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Exhibit 10.02
 
AMENDED AND RESTATED EMPLOYMENT AGREEMENT

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”) is entered into
effective as of May 31, 2018 (the “Effective Date”), by and between CAROLINA
TRUST BANK, a North Carolina banking corporation (the “Bank”) and RICHARD M.
RAGER, an individual resident of North Carolina (the “Officer”). The Bank and
Officer are sometimes herein referred to each as a “Party” and together as the
“Parties.”

WHEREAS, the Officer is currently employed by the Bank pursuant to that certain
Employment Agreement dated June 6, 2006 as amended by that certain Amendment
Number One to Employment Agreement dated November 1, 2007, that certain
Amendment Number Two to Employment Agreement dated December 1, 2008, and that
certain Amendment Number Three to Employment Agreement dated March 1, 2014 (as
amended, the “Original Agreement”); and

WHEREAS, the Officer and the Bank wish to amend and restate the Original
Agreement, such that this Agreement will wholly supersede and replace the
Original Agreement effective as of the Effective Date.

NOW THEREFORE, for and in consideration of their mutual promises, covenants and
conditions hereinafter set forth, and other good and valuable consideration, the
receipt and sufficiency of which hereby are acknowledged, the Parties agree as
follows:

1.         Employment. The Bank agrees to employ the Officer, and the Officer
agrees to accept employment upon the terms and conditions stated herein as its
Executive Vice President and Chief Credit Officer.  The Officer shall render
such administrative and management services to the Bank and to the Bank’s parent
holding company, Carolina Trust Bancshares, Inc. (the “Company”), as are
customarily performed by persons situated in a similar executive capacity. The
Officer shall promote the business of the Bank and perform such other duties as
shall, from time to time, be reasonably assigned by the President of the Bank.
Upon the request of the Board of Directors of the Bank (the “Board”), the
Officer shall disclose all business activities or commercial pursuits in which
Officer is engaged, other than Bank duties.

2.         Compensation. The Bank shall pay the Officer during the Term (as
defined below), as compensation for all services rendered by the Officer to the
Bank, a base salary at the rate of One Hundred Seventy-Four Thousand Four
Hundred Fifty-Two Dollars ($174,452) per annum, payable in cash not less
frequently than monthly (the “Base Salary”). The rate of such Base Salary shall
be reviewed by the Board not less often than annually and may be increased, but
not decreased, during the Term in such amounts as the Board, in its discretion,
may decide. In determining salary increases, the Board may compensate the
Officer for increases in the cost of living and may also provide for performance
or merit increases. Participation in the Bank’s incentive compensation, deferred
compensation, discretionary bonus, profit-sharing, retirement and other employee
benefit plans and participation in any fringe benefits shall not reduce the Base
Salary payable to the Officer under this Paragraph.

Following a Change in Control (as defined in Paragraph 10), the Officer’s rate
of Base Salary shall be increased not less than five percent (5%) annually
during the remaining Term.
 

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Any payments made under this Agreement shall be subject to such deductions as
are required by law or regulation or as may be agreed to by the Bank and the
Officer.

3.         Discretionary Bonuses. During the Term, the Officer shall be
entitled, in an equitable manner with all other key management personnel of the
Bank, to such discretionary bonuses as may be authorized, declared and paid by
the Board to the Bank’s key management employees.  No other compensation
provided for in this Agreement shall be deemed a substitute for the Officer’s
right to such discretionary bonuses when and as declared by the Board.

4.         Participation in Retirement and Employee Benefit Plans; Fringe
Benefits.

(a)       The Officer shall be entitled to participate in any plan relating to
medical and dental insurance, deferred compensation, stock options, stock
purchases, pension, thrift, profit sharing, group life insurance, education, or
other retirement or employee benefits that the Bank has adopted, or may, from
time to time adopt, for the benefit of its executive employees or for employees
generally, subject to the eligibility rules of such plans.

