable asset of the Company, and any violation of the restrictions set forth
in this Agreement would cause substantial injury to the Company;

 

D.
The restrictions contained in this Agreement will not unreasonably impair or infringe upon Employee’s right to work or earn
a living after Employee’s employment with the Company ends; and

 

E.
This Agreement is a contract for the protection of trade secrets under applicable law and is intended to protect the Confidential
Information (including trade secrets) identified above.

 

7.
“BLUE PENCIL” AND SEVERABILITY PROVISION. If a court of competent jurisdiction declares any provision of this
Agreement invalid, void, voidable, or unenforceable, the court shall reform such provision(s) to render the provision(s) enforceable,
but only to the extent absolutely necessary to render the provision(s) enforceable and only in view of the parties’ express
desire that the Company be protected to the greatest possible extent under applicable law from improper competition and the misuse
or disclosure of trade secrets and Confidential Information. To the extent such a provision (or portion thereof) may not be reformed
so as to make it enforceable, it may be severed and the remaining provisions shall remain fully enforceable.

 

8.
INVENTIONS. 

 

A.
Inventions Retained and Licensed. Attached as Exhibit A is a list describing all inventions and information created,
discovered or developed by Employee, whether or not patentable or registrable under patent, copyright or similar statutes, made
or conceived or reduced to practice or learned by Employee, either alone or with others before Employee’s employment with
the Company (“Prior Inventions”), which belong in whole or in part to Employee, and which are not being assigned
by Employee to the Company. Employee represents that Exhibit A is complete and contains no confidential or Confidential
information belonging to a person or entity other than Employee. Employee acknowledges and agrees that Employee has no rights
in any Inventions (as that term is defined below) other than the Prior Inventions listed on Exhibit A. If there is nothing
identified on Exhibit A, Employee represents that there are no Prior Inventions as of the time of signing this Agreement.
Employee shall not incorporate, or permit to be incorporated, any Prior Invention owned by Employee or in which he has an interest
in a Company product, process or machine without the Company’s prior written consent. Notwithstanding the foregoing, if,
in the course of Employee’s employment with the Company, Employee directly or indirectly incorporates into a Company product,
process or machine a Prior Invention owned by Employee or in which Employee has an interest, the Company is hereby granted and
shall have a non-exclusive, royalty-free, irrevocable, perpetual, world-wide license to make, have made, modify, use, create derivative
works from and sell such Prior Invention as part of or in connection with such product, process or machine.

 

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B.
Assignment of Inventions. Employee shall promptly make full, written disclosure to the Company, will hold in trust for
the sole right and benefit of the Company, and hereby irrevocably transfers and assigns, and agrees to transfer and assign, to
the Company, or its designee, all his right, title and interest in and to any and all inventions, original works of authorship,
developments, concepts, improvements, designs, discoveries, ideas, trademarks (and all associated goodwill), mask works, or trade
secrets, whether or not they may be patented or registered under copyright or similar laws, which Employee may solely or jointly
conceive or develop or reduce to practice, or cause to be conceived or developed or reduced to practice, during Employee’s
employment by the Company (the “Inventions”). Employee further acknowledges that all original works of authorship
which are made by Employee (solely or jointly with others) within the scope of and during the period of his employment with the
Company and which may be protected by copyright are “Works Made For Hire” as that term is defined by the United
States Copyright Act. Employee understands and agrees that the decision whether to commercialize or market any Invention developed
by Employee solely or jointly with others is within the Company’s sole discretion and the Company’s sole benefit and
that no royalty will be due to Employee as a result of the Company’s efforts to commercialize or market any such invention.

 

Employee
recognizes that Inventions relating to his activities while working for the Company and conceived or made by Employee, whether
alone or with others, within one (1) year after cessation of Employee’s employment, may have been conceived in significant
part while employed by the Company. Accordingly, Employee acknowledges and agrees that such Inventions shall be presumed to have
been conceived during Employee’s employment with the Company and are to be, and hereby are, assigned to the Company unless
and until Employee has established the contrary.

 

The
requirements of this Paragraph 8B do not apply to any intellectual property for which no equipment, supplies, facility or trade
secret information of the Company was used, and which was developed entirely on the Employee’s own time, and (i) which does
not relate (x) directly to the Company’s business or (y) to the Company’s actual or demonstrably anticipated research
and development or (ii) which does not result from any work the Employee performed for the Company.

 

C.
Maintenance of Records. Employee agrees to keep and maintain adequate and current written records of all Inventions made
by Employee (solely or jointly with others) during his employment with the Company. The records will be in the form of notes,
sketches, drawings and any other format that may be specified by the Company. The records will be available to and remain the
sole property of the Company at all times.

 

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D.
Patent, Trademark and Copyright Registrations. Employee agrees to assist the Company, or its designee, at the Company’s
expense, in every proper way to secure the Company’s rights in the Inventions and any copyrights, patents, trademarks, service
marks, mask works, or any other intellectual property rights in any and all countries relating thereto, including, but not limited
to, the disclosure to the Company of all pertinent information and data with respect thereto, the execution of all applications,
specifications, oaths, assignments and all other instruments the Company reasonably deems necessary in order to apply for and
obtain such rights and in order to assign and convey to the Company, its successors, assigns, and nominees the sole and exclusive
rights, title, and interest in and to such inventions, and any copyrights, patents, trademarks, service marks, mask works, or
any other intellectual property rights relating thereto. Employee further agrees that his obligation to execute or cause to be
executed, when it is in his power to do so, any such instrument or paper shall continue after termination or expiration of this
Agreement or the cessation of his employment with the Company. If the Company is unable because of Employee’s mental or
physical incapacity or for any other reason, after reasonably diligent efforts, to secure Employee’s signature to apply
for or to pursue any application for any United States or foreign patents, trademarks or copyright registrations covering inventions
or original works of authorship assigned to the Company as above, then Employee hereby irrevocably designates and appoints the
Company and its duly authorized officers and agents as Employee’s agent and attorney-in-fact to act for and in his behalf
and stead to execute and file any such applications and to do all other lawfully permitted acts to further the prosecution and
issuance of letters patent, trademarks or copyright registrations thereon with the same legal force and effect as if executed
by Employee; this power of attorney shall be a durable power of attorney which shall come into existence upon Employee’s
mental or physical incapacity.

 

9.
SURVIVAL AND REMEDIES. Employee’s obligations of nondisclosure, non-solicitation, non-interference, and non-competition
under this Agreement shall survive the cessation of Employee’s employment with the Company and shall remain enforceable
as provided in this Agreement. In addition, Employee acknowledges that upon a breach or threatened breach of any obligation of
nondisclosure, non-solicitation, non-interference, or noncompetition of this Agreement, the Company may suffer irreparable harm
and damage for which money alone cannot fully compensate the Company. Employee therefore agrees that upon such breach or threat
of imminent breach of any such obligation, the Company shall be entitled to seek a temporary restraining order, preliminary injunction,
permanent injunction or other injunctive relief, without posting any bond or other security, barring Employee from violating any
such provision. This Paragraph shall not be construed as an election of any remedy, or as a waiver of any right available to the
Company under this Agreement or the law, including the right to seek damages from Employee for a breach of any provision of this
Agreement and the right to require Employee to account for and pay over to the Company all profits or other benefits derived or
received by Employee as the result of such a breach, nor shall this Paragraph be construed to limit the rights or remedies available
under state law for any violation of any provision of this Agreement.

 

10.
RETURN OF COMPANY PROPERTY. All devices, records, reports, data, notes, compilations, lists, proposals, correspondence, specifications,
equipment, drawings, blueprints, manuals, DayTimers, planners, calendars, schedules, discs, data tapes, financial plans and information,
or other recorded matter, whether in hard copy, magnetic media or otherwise (including all copies or reproductions made or maintained,
whether on the Company’s premises or otherwise), pertaining to Employee’s work for the Company, or relating to the
Company or the Company’s Confidential Information, whether created or developed by Employee alone or jointly during his
employment with the Company, are the exclusive property of the Company. Employee shall surrender the same (as well as any other
property of the Company) to the Company upon its request or promptly upon the cessation of employment. Upon cessation of Employee’s
employment, Employee agrees to sign and deliver the “Termination Certificate” attached as Exhibit B,
which shall detail all Company property that is surrendered upon cessation of employment.

 

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11.
NO CONFLICTING AGREEMENTS OR IMPROPER USE OF THIRD-PARTY INFORMATION. During his employment with the Company, Employee shall
not improperly use or disclose any confidential information or trade secrets of any former employer or other person or entity,
and Employee shall not bring on to the premises of the Company any unpublished document or confidential information belonging
to any such former employer, person or entity, unless consented to in writing by the former employer, person or entity. Employee
represents that he has not improperly used or disclosed any confidential information or trade secrets of any other person or entity
during the application process or while employed or affiliated with the Company. Employee also acknowledges and agrees that he
is not subject to any contract, agreement, or understanding that would prevent Employee from performing his duties for the Company
or otherwise complying with this Agreement. Notwithstanding the generality of the foregoing, Employee represents and warrants
to the Company that Employee is not currently subject to a non-competition, non-solicitation, confidentiality, or other such agreement
which prohibits Employee from working for the Company and its subsidiaries. To the extent Employee violates this provision, or
his employment with the Company constitutes a breach or threatened breach of any contract, agreement, or obligation to any third
party, Employee shall indemnify and hold the Company harmless from all damages, expenses, costs (including reasonable attorneys’
fees) and liabilities incurred in connection with, or resulting from, any such violation or threatened violation.

 

12.
TERMINATION.

 

A.
By Either Party. Either Party may terminate the Employee’s at-will employment at any time with or without notice,
and with or without cause. Except as provided in this Paragraph 12, upon termination of employment, Employee shall only be entitled
to Employee’s accrued but unpaid Base Salary and other benefits earned under any Company-provided plans, policies and arrangements
for the period preceding the effective date of the termination of employment.

 

B.
Termination Without Cause. If the Company terminates Employee’s employment without Cause (defined below), Employee
shall be entitled to receive continuing severance pay at a rate equal to Employee’s Base Salary, as then in effect, for
twelve (12) months from the date of termination of employment, less all required tax withholdings and other applicable deductions,
payable in accordance with the Company’s standard payroll procedures, commencing on the effective date of a Separation Agreement
and Release of claims against the Company that has not been revoked, in substantially the form of Exhibit C attached hereto,
the timely execution and performance by Employee of which is specifically a condition to his receipt of any of the payments and
benefits provided under this Paragraph 12B; provided that (1) such Separation Agreement and Release shall be executed and
be fully effective within sixty (60) days of the Employee’s termination of employment; (2) the first payment shall include
any amounts that would have been paid to Employee if payment had commenced on the date of termination of employment; and (3) Employee
shall not be required to execute a release of any claims arising from the Company’s failure to comply with its obligations
under Paragraph 12A. If Employee timely and effectively elects continuation coverage under the Company’s group health plan
pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) or similar state law, the
Company will pay or reimburse the premiums for such coverage of Employee (and his dependents, as applicable) at the same rate
it pays for active employees for a period for twelve (12) months from the date of termination of employment; provided that
the Company’s obligation to make such payments shall immediately expire if Employee ceases to be eligible for continuation
coverage under COBRA or similar state law or otherwise terminates such coverage. Notwithstanding the foregoing, any of the foregoing
payments due under this Paragraph 12B shall commence within sixty (60) days of Employee’s termination of employment, provided
that if such sixty (60)-day period spans two (2) calendar years, payments shall commence in the latter calendar year. In addition
to the foregoing and subject to Employee’s execution of a Separation Agreement and Release of claims against the Company
that has been executed and not revoked within any applicable rescission period that has expired within sixty (60) days of the
Employee’s termination of employment, Employee shall be entitled to the pro-rated amount of any unpaid bonus for the calendar
year in which his termination of employment occurs, if earned pursuant to the terms thereof (except for the provision of remaining
an employee through the date of payment thereof) and at such time and in such manner as determined by the Board (or a committee
thereof) in its sole discretion pursuant to the terms thereof, provided such bonus shall be paid no later than as soon as reasonably
practicable after the earlier of the filing of the Company’s Annual Report on Form 10-K with the SEC and December 31 of
the calendar year immediately following the calendar year in which the bonus is being measured.

