Exhibit 10.1(a)

FIDELITY BANKSHARES, INC.

EMPLOYMENT AGREEMENT

FOR

VINCE A. ELHILOW

This Agreement (this “Agreement”) is made effective as of the 20th day of
December, 2005 by and between Fidelity Bankshares, Inc. (the “Company”), a
Delaware corporation, with its principal administrative office at 205 Datura
Street, West Palm Beach, Florida 33401, and Vince A. Elhilow (“Executive”).

WHEREAS, Executive is currently employed as the President and Chief Executive
Officer of the Company and of Fidelity Federal Bank & Trust (the “Bank”), and
the Company is the sole stockholder of the Bank; and

WHEREAS, the Company and Executive are parties to an employment agreement dated
January 1, 2004; and

WHEREAS, the Bank and Executive have entered into an updated employment
agreement dated December 20, 2005 (the “Bank Employment Agreement”) governing
the terms and conditions of Executive’s employment by the Bank; and

WHEREAS, new Section 409A of the Internal Revenue Code (“Code”), which is
initially effective in 2005, has deemed certain employment agreements to be
deferred compensation, subject to its provisions; and

WHEREAS, the Company and Executive desire at this time to update the employment
agreement to, among other things, comply with Code Section 409A.

NOW, THEREFORE, in consideration of the mutual covenants herein contained, and
upon the other terms and conditions hereinafter provided, the parties hereby
agree as follows:

1. POSITION AND RESPONSIBILITIES

During the period of his employment hereunder, Executive agrees to serve as
President and Chief Executive Officer of the Bank and the Company, respectively.
During said period, Executive also agrees to serve as a director of the Bank and
the Company and, if elected, as an officer and director of any subsidiary or
affiliate of the Company. Failure to reelect Executive as President and Chief
Executive Officer of the Company without the consent of Executive during the
term of this Agreement shall constitute a breach of this Agreement.

2. TERMS AND DUTIES

(a) The period of Executive’s employment under this Agreement shall begin as of
the date first above written and shall continue for thirty-six (36) full
calendar months thereafter. Commencing on the first anniversary date of this
Agreement (“Anniversary Date”) and continuing on each Anniversary Date
thereafter, this Agreement shall renew for an additional year such that the
remaining term shall be three (3) years unless written notice of non-renewal

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(“Non-Renewal Notice”) is provided to Executive at least thirty (30) days and
not more than sixty (60) days prior to any such Anniversary Date, in which case
his employment shall cease at the end of thirty-six (36) months following such
Anniversary Date. Prior to each notice period for non-renewal, the disinterested
members of the Board of Directors of the Company (“Board”) will conduct a
comprehensive performance evaluation and review of Executive for purposes of
determining whether to extend the Agreement, and the results thereof shall be
included in the minutes of the Board’s meeting.

(b) During the period of his employment hereunder, except for periods of absence
occasioned by illness, reasonable vacation periods, and reasonable leaves of
absence, Executive shall faithfully perform his duties hereunder, including
activities and services related to the organization, operation and management of
the Bank and the Company.

(c) Notwithstanding anything herein to the contrary, Executive’s employment with
the Company may be terminated by the Company or Executive during the term of
this Agreement, subject to the terms and conditions of this Agreement. However,
Executive shall not perform, in any respect, directly or indirectly, during the
pendency of his temporary or permanent suspension or termination from the
Company, duties and responsibilities as President and Chief Executive Officer of
the Bank.

3. COMPENSATION AND REIMBURSEMENT

(a) The compensation specified under this Agreement shall constitute the salary
and benefits paid for the duties described in Section 2. The Company shall pay
Executive as compensation a salary of not less than $465,000 per year (“Base
Salary”). Such Base Salary shall be payable monthly, or in accordance with the
normal payroll practices of the Bank. During the period of this Agreement,
Executive’s Base Salary shall be reviewed at least annually; the first such
review will be made no later than January 31 of each year during the term of
this Agreement and shall be effective from the first day of said month through
the end of the calendar year. Such review shall be conducted by a Committee
designated by the Board, and the Board may increase, but not decrease,
Executive’s Base Salary (any increase in Base Salary shall become the “Base
Salary” for purposes of this Agreement). In addition to the Base Salary provided
in this Section 3(a), the Company shall provide Executive at no cost to
Executive with all such other benefits as are provided uniformly to permanent
full-time employees of the Company and/or the Bank.