(b)       The Officer shall also be entitled to participate in any other fringe
benefits that are now or may be or become applicable to the Bank’s executive
employees and any other benefits that are commensurate with the duties and
responsibilities to be performed by the Officer under this Agreement.
Additionally, the Officer shall be entitled to such vacation and sick leave as
shall be established under uniform employee policies promulgated by the Board.
The Bank shall reimburse the Officer for all out-of-pocket reasonable and
necessary documented business expenses, including dues for one civic club and
mileage for the use of Officer’s personal automobile, which the Officer may
incur in connection with the Officer’s services on behalf of the Bank.

(c)       All employee benefits provided by the Bank are subject to the
provisions of their respective plan documents in accordance with their terms and
are subject to amendment or termination by the Bank without Officer’s consent.

5.         Term. The initial term of employment under this Agreement shall be
for the period commencing upon the Effective Date of this Agreement and ending
two (2) calendar years from the Effective Date of this Agreement (the “Initial
Term”). On each anniversary of the Effective Date of this Agreement, the term of
this Agreement shall automatically be extended for an additional one year period
beyond the then effective expiration date (each an “Extension Term”) unless the
Bank provides the Officer with written notice at least ninety (90) days prior to
the end of the Initial Term or any Extension Term advising the Officer that this
Agreement shall not be further extended. The Initial Term and any Extension
Term(s) are referred to herein as the “Term” of this Agreement.

6.         Loyalty; Noncompetition; Nondisclosure.

(a)       During the Term, the Officer shall devote his full efforts and entire
business time to the performance of the Officer’s duties and responsibilities
under this Agreement.
 

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(b)      During the Term, and during the period of twelve (12) months following
the termination of the Officer’s employment with the Bank for any reason, the
Officer agrees he will not, within the Restricted Area (as defined below),
engage in any business that competes with the Bank without the prior written
consent of the Bank (i) in which the Officer will have duties, or will perform
or be expected to perform services for such business, that are the same as or
substantially similar to the duties or services actually performed by the
Officer for the Bank within the twelve (12) month period immediately preceding
the termination of the Officer’s employment with the Bank, or (ii) in which the
Officer will use or disclose or be reasonably expected to use or disclose any
Confidential Information for the purpose of providing, or attempting to provide,
such business with a competitive advantage. For the purposes of this Agreement,
the “Restricted Area” is defined as the following divisible territories: (A)
Catawba County, North Carolina; (B) Gaston County, North Carolina; (C) Iredell
County, North Carolina; (D) Lincoln County, North Carolina; (E) Rowan County,
North Carolina; (F) Rutherford County, North Carolina; and (G) the area within
thirty (30) miles of any Bank office operated during the twelve (12) months
immediately preceding the termination of the Officer’s employment with the
Bank.  The one-year restricted period, however, does not include any period of
violation or period of time required for litigation to enforce the Officer’s
agreement not to compete against the Bank.  Notwithstanding the foregoing, the
Officer shall be free, without such consent, to purchase or hold as an
investment or otherwise, up to five percent (5%) of the outstanding stock or
other security of any corporation that has its securities publicly traded on any
recognized securities exchange or in any over-the-counter market. The provisions
of this Paragraph 6(b) shall not apply in the event that, within twenty-four
(24) months following a “Change of Control” (as such term is defined in
Paragraph 10 below), the Officer’s employment is terminated by the Bank other
than for “Cause” (as such term is defined in Paragraph 8(d) hereof), or the
Officer terminates his employment with the Bank due to the occurrence of a
“Termination Event” (as such term is defined in Paragraph 10(b) hereof).