 

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C.
Termination Upon a Change in Control. If the Company or any successor in interest to the Company terminates Employee’s
employment without Cause in connection with or within twelve (12) months after a Change in Control (defined below) or if Employee
terminates his employment for Good Reason (defined below) within twelve (12) months after a Change in Control, Employee shall
be entitled to receive (i) his accrued but unpaid Base Salary and other benefits earned under any Company-provided plans, policies
and arrangements for the period preceding the effective date of the termination of employment, and (ii) a lump-sum payment equal
to one times Employee’s Base Salary, as then in effect, less all tax withholdings and other applicable deductions the Company
reasonably determines are required to be made, payable on the first regular payroll date after the effective date of a Separation
Agreement and Release that has been executed and not revoked within any applicable rescission period that has expired within sixty
(60) days of the Employee’s termination of employment, in substantially the form of Exhibit C attached hereto, the
execution and performance by Employee of which is specifically a condition to his receipt of any of the payments and benefits
provided under this Paragraph 12C; provided that Employee shall not be required to execute a release of any claims arising
from the Company’s failure to comply with its obligations under Paragraph 12A. If Employee timely and effectively elects
continuation coverage under the Company’s group health plan pursuant to COBRA or similar state law, the Company will pay
or reimburse the premiums for such coverage of Employee (and his dependents, as applicable) at the same rate it pays for active
employees for a period for twelve (12) months from the date of termination of employment; provided that the Company’s
obligation to make such payments shall immediately expire if Employee ceases to be eligible for continuation coverage under COBRA
or similar state law or otherwise terminates such coverage. Notwithstanding the previous provisions of this Paragraph 12C, any
payments due under this Paragraph 12C shall commence within sixty (60) days of Employee’s termination of employment, provided
that if such sixty (60)-day period spans two calendar years, payments shall commence in the latter calendar year. In addition
to the foregoing and subject to Employee’s timely execution of a Separation Agreement and Release that has been executed
and not revoked within any applicable rescission period that has expired within sixty (60) days of the Employee’s termination
of employment, Employee shall be entitled to the pro-rated amount of any unpaid bonus for the calendar year in which his termination
of employment occurs, if earned pursuant to the terms thereof (except for the provision of remaining an employee through the date
of payment thereof) and at such time and in such manner as determined by the Board (or a committee thereof) in its sole discretion
pursuant to the terms thereof, provided such bonus shall be paid no later than as soon as reasonably practicable after the earlier
of the filing of the Company’s Annual Report on Form 10-K with the SEC and December 31 of the calendar year immediately
following the calendar year in which the bonus is being measured. The payments and benefits described in this Paragraph 12C are
in lieu of, and not in addition to, the payments and benefits described in Paragraph 12B, it being understood by Employee that
he shall be paid and receive only one set of severance payments and benefits.

 

D.
Termination for Cause, Death or Disability, or Resignation. If Employee’s employment with the Company terminates
voluntarily by Employee other than for Good Reason pursuant to Paragraph 12C above, for Cause by the Company or due to Employee’s
death or disability, then payments of compensation by the Company to Employee hereunder will terminate immediately (except as
to amounts already earned).

 

    	 	9	 

    	 

    

 

E.
Definitions.

 

1.
“Cause.” For all purposes under this Agreement, “Cause” is defined as (i) gross negligence
or willful failure to perform Employee’s duties and responsibilities to the Company; (ii) commission of any act of fraud,
theft, embezzlement, financial dishonesty or any other willful misconduct that has caused or is reasonably expected to result
in injury to the Company; (iii) conviction of, or pleading guilty or nolo contendere to, any felony or a lesser crime involving
dishonesty or moral turpitude; or (iv) material breach by Employee of any of his obligations under this Agreement or any written
agreement or covenant with the Company, including the policies adopted from time to time by the Company applicable to all employees.

 

2.
“Good Reason.” For all purposes under this Agreement, “Good Reason” is defined as Employee’s
resignation within thirty (30) days following the expiration of any Company cure period (discussed below) following the occurrence
of one or more of the following, without Employee’s express written consent: (i) a material reduction of Employee’s
duties, authority, reporting level, or responsibilities, relative to Employee’s duties, authority, reporting level, or responsibilities
in effect immediately prior to such Change in Control; (ii) a material reduction in Employee’s base compensation; or (iii)
the Company’s requiring of Employee to change the principal location at which Employee is to perform his services by more
than fifty (50) miles. Employee will not resign for Good Reason without first providing the Company with written notice within
thirty (30) days of the initial occurrence of the event that Employee believes constitutes “Good Reason” specifically
identifying the acts or omissions constituting the grounds for Good Reason and a reasonable cure period of not less than thirty
(30) days following the date of such notice during which such condition shall not have been cured.

 

3.
“Change in Control.” For all purposes under this Agreement, a “Change in Control” means
a Change in Control, as defined in the Plan, that occurs after the date hereof; provided, however, that a liquidation,
dissolution or winding up of the Company or change in the state of the Company’s incorporation shall not constitute a Change
in Control event for purposes of this Agreement nor shall any change in percentage ownership of the Company held by OrbiMed Advisors
LLC or any of its affiliates, whether as a result of a conversion of debt into equity or otherwise, constitute a Change in Control
event for purposes of this Agreement.

 

F.
No Other Benefits. In the event of a termination of Employee’s employment with the Company, the provisions of this
Paragraph 12 are Employee’s exclusive right to severance benefits and are in lieu of participation in any other severance
policy or plan to which Employee might otherwise be entitled.

 

G.
Termination from any Offices Held. Upon his termination of employment with the Company, Employee agrees that and any and
all offices held, if applicable, shall be automatically terminated. Employee agrees to cooperate with the Company and execute
any documents reasonably required by the Company or competent authorities to effect this provision.

 

13.
GENERAL PROVISIONS.

 

A.
Governing Law; Consent To Personal Jurisdiction. The laws of the State of Minnesota shall govern the Employee’s employment
and this Agreement without regard to conflict of laws principles. Employee and the Company each hereby consents to the personal
jurisdiction of the state courts located in Hennepin County, State of Minnesota, and the federal district court sitting in Hennepin
County, State of Minnesota, if that court otherwise possesses jurisdiction over the matter, for any legal proceeding concerning
Employee’s employment or termination of employment, or arising from or related to this Agreement or any other agreement
executed between Employee and the Company.

 

B.
Expenses. Except as otherwise provided in Employee’s Indemnification Agreement with the Company or any other agreement
between the Company and Employee, Employee and the Company hereby consents that each shall be responsible for their own legal
expenses for any legal proceeding related to this Agreement or any other agreement executed between Employee and the Company.

 

    	 	10	 

    	 

    

 

C.
Entire Agreement. This Agreement, together with the Exhibits hereto, sets forth this entire Agreement between the Company
(and any of its related or affiliated entities, officers, agents, owners or representatives) and Employee relating to the subject
matter herein, and supersedes any and all prior discussions and agreements, whether written or oral, on the subject matter hereof,
including without limitation that certain offer letter dated September 23, 2019 between the Parties, which includes the Employment
Offer Term Sheet provided to Employee by the Company prior to the commencement of his employment with the Company. To the extent
that this Agreement may conflict with the terms of another written agreement between Employee and the Company, the terms of this
Agreement will control.

 

D.
Modification. No modification of or amendment to this Agreement will be effective unless in writing and signed by Employee
and an authorized representative of the Company.

 

E.
Waiver. The Company’s failure to enforce any provision of this Agreement shall not act as a waiver of its ability
to enforce that provision or any other provision. The Company’s failure to enforce any breach of this Agreement shall not
act as a waiver of that breach or any future breach. No waiver of any of the Company’s rights under this Agreement will
be effective unless in writing. Any such written waiver shall not be deemed a continuing waiver unless specifically stated, and
shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for
the future or as to any act other than that specifically waived.

 

F.
Successors and Assigns. This Agreement shall be assignable to, and shall inure to the benefit of, the Company’s,
affiliates, subsidiaries, successors and assigns. Employee shall not have the right to assign his rights or obligations under
this Agreement.

 

G.
Construction. The language used in this Agreement will be deemed to be language chosen by Employee and the Company to express
their mutual intent, and no rules of strict construction will be applied against either Party.

 

H.
Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be enforceable, and all
of which together shall constitute one agreement. Signatures of the parties that are transmitted in person or by facsimile or
e-mail shall be accepted as originals.

 

I.
Further Assurances. Employee agrees to execute any proper oath or verify any document required to carry out the terms of
this Agreement.

 

J.
Title and Headings. The titles, captions and headings of this Agreement are included for ease of reference only and will
be disregarded in interpreting or construing this Agreement.

 

K.
Notices. All notices and communications that are required or permitted to be given under this Agreement shall be in writing
and shall be sufficient in all respects if given and delivered in person, by electronic mail, by facsimile, by overnight courier,
or by certified mail, postage prepaid, return receipt requested, to the receiving Party at such Party’s address shown in
the signature blocks below or to such other address as such Party may have given to the other by notice pursuant to this Paragraph.
Notice shall be deemed given (i) on the date of delivery in the case of personal delivery, electronic mail or facsimile, or (ii)
on the delivery or refusal date as specified on the return receipt in the case of certified mail or on the tracking report in
the case of overnight courier.

 

    	 	11	 

    	 

    

 

L.
Section 409A. The amounts payable under this Agreement are intended to be exempt from the requirements of Section 409A
of the Internal Revenue Code of 1986, as amended (“Section 409A”). Any payments due under this Agreement on
account of a termination of employment shall only be payable if the termination constitutes a “separation from service”
within the meaning of Section 409A. To the extent that any such payments are determined to be subject to Section 409A, (i) the
terms of this Agreement shall be interpreted to avoid incurring any penalties under Section 409A, (ii) any right to a series of
installment payments is to be treated as a right to a series of separate payments, and (iii) any payments due to a “specified
employee” of a publicly-traded company upon a separation from service shall be delayed until the first day of the seventh
month following such separation from service. Notwithstanding the foregoing, in no event shall the Company be responsible for
any taxes or penalties due under Section 409A.

 

14.
EMPLOYEE’S ACKNOWLEDGMENTS. Employee acknowledges that he is executing this Agreement voluntarily and without duress
or undue influence by the Company or anyone else and that Employee has carefully read this Agreement and fully understands the
terms, consequences, and binding effect of this Agreement.

 

IN
WITNESS WHEREOF, and intending to be legally bound, the Parties have executed this Employment Agreement as of the date first written
above.

 

	EMPLOYEE	 	XTANT
    MEDICAL HOLDINGS, INC.
	 	 	 
	/s/
    Sean E. Browne	 	/s/
    Jeffrey Peters
	Sean
    E. Browne	 	Jeffrey
    Peters
	 	 	Chair
    of the Board of Directors
	[Address]	 	 

 

    	 	12	 

    	 

    

 

EXHIBIT
A

LIST
OF PRIOR INVENTIONS AND ORIGINAL WORKS OF AUTHORSHIP

 

IS
A LIST ATTACHED? (PLEASE CHECK): _____YES _____NO

 

NOTE:
The following is a list of all Prior Inventions made, conceived, developed or reduced to practice by Employee prior to his employment
with the Company.

 

IF
NO SUCH LIST IS ATTACHED, THAT MEANS EMPLOYEE IS NOT ASSERTING THE EXISTENCE OF ANY PRIOR INVENTIONS.

 

    	 	13	 

    	 

    

 

EXHIBIT
B

 

TERMINATION
CERTIFICATE

 

I
hereby represent and certify that I have in all material respects complied with my obligations to the Company under the Employment
Agreement between the Company and me to which the form of this Certificate is attached as Exhibit B.

 

I
also represent that on or before my last day, I have specifically returned the following items:

 

	 	[  ]	Computer/laptop
	 	 	 
	 	[  ]	Keys/access
    cards
	 	 	 
	 	[  ]	Company
    credit card
	 	 	 
	 	[  ]	Other
    equipment (please list)_______________________________________________

 

____________________________________________________________________________

 

    	 	14	 

    	 

    

 

EXHIBIT
C

 

FORM
OF SEPARATION AGREEMENT AND RELEASE

 

This
Separation Agreement (“Agreement”) and the Release, which is attached and incorporated by reference as Exhibit
A (“Release”), are made by and between Sean E. Browne (“Employee”), and Xtant Medical
Holdings, Inc., its affiliates, related or predecessor corporations, subsidiaries, successors and assigns (“Employer”).

 

Employer
and Employee (collectively, “Parties”) wish to end their employment relationship in an honorable, dignified
and orderly fashion. Toward that end, the Parties have agreed to separate according to the following terms.

 

IN
CONSIDERATION OF THIS AGREEMENT, THE PARTIES AGREE AS FOLLOWS:

 

1.
Termination. Employee’s employment shall end on a date and time Employer shall determine (“Termination Date”).

 

2.
Consideration. Employer shall, (1) after receipt of a fully executed Agreement and Release; (2) after expiration of all
applicable rescission periods; and (3) provided Employee complies with her obligations under this Agreement, provide Employee
with separation benefits (“Consideration”) in compliance with Employee’s Employment Agreement (“Exhibit
B”):

 

3.
Termination of Benefits. Except as otherwise provided by this Agreement, Employee’s participation in Employer’s
employee benefits, bonus, and all other compensation or commission plans, will terminate on the Termination Date, unless otherwise
provided by law, or benefit plan. Employee shall receive no compensation or benefits under such plans, except as specifically
provided in Section 2 of this Agreement.

