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SECTION 1.1	Definitions and Interpretation.	1

ARTICLE II

POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE

SECTION 2.1	Powers and Duties of the Guarantee Trustee.	4
SECTION 2.2	Certain Rights of the Guarantee Trustee.	6
SECTION 2.3	Not Responsible for Recitals or Issuance of Guarantee.	7
SECTION 2.4	Events of Default; Waiver.	7
SECTION 2.5	Events of Default, Notice.	8

ARTICLE III

THE GUARANTEE TRUSTEE

SECTION 3.1	The Guarantee Trustee. Eligibility.	8
SECTION 3.2	Appointment. Removal and Resignation of the Guarantee Trustee.	9

ARTICLE IV

GUARANTEE

SECTION 4.1	Guarantee.	10
SECTION 4.2	Waiver of Notice and Demand.	10
SECTION 4.3	Obligations Not Affected.	10
SECTION 4.4	Rights of Holders.	11
SECTION 4.5	Guarantee of Payment.	12
SECTION 4.6	Subrogation.	12
SECTION 4.7	Independent Obligations.	12
SECTION 4.8	Enforcement.	12

ARTICLE V

LIMITATION OF TRANSACTION, SUBORDINATION

SECTION 5.1	Limitation of Transactions.	13
SECTION 5.2	Ranking.	13

ARTICLE VI

TERMINATION

SECTION 6.1	Termination.	14

ARTICLE VII

INDEMNIFICATION

SECTION 7.1	Exculpation.	14
SECTION 7.2	Indemnification.	14
SECTION 7.3	Compensation; Reimbursement of Expenses.	15

ARTICLE VIII

MISCELLANEOUS

SECTION 8.1	Successors and Assigns.	16
SECTION 8.2	Amendments.	16
SECTION 8.3	Notices.	16
SECTION 8.4	Benefit.	17
SECTION 8.5	Governing Law.	17
SECTION 8.6	Counterparts.	17

This GUARANTEE AGREEMENT (the ?Guarantee?), dated as of December 12, 2005, is executed and delivered by Bay National Corporation, a bank holding company incorporated in the State of Maryland (the ?Guarantor?), and Wilmington Trust Company, a Delaware banking corporation, as trustee (the ?Guarantee Trustee?), for the benefit of the Holders (as defined herein) from time to time of the Capital Securities (as defined herein) of Bay National Capital Trust I, a Delaware statutory trust (the ?Issuer?).

WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the ?Declaration?), dated as of December 12, 2005, among the trustees named therein of the Issuer, Bay National Corporation, as sponsor, and the Holders from time to time of undivided beneficial interests in the assets of the Issuer, the Issuer is issuing on the date hereof securities, having an aggregate liquidation amount of $8,000,000, designated in the Declaration as MMCapS^SM (the ?Capital Securities?); and

WHEREAS, as incentive for the Holders to purchase the Capital Securities, the Guarantor desires irrevocably and unconditionally to agree, to the extent set forth in this Guarantee, to pay to the Holders of Capital Securities the Guarantee Payments (as defined herein) and to make certain other payments on the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the purchase by each Holder of the Capital Securities, which purchase the Guarantor hereby agrees shall benefit the Guarantor, the Guarantor executes and delivers this Guarantee for the benefit of the Holders.