Exhibit 10.1

SEVERANCE AND
GENERAL RELEASE AGREEMENT

This SEVERANCE AND GENERAL RELEASE AGREEMENT (“Agreement”) is made and entered
into between Four Oaks Bank & Trust Company (the “Bank”) and W. Leon Hiatt, III
(“Employee”). Throughout the remainder of this Agreement, the Bank and Employee
may be collectively referred to as the “Parties” and individually referred to as
a “Party.”
Employee is currently employed as Executive Vice President, Chief Administrative
Officer of the Bank pursuant to that certain Amended and Restated Executive
Employment Agreement between the Parties dated December 11, 2008 (the
“Employment Agreement”). The Bank is eliminating the position of Chief
Administrative Officer. Thus, Employee’s employment and the Employment Agreement
are being terminated by the Bank without Cause with such termination to be
effective on February 1, 2016.
Employee represents that he has carefully read this entire Agreement,
understands its consequences, and voluntarily enters into it.
In consideration of the above and the mutual promises set forth below, Employee
and the Bank agree as follows:
1.    SEPARATION AND TERMINATION OF EMPLOYMENT AGREEMENT. Employee’s employment
with the Bank and the Employment Agreement will terminate on February 1, 2016
(“Termination Date”). By signing this Agreement, Employee represents that he has
been properly paid for all time worked and has received all salary, expense
reimbursement, and all other amounts of any kind due to him from the Bank with
the sole exception of the benefits payable under this Agreement.
The Parties hereby terminate the Employment Agreement and acknowledge and agree
that neither Party shall have any further obligation or entitlement thereunder.
2.    SEVERANCE BENEFITS.
A.    Severance Payment. The Bank will pay Employee an amount equal to two (2)
times his most recent annual salary plus his most recent annual bonus (less
applicable taxes and withholdings (the “Severance Payment”). The Severance
Payment shall be payable in a lump sum on the next regularly scheduled payroll
date following the Termination Date, February 29, 2016.
B.    Reimbursement for COBRA. If Employee timely and properly elects continuing
coverage under the Bank’s group health insurance policy under the Consolidated
Omnibus Budget Reconciliation Act of 1985 (“COBRA”), the Bank will reimburse
Employee for the additional costs he incurs for coverage for a period of
eighteen (18) months, and, following the end of that eighteen (18)-month period
until the end of the twenty-four (24)-month period following the Termination
Date, the Bank will reimburse Employee for the additional reasonable costs of
obtaining comparable health insurance coverage through an insurance policy or
policies he purchases on his own, provided, however, such reimbursements shall
cease if Employee obtains comparable coverage in connection with subsequent
employment. Employee shall provide the Bank notice of such subsequent employment
and comparable coverage within thirty (30) days of obtaining the same.
Employee shall bear full responsibility for applying for COBRA coverage and
obtaining coverage under any other insurance policy subject to reimbursements
under this Paragraph 2B and nothing herein shall constitute a guarantee of COBRA
continuation coverage or benefits or a guarantee of eligibility for health
insurance coverage. All reimbursements shall be paid as soon as practicable
following Employee's submission of proof of timely premium payments to the Bank;
provided, however, that all such reimbursements shall be made on or before the
last day of the taxable year following the taxable year in which the expenses
were incurred. Under no circumstances will Employee be entitled to a cash
payment or other benefit in lieu of reimbursement for the actual costs of
premiums for health insurance coverage hereunder. The amount of expenses
eligible for reimbursement during any calendar year shall not be affected by the
amount of expenses eligible for reimbursement in any other calendar year, and
Employee’s right to reimbursement shall not be subject to liquidation or
exchange for any other benefit.
C.    Payment for Notice Period. Pursuant to Paragraph 4(d) of the Employment
Agreement, Employee is entitled to ninety (90) days’ written notice of
termination without Cause. The Bank gave Employee written notice of termination
without Cause on January 4, 2016. The Bank will pay Employee Twenty Seven
Thousand Five Hundred Thirty Three and 96/00 Dollars ($27,531.96) which equals
the salary he would have received for the remainder of the ninety (90)-day
notice period. This total amount shall be paid in a lump sum (less applicable
taxes and withholdings) on the next regularly scheduled payroll date following
the Termination Date, February 29, 2016.
D.    Extension of Restricted Stock Rights. The Bank agrees that ten thousand
(10,000) shares of restricted Bank common stock previously awarded to Employee
shall, instead of being forfeited on the Termination Date as provided in the
award of such restricted stock, remain issued and outstanding and vest on
December 31, 2016 subject to, in the Bank’s reasonable judgment, Employee’s
compliance with his obligations under this Agreement from the Termination Date
to such date.
E.    Automobile. On the Termination Date, the Bank will transfer to Employee
the title of the automobile which is currently owned by the Bank and provided to
Employee for his use as an employee of the Bank.
F. Vacation and Sick Days. The Bank will pay Employee for his accrued, unused
vacation days (8 days, totaling $4,862.75) and his accrued, unused sick days (32
days, totaling $19,124.27) with such payments (less applicable taxes and
withholdings) being made on the next regularly scheduled payroll date following
the Termination Date, February 29, 2016.
The severance benefits afforded under this Agreement are in lieu of any other
compensation or benefits to which Employee otherwise might be entitled, and
payment of the severance benefits is conditioned upon Employee’s compliance with
the terms of this Agreement.
3.    MUTUAL RELEASE.
A.    Release by Employee.