 

4.
Execution of Agreement and Release of all Claims. Employee agrees to fully execute this Agreement, and the Release attached
as Exhibit A, releasing any and all actual or potential claims which may have arisen at any time during her employment
with or termination from employment with Employer. Employee’s failure to execute this Agreement and/or Release, or any attempt
to rescind this Agreement or that Release, shall terminate this Agreement, and the Parties’ respective rights and obligations
under this Agreement.

 

5.
Satisfactory Performance and Cooperation During Transition. Employee shall fully cooperate with Employer in responding
to questions, providing assistance and information, and defending against claims of any type, and will otherwise assist Employer
as Employer may request through Employee’s Termination Date (“Transition Period”). More specifically:

 

(a)
During the Transition Period, Employee shall reasonably cooperate with Employer as it meets and otherwise communicates/works,
with Employer’s employees, customers, strategic relationships, consultants, and vendors on the transition of Employee’s
duties to other individuals. Employee shall be available, upon reasonable notice, during business hours to respond to Employer’s
questions and electronic communications. Employer shall reimburse Employee for Employee’s reasonable out-of-pocket expenses
(such reimbursement shall not include compensation for any such time or Employee’s attorney’s fees) incurred in accordance
with this paragraph upon submission of receipts to Employer for such expenses.

____________________

EMPLOYEE
INITIALS

 

    	 

    	 

    

 

(b)
Employee shall not, absent Employer’s specific approval, initiate any form of communication with Employer’s employees,
customers or strategic partners regarding Employer, Employer’s products or Employees, and shall communicate with such persons
in the above capacity only in conjunction with person(s) who Employer has designated to participate in such communications.

 

6.
Stipulation of No Charges. Employee affirmatively represents that he has not filed nor caused to be filed any charges,
claims, complaints, or actions against Employer before any federal, state, or local administrative agency, court, or other forum.
Except as expressly provided in this Agreement or required by law, Employee acknowledges and agrees that he has been paid all
wages, bonuses, compensation, benefits and other amounts that are due, with the exception of any vested right under the terms
of a written ERISA-qualified benefit plan. Employee waives any right to any form of recovery or compensation from any legal action,
excluding any action claiming this Agreement and Release violate the Age Discrimination in Employment Act (“ADEA”)
and/or the Older Workers Benefit Protection Act (“OWBPA”), filed or threatened to be filed by Employee or on
Employee’s behalf based on Employee’s employment, terms of employment, or separation from, Employer. Employee understands
that any Consideration paid to Employee pursuant to this Agreement may be deducted from any monetary award he may receive as a
result of a successful ADEA and/or OWBPA claim or challenge to this Agreement and Release. This does not preclude Employee from
eligibility for unemployment benefits, and does not preclude or obstruct Employee’s right to file a Charge with the Equal
Employment Opportunity Commission (“EEOC”).

 

7.
Return of Property. Employee shall return, on or before the Termination Date, all Employer property in Employee’s
possession or control, including but not limited to any drawings, orders, files, documents, notes, computers, laptop computers,
fax machines, cell phones, smart devices, access cards, fobs, keys, reports, manuals, records, product samples, correspondence
and/or other documents or materials related to Employer’s business that Employee has compiled, generated or received while
working for Employer, including all electronically stored information, copies, samples, computer data, disks, or records of such
materials. Employee must return to Employer, and Employee shall not retain, any Employer property as previously defined in this
section.

 

8.
Agreement Not to Seek Future Employment. Employee agrees that he will never knowingly seek nor accept employment or a consulting/independent
contractor relationship with Employer, nor any other entity owned by Xtant Medical Holdings, Inc., either directly or through
a consulting firm.

 

9.
Withholding For Amounts Owed to Employer. Execution of this Agreement shall constitute Employee’s authorization for
Employer to make deductions from Employee’s Consideration, for Employee’s indebtedness to Employer, or to repay Employer
for unaccrued Paid Time Off already taken, employee purchases, wage or benefit overpayment, or other Employer claims against Employee,
to the extent permitted by applicable law.

 

10.
Non-Disparagement. Employee agrees that, unless it is in the context of an EEOC or other civil rights or other government
enforcement agency investigation or proceeding, Employee will make no critical, disparaging or defamatory comments regarding Employer
or any Released Party, as defined in the Release, in any respect or make any comments concerning the conduct or events which precipitated
Employee’s separation. Furthermore, Employee agrees not to assist or encourage in any way any individual or group of individuals
to bring or pursue a lawsuit, charge, complaint, or grievance, or make any other demands against Employer or any Released Party.
This provision does not prohibit Employee from participating in an EEOC or other civil rights or other government enforcement
agency charge, investigation or proceeding, or from providing testimony or documents pursuant to a lawful subpoena or as otherwise
required by law.

____________________

EMPLOYEE
INITIALS

 

    	2

    	 

    

 

11.
Compliance with Employment Agreement and Protection of Confidential Information. Employee agrees to comply with the provisions
of and the restrictions set forth in his Employment Agreement (Exhibit B). Employee agrees to never divulge or use any trade secrets,
confidential information, or other proprietary information of Employer which Employee obtained or to which Employee had access
during his employment with Employer. For purposes of this latter obligation, “Confidential Information” means
information that is not generally known and that is proprietary to Employer or that Employer is obligated to treat as proprietary.
It includes, but is not limited to, information or data of Employer concerning its business, financial statements, patient contact
information and data, products, plans, ideas, drawings, designs, concepts, inventions, discoveries, improvements, patent applications,
know-how, trade secrets, prototypes, processes, techniques and other proprietary information. It does not include information
that Employee can establish: (i) is already lawfully in the possession of Employee through independent means at the time of disclosure
thereof; (ii) is or later becomes part of the public domain through no fault of Employee; (iii) is lawfully received by Employee
from a third party having no obligations of confidentiality to Employer; or (iv) is required to be disclosed by order of a governmental
agency or by a court of competent jurisdiction. Any information that Employee knows or should reasonably know is Confidential
Information, or that Employer treats as Confidential Information, will be presumed to be Confidential Information.

 

12.
Confidentiality. It is the intent of Employer and Employee that the terms of this Agreement be treated as Confidential,
except to the extent this Agreement is required to be disclosed under applicable federal securities laws, as determined by Employer.
Employee warrants that he has not and agrees that he will not in the future disclose the terms of this Agreement, or the terms
of the Consideration to be paid by Employer to Employee as part of this Agreement, to any person other than his attorney, tax
advisor, spouse, or representatives of any state or federal regulatory agency, who shall be bound by the same prohibitions against
disclosure as bind Employee, and Employee shall be responsible for advising those individuals or agencies of this confidentiality
provision. Employee shall not provide or allow to be provided to any person this Agreement, or any copies thereof, nor shall Employee
now or in the future disclose the terms of this Agreement to any person, with the sole exception of communications with Employee’s
spouse, attorney and tax advisor, unless otherwise ordered to do so by a court or agency of competent jurisdiction.

 

13.
Invalidity. In case any one or more of the provisions of this Agreement or Release shall be held invalid, illegal or unenforceable
in any respect, the validity, legality and enforceability of the remaining provisions contained in this Agreement and Release
will not in any way be affected or impaired thereby.

 

14.
Non-Admissions. The Parties expressly deny any and all liability or wrongdoing and agree that nothing in this Agreement
or the Release shall be deemed to represent any concession or admission of such liability or wrongdoing or any waiver of any defense.

 

15.
Governing Law. This Agreement shall be governed by and construed in accordance with the laws of Minnesota, without reference
to its choice of law rules. Any action for breach of this Agreement shall be brought in the federal or state court, as appropriate,
located in Minnesota.

 

16.
Voluntary and Knowing Action. Employee acknowledges that he has had sufficient opportunity to review the terms of this
Agreement and attached Release, and that he has voluntarily and knowingly entered into this Agreement. Employer shall not be obligated
to provide any Consideration to Employee pursuant to this Agreement in the event Employee elects to rescind/revoke the Release.
The Release becomes final and binding on the Parties upon expiration of the rescission/revocation period, provided Employee has
not exercised his option to rescind/revoke the Release. Any attempt by Employee to rescind any part of the Release obligates Employee
to immediately return all Consideration under this Agreement to counsel for Employer.

____________________

EMPLOYEE
INITIALS

 

    	3

    	 

    

 

17.
Legal Counsel and Fees. Except as otherwise provided in this Agreement and the Release, the Parties agree to bear their
own costs and attorneys’ fees, if any. Employee acknowledges that Employer, by this Agreement, has advised his that he may
consult with an attorney of his choice prior to executing this Agreement and the Release. Employee acknowledges that he has had
the opportunity to be represented by legal counsel during the negotiation and execution of this Agreement and the Release, and
that he understands he will be fully bound by this Agreement and the Release.

 

18.
Modification. This Agreement may be modified or amended only by a writing signed by both Employer and Employee.

 

19.
Successors and Assigns. This Agreement is binding on and inures to the benefit of the Parties’ respective successors
and assigns.

 

20.
Notices. Any notice, request or demand required or desired to be given hereunder shall be in writing and shall be addressed
as follows:

 

	 	If
    to Employer:	Jeffrey
    Peters
	 	 	Chair
    of the Board of Directors
	 	 	Xtant
    Medical Holdings, Inc.
	 	 	664
    Cruiser Lane
	 	 	Belgrade,
    MT 59714

 

	 	With
    a copy to:	Thomas
    A. Letscher
	 	 	Fox
    Rothschild LLP
	 	 	Campbell
    Mithun Tower - Suite 2000
	 	 	222
    South Ninth Street
	 	 	Minneapolis,
    MN 55402-3338

 

	 	If
    to Employee:	Sean
    E. Browne
	 	 	Address
	 	 	Address

 

Either
party may change its address by giving the other Party written notice of its new address.

 

21.
Waivers. No failure or delay by either Party in exercising any right or remedy under this Agreement will waive any provision
of this Agreement.

 

22.
Miscellaneous. This Agreement may be executed simultaneously in counterparts, each of which shall be an original, but all
of which shall constitute but one and the same agreement.

 

23.
Entire Agreement. Except for any continuing, post-employment, obligations under Exhibit B, or employment related
Employer policy, or as otherwise provided in this Agreement, this Agreement, the attached Release, and Exhibit B are the
entire Agreement between Employer and Employee relating to his employment and his separation. Employee understands that this Agreement
and the Release cannot be changed unless it is done in writing and signed by both Employer and Employee.

____________________

EMPLOYEE
INITIALS

 

    	4

    	 

    

 

	 	EMPLOYEE
	 	 
	 	 
	 	Sean
    E. Browne
	 	Dated:
    ___________, 20____
	 	 
	 	XTANT
    MEDICAL HOLDINGS, INC.
	 	 
	 	By:	                                         
	 	Its:	 
	 	 	 
	 	Dated:
    ___________, 20____

____________________

EMPLOYEE
INITIALS

 

    	5

    	 

    

 

EXHIBIT
A

 

RELEASE

 

	I.	Definitions.
    I, Sean E. Browne, intend all words used in this release (“Release”) to have their plain meanings in ordinary
    English. Technical legal words are not needed to describe what I mean. Specific terms I use in this Release have the following
    meanings:

 

	 	A.	“I,”
    “Me,” and “My” individually and collectively mean Sean E. Browne and anyone who has
    or obtains or asserts any legal rights or claims through Me or on My behalf.
	 	 	 
	 	B.	“Employer”
    as used in this Release, shall at all times mean Xtant Medical Holdings, Inc. and any affiliates, related or predecessor corporations,
    parent corporations or subsidiaries, successors and assigns.
	 	 	 
	 	C.	“Released
    Party” or “Released Parties” as used in this Release, shall at all times mean Xtant Medical Holdings,
    Inc. and its affiliates, related or predecessor corporations, subsidiaries, successors and assigns, present or former officers,
    directors, shareholders, agents, employees, representatives and attorneys, whether in their individual or official capacities,
    and its affiliates, related or predecessor corporations, parent corporations or subsidiaries, successors and assigns, present
    or former officers, directors, shareholders, agents, employees, representatives and attorneys, whether in their individual
    or official capacities, benefit plans and plan administrators, and insurers, insurers’ counsel, whether in their individual
    or official capacities, and the current and former trustees or administrators of any pension, 401(k), or other benefit plan
    applicable to the employees or former employees of Employer, in their official and individual capacities.
	 	 	 