(c)       Officer understands and agrees that the relationship between the Bank
and each of its Customers and Prospective Customers (as defined below)
constitutes a valuable asset of the Bank and may not be converted to Officer’s
own use or benefit or for the use or benefit of any other third party.  Officer
therefore agrees that during the Term and for twelve (12) months following the
termination of Officer’s employment with the Bank for any reason, Officer will
not, without the Bank’s prior written consent, directly or indirectly:

(i)          Request, induce, or attempt to influence any Customer to limit,
curtail, cancel, or terminate any business it transacts with, or products or
services it receives from, Bank;

(ii)         Request, induce or attempt to influence any Prospective Customer
(to terminate any business negotiations it is having with Bank or to otherwise
not do business with Bank;

(iii)        Request, induce, or solicit any Customer to purchase products or
services from an entity other than Bank which are the same or substantially
similar to those offered by Bank; or

(iv)        Request, induce, or solicit any Prospective Customer to purchase
products or services from an entity other than Bank which are the same or
substantially similar to those offered to the Prospective Customer by Bank.
 

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For purposes of this Agreement, the term “Customer” means any person or entity
who, at the time of, or in the twelve (12) months prior to the termination of
Officer’s employment with the Bank for any reason (or if the Officer is still
employed with the Bank at the time of the conduct described above, then during
the 12-month period preceding the such conduct), was an actual customer of the
Bank, with whom the Officer had dealings in the course of Officer’s employment
with the Bank during such period, or about whom Officer learned or received
Confidential Information in the course of Officer’s employment with Bank.

For purposes of this Agreement, the term “Prospective Customer” means any person
or entity who has not yet purchased Bank’s products or services, but who has
been targeted or identified by Bank as a potential user of Bank’s products or
services, and (A) whom Officer or his/her direct subordinates was engaged in
soliciting on behalf of Bank during the twelve months preceding the Officer’s
termination (or if the Officer is still employed with the Bank at the time of
the conduct described above, then during the 12-month period preceding the
prohibited contact), or (B) whom the Officer would have an advantage in
soliciting as a result of the Officer’s access to the Bank’s Confidential
Information as a result of the Officer’s employment with Bank.

(d)       Officer further understands and agrees that the relationship between
the Bank and each of its employees and contractors constitutes a valuable asset
of the Bank and may not be converted to Officer’s own use or benefit or for the
use or benefit of any other third party.  Officer therefore agrees that during
the Term and for twelve (12) months following the termination of Officer’s
employment with the Bank for any reason, Officer will not, without the Bank’s
prior written consent, directly or indirectly, solicit, induce, or attempt to
solicit or induce any employee or contractor of the Bank to terminate his or her
employment or engagement with the Bank, or to accept employment with any other
person or entity engaging in any business that competes with the Bank in the
Restricted Area.

(e)       The Officer acknowledges that the Bank will give him access to certain
highly-sensitive confidential and proprietary information belonging to the Bank
or the Company (or third parties, including customers of the Bank, who may have
furnished such information under obligations of confidentiality) relating to and
used in the Bank’s or the Company’s business (collectively, “Confidential
Information”).  The Officer acknowledges that, unless otherwise available to the
public, Confidential Information includes, but is not limited to, the following
categories of information and materials (including such information and
materials of, or pertaining to, the Company): financial statements and
information; budgets, forecasts, and projections; business and strategic plans;
marketing and business development strategies; records relating to any
intellectual property developed by, owned by, controlled by, or maintained by
the Bank; information related to the Bank’s inventions, research, products,
designs, methods, techniques, systems, and processes; non-public information
relating to the Bank’s customers, clients, suppliers, vendors, and investors;
the specific terms of the Bank’s agreements or arrangements, whether oral or
written, with any customer, supplier, vendor, or contractor with which the Bank
may be associated from time to time; and any and all information relating to the
operation of the Bank’s business which the Bank may from time to time designate
as confidential or proprietary or that the Officer reasonably knows should be,
or has been, treated by the Bank as confidential or proprietary.  Confidential
Information encompasses all formats in which information is preserved, whether
electronic, print, oral, or any other form, including all originals, copies,
notes, or other reproductions or replicas thereof.  Confidential Information
does not include any information that: (i) at the time of disclosure is
generally known to, or readily ascertainable by, the public; (ii) becomes known
to the public through no fault of the Officer or other violation of this
Agreement; or (iii) is disclosed to the Officer by a third party under no
obligation to maintain the confidentiality of the information.  The Officer
agrees he will hold in confidence all Confidential Information and will not
disclose or make use of such information without the prior written consent of
the Bank.  Notwithstanding the preceding sentence, the Officer may disclose
Confidential Information solely to the extent that he is required to disclose
such information by law, provided that the Officer (i) notifies the Bank of the
existence and terms of such obligation, (ii) gives the Bank a reasonable
opportunity to seek a protective or similar order to prevent or limit such
disclosure, and (iii) only discloses that information actually required to be
disclosed.
 