(b) The Company will provide Executive with employee benefit plans, arrangements
and perquisites substantially equivalent to those in which Executive was
participating or otherwise deriving benefit from immediately prior to the
beginning of the term of this Agreement, and the Company will not, without
Executive’s prior written consent, make any changes in such plans, arrangements
or perquisites which would adversely affect Executive’s rights or benefits
thereunder. Without limiting the generality of the foregoing provisions of this
Section 3(b), Executive will be entitled to participate in or receive benefits
under any employee benefit plans of the Bank or the Company including, but not
limited to, retirement plans, supplemental retirement plans, pension plans,
profit-sharing plans, stock option and restricted stock plans,
health-and-accident plans, medical coverage and any other employee benefit plan
or arrangement made available by the Bank and/or the Company in the future to
its senior

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executives and key management employees, subject to and on a basis consistent
with the terms, conditions and overall administration of such plans and
arrangements. Executive will be entitled to incentive compensation and bonuses
as provided in any plan of the Company and/or the Bank in which Executive is
eligible to participate. Nothing paid to Executive under any such plan or
arrangement will be deemed to be in lieu of other compensation to which
Executive is entitled under this Agreement.

(c) In addition to the benefits provided under paragraph (b) of this Section,
Executive and his spouse shall be entitled to continuing health care coverage
upon Executive=s retirement or other termination of employment with the Company,
other than termination for Cause, which coverage shall be fully paid by the
Company and shall be substantially similar to the coverage provided for
Executive and his spouse prior to Executive=s termination of employment. Such
health care coverage shall survive the termination of, or expiration of, this
Agreement, and shall continue for the lifetime of each of Executive and his
spouse, provided however, that upon each such person=s eligibility for Medicare
coverage, the Company shall provide health care coverage to such person at the
highest level of coverage provided or made available by the American Association
of Retired Persons (AARP) to its members residing in the locale where Executive
resides, which coverage shall be supplemental to his or her Medicare coverage
for his or her lifetime.

(d) The Company shall pay or reimburse Executive for all reasonable travel and
other reasonable expenses incurred by Executive in performing his obligations
under this Agreement and may provide such additional compensation in such form
and such amounts as the Board may from time to time determine.

4. OUTSIDE ACTIVITIES

Executive may serve as a member of the board of directors of business, community
and charitable organizations, subject to the approval of the Board, provided
that in each case such service shall not materially interfere with the
performance of his duties under this Agreement or present any conflict of
interest. Such service to and participation in outside organizations shall be
presumed for these purposes to be for the benefit of the Company, and the
Company shall reimburse Executive his reasonable expenses associated therewith.

5. WORKING FACILITIES AND EXPENSES

Executive’s principal place of employment shall be at the Company’s principal
executive offices. The Company shall provide Executive, at his principal place
of employment, with a private office and other support services and facilities
that are suitable to his position with the Company and necessary or appropriate
in connection with the performance of his duties under this Agreement. The
Company shall provide Executive with an automobile suitable to the position of
President and Chief Executive Officer of the Company, and such automobile may be
used by Executive in carrying out his duties under this Agreement as well as for
his personal use. The Company shall reimburse Executive for the cost of
maintenance, use and servicing of such automobile. The Company shall also
reimburse Executive for his ordinary and necessary business expenses incurred in
connection with the performance of his duties under this Agreement, including,
without limitation, travel and reasonable entertainment expenses and fees

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for memberships in such clubs and organizations that Executive and the Board
mutually agree are necessary and appropriate to further the business of the
Company. Reimbursement of such expenses shall be made upon presentation to the
Company of an itemized account of the expenses in such form as the Company may
reasonably require.

6. PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION OR CHANGE IN CONTROL

The provisions of this Section shall in all respects be subject to the terms and
conditions stated in Sections 9 and 17.

(a) The provisions of this Section 6(a) shall apply upon the occurrence of an
Event of Termination (as herein defined) during Executive’s term of employment
under this Agreement. As used in this Agreement, an “Event of Termination” shall
mean and include any one or more of the following:

(i) the termination by the Bank or the Company of Executive’s full-time
employment hereunder for any reason other than (A) Disability or Retirement, as
defined in Section 7 below, or (B) Termination for Cause as defined in Section 8
hereof; or

(ii) Executive’s resignation from the Company’s employ, upon any

(A) failure to elect or reelect or to appoint or reappoint Executive as
President and Chief Executive Officer of the Bank and/or the Company,

(B) material change in Executive’s function, duties, or responsibilities, which
change would cause Executive’s position to become one of lesser responsibility,
importance, or scope from the position and attributes thereof described in
Section 1 above,

(C) relocation of Executive’s principal place of employment by more than 30
miles from its location at the effective date of this Agreement,

(D) liquidation or dissolution of the Bank or Company other than liquidations or
dissolutions that are caused by reorganizations that do not affect the status of
Executive, or

(E) breach of this Agreement by the Company.