	 	D.	“My
    Claims” mean any and all of the actual or potential claims of any kind whatsoever I may have had, or currently may
    have against Employer or any Released Party, whether known or unknown, that are in any way related to My employment with or
    separation from employment with Employer, including, but not limited to any claims for: invasion of privacy; breach of written
    or oral, express or implied, contract; fraud; misrepresentation; violation of the Age Discrimination in Employment Act of
    1967 (“ADEA”), 29 U.S.C. § 626, as amended; the Genetic Information Nondiscrimination Act of 2008
    (“GINA”), 42 U.S.C. § 2000, et seq., the Older Workers Benefit Protection Act of 1990 (“OWBPA”),
    29 U.S.C. § 626(f), Title VII of the Civil Rights Act of 1964 (“Title VII”), 42 U.S.C. § 2000e,
    et seq., the Americans with Disabilities Act (“ADA”), 29 U.S.C. § 2101, et seq., and as amended
    (“ADAAA”), the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended,
    29 U.S.C. § 1001, et seq., Equal Pay Act (“EPA”), 29 U.S.C. § 206(d), the Worker Adjustment
    and Retraining Notification Act (“WARN”), 29 U.S.C. § 2101, et seq., the Family and Medical
    Leave Act (“FMLA”), 29 U.S.C. § 2601, et seq.; National Labor Relations Act, 29 U.S.C. §
    141, et seq., the False Claims Act, 31 U.S.C. § 3729, et seq., Anti-Kickback Statute, 42 U.S.C. §
    1320a, et seq., the Minnesota Human Rights Act, Minn. Stat. § 363A.01, et seq., Minn. Stat. § 181,
    et seq., the Minnesota Whistleblower Act, Minn. Stat. § 181.931, et seq., the Montana Human Rights Act,
    Mont. Code Ann. § 49-1-101, et seq., the Montana Wrongful Discharge for Employment Act, Mont. Code Ann. §
    39-2-901, et seq., the Montana Wage Payment Act, Mont. Code Ann. § 39-3-201, et. seq., the Texas Commission
    on Human Rights Act, Tex. Lab. Code Ann. §21.001, et seq., Texas Emergency Evacuation Discrimination Act, Tex. Lab. Code
    Ann. §22.001, et seq., Texas Payday Law, Tex. Lab. Code Ann. §61.001, et seq., Texas Minimum Wage Act, Tex. Lab.
    Code Ann. §62.001, et seq., Hazard Communication Act, Tex. Health & Safety Code Ann. § 502.001, et seq., Texas’
    Juror Protection Law, Tex. Civ. Prac. & Rem. Code Ann. § 122.001, et seq., Texas’ State Militia Protection
    Law, Tex. Gov. Code Ann. § 431.006, Texas Labor Organization Law, Tex. Lab. Code Ann. § 101.001 et seq. and Tex.
    Rev. Civ. Stat. Ann. art. 5196(7), Texas’ Workers’ Compensation law, Tex. Lab. Code Ann. §§ 451.001
    et seq., Texas’ Wage, Garnishment law, Tex. Fam. Code Ann. §§ 158.209, et seq.; Texas’ Election Law,
    Tex. Elec. Code Ann. §§ 161.007, 276.004; Texas’ subpoena law, Tex. Lab. Code Ann. § 52.051; Texas’s
    Employee Coercion Law, Tex. Lab. Code Ann. § 52.041, the Texas Constitution, or any and all other Minnesota, Montana,
    Texas and other state human rights or fair employment practices statutes, administrative regulations, or local ordinances,
    and any other Minnesota, Montana, Texas or other federal, state, local or foreign statute, law, rule, regulation, ordinance
    or order, all as amended. This includes, but is not limited to, claims for violation of any civil rights laws based on protected
    class status; claims for assault, battery, defamation, intentional or negligent infliction of emotional distress, breach of
    the covenant of good faith and fair dealing; promissory estoppel; negligence; negligent hiring; retention or supervision;
    retaliation; constructive discharge; violation of whistleblower protection laws; unjust enrichment; violation of public policy;
    and, all other claims for unlawful employment practices, and all other common law or statutory claims.

____________________

EMPLOYEE
INITIALS

 

    	Ex. A-1

    	 

    

 

	II.	Agreement
    to Release My Claims. Except as stated in Section V of this Release, I agree to release all My Claims and waive any
    rights to My Claims. I also agree to withdraw any and all of My charges and lawsuits against Employer; except that
    I may, but am not required to, withdraw or dismiss, or attempt to withdraw or dismiss, any charges that I may have pending
    against Employer with the Employment Opportunity Commission (“EEOC”) or other civil rights enforcement
    agency. In exchange for My agreement to release My Claims, I am receiving satisfactory Consideration from Employer to which
    I am not otherwise entitled by law, contract, or under any Employer policy. The Consideration I am receiving is a full and
    fair consideration for the release of all My Claims. Employer does not owe Me anything in addition to what I will be receiving
    according to the Separation Agreement which I have signed.
	 	 
	III.	Unknown
    Claims. In waiving and releasing any and all actual, potential, or threatened claims against Employer, whether or
    not now known to me, I understand that this means that if I later discover facts different from or in addition to those facts
    currently known by me, or believed by me to be true, the waivers and releases of this Release will remain effective in all
    respects – despite such different or additional facts and my later discovery of such facts, even if I would not have
    agreed to the Separation Agreement and this Release if I had prior knowledge of such facts.
	 	 
	IV.	Confirmation
    of No Claims, Etc. I am not aware of any other facts, evidence, allegations, claims, liabilities, or demands relating
    to alleged or potential violations of law that may give rise to any claim or liability on the part of any Released Party under
    the Securities Exchange Act of 1934, the Sarbanes–Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer
    Protection Act, the False Claims Act, the Anti-kickback Statute. I understand that nothing in this Release interferes with
    My right to file a complaint, charge or report with any law enforcement agency, with the Securities and Exchange Commission
    (“SEC”) or other regulatory body, or to participate in any manner in an SEC or other governmental investigation
    or proceeding under any such law, statute or regulation, or to require notification or prior approval by Employer of any such
    a complaint, charge or report. I understand and agree, however, that I waive My right to recover any whistleblower award under
    the Securities Exchange Act of 1934, the Sarbanes–Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer
    Protection Act, or other individual relief in any administrative or legal action whether brought by the SEC or other governmental
    or law enforcement agency, Me, or any other party, unless and to the extent that such waiver is contrary to law. I agree that
    the Released Parties reserve any and all defenses which they might have against any such allegations or claims brought by
    Me or on My behalf. I understand that Employer is relying on My representations in this Release and related Separation Agreement.

____________________

EMPLOYEE
INITIALS

 

    	Ex. A-2

    	 

    

 

	V.	Exclusions
    from Release.

 

	 	A.	The
    term “Claims” does not include My rights, if any, to claim the following: unemployment insurance benefits; workers
    compensation benefits; claims for My vested post-termination benefits under any 401(k) or similar retirement benefit plan;
    My rights to group medical or group dental insurance coverage pursuant to section 4980B of the Internal Revenue Code of 1986,
    as amended (“COBRA”); My rights to enforce the terms of this Release; or My rights to assert claims that
    are based on events occurring after this Release becomes effective.
	 	 	 
	 	B.	Nothing
    in this Release interferes with My right to file or maintain a charge with the Equal Employment Opportunity Commission or
    other local civil rights enforcement agency, or participate in any manner in an EEOC or other such agency investigation or
    proceeding. I, however, understand that I am waiving My right to recover individual relief including, but not limited to,
    back pay, front pay, reinstatement, attorneys’ fees, and/or punitive damages, in any administrative or legal action
    whether brought by the EEOC or other civil rights enforcement agency, Me, or any other party.
	 	 	 
	 	C.	Nothing
    in this Release interferes with My right to challenge the knowing and voluntary nature of this Release under the ADEA and/or
    OWBPA.
	 	 	 
	 	D.	I
    agree that Employer reserves any and all defenses, which it has or might have against any claims brought by Me. This includes,
    but is not limited to, Employer’s right to seek available costs and attorneys’ fees as allowed by law, and to
    have any monetary award granted to Me, if any, reduced by the amount of money that I received in consideration for this Release.

 

	VI.	Older
    Workers Benefit Protection Act. The Older Workers Benefit Protection Act applies to individuals age 40 and older and
    sets forth certain criteria for such individuals to waive their rights under the Age Discrimination in Employment Act in connection
    with an exit incentive program or other employment termination program. I understand and have been advised that, if applicable,
    the above release of My Claims is subject to the terms of the OWBPA. The OWBPA provides that a covered individual cannot waive
    a right or claim under the ADEA unless the waiver is knowing and voluntary. If I am a covered individual, I acknowledge that
    I have been advised of this law, and I agree that I am signing this Release voluntarily, and with full knowledge of its consequences.
    I understand that Employer is giving Me twenty-one (21) days from the date I received a copy of this Release to decide whether
    I want to sign it. I acknowledge that I have been advised to use this time to consult with an attorney about the effect of
    this Release. If I sign this Release before the end of the twenty-one (21) day period it will be My personal, voluntary decision
    to do so, and will be done with full knowledge of My legal rights. I agree that material and/or immaterial changes to the
    Separation Agreement or this Release will not restart the running of this consideration period. I also acknowledge that the
    Separation Agreement, this Release and any other attachments or exhibits have each been written in a way that I understand.

____________________

EMPLOYEE
INITIALS

 

    	Ex. A-3

    	 

    

 

	VII.	Right
    to Rescind and/or Revoke. I understand that insofar as this Release relates to My rights under the Minnesota Human
    Rights Act, it shall not become effective or enforceable until fifteen (15) days after I sign it. Any such revocation must
    be in writing and hand-delivered to Employer or, if sent by mail, postmarked within the applicable time period, sent by certified
    mail, return receipt requested, and addressed as follows:

 

	 	A.	post-marked
    within the fifteen (15) day revocation period;
	 	 	 
	 	B.	properly
    addressed to:

 

Jeffrey
Peters

Chair
of the Board of Directors

Xtant
Medical Holdings, Inc.

664
Cruiser Lane

Belgrade,
MT 59714

 

and

 

	 	C.	sent
    by certified mail, return receipt requested.

 

I
understand that the Consideration I am receiving for settling and releasing My Claims is contingent upon My agreement to be bound
by the terms of this Release. Accordingly, if I decide to rescind or revoke this Release, I understand that I am not entitled
to the Consideration described in the Separation Agreement. I further understand that if I attempt to rescind or revoke My release
of any claim, I must immediately return to Employer all Consideration I have received under My Agreement.

 

	VIII.	I
    Understand the Terms of this Release. I have had the opportunity to read this Release carefully and understand all
    its terms. I have had the opportunity to review this Release with My own attorney. In agreeing to sign this Release, I have
    not relied on any oral statements or explanations made by Employer, including its employees or attorneys. I understand and
    agree that this Release and the attached Agreement contain all the agreements between Employer and Me. We have no other written
    or oral agreements.

 

	 	 
	 	Sean
    E. Browne
	 	Dated:
    ____________, 20____

____________________

EMPLOYEE
INITIALS

 

    	Ex. A-4

    	 

    

 

EXHIBIT
B

 

AGREEMENTExhibit 4.1

    FORM OF SUBORDINATED NOTE

    BAY BANKS OF VIRGINIA, INC.

    5.625% FIXED-TO-FLOATING RATE SUBORDINATED NOTE DUE 2029

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

    THIS SUBORDINATED NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE PAYING AGENCY AND REGISTRAR AGREEMENT, DATED AS OF OCTOBER 7, 2019
      (THE “PAYING AGENT AGREEMENT”), BETWEEN BAY BANKS OF VIRGINIA, INC. AND UMB BANK N.A., AS PAYING AGENT AND REGISTRAR, AND IS REGISTERED IN THE NAME OF CEDE & CO AS NOMINEE OF THE DEPOSITORY TRUST COMPANY (“DTC”) OR A NOMINEE OF DTC. THIS SUBORDINATED NOTE IS EXCHANGEABLE FOR SUBORDINATED NOTES REGISTERED IN THE NAME OF A PERSON OTHER THAN DTC OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES
      DESCRIBED IN THE PAYING AGENT AGREEMENT, AND NO TRANSFER OF THIS SUBORDINATED NOTE (OTHER THAN A TRANSFER OF THIS SUBORDINATED NOTE AS A WHOLE BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC) MAY BE REGISTERED
      EXCEPT IN LIMITED CIRCUMSTANCES SPECIFIED IN THE PAYING AGENT AGREEMENT.

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

    TRANSFERS OF THIS SUBORDINATED NOTE WILL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR A SUCCESSOR THEREOF
      OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF THIS SUBORDINATED NOTE WILL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH RESTRICTIONS SET FORTH IN THE PAYING AGENT AGREEMENT IDENTIFIED HEREIN.