i.In consideration of the benefits conferred by this Agreement, EMPLOYEE (ON
BEHALF OF HIMSELF AND HIS ASSIGNS, HEIRS AND OTHER REPRESENTATIVES) RELEASES THE
BANK AND ITS PAST, PRESENT AND FUTURE PARENTS, SUBSIDIARIES, AFFILIATES, AND ITS
AND/OR THEIR PREDECESSORS, SUCCESSORS, ASSIGNS, AND ITS AND/OR THEIR PAST,
PRESENT AND FUTURE OFFICERS, DIRECTORS, EMPLOYEES, OWNERS, INVESTORS,
SHAREHOLDERS, ADMINISTRATORS, BUSINESS UNITS, EMPLOYEE BENEFIT PLANS (TOGETHER
WITH ALL PLAN ADMINISTRATORS, TRUSTEES, FIDUCIARIES AND INSURERS) AND AGENTS
(“RELEASEES”) FROM ALL CLAIMS AND WAIVES ALL RIGHTS KNOWN OR UNKNOWN, HE MAY
HAVE OR CLAIM TO HAVE RELATING TO HIS EMPLOYMENT WITH THE BANK, ITS
PREDECESSORS, SUBSIDIARIES, OR AFFILIATES OR HIS SEPARATION OR TERMINATION
THEREFROM arising before the execution of this Agreement to the fullest extent
permitted by law, including but not limited to claims:
a.for discrimination, harassment or retaliation arising under federal, state or
local laws prohibiting age (including, but not limited to claims under the Age
Discrimination in Employment Act of 1967 (“ADEA”), as amended), sex, national
origin, race, religion, disability, veteran status or other protected class
discrimination, harassment or retaliation for protected activity;
b.for compensation and benefits including but not limited to, claims under the
Employee Retirement Income Security Act of 1974 (“ERISA”), Fair Labor Standards
Act of 1938 (“FLSA”), Family and Medical Leave Act of 1993 (“FMLA”), all as
amended, and similar federal, state, and local laws and claims under any Bank
policy, plan or program;
c.under federal, state or local law of any nature whatsoever (including but not
limited to constitutional, statutory, tort, express or implied contract or other
common law);
d.under the Employment Agreement;
e.for attorneys’ fees; and
f.of any kind whatsoever (with the sole exception of those listed below) whether
or not Employee knows about them at the time he signs this general release.
Provided, however, the release of claims set forth in this Agreement does NOT:
g.apply to claims for workers’ compensation benefits, vested retirement benefits
or unemployment benefits filed with the applicable state agencies or where
otherwise prohibited by law;
h.bar a challenge under the Older Workers Benefit Protection Act of 1990
(“OWBPA”) to the enforceability of the waiver and release of ADEA claims set
forth in this Agreement; or
i.prohibit Employee from filing a charge with or participating in an
investigation by the U.S. Equal Employment Opportunity Commission or other
governmental agency with jurisdiction concerning the terms, conditions and
privileges of employment or jurisdiction over the Bank’s business or assisting
with an investigation conducted internally by the Bank; provided, however, that
by signing this Agreement, Employee waives the right to, and shall not seek or
accept, any monetary or other relief of any nature whatsoever in connection with
any such charges, investigations or proceedings.
ii.Employee will not sue Releasees on any matters relating to his employment or
separation therefrom arising before the execution of this Agreement (with the
sole exception of claims and challenges set forth in subparagraph A (vii) - (ix)
above), or join as a party with others who may sue on any such claims, or opt-in
to an action brought by others asserting such claims, and, in the event that
Employee is made a member of any class asserting such claims without his
knowledge or consent, Employee shall opt out of such action at the first
opportunity.
B.    Release by Bank.
The Bank hereby releases Employee from all claims and waives all rights known or
unknown that it may have or claim to have relating to his employment with the
Bank arising before the execution of this Agreement.
4.    BANK INFORMATION AND PROPERTY. Employee shall not at any time after his
employment terminates disclose, use or aid third parties in obtaining or using
any confidential or proprietary information of the Bank nor access or attempt to
access any Bank computer systems, networks or any resources or data that resides
thereon. Confidential or proprietary information is information relating to the
Bank or any aspect of its business which is not generally available to the
public, the Bank’s competitors, or other third parties, or ascertainable through
common sense or general business or technical knowledge. Nothing in this
Agreement shall relieve Employee from any obligations under any previously
executed confidentiality, proprietary information or secrecy agreements.
All records, files or other materials maintained by or under the control,
custody or possession of the Bank or its agents in their capacity as such shall
be and remain the Bank’s property. By signing this Agreement, Employee
represents that he: (a) has returned all Bank property (including, but not
limited to, credit cards; keys; access cards; thumb drive(s), laptop(s),
personal digital devices and all other computer hardware and software; records,
files, documents, manuals, and other documents in whatever form they exist,
whether electronic, hard copy or otherwise and all copies, notes or summaries
thereof) which he created, received or otherwise obtained in connection with his
employment; (b) has permanently deleted any Bank information that may reside on
his personal computer(s), other devices or accounts; and (c) will fully
cooperate with the Bank in winding up his work and transferring that work to
those individuals designated by the Bank. Notwithstanding the above, Employee
may retain the iPhone and iPad that were issued to him by the Bank provided that
all Bank information that may reside on such devices is permanently deleted from
the devices.
5.    RIGHT TO REVIEW. The Bank delivered, via hand delivery, this Agreement,
containing the release language set forth in Paragraph 3 to Employee on January
4, 2016 (the “Notification Date”) and desires that he have adequate time and
opportunity to review and understand the consequences of entering into it.
Accordingly, the Bank advises Employee as follows:
•
To consult with his attorney prior to executing it; and