Upon the occurrence of any event described in clauses (ii) (A), (B), (C), (D) or
(E) above, Executive shall have the right to elect to terminate his employment
under this Agreement by resignation upon sixty (60) days prior written notice
given within a reasonable period of time not to exceed four (4) calendar months
after the initial event giving rise to said right to elect. Notwithstanding the
preceding sentence, in the event of a continuing breach of this Agreement by the
Company, Executive, after giving due notice within the prescribed time frame of
an initial event specified above, shall not waive any of his rights solely under
this Agreement and this Section by virtue of the fact that Executive has
submitted his resignation but has remained in the employment of the Company and
is engaged in good faith discussions to resolve any occurrence of an event
described in clauses (A), (B), (C), (D) or (E) above.

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(b) The provisions of this Section 6(b) and 6(d) shall apply upon the occurrence
of a Change in Control during the term of this Agreement, including extensions
hereof. In the event of a Change in Control of the Company or the Bank,
Executive shall be entitled to the payments set forth in Section 6(d) hereof.
For purposes of this Agreement, a Change in Control of the Company or the Bank
shall mean (i) a change in ownership of the Company or the Bank under paragraph
(1) below, or (ii) a change in effective control of the Company or the Bank
under paragraph (2) below, or (iii) a change in the ownership of a substantial
portion of the assets of the Company or the Bank under paragraph (3) below:

(1) Change in the ownership of the Company or the Bank. A change in the
ownership of the Company or the Bank shall occur on the date that any one
person, or more than one person acting as a group (as defined in Proposed
Treasury Regulation Section 1.409A-3(g)(5)(v)(B) or subsequent guidance),
acquires ownership of stock of the corporation that, together with stock held by
such person or group, constitutes more than 50 percent of the total fair market
value or total voting power of the stock of such corporation.

(2) Change in the effective control of the Company or the Bank. A change in the
effective control of the Company or the Bank shall occur on the date that either
(i) any one person, or more than one person acting as a group (as defined in
Proposed Treasury Regulation Section 1.409A-3(g)(5)(v)(B) or subsequent
guidance), acquires (or has acquired during the 12-month period ending on the
date of the most recent acquisition by such person or persons) ownership of
stock of the corporation possessing 35 percent or more of the total voting power
of the stock of such corporation; or (ii) a majority of members of the
corporation’s board of Directors is replaced during any 12-month period by
Directors whose appointment or election is not endorsed by a majority of the
members of the corporation’s board of Directors prior to the date of the
appointment or election, provided that this sub-section (ii) is inapplicable
where a majority shareholder of the Company or the Bank is another corporation.

(3) Change in the ownership of a substantial portion of the Company’s or the
Bank’s assets. A change in the ownership of a substantial portion of the Company
or the Bank’s assets shall occur on the date that any one person, or more than
one person acting as a group (as defined in Proposed Treasury Regulation
Section 1.409A-3(g)(5)(v)(B) or subsequent guidance), acquires (or has acquired
during the 12-month period ending on the date of the most recent acquisition by
such person or persons) assets from the corporation that have a total gross fair
market value equal to or more than 40 percent of the total gross fair market
value of (i) all of the assets of the Company or the Bank, or (ii) the value of
the assets being disposed of, either of which is determined without regard to
any liabilities associated with such assets.

(4) For all purposes hereunder, the definition of Change in Control shall be
construed to be consistent with the requirements of Proposed Treasury Regulation
Section 1.409A-3(g) or subsequent guidance.

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(c) Upon the occurrence of an Event of Termination, as defined in
Section 6(a)(i) or (ii), on the Date of Termination, as defined in Section 9(b)
or, if different, within the time frame set forth in any sub-paragraph below,
the Company shall pay, provide or credit to Executive (or, in the event of his
subsequent death, his beneficiary or beneficiaries, or his estate, as the case
may be):

(i) his earned but unpaid salary as of the date of termination of employment
with the Company and the benefits to which he would be entitled as of the date
of termination as a former employee under the Company’s or the Bank’s employee
benefit plans and programs and compensation plans and programs;

(ii) as severance pay or liquidated damages, or both, a sum equal to three
(3) times the sum of (A) the highest annual rate of Base Salary and (B) the
highest annual bonus awarded to Executive during the prior three years. Payment
of the amount required hereunder shall be made no later than the first day of
the seventh month following Executive’s Separation from Service if Executive is
a Specified Employee and such delay is required by Code Section 409A. For these
purposes, the terms “Specified Employee” and “Separation from Service” shall
have the meaning required by Code Section 409A. Such payments shall not be
reduced in the event Executive obtains other employment following termination of
employment;