    THE INDEBTEDNESS EVIDENCED BY THIS SUBORDINATED NOTE IS SUBORDINATED AND JUNIOR IN RIGHT OF PAYMENT TO SENIOR INDEBTEDNESS (AS DEFINED
      IN SECTION 3 OF THIS SUBORDINATED NOTE) OF BAY BANKS OF VIRGINIA, INC. (THE “COMPANY”),
      INCLUDING OBLIGATIONS OF THE COMPANY TO ITS GENERAL AND SECURED CREDITORS AND IS UNSECURED.  IT IS INELIGIBLE AS COLLATERAL FOR ANY EXTENSION OF CREDIT BY THE COMPANY OR ANY OF ITS SUBSIDIARIES.

     

    

    
      1

      
        

    

    IN THE EVENT OF LIQUIDATION ALL HOLDERS OF SENIOR INDEBTEDNESS OF THE COMPANY SHALL BE ENTITLED TO BE PAID IN FULL WITH SUCH INTEREST
      AS MAY BE PROVIDED BY LAW BEFORE ANY PAYMENT SHALL BE MADE ON ACCOUNT OF PRINCIPAL OF OR INTEREST ON THIS SUBORDINATED NOTE.  AFTER PAYMENT IN FULL OF ALL SUMS OWING TO SUCH HOLDERS OF SENIOR INDEBTEDNESS, THE HOLDER OF THIS SUBORDINATED NOTE,
      TOGETHER WITH THE HOLDERS OF ANY OBLIGATIONS OF THE COMPANY RANKING ON A PARITY WITH THE SUBORDINATED NOTES, SHALL BE ENTITLED TO BE PAID FROM THE REMAINING ASSETS OF THE COMPANY THE UNPAID PRINCIPAL AMOUNT OF THIS SUBORDINATED NOTE PLUS ACCRUED AND
      UNPAID INTEREST THEREON BEFORE ANY PAYMENT OR OTHER DISTRIBUTION, WHETHER IN CASH, PROPERTY OR OTHERWISE, SHALL BE MADE (I) WITH RESPECT TO ANY OBLIGATION THAT BY ITS TERMS EXPRESSLY IS JUNIOR IN THE RIGHT OF PAYMENT TO THE SUBORDINATED NOTES, (II)
      ANY INDEBTEDNESS BETWEEN THE COMPANY AND ANY OF ITS SUBSIDIARIES OR AFFILIATES OR (III) ON ACCOUNT OF ANY SHARES OF CAPITAL STOCK OF THE COMPANY.

    THIS SUBORDINATED NOTE WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN MINIMUM DENOMINATIONS OF ONE THOUSAND DOLLARS (U.S.) ($1,000) AND
      MULTIPLES OF ONE THOUSAND DOLLARS (U.S.) ($1,000) IN EXCESS THEREOF. ANY ATTEMPTED TRANSFER OF THIS SUBORDINATED NOTE IN A DENOMINATION OF LESS THAN ONE THOUSAND DOLLARS (U.S.) ($1,000) SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER.
      ANY SUCH PURPORTED TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF THIS SUBORDINATED NOTE FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF PAYMENTS ON THIS SUBORDINATED NOTE, AND SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO
      INTEREST WHATSOEVER IN THIS SUBORDINATED NOTE.

    THIS SUBORDINATED NOTE MAY BE SOLD ONLY IN COMPLIANCE WITH APPLICABLE FEDERAL AND STATE SECURITIES LAWS. THIS SUBORDINATED NOTE HAS
      NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS, OR ANY OTHER APPLICABLE
      SECURITIES LAWS. NEITHER THIS SUBORDINATED NOTE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS
      EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

    CERTAIN ERISA CONSIDERATIONS:

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

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

     

    

    
      2

      
        

    

    No. [●]CUSIP: [Accredited Investors: 072035 AB4][QIBs: 072035 AA6]

    

    

    BAY BANKS OF VIRGINIA, INC.

    5.625% FIXED-TO-FLOATING RATE SUBORDINATED NOTE DUE 2029

    1. Subordinated Notes.
        This Subordinated Note is one of an issue of notes of Bay Banks of Virginia, Inc., a Virginia corporation (the “Company”), designated as the “5.625%
        Fixed-to-Floating Rate Subordinated Notes due 2029” (the “Subordinated Notes”) issued pursuant to that Subordinated Note Purchase Agreement dated as
        of the Issue Date (as defined below in Section 4(a)) between the Company and the several purchasers of the Senior Notes identified in the signature
        pages thereto (the “Purchase Agreement”).

    2. Payment.
        The Company, for value received, promises to pay to Cede & Co., or its registered assigns, as nominee for The Depository Trust Company (“DTC”),
        the principal sum of [●] Dollars (U.S.) ($[●]), plus accrued but unpaid interest on October 15, 2029 (the “Maturity Date”) and to pay interest
        thereon (i) from and including the Issue Date of the Subordinated Notes to but excluding October 15, 2024 or the earlier redemption date contemplated by Section
            4 of this Subordinated Note (the “Fixed Rate Period”), at the rate of five and six hundred twenty-five thousandths percent (5.625%)
        per annum, computed on the basis of a 360-day year consisting of twelve 30-day months and payable semi-annually in arrears on April 15 and October 15 of each year (each payment date, a “Fixed Interest Payment Date”), beginning April 15, 2020, and (ii) from and including October 15, 2024 to but excluding the Maturity Date or earlier redemption date contemplated by Section 4 of this Subordinated Note (the “Floating Rate Period”), at the
        rate per annum, reset quarterly, equal to the Floating Interest Rate (as defined below in Section 2(b)) determined on the second Business Day (as
        defined below in Section 2(d)) before the first day of the applicable interest period (the “Floating Interest Determination Date”) plus 433.5 basis points, computed on the basis of a 360-day year and the actual number of days elapsed and payable quarterly in arrears (each quarterly period a “Floating Interest Period”) on January 15, April 15, July 15, and October 15 of each year (each payment date, a “Floating Interest Payment Date”). Dollar amounts resulting from this calculation shall be rounded to the nearest cent, with one-half cent being rounded up.

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

    (b) The “Floating Interest Rate”
        means:

    (i) initially Three-Month Term SOFR (as defined below in Section 2(c)(v)(22)).

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

    (1) If the Calculation Agent (as defined below in Section 2(c)(v)(7)), determines prior to the relevant Floating Interest Determination Date that a Benchmark Transition Event (as defined below in Section 2(c)(v)(6)) and its related Benchmark Replacement Date (as defined below in Section 2(c)(v)(5))
        have occurred with respect to Three-Month Term SOFR, then the Company shall promptly provide notice of such determination to the Noteholder and Section 2(c)
        will thereafter apply to all determinations, calculations and quotations made or obtained for the purposes of calculating the Floating Interest Rate payable on the Subordinated Notes during a relevant Floating Interest Period.

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

    (iii) If the then-current Benchmark (as defined below in Section 2(c)(v)(1)) is Three-Month Term SOFR and any of the foregoing provisions concerning the calculation of the Floating Interest Rate and the payment of interest during the Floating Rate Period are
        inconsistent with any of the Three-Month Term SOFR Conventions (as defined below in Section 2(c)(v)(23)) determined by the Company, then the
        relevant Three-Month Term SOFR Conventions will apply.

    (iv) Notwithstanding any other provision of the Subordinated Notes, in the event that the Floating Interest Rate, as determined in
        accordance with this Section 2, is less than zero (0) on any Floating Interest Determination Date, the Floating Interest Rate for the immediately
        following Floating Interest Period shall be deemed to be zero (0).

     

      

    
      3

      
        

    

    (c) Effect of Benchmark Transition Event.

    (i) If the Calculation Agent determines that a Benchmark Transition Event and its related Benchmark Replacement Date have
        occurred prior to the Reference Time (as defined below in Section 2(c)(v)(17)) in respect of any determination of the Benchmark on any date, the
        Benchmark Replacement will replace the then-current Benchmark for all purposes relating to the Subordinated Notes during the relevant Floating Interest Period in respect of such determination on such date and all determinations on all subsequent
        dates.

    (ii) In connection with the implementation of a Benchmark Replacement, the Company will have the right to make Benchmark
        Replacement Conforming Changes (as defined below in Section 2(c)(v)(4)) from time to time.

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

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

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

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

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

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

    (v) As used in this Subordinated Note:

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

    (2) “Benchmark Replacement”
        means the Interpolated Benchmark (as defined below in Section 2(c)(v)(12) with respect to the then-current Benchmark, plus the Benchmark Replacement
        Adjustment (as defined below in Section 2(c)(v)(3)) for such Benchmark; provided that if (a) the Calculation Agent cannot determine the Interpolated
        Benchmark as of the Benchmark Replacement Date or (b) the then-current Benchmark is Three-Month Term SOFR and a Benchmark Transition Event and its related Benchmark Replacement Date have occurred with respect to Three-Month Term SOFR (in which
        event no Interpolated Benchmark with respect to Three-Month Term SOFR shall be determined), then “Benchmark Replacement” means the first alternative
        set forth in the order below that can be determined by the  Calculation Agent, as of the Benchmark Replacement Date:

    a. Compounded SOFR (as defined below in Section
            2(c)(v)(8));

    b. the sum of: (i) the alternate rate of interest that has been selected or recommended by the Relevant Governmental Body (as
        defined below in Section 2(c)(v)(18)) as the replacement for the then-current Benchmark for the applicable Corresponding Tenor (as defined below in
        Section 2(c)(v)(9)) and (ii) the Benchmark Replacement Adjustment;

    c. the sum of: (i) the ISDA Fallback Rate (as defined below in Section 2(c)(v)(16)) and (ii) the Benchmark Replacement Adjustment;

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

     

      

    
      4

      
        

    

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

    a. the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative
        value or zero) that has been selected or recommended by the Relevant Governmental Body for the applicable Unadjusted Benchmark Replacement (as defined below in Section
            2(c)(v)(24));

    b. if the applicable Unadjusted Benchmark Replacement is equivalent to the ISDA Fallback Rate, then the ISDA Fallback Adjustment
        (as defined below in Section 2(c)(v)(15));

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

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

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

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

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

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

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

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

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

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

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

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

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

     

      

    
      5

      
        

    

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

     

      

    
      6

      
        

    

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

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

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

    3. Subordination.

    (a) The indebtedness of the Company evidenced by this Subordinated Note, including the principal and interest on this
        Subordinated Note, shall be subordinate and junior in right of payment to the prior payment in full of all existing claims of creditors of the Company and depositors of Virginia Commonwealth Bank (the “Bank”) whether now outstanding or subsequently created, assumed, guaranteed or incurred (collectively, “Senior
            Indebtedness”), which shall consist of principal of (and premium, if any) and interest, if any, on: (i) all indebtedness and obligations of, or guaranteed or assumed by, the Company for money borrowed, whether or not evidenced by
        bonds, debentures, securities, notes or other similar instruments, and including, but not limited to, deposits of the Bank, and all obligations to the Company’s general and secured creditors; (ii) any deferred obligations of the Company for the
        payment of the purchase price of property or assets acquired other than in the ordinary course of business; (iii) all obligations, contingent or otherwise, of the Company in respect of any letters of credit, bankers’ acceptances, security purchase
        facilities and similar direct credit substitutes; (iv) any capital lease obligations of the Company; (v) all obligations of the Company in respect of interest rate swap, cap or other agreements, interest rate future or option contracts, currency
        swap agreements, currency future or option contracts, commodity contracts and other similar arrangements or derivative products; (vi) all obligations that are similar to those in clauses (i) through (v) of other persons for the payment of which the Company is responsible or liable as
        obligor, guarantor or otherwise arising from an off-balance sheet guarantee; (vii) all obligations of the types referred to in clauses (i) through (vi) of other persons secured by a lien on any property or asset of the Company; and (viii) in the case of (i) through (vii) above, all amendments,
        renewals, extensions, modifications and refunding’s of such indebtedness and obligations; except “Senior Indebtedness” does not include
        (A) the Subordinated Notes, (B) any obligation that by its terms expressly is junior to, or ranks equally in right of payment with, the Subordinated Notes, or (C) any indebtedness between the Company and any of its subsidiaries or Affiliates.  This
        Subordinated Note is not secured by any assets of the Company.  The term “Affiliate(s)” means, with respect to any Person (as such term is defined in
        the Purchase Agreement), such Person’s immediate family members, partners, members or parent and subsidiary corporations, and any other Person directly or indirectly controlling, controlled by, or under common control with said Person and their
        respective Affiliates.