•
That he has twenty-one (21) days from the Notification Date to consider it.

Employee may not execute this Agreement prior to the Termination Date. In the
event that Employee does not return an executed copy of this Agreement to David
Rupp, President and CEO at the Bank on the Termination Date, this Agreement and
the obligations of the Bank herein shall become null and void and Employee will
not be entitled to the additional severance pay benefits described herein.
Employee may revoke this Agreement during the seven (7)-day period immediately
following his execution of it. This Agreement will not become effective or
enforceable until the revocation period has expired. To revoke this Agreement, a
written notice of revocation must be delivered to David Rupp, President and CEO
at the Bank.
6.    CONFIDENTIALITY AND NONDISPARAGEMENT. Employee shall keep the terms and
provisions of this Agreement confidential, and Employee represents and warrants
that since receiving this Agreement he has not disclosed, and going forward will
not disclose, the terms and conditions of this Agreement to third parties,
except as follows: (a) he may reveal the terms and provisions of this Agreement
to members of his immediate family or to an attorney whom he may consult for
legal advice, provided that such persons agree to maintain the confidentiality
of the Agreement and (b) he may disclose the terms and provisions of this
Agreement to the extent such disclosure is required by law.
Employee represents and warrants that, since receiving this Agreement, he (x)
has not made, and going forward will not make, disparaging, defaming, or
derogatory remarks about the Bank or its products, services, business practices,
directors, officers, managers or employees to anyone; nor (y) taken, and going
forward will not take, any action that may impair the relations between the Bank
and its vendors, customers, employees, or agents or that may be detrimental to
or interfere with, the Bank or its business. The Bank warrants that it will use
its best commercially reasonable efforts to insure that no representative of the
Bank makes disparaging, defaming, or derogatory remarks about Employee.
7.    COOPERATION.
A.Employee agrees that he will assist and cooperate with the Bank in connection
with the defense or prosecution of any claim that may be made against or by the
Bank, or in connection with any ongoing or future investigation, examination,
dispute, or claim of any kind involving the Bank, including any proceeding
before any arbitral, administrative, judicial, regulatory, legislative, or other
body or agency, to the extent such claims, investigations or proceedings relate
to services performed or required to be performed by Employee, pertinent
knowledge possessed by Employee, or any act or omission by Employee. The
cooperation to be provided by Employee includes without limitation: (i)
testifying in a proceeding or at a deposition; (ii) execution and delivery of
any documents that may be reasonably necessary to carry out the provisions of
this Paragraph, including execution and delivery of affidavits or declarations
under penalty of perjury; and (iii) providing information as requested by the
Bank.  Proceedings within the scope of this Paragraph include without
limitation, Dillon v. BMO Harris Bank, N.A., et al., 1:13-cv-897 (M.D.N.C.), and
Gunson v. BMO Harris Bank, N.A., et al., 0:13-cv-62321 (S.D. Fla.).
B.Employee acknowledges that he has from time to time received document
preservation notices from the Bank, including a notice on May 22, 2013,
regarding information related to LST Financial, Inc. and its clients.  Employee
represents and warrants that he has fully complied with all such preservation
notices, and that all documents within the scope of any preservation notice in
effect at the time of this Agreement have been produced to the Bank.
C.In enforcing its rights under this Paragraph, the Bank shall make reasonable