(iii) at the Company’s expense, continued medical, dental and life insurance
coverage substantially identical to the coverage maintained by the Company or
the Bank for Executive prior to his termination of employment. Such medical and
dental coverage shall continue for the lifetime of each of Executive and his
spouse as provided in Section 3(c) hereof, and such life insurance coverage
shall cease thirty-six (36) months following the Event of Termination;

(iv) any outstanding unvested stock options or shares of restricted stock of the
Company that have been awarded to him, which shall become fully vested as of his
termination of employment;

(v) within sixty (60) days (or within such shorter period to the extent that
information can be reasonably be obtained) following his termination of
employment with the Company, a lump sum payment in an amount equal to the
present value of the Company and/or the Bank’s contributions that would have
been made on Executive’s behalf under the Bank’s 401(k) Plan and employee stock
ownership plan (and any other defined contribution plan maintained by the Bank
or the Company) if he had continued working for the Company and the Bank for a
thirty-six (36) month period following his termination earning the Base Salary
that would have been achieved during the remaining unexpired term of this
Agreement (assuming, if a Change in Control has occurred, that the annual Base
Salary increases at the rate of six percent (6%) per year on each Anniversary
Date over the remaining unexpired term of the Agreement) and making the maximum
amount of employee contributions permitted, if any, under such plan or plans,
where such present values are to be determined using a discount rate of six
percent (6%);

(vi) within sixty (60) days (or within such shorter period to the extent that
information can reasonably be obtained) following his termination of employment
with the Company and/or the Bank, a lump sum payment in an amount equal to the
excess, if any, of (A) the present value of the benefits to which he would be
entitled under the Supplemental Executive Retirement Plan

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(and any other deferred compensation plan for management or highly compensated
employees that are maintained by the Bank and/or the Company), if he had
continued working for the Company and the Bank for the thirty-six (36) month
period following his termination at the Base Salary and bonus that would have
been achieved during the remaining unexpired term of this Agreement (assuming,
if a Change in Control has occurred, that annual Base Salary and bonus each
increase at the rate of six percent (6%) per year on each Anniversary Date for
the remaining unexpired term of the Agreement) over (B) the present value of the
benefits to which he is actually entitled under any such plan, as of the date of
his termination with the Company and/or the Bank, where the present values are
to be determined using a discount rate of six percent (6%) and the mortality
tables prescribed under Section 72 of the Code.

(d) Upon the occurrence of a Change in Control, as defined in Section 6(b) the
Company shall pay, provide or credit to Executive (or in the event of his death,
to his Beneficiary):

(i) as severance pay or liquidated damages, or both, a sum equal to three
(3) times the sum of (A) the highest annual rate of Base Salary and (B) the
highest annual bonus awarded to Executive during the prior three years. Payment
of the amount required hereunder shall be made in a lump sum on the effective
date of the Change in Control;

(ii) at the Company’s expense, continued medical, dental and life insurance
coverage substantially identical to the coverage maintained by the Bank and/or
the Company for Executive prior to the Change in Control. Such medical and
dental coverage shall continue for the lifetime of each of Executive and his
spouse as provided in Section 3(c) hereof, and such life insurance shall cease
thirty-six (36) months following the Executive’s termination of employment;

(iii) any outstanding unvested stock options or shares of restricted stock of
the Company that have been awarded to him, which shall become fully vested as of
the effective date of the Change in Control;

(iv) at the time of or within sixty (60) days (or within such shorter period to
the extent that information can be reasonably obtained) following the Change in
Control, a lump sum payment in an amount equal to the present value of the
Company’s and/or the Bank’s contributions that would have been made on
Executive’s behalf under the Bank’s 401(k) Plan and employee stock ownership
plan (and any other defined contribution plan maintained by the Bank and/or the
Company) if he had continued working for the Bank and the Company for a
thirty-six (36) month period following his termination, earning the Base Salary
that would have been achieved during the remaining unexpired term of this
Agreement (assuming, if a Change in Control has occurred, that the annual Base
Salary increases at the rate of six percent (6%) per year on each Anniversary
Date over the remaining unexpired term of the Agreement) and making the maximum
amount of employee contributions permitted, if any, under such plan or plans,
where such present values are to be determined using a discount rate of six
percent (6%) per year;