    (b) In the event of liquidation of the Company, holders of Senior Indebtedness shall be entitled to be paid in full with such
        interest as may be provided by law before any payment shall be made on account of principal of or interest on this Subordinated Note.  Additionally, in the event of any insolvency, dissolution, assignment for the benefit of creditors or any
        liquidation or winding up of or relating to the Company, whether voluntary or involuntary, holders of Senior Indebtedness shall be entitled to be paid in full before any payment shall be made on account of the principal of or interest on the
        Subordinated Notes, including this Subordinated Note.  In the event of any such proceeding, after payment in full of all sums owing with respect to the Senior Indebtedness, the registered holders of the Subordinated Notes from time to time (each a
        “Noteholder” and, collectively, the “Noteholders”),
        together with the holders of any obligations of the Company ranking on a parity with the Subordinated Notes, shall be entitled to be paid from the remaining assets of the Company the unpaid principal thereof, and the unpaid interest thereon before
        any payment or other distribution, whether in cash, property or otherwise, shall be made (i) with respect to any obligation that by its terms expressly is junior to in the right of payment to the Subordinated Notes, (ii) any indebtedness between
        the Company and any of its subsidiaries or Affiliates or (iii) on account of any capital stock.

    (c) If there shall have occurred and be continuing (i) a default in any payment with respect to any Senior Indebtedness or (ii)
        an event of default with respect to any Senior Indebtedness as a result of which the maturity thereof is accelerated, unless and until such payment default or event of default shall have been cured or waived or shall have ceased to exist, no
        payments shall be made by the Company with respect to the Subordinated Notes.  The provisions of this paragraph shall not apply to any payment with respect to which the immediately preceding paragraph of this Section 3 would be applicable.

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

     

      

    
      7

      
        

    

    
      	
              4.

            	
              Redemption.

            

    

    (a) Redemption Prior to Fifth Anniversary. 
        This Subordinated Note shall not be redeemable by the Company in whole or in part prior to the fifth anniversary of the date upon which this Subordinated Note was originally issued (the “Issue Date”), except in the event of a: (i) Tier 2 Capital Event (as defined below); (ii) Tax Event (as defined below); or (iii) Investment Company Event (as defined below).  Upon the occurrence of a Tier 2
        Capital Event, a Tax Event or an Investment Company Event, the Company may redeem this Subordinated Note in whole or in part at any time, upon giving not less than ten (10) days’ notice to the holder of this Subordinated Note at an amount equal to
        one hundred percent (100%) of the outstanding principal amount being redeemed plus accrued but unpaid interest, to but excluding the redemption date.  “Tier 2
            Capital Event” means the receipt by the Company of an opinion of counsel to the Company to the effect that there is a material risk that this Subordinated Note no longer qualifies as “Tier 2” Capital (or its then equivalent) as a
        result of a change in interpretation or application of law or regulation by any judicial, legislative or regulatory authority that becomes effective after the date of issuance of this Subordinated Note.  “Tax Event” means the receipt by the Company of an opinion of counsel to the Company that as a result of any amendment to, or change (including any final and adopted (or enacted) prospective
        change) in, the laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority thereof or therein, or as a result of any official administrative pronouncement or judicial decision interpreting or applying
        such laws or regulations, there is a material risk that interest payable by the Company on the Subordinated Notes is not, or within one hundred twenty (120) days after the receipt of such opinion will not be, deductible by the Company, in whole or
        in part, for United States federal income tax purposes.  “Investment Company Event” means the receipt by the Company of an opinion of counsel to the
        Company to the effect that there is a material risk that the Company is or, within one hundred twenty (120) days after the receipt of such opinion will be, required to register as an investment company pursuant to the Investment Company Act of
        1940, as amended.

    (b) Redemption on or after Fifth
            Anniversary. On or after the fifth anniversary of the Issue Date, subject to the provisions of Section 4(f) hereof, this Subordinated
        Note shall be redeemable at the option of and by the Company, in whole or in part from time to time upon any Interest Payment Date, at an amount equal to one hundred percent (100%) of the outstanding principal amount being redeemed plus accrued but
        unpaid interest, to but excluding the redemption date, but in all cases in a principal amount with integral multiples of One Thousand Dollars (U.S.) ($1,000). In addition, the Company may redeem all or a portion of the Subordinated Notes, at any
        time upon the occurrence of a Tier 2 Capital Event, Tax Event or an Investment Company Event. The redemption referenced in this Section 4(b) shall
        be subject to the receipt of any required regulatory approval.

    (c) Partial Redemption. If
        less than the then outstanding principal amount of this Subordinated Note is redeemed, (i) a new Subordinated Note shall be issued representing the unredeemed portion without charge to the holder thereof and (ii) such redemption shall be effected
        on a pro rata basis as to the Noteholders.  For purposes of clarity, any redemption processed through DTC, shall be made on a “Pro Rata Pass-Through Distribution of Principal” basis, among all of the Subordinated Notes outstanding at the time
        thereof.

    (d) No Redemption at Option of Noteholder.
        This Subordinated Note is not subject to redemption at the option of the holder of this Subordinated Note.

    (e) Effectiveness of Redemption.
        If notice of redemption has been duly given and notwithstanding that this Subordinated Note has been called for redemption but has not yet been surrendered for cancellation, on and after the date fixed for redemption interest shall cease to accrue
        on the portion of this Subordinated Note called for redemption, this Subordinated Note shall no longer be deemed outstanding with respect to the portion called for redemption and all rights with respect to the portion of this Subordinated Note
        called for redemption shall forthwith on such date fixed for redemption cease and terminate unless the Company shall default in the payment of the redemption price, except only the right of the holder hereof to receive the amount payable on such
        redemption, without interest.

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

    (g) Purchase and Resale of the
            Subordinated Notes. Subject to any required federal and state regulatory approvals and the provisions of this Subordinated Note, the Company shall have the right to purchase any of the Subordinated Notes at any time in the open
        market, private transactions or otherwise. If the Company purchases any Subordinated Notes, it may, in its discretion, hold, resell or cancel any of the purchased Subordinated Notes.

    
      	
              5.

            	
              Global
                    Subordinated Notes.

            

    

    (a) Provided that applicable depository eligibility requirements are met, upon the written election of any Noteholder that is
        either (i) a Qualified Institutional Buyer, as defined in Rule 144A under the Securities Act, or (ii) an institutional “accredited investor” as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act, the Company shall use its
        commercially reasonable efforts to provide that the Subordinated Notes owned by such Noteholders shall be issued in the form of one or more Global Subordinated Notes (each a “Global Subordinated Note”) registered in the name of DTC or another organization registered as a clearing agency under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and designated as Depositary by the Company or any successor thereto (the “Depositary”)
        or a nominee thereof and delivered to such Depositary or a nominee thereof.

     

      

    
      8

      
        

    

    (b) Notwithstanding any other provision herein, no Global Subordinated Note may be exchanged in whole or in part for Subordinated
        Notes registered, and no transfer of a Global Subordinated Note in whole or in part may be registered, in the name of any person other than the Depositary for such Global Subordinated Note or a nominee thereof unless (i) such Depositary advises the
        Company in writing that such Depositary is no longer willing or able to properly discharge its responsibilities as Depositary with respect to such Global Subordinated Note, and no qualified successor is appointed by the Company within ninety (90)
        days of receipt by the Company of such notice, (ii) such Depositary ceases to be a clearing agency registered under the Exchange Act and no successor is appointed by the Company within ninety (90)  days after obtaining knowledge of such event,
        (iii) the Company elects to terminate the book-entry system through the Depositary or (iv) an Event of Default (as defined in Section 6) shall have
        occurred and be continuing.  Upon the occurrence of any event specified in clause (i), (ii), (iii) or (iv) of this Section 5(b), the Company or its agent shall notify the Depositary and
        instruct the Depositary to notify all owners of beneficial interests in such Global Subordinated Note of the occurrence of such event and of the availability of Subordinated Notes to such owners of beneficial interests requesting the same.

    (c) If any Global Subordinated Note is to be exchanged for other Subordinated Notes or canceled in part, or if another
        Subordinated Note is to be exchanged in whole or in part for a beneficial interest in any Global Subordinated Note, then either (i) such Global Subordinated Note shall be so surrendered for exchange or cancellation as provided in this Section 5 or (ii) the principal amount thereof shall be reduced or increased by an amount equal to the portion thereof to be so exchanged or canceled, or
        equal to the principal amount of such other Subordinated Note to be so exchanged for a beneficial interest therein, as the case may be, by means of an appropriate adjustment made on the records of the Company or, if applicable, the Company’s
        registrar and transfer agent (“Registrar”), whereupon the Company or, if applicable, the Registrar, in accordance with the applicable rules and
        procedures of the Depositary (“Applicable Depositary Procedures”), shall instruct the Depositary or its authorized representative to make a
        corresponding adjustment to its records.  Upon any such surrender or adjustment of a Global Subordinated Note by the Depositary, accompanied by registration instructions, the Company shall execute and deliver any Subordinated Notes issuable in
        exchange for such Global Subordinated Note (or any portion thereof) in accordance with the instructions of the Depositary.

    (d) Every Subordinated Note executed and delivered upon registration of transfer of, or in exchange for or in lieu of, a Global
        Subordinated Note or any portion thereof shall be executed and delivered in the form of, and shall be, a Global Subordinated Note, unless such Subordinated Note is registered in the name of a person other than the Depositary for such Global
        Subordinated Note or a nominee thereof.

    (e) The Depositary or its nominee, as the registered owner of a Global Subordinated Note, shall be the holder of such Global
        Subordinated Note for all purposes under this Subordinated Note, and owners of beneficial interests in a Global Subordinated Note shall hold such interests pursuant to Applicable Depositary Procedures. Accordingly, any such owner’s beneficial
        interest in a Global Subordinated Note shall be shown only on, and the transfer of such interest shall be effected only through, records maintained by the Depositary or its nominee or its Depositary participants.  If applicable, the Registrar shall
        be entitled to deal with the Depositary for all purposes relating to a Global Subordinated Note (including the payment of principal and interest thereon and the giving of instructions or directions by owners of beneficial interests therein and the
        giving of notices) as the sole holder of the Subordinated Note and shall have no obligations to the owners of beneficial interests therein.  The Registrar shall have no liability in respect of any transfers affected by the Depositary.

    (f) The rights of owners of beneficial interests in a Global Subordinated Note shall be exercised only through the Depositary and
        shall be limited to those established by law and agreements between such owners and the Depositary and/or its participants.

    (g) No holder of any beneficial interest in any Global Subordinated Note held on its behalf by a Depositary shall have any rights
        with respect to such Global Subordinated Note, and such Depositary may be treated by the Company and any agent of the Company as the owner of such Global Subordinated Note for all purposes whatsoever.  Neither the Company nor any agent of the
        Company will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a Global Subordinated Note or maintaining, supervising or reviewing any records relating to
        such beneficial ownership interests. Notwithstanding the foregoing, nothing herein shall prevent the Company or any agent of the Company from giving effect to any written certification, proxy or other authorization furnished by a Depositary or
        impair, as between a Depositary and such holders of beneficial interests, the operation of customary practices governing the exercise of the rights of the Depositary (or its nominee) as holder of any Subordinated Note.

     

      

    
      9

      
        

    

    (h) Company, within thirty (30) calendar days after the receipt of written notice from the Noteholder or any other holder of the
        Subordinated Notes of the occurrence of an Event of Default with respect to this Subordinated Note, shall mail to all the Noteholders, at their addresses shown on the Security Register (as defined in Section 14 below), such written notice of Event of Default, unless such Event of Default shall have been cured or waived before the giving of such notice as certified by Company in writing.

    6. Events of Default;
            Acceleration; Compliance Certificate.

    Each of the following events shall constitute an “Event of Default”:

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

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

    (c) the Company (i) becomes insolvent or is unable to pay its debts as they mature, (ii) makes an assignment for the benefit of
        creditors, (iii) admits in writing its inability to pay its debts as they mature or (iv) ceases to be a bank holding company or financial holding company under the Bank Holding Company Act of 1956, as amended;

    (d) the failure of the Company to pay any installment of interest on any of the Subordinated Notes as and when the same will
        become due and payable, and the continuation of such failure for a period of fifteen (15) days;

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

    (f) the liquidation of the Company (for avoidance of doubt, “liquidation” does not include any merger, consolidation, sale of
        equity or assets or reorganization (exclusive of a reorganization in bankruptcy) of the Company or any of its subsidiaries);

    (g) the failure of the Company to perform any other covenant or agreement on the part of the Company contained in the
        Subordinated Notes or the Purchase Agreement, and the continuation of such failure for a period of thirty (30) days after the date on which notice specifying such failure, stating that such notice is a “Notice of Default” hereunder and demanding
        that the Company remedy the same, will have been given, in the manner set forth in Section 22, to the Company by a Noteholder; or

    (h) the default by the Company under any bond, debenture, note or other evidence of indebtedness for money borrowed by the
        Company having an aggregate principal amount outstanding of at least Fifteen Million Dollars (U.S.) ($15,000,000), whether such indebtedness now exists or is created or incurred in the future, which default (i) constitutes a failure to pay any
        portion of the principal of such indebtedness when due and payable after the expiration of any applicable grace period or (ii) results in such indebtedness becoming due or being declared due and payable prior to the date on which it otherwise would
        have become due and payable without, in the case of clause (i), such indebtedness having been discharged or, in the case of clause (ii), without such indebtedness having been discharged or such acceleration having been rescinded or annulled.