efforts to minimize disruption of Employee’s other activities.
D.To the extent Employee is requested to provide cooperation pursuant to this
Paragraph after his employment has terminated and following any period during
which he is receiving post-termination payments, and to the extent not
prohibited by law, the Bank shall reimburse Employee for reasonable expenses
incurred in connection with Employee’s cooperation.  In the event it becomes
necessary for Employee to testify in a proceeding or deposition under this
Paragraph, the Bank will provide Employee with counsel of the Bank’s choosing at
the Bank’s expense.  Employee agrees to devote adequate time to prepare for any
such testimony as directed by his counsel. 
E.Failure of Employee to comply with this Paragraph constitutes a material
breach of this Agreement.
8.    NON-SOLICITATION OF EMPLOYEES. For the one (1)-year period following the
Termination Date, Employee agrees that he will not offer employment to or
otherwise solicit for employment any employee of the Bank or any person who had
been employed by the Bank during the last year of Employee’s employment with the
Bank or otherwise interfere with the relationship between the Bank and any
employee or independent contractor of the Bank or encourage any such person to
terminate his or her relationship with the Bank.
9.    OTHER. Except as expressly provided in this Agreement, this Agreement
supersedes all other understandings and agreements, oral or written, between the
Parties and constitutes the sole agreement between the Parties with respect to
its subject matter. Each Party acknowledges that no representations,
inducements, promises or agreements, oral or written, have been made by any
Party or by anyone acting on behalf of any Party, which are not embodied in this
Agreement, and no agreement, statement or promise not contained in the Agreement
shall be valid or binding on the Parties. No change or modification of this
Agreement shall be valid or binding on the Parties unless such change or
modification is in writing and is signed by the Parties. Employee’s or the
Bank’s waiver of any breach of a provision of this Agreement shall not waive any
subsequent breach by the other Party. If a court of competent jurisdiction holds
that any provision or sub-part thereof contained in this Agreement is invalid,
illegal or unenforceable, that invalidity, illegality or unenforceability shall
not affect any other provision in this Agreement.
This Agreement is intended to avoid all litigation relating to Employee’s
employment with the Bank and his separation therefrom; therefore, it is not to
be construed as the Bank’s admission of any liability to him, liability which
the Bank denies.
If Employee does not abide by this Agreement, then he will (a) return all monies
received under this Agreement and the Bank will be relieved of its obligations
hereunder, except to the extent that such return and relief would result in
invalidation of the release set forth above, and (b) indemnify the Bank for all
expenses it incurs in seeking to enforce this Agreement or as a result of his
failure to abide by this Agreement, including reasonable attorneys’ fees in
defending any released claims.
This Agreement shall apply to, be binding upon and inure to the benefit of the
Parties’ successors, assigns, heirs and other representatives and be governed by
North Carolina law (with the sole exception of its conflicts of laws provisions)
and the applicable provisions of federal law, including but not limited to ADEA.

IN WITNESS WHEREOF, the parties have entered into this Agreement on the day and
year written below.
EMPLOYEE REPRESENTS THAT HE HAS CAREFULLY READ THE ENTIRE AGREEMENT, UNDERSTANDS
ITS CONSEQUENCES, AND VOLUNTARILY ENTERS INTO IT.

/s/ W. Leon Hiatt, III                2/1/2016    
W. Leon Hiatt, III                Date

Four Oaks Bank & Trust Company

By:/s/David Rupp                2/1/2016    
Date

Title: CEO