(v) at the time of or within sixty (60) days (or within such shorter period to
the extent that information can reasonably be obtained) following the Change in
Control, a lump sum payment in an amount equal to the excess, if any, of (A) the
present value of the benefits to

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which he would be entitled under the Fidelity Federal Savings Bank of Florida
Supplemental Executive Retirement Plan (and any other deferred compensation plan
for management or highly compensated employees that are maintained by the Bank
and/or the Company) if he had continued working for the Bank and the Company for
the thirty-six (36) month period following his termination at the Base Salary
and bonus that would have been achieved during the remaining unexpired term of
this Agreement (assuming, if a Change in Control has occurred, that annual Base
Salary and bonus each increase at the rate of six percent (6%) per year on each
Anniversary Date for the remaining unexpired term of the Agreement) over (B) the
present value of the benefits to which he is actually entitled under any such
plan, as of the date of his termination with the Company and/or the Bank, where
the present values are to be determined using a discount rate of six percent
(6%) and the mortality tables prescribed under Section 72 of the Code.

(e) Notwithstanding the preceding paragraphs of this Section, in the event that:

(i) the aggregate payments or benefits to be made or afforded to Executive under
said paragraphs (the “Parachute Benefits”) would be deemed to include an “excess
parachute payment” under Section 280G of the Code or any successor thereto, and

(ii) if such Parachute Benefits were reduced to an amount (the “Non-Triggering
Amount”), the value of which is one dollar ($1.00) less than an amount equal to
the total amount of payments permissible under Section 280G of the Code or any
successor thereto, then the Parachute Benefits to be paid to Executive shall be
so reduced so as to be a Non-Triggering Amount.

(f) Payments under Section 6(d) and 6(e) above shall be made irrespective of
whether termination of employment has occurred. Notwithstanding anything herein
to the contrary, Executive shall only be entitled to a payment under the first
to occur of an Event of Termination under Section 6(c) or a Change in Control
under Section 6(d). Payments under one of these alternatives shall preclude any
payments under the other.

7. TERMINATION UPON RETIREMENT, DISABILITY OR DEATH

For purposes of this Agreement, termination by the Company of Executive’s
employment based on “Retirement” shall mean termination in accordance with the
Company’s and/or the Bank’s retirement policy or in accordance with any
retirement arrangement established with Executive’s consent with respect to him.
Upon termination of Executive upon Retirement, Executive shall be entitled to
all benefits under any retirement plan of the Company or the Bank and other
plans to which Executive is a party.

In the event Executive is unable to perform his duties under this Agreement on a
full-time basis for a period of six (6) consecutive months by reason of illness
or other physical or mental disability (“Disability”), the Company may terminate
this Agreement, provided that the Company shall continue to be obligated to pay
Executive his Base Salary for the remaining term of the Agreement, or one year,
whichever is the longer period of time, and provided further that any amounts
actually paid to Executive pursuant to any disability insurance or other similar
such program which the Company and/or the Bank has provided or may provide on
behalf of its

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employees generally or its senior executives or pursuant to any workman’s or
social security disability program shall reduce the compensation to be paid to
Executive pursuant to this paragraph.

In the event of Executive’s death during the term of the Agreement, his estate,
legal representatives or named beneficiaries (as directed by Executive in
writing) shall be paid Executive’s Base Salary as defined in Section 3(a) at the
rate in effect at the time Executive’s death for a period of one (1) year from
the date of Executive’s death.

8. TERMINATION FOR CAUSE

The term “Termination for Cause” shall mean termination because of Executive’s
personal dishonesty, incompetence, willful misconduct, any breach of fiduciary
duty involving personal profit, intentional failure to perform stated duties,
willful violation of any material law, rule, or regulation (other than minor
traffic violations or similar offenses) or final cease-and-desist order, or
material breach of any provision of this Agreement. In determining incompetence,
the acts or omissions shall be measured against standards generally prevailing
in the savings institution industry. For purposes of this paragraph, no act or
failure to act on the part of Executive shall be considered “willful” unless
done, or omitted to be done, by Executive not in good faith and without
reasonable belief that Executive’s action or omission was in the best interest
of the Company. Notwithstanding the foregoing, Executive shall not be deemed to
have been Terminated for Cause unless and until there shall have been delivered
to him a copy of a resolution duly adopted by the affirmative vote of not less
than three-fourths of the members of the Board at a meeting of the Board called
and held for that purpose (after reasonable notice to Executive and an
opportunity for him, together with counsel, to be heard before the Board),
finding that in the good faith opinion of the Board, Executive was guilty of
conduct justifying Termination for Cause and specifying the particulars thereof
in detail. Executive shall not have the right to receive compensation or other
benefits for any period after Termination for Cause. Any stock options granted
to Executive under any stock option plan of the Bank, the Company or any
subsidiary or affiliate thereof, shall become null and void effective upon
Executive’s receipt of Notice of Termination for Cause pursuant to Section 9
hereof, and shall not be exercisable by Executive at any time subsequent to such
Termination for Cause.