    Unless the principal of this Subordinated Note already shall have become due and payable, if an Event of Default
      set forth in Section 6(a) or Section 6(b) above
      shall have occurred and be continuing, the Noteholder, by notice in writing to the Company, may declare the principal amount of this Subordinated Note to be due and payable immediately and, upon any such declaration the same shall become and shall be
      immediately due and payable.  The Company waives demand, presentment for payment, notice of nonpayment, notice of protest, and all other notices. Notwithstanding the foregoing, because the Company will treat the Subordinated Notes as Tier 2 Capital,
      upon the occurrence of an Event of Default other than an Event of Default described in Section 6(a) or Section 6(b), no Noteholder may accelerate the Stated Maturity of the Subordinated Notes and make the principal of, and any accrued and unpaid interest on, the Subordinated Notes, immediately
      due and payable. The Company, within forty-five (45) calendar days after the receipt of written notice from any Noteholder of the
      occurrence of an Event of Default with respect to this Subordinated Note, shall mail to all Noteholders, at their addresses shown on the Security Register, such written notice of Event of Default, unless such Event of Default shall have been cured or
      waived before the giving of such notice as certified by the Company in writing.

     

    

    
      10

      
        

    

    7. Failure to Make
            Payments. In the event of an Event of Default under Section 6(c), Section 6(d) or Section 6(e) above, the Company will, upon demand of the Noteholder, pay to the Noteholder
        the amount then due and payable on this Subordinated Note for principal and interest (without acceleration of the Subordinated Note in any manner), with interest on the overdue principal and interest at the per annum rate borne by this Subordinated
        Note, to the extent permitted by applicable law.  If the Company fails to pay such amount upon such demand, the holder of this Subordinated Note may, among other things, institute a judicial proceeding for the collection of the sums so due and
        unpaid and such amount as shall be sufficient to cover the reasonable costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of such Noteholder, its agents and counsel, may prosecute such
        proceeding to judgment or final decree and may enforce the same against the Company and collect the amounts adjudged or decreed to be payable in the manner provided by law out of the property of the Company.

    Upon the occurrence of a failure by the Company to make any required payment of principal or interest on this
      Subordinated Note or an Event of Default, until such Event of Default is cured by the Company or waived by the Noteholders in accordance with Section 18
      hereof, except as may be required by any federal or state bank regulatory agency, the Company shall not: (a) declare or pay any dividends or distributions on, or redeem, purchase, acquire, or make a liquidation payment with respect to, any of the
      Company’s capital stock; (b) make any payment of principal or interest or premium, if any, on or repay, repurchase or redeem any indebtedness of the Company that ranks equal with or junior to the Subordinated Notes; or (c) make any payments under any
      guarantee that ranks equal with or junior to the Subordinated Notes, other than: (i) any dividends or distributions in shares of, or options, warrants or rights to subscribe for or purchase shares of, any class of the Company’s common stock; (ii) any
      declaration of a non-cash dividend in connection with the implementation of a shareholders’ rights plan, or the issuance of stock under any such plan in the future, or the redemption or repurchase of any such rights pursuant thereto; (iii) as a
      result of a reclassification of the Company’s capital stock or the exchange or conversion of one class or series of the Company’s capital stock for another class or series of the Company’s capital stock; (iv) the purchase of fractional interests in
      shares of the Company’s capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged; or (v) purchases of any class of the Company’s common stock related to the issuance of common
      stock or rights under any benefit plans for the Company’s directors, officers or employees or any of the Company’s dividend reinvestment plans.

    
      	
              8.

            	
              Affirmative
                    Covenants of the Company.

            

    

    (a) Notice of Certain Events. 
        The parties agree that prior to any notice or disclosure required by the Company pursuant to this Section 8(a), the Noteholder and the Company shall have executed a non-disclosure agreement in a form reasonably acceptable to the Noteholder and the
        Company.

    To the extent permitted by applicable statute, rule or regulation, the Company shall provide written notice to the Noteholder of the
      occurrence of any of the following events as soon as practicable, but in no event later than fifteen (15) Business Days following the Company becoming aware of the occurrence of such event:

    (i) The Company becomes less than “well-capitalized” as defined under the then applicable regulatory capital standards or the
        total risk-based capital ratio, Tier 1 risk-based capital ratio, common equity Tier 1 risk-based capital ratio or leverage ratio of the Company or any of the Company’s banking subsidiaries becomes less than ten percent (10.0%), eight percent (8.0%)
        six and one-half percent (6.5%), or five percent (5.0%), respectively, as of the end of any calendar quarter;

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

    (iii) The dollar amount of any nonperforming assets of the Company on a consolidated basis as of the end of a given fiscal quarter
        as a percentage of the Company’s total loan portfolio exceeds two percent (2%); or

    (iv) There is a change in ownership of twenty-five percent (25%) or more of the outstanding securities of the Company entitled to
        vote for the election of directors.

    (b) Payment of Principal and Interest.
        The Company covenants and agrees for the benefit of the Noteholder that it will duly and punctually pay the principal of, and interest on, this Subordinated Note, in accordance with the terms hereof.

    (c) Maintenance of Office. The
        Company will maintain an office or agency in the Commonwealth of Virginia where Subordinated Notes may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Company in respect of the Subordinated
        Notes may be served.

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

     

    

    
      11

      
        

    

    (d) Corporate Existence.
        Except as contemplated by Section 9(b), the Company will do or cause to be done all things necessary to preserve and keep in full force and effect:
        (i) the corporate existence of the Company; (ii) the existence (corporate or other) of each subsidiary; and (iii) the rights (constituent governing documents and statutory), licenses and franchises of the Company and each of its subsidiaries; provided, however, that the Company will not be required to preserve the existence (corporate or other) of any of its subsidiaries or any
        such right, license or franchise of the Company or any of its subsidiaries if the Board of Directors of the Company determines that the preservation thereof is no longer desirable in the conduct of the business of the Company and its subsidiaries
        taken as a whole and that the loss thereof will not be disadvantageous in any material respect to the Noteholders.

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

    (f) Waiver of Certain Covenants.
        The Company may omit in any particular instance to comply with any term, provision or condition set forth in Section 8(b) or Section 8(c) above, with respect to this Subordinated Note if before the time for such compliance the Noteholders of at least a majority in aggregate
        principal amount of the outstanding Subordinated Notes, by act of such Noteholders, either will waive such compliance in such instance or generally will have waived compliance with such term, provision or condition, but no such waiver will extend
        to or affect such term, provision or condition except to the extent so expressly waived, and, until such waiver will become effective, the obligations of the Company in respect of any such term, provision or condition will remain in full force and
        effect.

    (g) Tier 2 Capital.  If all or
        any portion of the Subordinated Notes ceases to be deemed to be Tier 2 Capital, other than due to the limitation imposed on the capital treatment of subordinated debt during the five (5) years immediately preceding the Stated Maturity of the
        Subordinated Notes, the Company will immediately notify the Noteholders and thereafter, if requested by the Company, the Company and the Noteholders will work together in good faith to execute and deliver all agreements as reasonably necessary in
        order to restructure the applicable portions of the obligations evidenced by the Subordinated Notes to qualify as Tier 2 Capital; provided,
        however, that nothing contained in this Section
            8(g) shall limit the Company’s right to redeem the Subordinated Notes upon the occurrence of a Tier 2 Capital Event pursuant to Section 4(a)
        or Section 4(b).

    (h) Compliance with Laws. The
        Company shall comply with the requirements of all laws, regulations, orders and decrees applicable to it or its properties, except for such noncompliance that would not reasonably be expected to result in a Material Adverse Effect (as such term is
        defined in the Purchase Agreement) (i) in the condition (financial or otherwise), or in the earnings of the Company, whether or not arising in the ordinary course of business, or (ii) on the ability of the Company to perform its obligations under
        this Subordinated Note.

    (i) Taxes and Assessments. The
        Company shall punctually pay and discharge all material taxes, assessments, and other governmental charges or levies imposed upon it or upon its income or upon any of its properties; provided, that no such taxes, assessments or other governmental
        charges need be paid if they are being contested in good faith by the Company.

    (j) Financial Statements; Access to
            Records.

    (i) Not later than forty-five (45) days following the end of each of the first three fiscal quarters for which the Company has
        not timely filed a Quarterly Report on Form 10-Q with the Securities and Exchange Commission, upon request, the Company shall provide the Noteholder with a copy of the Company’s unaudited parent company only balance sheet and statement of income
        (loss) for and as of the end of such immediately preceding fiscal quarter, prepared in accordance with past practice. Quarterly financial statements, if required herein, shall be unaudited and need not comply with generally accepted accounting
        principles in effect from time to time in the United States of America (“GAAP”).

     

      

    
      12

      
        

    

    (ii) Not later than ninety (90) days from the end of each fiscal year, upon request the Company shall provide the Noteholder with
        copies of the Company’s audited financial statements consisting of the consolidated balance sheet of the Company as of the fiscal year end and the related statements of income (loss) and retained earnings, stockholders’ equity and cash flows for
        the fiscal year then ended.  Such financial statements shall be prepared in accordance with GAAP applied on a consistent basis throughout the period involved.

    (iii) In addition to the foregoing Sections
            8(j)(i) and (ii), if a Noteholder holds at least twenty-five percent (25%) in aggregate principal amount (excluding any Subordinated
        Notes held by Company or any of its Affiliates) of the Subordinated Notes at the time outstanding, the Company agrees to furnish to such Noteholder, upon request, with such financial and business information of the Company and the Bank as such
        Noteholder may reasonably request as may be reasonably necessary or advisable to allow such Noteholder to confirm compliance by the Company with this Subordinated Note; provided, however that, prior to any disclosure by the Company
        pursuant to this provision, such information shall be subject to an executed non-disclosure agreement in a form reasonably acceptable to the Noteholder and the Company.

    (k) Company Statement as to Compliance.
        The Company will deliver to the Noteholders, within one hundred twenty (120) days after the end of each fiscal year, an Officer’s Certificate covering the preceding fiscal year stating whether or not, to the best of his or her knowledge, the
        Company is in default in the performance and observance of any of the terms, provisions and conditions of this Subordinated Note (without regard to notice requirements or periods of grace) and if the Company will be in default, specifying all such
        defaults and the nature and status thereof of which he or she may have knowledge.

    
      	
              9.

            	
              Negative
                    Covenants of the Company.

            

    

    (e) Limitation on Dividends.
        The Company shall not declare or pay any dividend or make any distribution on capital stock or other equity securities of any kind of the Company if the Company is not “well capitalized” for regulatory purposes immediately prior to the declaration
        of such dividend or distribution, except for dividends payable solely in shares of common stock of the Company.

    (f) Merger or Sale of Assets.
        The Company shall not merge into another entity, effect a Change in Bank Control (as defined below) or convey, transfer or lease substantially all of its properties and assets to any person, unless:

    (i) the continuing entity into which the Company is merged or the person which acquires by conveyance or transfer or which leases
        substantially all of the properties and assets of the Company shall be a corporation, association or other legal entity organized and existing under the laws of the United States of America, any State thereof or the District of Columbia and
        expressly assumes the due and punctual payment of the principal of and any premium and interest on the Subordinated Notes according to their terms, and the due and punctual performance of all covenants and conditions hereof on the part of the
        Company to be performed or observed; and

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

    “Change in Bank Control”
      means the sale, transfer, lease or conveyance by the Company, or an issuance of equity securities by the Bank other than to the Company, in either case resulting in ownership by the Company of less than fifty percent (50%) of the Bank.

    (g) Transfer of Voting Stock.
        Except as contemplated by Section 9(b), the Company will not, nor will it permit the Bank to, directly or indirectly, sell, assign, transfer or
        otherwise dispose of any shares of, securities convertible into, or options, warrants or rights to subscribe for or purchase shares of, Voting Stock (as defined below) of the Bank or any successor thereof or any subsidiary of the Company that is a
        depository institution and that has consolidated assets equal to thirty percent (30%) or more of the Company’s consolidated assets (“Material Subsidiary”),
        nor will the Company permit the Material Subsidiary to issue any shares of, or securities convertible into, or options, warrants or rights to subscribe for or purchase shares of, Voting Stock of the Material Subsidiary if, in each case, after
        giving effect to any such transaction and to the issuance of the maximum number of shares of Voting Stock of the Material Subsidiary issuable upon the exercise of all such convertible securities, options, warrants or rights, the Company would cease
        to own, directly or indirectly, at least eighty percent (80%) of the issued and outstanding Voting Stock of the Material Subsidiary.  “Voting Stock”
        means outstanding shares of capital stock having voting power for the election of directors, whether at all times or only so long as no senior class of stock has such voting power because of default in dividends or other default.