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(f)        Nothing in this Agreement is intended to or will prohibit the Officer
from communicating with any governmental authority, or making a report in good
faith and with a reasonable belief of any violations of law or regulation to a
governmental authority, or from filing, testifying or participating in a legal
proceeding relating to such violations, including making disclosures protected
or required by any whistleblower law or regulation to the Securities and
Exchange Commission, the Department of Labor, or any other appropriate
government authority charged with the enforcement of any applicable laws.  In
addition, nothing in this Agreement is intended to or will limit any employee’s
right to discuss the terms, wages, and working conditions of their employment,
as protected by applicable law.  Pursuant to the Defend Trade Secrets Act of
2016, an individual will not be held criminally or civilly liable under any
federal or state trade secret law for the disclosure of a trade secret that (i)
is made (A) in confidence to a federal, state or local government official,
either directly or indirectly, or to an attorney; and (B) solely for the purpose
of reporting or investigating a suspected violation of law; or (ii) is made in a
complaint or other document filed in a lawsuit or other proceeding, if such
filing is made under seal.  An individual who files a lawsuit for retaliation by
an employer for reporting a suspected violation of law may disclose the trade
secret to his or her attorney and use the trade secret information in the court
proceeding, if the individual files any document containing the trade secret
under seal, and does not disclose the trade secret, except pursuant to court
order.

(g)       Upon request during employment and immediately at the termination of
the Officer’s employment with the Bank for any reason, the Officer will return
to the Bank all Confidential Information in any form (including all copies and
reproductions thereof) and all other property whatsoever of the Bank in the
Officer’s possession or under his control.  If requested by the Bank, the
Officer will certify in writing that all such materials have been returned to
the Bank.  The Officer also expressly agrees that immediately upon the
termination of the Officer’s employment with the Bank for any reason, the
Officer will cease using any secure website, computer systems, e-mail system, or
phone system or voicemail service provided by the Bank for the use of its
employees.

(h)       The Officer acknowledges that the Bank will suffer irreparable harm in
the event that the Officer breaches any of his obligations under Paragraph 6 of
this Agreement and that it would not be possible to ascertain the amount of
monetary damages in the event of such a breach. Accordingly, the Officer agrees
that, in the event of a breach by the Officer of any of his obligations under
Paragraph 6 of this Agreement, the Bank, in addition to any other relief
available to it at law or in equity, will be entitled to obtain from any court
of competent jurisdiction preliminary and permanent injunctive relief, and
expedited discovery for the purpose of seeking relief, in order to prevent or to
restrain any such breach. If the scope of any restriction contained in this
Paragraph 6 is determined to be too broad by any court of competent
jurisdiction, then such restriction shall be enforced to the maximum extent
permitted by law, and the Officer consents that the scope of this restriction
may be modified judicially.
 

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(i)         The Officer acknowledges and agrees that the restrictive covenants
in this Paragraph 6 are essential elements of the Officer’s employment by the
Bank and are reasonable given the Officer’s access to the Confidential
Information of the Bank and the substantial knowledge and goodwill the Officer
has and will acquire with respect to the business of the Bank as a result of the
Officer’s employment with the Bank.  The Officer further acknowledges and agrees
that the restrictive covenants in this Paragraph 6 are reasonable in time,
territory, scope, and all other respects, and are supported by adequate
consideration, including but not limited to a one-time bonus in the gross amount
of Five Hundred Dollars ($500), the payment of which was provided in exchange
for the Officer’s acceptance of the provisions of this Paragraph 6.  The
obligations of this Paragraph 6 shall survive any termination of this Agreement.