9. NOTICE

(a) Any purported termination by the Company or by Executive shall be
communicated by Notice of Termination to the other party hereto. For purposes of
this Agreement, a “Notice of Termination” shall mean a written notice which
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Executive’s employment under the provision so
indicated.

(b) “Date of Termination” shall mean (A) if Executive’s employment is terminated
for Disability, thirty (30) days after a Notice of Termination is given
(provided that he shall not have returned to the performance of his duties on a
full-time basis during such thirty (30) day period), and (B) if his employment
is terminated for any other reason, the date specified in the Notice of
Termination (which, in the case of a Termination for Cause, shall not be less
than thirty (30) days from the date such Notice of Termination is given).

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(c) If, within thirty (30) days after any Notice of Termination is given, the
party receiving such Notice of Termination notifies the other party that a
dispute exists concerning the termination, except upon the voluntary termination
by Executive, in which case the Date of Termination shall be the date specified
in the Notice, the Date of Termination shall be the date on which the dispute is
finally determined, either by mutual written agreement of the parties, by a
binding arbitration award, or by a final judgment, order or decree of a court of
competent jurisdiction (the time for appeal having expired and no appeal having
been perfected) and provided further that the Date of Termination shall be
extended by a notice of dispute only if such notice is given in good faith and
the party giving such notice pursues the resolution of such dispute with
reasonable diligence. Notwithstanding the pendency of any such dispute, the
Company will continue to pay Executive his full compensation in effect when the
notice giving rise to the dispute was given (including, but not limited to, Base
Salary) and continue Executive as a participant in all compensation, benefit and
insurance plans in which he was participating when the notice of dispute was
given, until the dispute is finally resolved in accordance with this Agreement,
provided such dispute is resolved within the term of this Agreement. If such
dispute is not resolved within the term of the Agreement, the Company shall not
be obligated, upon final resolution of such dispute, to pay Executive
compensation and other payments accruing beyond the term of the
Agreement. Amounts paid under this Section shall be offset against or reduce any
other amounts due under this Agreement.

10. POST-PAYMENT OBLIGATIONS

(a) All payments and benefits to Executive under this Agreement shall be subject
to Executive’s compliance with paragraph (b) of this Section during the term of
this Agreement and for one (1) full year after the expiration or termination
hereof.

(b) Executive shall, upon reasonable notice, furnish such information and
assistance to the Company and/or the Bank as may reasonably be required by the
Company and/or the Bank in connection with any litigation in which it or any of
its subsidiaries or affiliates is, or may become, a party.

11. ADDITIONAL PAYMENTS RELATED TO A CHANGE IN CONTROL

(a) In the event of a Change in Control of the Bank or the Company, Executive
shall be entitled to receive an amount payable by the Company, in addition to
any compensation or benefits paid by the Bank pursuant to the Bank Employment
Agreement, which amount shall equal the difference, if any, between (i) the
amount that would be paid by the Bank under the Bank Employment Agreement
without regard to any reduction that may be required by reason of Section 6(c)
of the Bank Employment Agreement, and (ii) the amount that is actually paid by
the Bank under the terms of the Bank Employment Agreement.

(b) In addition, in each calendar year that Executive is entitled to receive
payments or benefits under the provisions of the Bank Employment Agreement, this
Agreement and/or a Company or Bank sponsored employee benefit plan, the
independent accountants of the

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Company shall determine if an excess parachute payment (as defined in
Section 4999 of the Code) exists. Such determination shall be made after taking
any reductions permitted pursuant to Section 280G of the Code and the
regulations thereunder. Any amount determined to be an excess parachute payment
after taking into account such reductions shall be hereafter referred to as the
“Initial Excess Parachute Payment.” As soon as practicable after a Change in
Control, the Initial Excess Parachute Payment shall be determined. For purposes
of this determination, Executive shall be deemed to pay federal income taxes at
the highest marginal rate of federal income tax (including, but not limited to,
the Alternative Minimum Tax under Code Sections 55-59, if applicable) and state
and local income tax, if applicable, at the highest marginal rate of taxation in
the state and locality of Executive’s residence on the date such payment is
payable, net of the maximum reduction in the federal income taxes which could be
obtained from any available deduction of such state and local taxes. Any
determination by the independent accountants shall be binding on the Company and
Executive. Within five (5) days after such determination, the Company shall pay
Executive, subject to applicable withholding requirements under applicable state
or federal law an amount equal to:

(i) twenty (20) percent of the Initial Excess Parachute Payment (or such other
amount equal to the tax imposed under Section 4999 of the Code), and

(ii) such additional amount (tax allowance) as may be necessary to compensate
Executive for the payment by Executive of state and federal income and excise
taxes on the payment provided under Clause (i) and on any payments under this
Clause (ii). In computing such tax allowance, the payment to be made under
Clause (i) shall be multiplied by the “gross up percentage” (“GUP”). The GUP
shall be determined as follows:

 

GUP =    

      Tax Rate

         1-Tax Rate   

The Tax Rate for purposes of computing the GUP shall be the highest marginal
federal and state income and employment-related tax rate, including any
applicable excise tax rate, applicable to Executive in the year in which the
payment under Clause (i) is made.

(c) Notwithstanding the foregoing, if it shall subsequently be determined in a
final judicial determination or a final administrative settlement to which
Executive is a party that the excess parachute payment as defined in
Section 4999 of the Code, reduced as described above, is different from the
Initial Excess Parachute Payment (such different amount being hereafter referred
to as the “Determinative Excess Parachute Payment”) then the Company’s
independent accountants shall determine the amount (the “Adjustment Amount”)
Executive must pay to the Company or the Company must pay to Executive in order
to put Executive (or the Company, as the case may be) in the same position as
Executive (or the Company, as the case may be) would have been if the Initial
Excess Parachute Payment had been equal to the Determinative Excess Parachute
Payment. In determining the Adjustment Amount, the independent accountants shall
take into account any and all taxes (including any penalties and interest) paid
by or for Executive or refunded to Executive or for Executive’s benefit. As soon
as practicable after the Adjustment Amount has been so determined, the Company
shall pay the Adjustment Amount to Executive or Executive shall repay the
Adjustment Amount to the Company, as the case may be. The purpose of this
paragraph is to assure that (i) Executive is not reimbursed more for the golden
parachute

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excise tax than is necessary to make him whole, and (ii) if it is subsequently
determined that additional golden parachute excise tax is owed by him,
additional reimbursement payments will be made to him to make him whole for the
additional excise tax.

(d) In each calendar year that Executive receives payments or benefits under the
Bank Employment Agreement and/or this Agreement and/or a Company or Bank
sponsored employee benefit plan, Executive shall report on his state and federal
income tax returns such information as is consistent with the determination made
by the independent accountants of the Company as described above. The Company
shall indemnify and hold Executive harmless from any and all losses, costs and
expenses (including without limitation, reasonable attorney’s fees, interest,
fines and penalties) that Executive incurs as a result of so reporting such
information. Executive shall promptly notify the Company in writing whenever
Executive receives notice of the institution of a judicial or administrative
proceeding, formal or informal, in which the federal tax treatment under
Section 4999 of the Code of any amount paid or payable under this Section is
being reviewed or is in dispute. The Company shall assume control at its expense
over all legal and accounting matters pertaining to such federal tax treatment
(except to the extent necessary or appropriate for Executive to resolve any such
proceeding with respect to any matter unrelated to amounts paid or payable
pursuant to this contract). Executive shall cooperate fully with the Company in
any such proceeding. Executive shall not enter into any compromise or settlement
or otherwise prejudice any rights the Company may have in connection therewith
without prior consent of the Company.

12. NON-COMPETITION

(a) Upon any termination of Executive’s employment hereunder, other than a
termination (whether voluntary or involuntary) in connection with a Change in
Control, as a result of which the Company and/or the Bank is paying Executive
the benefits entitled to Executive under Section 6 of this Agreement, Executive
agrees not to compete with the Bank and/or the Company for a period of one (1)
year following such termination in any city, town or county in which the Bank
and/or the Company has an office or has filed an application for regulatory
approval to establish an office, determined as of the effective date of such
termination, except as agreed to pursuant to a resolution duly adopted by the
Board. Executive agrees that during such period and within said area, cities,
towns and counties, Executive shall not work for or advise, consult or otherwise
serve with, directly or indirectly, any entity whose business materially
competes with the depository, lending or other business activities of the Bank
and/or the Company. The parties hereto, recognizing that irreparable injury
would result to the Bank and/or the Company, its business and property in the
event of Executive’s breach of this Subsection 12(a), agree that in the event of
any such breach by Executive, the Bank and/or the Company would be entitled, in
addition to any other remedies and damages available, to an injunction to
restrain the violation hereof by Executive, Executive’s partners, agents,
employers, employees and all persons acting for or with Executive. Nothing
herein shall be construed as prohibiting the Bank and/or the Company from
pursuing any other remedies available to the Bank and/or the Company for such
breach or threatened breach, including the recovery of damages from Executive.