    10. Denominations.
        The Subordinated Notes are issuable only in registered form without interest coupons in minimum denominations of One Thousand Dollars (U.S.) ($1,000) and integral multiples of One Thousand Dollars (U.S.) ($1,000) in excess thereof.

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

     

      

    
      13

      
        

    

    12. Payment Procedures.
        Payment of the principal and interest payable on the Maturity Date will be made by check, by wire transfer or by Automated Clearing House (ACH) transfer in immediately available funds to a bank account in the United States designated by the
        registered Noteholder if such Noteholder shall have previously provided wire instructions to the Company, upon presentation and surrender of this Subordinated Note at the Payment Office (as defined in Section 22 below) or at such other place or places as the Company shall designate by notice to the registered Noteholders as the Payment Office, provided that this Subordinated Note is
        presented to the Company in time for the Company to make such payments in such funds in accordance with its normal procedures.  Payments of interest (other than interest payable on the Maturity Date) shall be made on each Interest Payment Date by
        wire transfer in immediately available funds or check mailed to the registered Noteholder, as such person’s address appears on the Security Register. Interest payable on any Interest Payment Date shall be payable to the Noteholder in whose name
        this Subordinated Note is registered at the close of business on the fifteenth (15th) calendar day prior to the applicable Interest Payment Date, without regard to whether such date is a Business Day (such date being referred to herein
        as the “Regular Record Date”), except that interest not paid on the Interest Payment Date, if any, will be paid to the holder in whose name this
        Subordinated Note is registered at the close of business on a special record date fixed by the Company (a “Special Record Date”), notice of which
        shall be given to the Noteholder not less than ten (10) calendar days prior to such Special Record Date.  The Regular Record Date and Special Record Date are referred to herein collectively as the “Record Dates.” To the extent permitted by applicable law, interest shall accrue, at the rate at which interest accrues on the principal of this Subordinated Note, on any amount of principal
        or interest on this Subordinated Note not paid when due. All payments on this Subordinated Note shall be applied first against costs and expenses of the Noteholder, if any, for which the Company is liable under this Subordinated Note; then against
        interest due hereunder; and then against principal due hereunder. The Noteholder acknowledges and agrees that the payment of all or any portion of the outstanding principal amount of this Subordinated Note and all interest hereon shall be pari passu in right of payment and in all other respects to the other Subordinated Notes. In the event that the Noteholder receives payments
        in excess of its pro rata share of the Company’s payments to the holders of all of the Subordinated Notes, then the Noteholder shall hold in trust all such excess payments for the benefit of the other Noteholders and shall pay such amounts held in
        trust to such other holders upon demand by such holders.

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

    14. Registration of
            Transfer, Security Register. Except as otherwise provided herein, this Subordinated Note is transferable in whole or in part, and may be exchanged for a like aggregate principal amount of Subordinated Notes of other authorized
        denominations, by the Noteholder in person, or by his attorney duly authorized in writing, at the Payment Office or the offices of the Registrar.  The Subordinated Notes will initially be issued in certificated form. The Company or the Registrar
        shall maintain a register providing for the registration of the Subordinated Notes and any exchange or transfer thereof (the “Security Register”).
        Upon surrender or presentation of this Subordinated Note for exchange or registration of transfer, the Company or the Registrar shall execute and deliver in exchange therefor a Subordinated Note or Subordinated Notes of like aggregate principal
        amount, each in a minimum denomination of One Thousand Dollars (U.S.) ($1,000) or any amount in excess thereof which is an integral multiple of One Thousand Dollars (U.S.) ($1,000) (and, in the absence of an opinion of counsel satisfactory to the
        Company to the contrary, bearing the restrictive legend(s) set forth hereinabove) and that is or are registered in such name or names requested by the Noteholder.  Any Subordinated Note presented or surrendered for registration of transfer or for
        exchange shall be duly endorsed and accompanied by a written instrument of transfer in such form as is attached hereto and incorporated herein, duly executed by the Noteholder or his attorney duly authorized in writing, with such tax identification
        number or other information for each person in whose name a Subordinated Note is to be issued, and accompanied by evidence of compliance with any restrictive legend(s) appearing on such Subordinated Note or Subordinated Notes as the Company may
        reasonably request to comply with applicable law.  No exchange or registration of transfer of this Subordinated Note shall be made on or after the fifteenth (15th) day immediately preceding the Maturity Date.

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

    16. Priority.
        The Subordinated Notes rank pari passu among themselves and pari passu, in the event of any insolvency proceeding, dissolution, assignment for the benefit of creditors, reorganization, restructuring of debt, marshaling of assets and liabilities or
        similar proceeding or any liquidation or winding up of the Company, with all other present or future unsecured subordinated debt obligations of the Company, except any unsecured subordinated debt that, pursuant to its express terms, is senior or
        subordinate in right of payment to the Subordinated Notes.

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

    18. Waiver and Consent.

    (a) This Subordinated Note may be amended or waived pursuant to, and in accordance with, the provisions set forth herein. Any
        such consent or waiver given by the Noteholder shall be conclusive and binding upon such Noteholder and upon all subsequent holders of this Subordinated Note and of any Subordinated Note issued upon the registration of transfer hereof or in
        exchange therefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Subordinated Note.  No delay or omission of the Noteholder to exercise any right or remedy accruing upon any Event of Default shall impair such
        right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Any insured depository institution which shall be a Noteholder or which otherwise shall have any beneficial ownership interest in this Subordinated Note
        shall, by its acceptance of such Subordinated Note (or beneficial interest therein), be deemed to have waived any right of offset with respect to the indebtedness evidenced thereby.

     

      

    
      14

      
        

    

    (b) No waiver or amendment of any term, provision, condition, covenant or agreement in the Subordinated Notes shall be effective
        except with the consent of the Noteholders holding more than fifty percent (50%) in aggregate principal amount (excluding any Subordinated Notes held by the Company or any of its Affiliates) of the Subordinated Notes at the time outstanding; provided, however, that
        without the consent of each Noteholder of an affected Subordinated Note, no such amendment or waiver may:  (i) reduce the principal amount of any Subordinated Note; (ii) reduce the rate of or change the time for payment of interest on any
        Subordinated Note; (iii) extend the maturity of any Subordinated Note; (iv) change the currency in which payment of the obligations of the Company under the Subordinated Notes are to be made; (v) lower the percentage of aggregate principal amount
        of outstanding Subordinated Notes required to approve any amendment of the Subordinated Notes; (vi) make any changes to Section 6 (Events of
        Default; Acceleration; Compliance Certificate), Section 7 (Failure to Make Payments), Section 8 (Affirmative Covenants of the Company), or Section 9 (Negative Covenants of the Company) of the
        Subordinated Notes that adversely affects the rights of any Noteholder; or (vii) disproportionately and adversely affects the rights of any of the Noteholders of the then outstanding Subordinated Notes.  Notwithstanding the foregoing, the Company
        may amend or supplement the Subordinated Notes without the consent of the Noteholders to cure any ambiguity, defect or inconsistency or to provide for uncertificated Subordinated Notes in addition to or in place of certificated Subordinated Notes,
        or to make any change that does not adversely affect the rights of any Noteholder of any of the Subordinated Notes.  No failure to exercise or delay in exercising, by any Noteholder of the Subordinated Notes, of any right, power or privilege
        hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege preclude any other or further exercise thereof, or the exercise of any other right or remedy provided by law, except as
        restricted hereby.  The rights and remedies provided in this Subordinated Note are cumulative and not exclusive of any right or remedy provided by law or equity. No notice or demand on the Company in any case shall, in itself, entitle the Company
        to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of the Noteholders to any other or further action in any circumstances without notice or demand.  No consent or waiver, expressed or
        implied, by the Noteholders to or of any breach or default by the Company in the performance of its obligations hereunder shall be deemed or construed to be a consent or waiver to or of any other breach or default in the performance of the same or
        any other obligations of the Company hereunder.  Failure on the part of the Noteholders to complain of any acts or failure to act or to declare an Event of Default, irrespective of how long such failure continues, shall not constitute a waiver by
        the Noteholders of their rights hereunder or impair any rights, powers or remedies on account of any breach or default by the Company.

    19. Absolute and
            Unconditional Obligation of the Company.

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

    (b) No delay or omission of the Noteholder to exercise any right or remedy accruing upon any Event of Default shall impair such
        right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein.

    (c) Any insured depository institution which shall be a Noteholder or which otherwise shall have any beneficial ownership
        interest in this Subordinated Note shall, by its acceptance of such Note (or beneficial interest therein), be deemed to have waived any right of offset with respect to the indebtedness evidenced thereby.

    20. No Sinking Fund;
            Convertibility. This Subordinated Note is not entitled to the benefit of any sinking fund. This Subordinated Note is not convertible into or exchangeable for any of the equity securities, other securities or assets of the Company or
        any subsidiary of the Company.

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

    22. Notices.
        All notices to the Company under this Subordinated Note shall be in writing and addressed to the Company at Bay Banks of Virginia, Inc., 1801 Bayberry Court, Suite 101, Richmond, Virginia 23226, Attention: Randal R. Greene, or to such other address
        as the Company may notify to the Noteholder (the “Payment Office”). All notices to the Noteholders shall be in writing and sent by first-class mail
        to each Noteholder at his or its address as set forth in the Security Register.

    23. Further Issues.
        The Company may, without the consent of the Noteholders, create and issue additional notes having the same terms and conditions of the Subordinated Notes (except for the Issue Date and issue price) so that such further notes shall be consolidated
        and form a single series with the Subordinated Notes.

    24. Governing Law;
            Interpretation. THIS SUBORDINATED NOTE WILL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK AND WILL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
        CONFLICT OF LAW PRINCIPLES THEREOF. THIS SUBORDINATED NOTE IS INTENDED TO MEET THE CRITERIA FOR QUALIFICATION OF THE OUTSTANDING PRINCIPAL AS TIER 2 CAPITAL UNDER THE REGULATORY GUIDELINES OF THE FEDERAL RESERVE, AND THE TERMS HEREOF SHALL BE
        INTERPRETED IN A MANNER TO SATISFY SUCH INTENT.

    [Signature Page Follows]

    

    

    
      15

      
        

    

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

    	 	
            Bay Banks of Virginia, Inc.

          	 
	 	 	 	 
	 	 	 	 
	 	
            By:

          	
            

            

          	 
	 	 	
            Name: Randal R. Greene

          	 
	 	 	
            Title: President and Chief Executive Officer

          	 
	 	 	 	 

    

    

    ATTEST:

    __________________________________

      Name:  

      Title: 

    

    

    

    

    

    

    

    

    

    

    [Signature Page to Subordinated Note]

    

    

    

    

    

    

    
      16

      
        

    

    

    

    

    

    

    

    
      ASSIGNMENT FORM

    

    

    

    

    

    

    

    

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

     

    

    ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________

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

    

    

    ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________

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

     

      

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

    Date: _____________________          Your signature: _______________________________________________   

        

    (Sign exactly as your name appears on the face of this Subordinated Note)

    Tax Identification No: _______________________________________  ____

      

    Signature Guarantee: ________________________________________  _____

      

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

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

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

    CHECK ONE BOX BELOW:

    	
            □

          	
            (1)

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

          
	
            □

          	
            (2)

          	
            transferred to the Company;

          
	
            □

          	
            (3)

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

          
	
            □

          	
            (4)

          	
            transferred under an effective registration statement under the Securities Act;

          
	
            □

          	
            (5)

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

          
	
            □

          	
            (6)

          	
            transferred to an institutional “accredited investor” (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act);

          
	
            □

          	
            (7)

          	
            transferred to an “accredited investor” (as defined in Rule 501(a)(4) under the Securities Act), not referred to in item (6) that has been provided
              with the information designated under Section 4(d) of the Securities Act; or

          
	
            □

          	
            (8)

          	
            transferred in accordance with another available exemption from the registration requirements of the Securities Act.

          

    

    

    Unless one of the boxes is checked, the Company will refuse to register this Subordinated Note in the name of any person other than
      the registered holder thereof; provided, however, that if box (5), (6), (7) or (8) is checked, the Company may require, prior to registering any such transfer of this Subordinated Note, in its sole discretion, such legal opinions, certifications and
      other information as the Company may reasonably request to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act such as the exemption provided
      by Rule 144 under such Act.

    Signature:  ________________________________________

      

     

      

    Signature Guarantee: ________________________________  ____________________________

      

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

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

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

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

  

  17

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