7.         Standards. The Officer shall perform his duties and responsibilities
under this Agreement in accordance with such reasonable standards expected of
executives with comparable positions in comparable organizations and as may be
established from time to time by the Board. The Bank will provide the Officer
with the working facilities and staff customary for similar executives and
necessary for the Officer to perform his duties.

8.         Termination and Termination Pay.

(a)       The Officer’s employment under this Agreement shall be terminated upon
the death of the Officer during the Term, in which event, the Officer’s estate
shall be entitled to receive the compensation due the Officer through the last
day of the calendar month in which the Officer’s death shall have occurred and
for a period of one month thereafter, along with reimbursement for any
unreimbursed business expenses incurred through the date of termination and
supported by reasonable substantiation and documentation in accordance with
applicable Bank policies.

(b)       The Officer may terminate his employment under this Agreement at any
time upon sixty (60) days’ prior written notice to the Board.  The Bank, at its
sole election, may relieve the Officer of his duties and pay the Officer his
current Base Salary in lieu of all or a portion of such notice period.  Upon
such termination, the Officer shall be entitled to receive compensation through
the effective date of such termination along with reimbursement for any
unreimbursed business expenses incurred through the date of termination and
supported by reasonable substantiation and documentation in accordance with Bank
policies (such amounts collectively the “Accrued Benefits”).

(c)       The Board may terminate the Officer’s employment at any time and for
any reason in the absence of “Cause” as defined below. Upon a termination
without Cause, the Officer will be entitled to receive (i) the Accrued Benefits,
and (ii) continued payment of the Officer’s then-current Base Salary through the
end of the Term (the “Separation Pay”).  The Bank’s obligation to provide the
Separation Pay is expressly conditioned upon the Officer’s execution and
delivery of a general release of claims against the Bank, the Company, and their
affiliates in a form acceptable to the Bank (the “Release”).  The Release must
be executed and delivered (and no longer subject to revocation, if applicable)
within sixty (60) days following termination.  The Separation Pay will be
payable to the Officer over time in accordance with the Bank’s payroll practices
and procedures beginning on the sixtieth (60th) day following the termination of
the Officer’s employment with the Bank, provided that the first installment will
include all installments that would have been paid if the payments had begun
immediately following the date of termination.
 

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(d)       The Board may terminate the Officer’s employment for Cause immediately
upon written notice specifying the grounds for a termination for Cause.  Upon a
termination for Cause, the Officer will be entitled to receive the Accrued
Benefits, but the Officer shall have no right to receive compensation or other
benefits for any period after termination for Cause.  For the purpose of this
Agreement, a termination for Cause shall include termination because of the
Officer’s: (i) personal dishonesty or moral turpitude; (ii) incompetence in the
performance of his duties; (iii) willful misconduct; (iv) breach of fiduciary
duty involving personal profit; (v) willful failure or refusal to perform stated
duties or failure to follow any specific lawful instructions of the Board; (vi)
willful violation of any law, rule, or regulation (other than minor traffic
violations or similar minor offenses); (vii) removal from office or permanent
prohibition from participating in the Bank’s affairs by an order issued under
section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act, 12 U.S.C.
1818(e)(4) or (g)(1); (viii) being excluded from coverage, or having coverage
limited as compared to other executives of the Bank, under the Bank’s (or, as
applicable, the Company’s) blanket bond or other fidelity or insurance policy
covering its directors, officers, or employee; or (ix) material breach of any
provision of this Agreement.

(e)       Subject to the Bank’s obligations and the Officer’s rights under (i)
Title I of the Americans with Disabilities Act, §504 of the Rehabilitation Act,
and the Family and Medical Leave Act, and to (ii) the vacation leave, disability
leave, sick leave and any other leave policies of the Bank, the Board may
terminate the Officer’s employment upon written notice as a result of the
Officer’s Disability.  As used herein, the term “Disability” means the Officer’s
inability to perform the essential functions of the Officer’s job under this
Agreement with or without a reasonable accommodation for sixty (60) business
days or more (which need not be consecutive) during any 12-month period as a
result of the condition of his physical, mental or emotional health.  The
determination of whether a Disability exists will be made by the Board in good
faith, and may be based upon information supplied by a reputable physician
retained by the Bank for such purpose; provided that the Officer shall cooperate
fully with such physician to permit such physician to make an accurate
determination as to any incapacity or disability.  Upon any such termination,
the Officer shall be entitled to receive any compensation the Officer shall have
earned prior to the date of termination but which remains unpaid, and shall be
entitled to any payments provided under any disability income plan of the Bank
which is applicable to the Officer.

9.         Additional Regulatory Requirements. Notwithstanding anything
contained in this Agreement to the contrary, it is understood and agreed that
the Bank (or any of its successors in interest) shall not be required to make
any payment or take any action under this Agreement if:
 

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(a)       the Bank is declared by any governmental agency having jurisdiction
over the Bade (hereinafter referred to as “Regulatory Authority”) to be
insolvent, in default or operating in an unsafe or unsound manner; or

(b)       in the reasonable opinion of counsel to the Bank, such payment or
action (i) would be prohibited by or would violate any provision of state or
federal law applicable to the Bank, including, without limitation, the Federal
Deposit Insurance Act as now in effect or hereafter amended, (ii) would be
prohibited by or would violate any applicable rules, regulations, orders or
statements of policy, whether now existing or hereafter promulgated, of any
Regulatory Authority, or (iii) otherwise would be prohibited by any Regulatory
Authority.

10.       Change in Control.

(a)       In the event of a termination of the Officer’s employment by the Bank
other than for Cause, and other than due to the Officer’s death or Disability,
at the time of or within twenty-four (24) months after a “Change in Control” (as
defined below), the Officer shall be entitled to receive the amount set forth in
Subparagraph (c) below, in lieu of the Separation Pay.  Said sum shall be
payable as provided in Subparagraph (e) below.

(b)       In addition, the Officer shall have the right to terminate this
Agreement upon the occurrence of any of the following events (the “Termination
Events”) without the Officer’s consent within twenty-four (24) months following
a Change in Control of the Bank:

(i)        Officer is assigned any duties and/or responsibilities that are
inconsistent with or constitute a demotion or reduction in the Officer’s
position, duties, responsibilities or status as such existed at the time of the
Change in Control or with his reporting responsibilities or titles with the Bank
in effect at such time, regardless of Officer’s resulting position; or

(ii)       Officer’s annual base salary rate is materially reduced below the
annual amount in effect as of the effective date of a Change in Control or as
the same shall have been increased from time to time following such effective
date; or

(iii)      Officer’s life insurance, medical or hospitalization insurance,
disability insurance, stock options plans, stock purchase plans, deferred
compensation plans, management retention plans, retirement plans or similar
plans or benefits being provided by the Bank to the Officer as of the effective
date of the Change in Control are materially reduced in their level, scope or
coverage, or any such insurance, plans or benefits are eliminated, unless such
reduction or elimination applies proportionately to all salaried employees of
the Bank who participated in such benefits prior to such Change in Control; or

(iv)      Officer is transferred to a location that is an unreasonable distance
from his current principal work location without the Officer’s express written
consent.
 

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The Officer shall notify the Bank within ninety (90) days of the initial
existence of a Termination Event described above. If the Bank does not correct
the Termination Event within thirty (30) days following such notification, the
Officer shall have the right to terminate this Agreement in accordance with this
Paragraph 10(b).  If Officer does not so terminate this Agreement within seven
(7) days following the end of the thirty (30) day correction period, he shall
thereafter have no further rights hereunder with respect to that Termination
Event, but shall retain rights, if any, hereunder with respect to any other
Termination Event occurring in the applicable twenty-four (24) month period.

(c)       In the event that the Officer terminates this Agreement pursuant to
Paragraph 10(b), the Bank will be obligated to pay or cause to be paid to
Officer an amount equal to 2.5 times the Officer’s “base amount” as defined in
Section 280G(b)(3) of the Internal Revenue Code of 1986, as amended (the
“Code”), in lieu of the Separation Pay.

(d)       For the purposes of this Agreement, the term “Change in Control” shall
mean any of the following events:

(i)        Any person, or more than one person acting as a group, accumulates
ownership of the common stock of the Bank or the Company constituting more than
50% of the total fair market value or total voting power of the common stock of
the Bank or the Company, as applicable;

(ii)       Any person, or more than one person acting as a group, acquires
within a 12-month period ownership of the common stock of the Bank or the
Company possessing 30% or more of the total voting power of the common stock of
the Bank or the Company, as applicable;

(iii)      A majority of the Board is replaced during any 12-month period by
directors whose appointment or election is not endorsed in advance by a majority
of the Board before the date of appointment or election;

(iv)      The Company or the Bank consolidates or merges with or into another
corporation, association or entity, or is otherwise reorganized, where the
Company or the Bank, as applicable, is not the surviving corporation in such
transaction; or

(v)       All or substantially all of the assets of the Company or the Bank are
sold or otherwise transferred to or are acquired by any other corporation,
association or other person, entity or group.

Notwithstanding the other provisions of this Paragraph 10, a transaction or
event shall not be considered a Change in Control if, prior to the consummation
or occurrence of such transaction or event, Officer and Bank agree in writing
that the same shall not be treated as a Change in Control for purposes of this
Agreement.

(e)        Such amounts payable pursuant to this Paragraph 10 shall be paid in
one lump sum within sixty (60) days following termination of this Agreement. 
The Bank’s obligation to make such payments is expressly conditioned upon the
Officer’s execution and delivery of a Release (as defined above).  The Release
must be executed and delivered (and no longer subject to revocation, if
applicable) within sixty (60) days following termination.
 

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(f)        It is the intent of the Parties hereto that all payments made
pursuant to this Agreement be deductible by the Bank for federal income tax
purposes and not result in the imposition of an excise tax on the Officer.  In
the event that the payments provided for in this Agreement or otherwise payable
to the Officer (the “Payments”) constitute “parachute payments” within the
meaning of Section 280G of the Code and the Treasury Regulations promulgated
thereunder, and but for this section, would be subject to the excise tax imposed
by Section 4999 of the Code, then the Payments shall be reduced and shall be
paid in such lesser amount which would result in no portion of such Payments
being subject to the excise tax under Section 4999 of the Code.  Unless the
Officer and the Bank otherwise agree in writing, any determination required
under this section shall be made in writing by independent accountants selected
by the Bank, which determination shall be conclusive and binding upon the
Officer and the Bank for all purposes.  For purposes of making the calculations
required by this section, the accountants may make reasonable assumptions and
approximations concerning applicable taxes and may rely on reasonable, good
faith interpretations concerning the application of the Code (including but not
limited to Sections 280G and 4999).  The Bank shall bear all costs the
accountants may reasonably incur in connection with any calculations
contemplated by this section.  If a reduction in the Payments constituting
“parachute payments” is necessary, such reduction will occur in the following
order: (1) reduction of cash payments; (2) cancellation of accelerated vesting
of stock awards other than stock options; (3) cancellation of accelerated
vesting of stock options; and (4) reduction of other benefits paid to the
Officer, with the understanding that reductions will occur first with respect to
amounts that are not “deferred compensation” within the meaning of Section 409A
of the Code, and then (if necessary to effect the reduction described in this
section) with respect to amounts that are “deferred compensation.”

11.       Code Section 409A.  The Parties intend that this Agreement and the
payments made hereunder will be exempt from, or comply with, the requirements of
Section 409A of the Code and the regulations and other guidance thereunder and
any state law of similar effect (collectively, “Section 409A”), and this
Agreement will be interpreted and applied to the greatest extent possible in a
manner that is consistent with the requirements for avoiding taxes or penalties
under Section 409A.  In the event that the Officer is determined to be a
“specified employee” (as defined under Section 409A), any payment to be made to
the Officer upon a separation from service which is deferred compensation
subject to Section 409A (and not otherwise exempt from Section 409A) may not be
made before the date that is six months after the Officer’s separation from
service (or death, if earlier).  To the extent that the Officer is or becomes
subject to this six-month delay rule, all payments of deferred compensation
subject to Section 409A (and not otherwise exempt from Section 409A) that would
have been made to the Officer during the six months following his separation
from service, if any, will be accumulated and paid to the Officer on the date
that is six months and one day following his separation from service, and any
remaining payments due will be made in their ordinary course as described in the
Agreement.  The Parties intend that each installment of any payments provided
for in this Agreement is a separate “payment” for purposes of Section 409A.  For
the purposes herein, the phrase “termination of employment” or similar phrases
will be interpreted in accordance with the term “separation from service” as
defined under Section 409A if and to the extent required under Section 409A. 
Deferrals of benefits payable or distributable pursuant to the Agreement that
are otherwise exempt from Section 409A in a manner that would cause Section 409A
to apply shall not be permitted unless such deferrals are in compliance with
Section 409A.  Further, (i) in the event that Section 409A requires that any
special terms, provisions or conditions be included in the Agreement, then such
terms, provisions and conditions shall, to the extent practicable, be deemed to
be made a part of the Agreement, and (ii) terms used in the Agreement shall be
construed in accordance with Section 409A if and to the extent required. 
Further, in the event that the Agreement or any benefit thereunder shall be
deemed not to comply with Section 409A, then neither the Bank, the Board, the
Company, nor its or their designees or agents shall be liable to the Officer or
other person for actions, decisions or determinations made in good faith.
 

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12.       Successors and Assigns.

(a)        This Agreement shall inure to the benefit of and be binding upon any
corporate or other successor of the Bank which shall acquire, directly or
indirectly, by conversion, merger, purchase or otherwise, all or substantially
all of the assets of the Bank.

(b)       Since the Bank is contracting for the unique and personal skills of
the Officer, the Officer shall be precluded from assigning or delegating his
rights or duties hereunder without first obtaining the written consent of the
Bank.

13.       Modification: Waiver; Amendments. No provision of this Agreement may
be modified, waived or discharged unless such waiver, modification or discharge
is agreed to in writing, signed by the Officer and on behalf of the Bank by such
officer as may be specifically designated by the Board. No waiver by either
Party hereto, at any time, of any breach by the other Party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other Party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No amendment or
addition to this Agreement shall be binding unless in writing and signed by both
Parties, except as herein otherwise provided.

14.       Applicable Law. This Agreement shall be governed in all respects
whether as to validity, construction, capacity, performance or otherwise, by the
laws of North Carolina, except to the extent that federal law shall be deemed to
apply.

15.       Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.

16.       Entire Agreement.  This Agreement constitutes the entire agreement
between the Parties with respect to the subject matter addressed herein and
supersedes all other agreements or understandings (whether written or oral and
whether express or implied) that may exist between the Parties with regard to
such subject matter, including but not limited to the Original Agreement.

[Signature page follows.]
 

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IN WITNESS WHEREOF, the Parties have executed this Agreement to be effective as
of the day and year first written above.

  CAROLINA TRUST BANK          
By:
/s/
Jerry L. Ocheltree
       
Jerry L. Ocheltree
       
President and Chief Executive Officer
 

 
Attest:
 
/s/ Sue S. Stamey
 
Sue S. Stamey, Corporate Secretary
 

 

 
OFFICER:
         
/s/ Richard M. Rager
   
Richard M. Rager
 

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