(b) Executive recognizes and acknowledges that the knowledge of the business
activities and plans for business activities of the Company and affiliates
thereof, as it may exist

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from time to time, is a valuable, special and unique asset of the business of
the Company. Executive will not, during or after the term of his employment,
disclose any knowledge of the past, present, planned or considered business
activities of the Company or affiliates thereof to any person, firm,
corporation, or other entity for any reason or purpose whatsoever (except for
such disclosure as may be required to be provided to any federal banking agency
with jurisdiction over the Company or Executive). Notwithstanding the foregoing,
Executive may disclose any knowledge of banking, financial and/or economic
principles, concepts or ideas which are not solely and exclusively derived from
the business plans and activities of the Company, and Executive may disclose any
information regarding the Bank or the Company which is otherwise publicly
available. In the event of a breach or threatened breach by Executive of the
provisions of this Section, the Company will be entitled to an injunction
restraining Executive from disclosing, in whole or in part, the knowledge of the
past, present, planned or considered business activities of the Company or
affiliates thereof, or from rendering any services to any person, firm,
corporation or other entity to whom such knowledge, in whole or in part, has
been disclosed or is threatened to be disclosed. Nothing herein will be
construed as prohibiting the Company from pursuing any other remedies available
to the Company for such breach or threatened breach, including the recovery of
damages from Executive.

13. SOURCE OF PAYMENTS; NO DUPLICATION OF PAYMENTS

(a) All payments provided in this Agreement shall be timely paid in cash or
check from the general funds of the Company.

(b) Notwithstanding any provision here to the contrary, to the extent that
payments and benefits as provided by this Agreement, are paid to or received by
Executive under the Bank Employment Agreement, such payments and benefits paid
by the Bank will be subtracted from any amount due simultaneously to Executive
under similar provisions of this Agreement.

(c) For financial statement purposes, ongoing payments pursuant to this
Agreement and the Bank Employment Agreement (collectively, the “Agreements”)
shall be allocated by the Company and the Bank on a quarterly basis in
proportion to the services rendered to the Company and the Bank, respectively.
Termination payments made pursuant to the provisions of Section 6 of each of the
Agreements shall be charged and paid in accordance with the terms of
Section 6(c) of the Bank Employment Agreement and Section 11 of this Agreement.

14. NO EFFECT ON EMPLOYEE BENEFITS PLANS OR PROGRAMS

The termination of Executive’s employment during the term of this Agreement or
thereafter, whether by the Company or by Executive, shall have no effect on the
vested rights of the Executive under the Company’s or the Bank’s qualified or
non-qualified retirement, pension, savings, thrift, profit-sharing or stock
bonus plans, group life, health (including hospitalization, medical and major
medical), dental, accident and long term disability insurance plans or other
employee benefit plans or programs, or compensation plans or programs in which
Executive was a participant.

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15. NO ATTACHMENT

(a) Except as required by law, no right to receive payments under this Agreement
shall be subject to anticipation, commutation, alienation, sale, assignment,
encumbrance, charge, pledge, or hypothecation, or to execution, attachment,
levy, or similar process or assignment by operation of law, and any attempt,
voluntary or involuntary, to affect any such action shall be null, void, and of
no effect.

(b) This Agreement shall be binding upon, and inure to the benefit of, Executive
and the Company and their respective successors and assigns.

16. ENTIRE AGREEMENT; MODIFICATION AND WAIVER

(a) This Agreement and the Bank Employment Agreement contain the entire
agreement of the Executive, the Company and the Bank relating to the subject
matter hereof, and supercede in its entirety any and all prior agreements,
understandings or representations relating to the subject matter hereof,
including, but not limited to, that certain employment agreement between the
Bank and Executive dated January 7, 1994.

(b) This Agreement may not be modified or amended except by an instrument in
writing signed by the parties hereto.

(c) No term or condition of this Agreement shall be deemed to have been waived,
nor shall there be any estoppel against the enforcement of any provision of this
Agreement, except by written instrument of the party charged with such waiver or
estoppel. No such written waiver shall be deemed a continuing waiver unless
specifically stated therein, and each such waiver 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 as to any act other than that specifically waived.

17. REGULATORY PROVISIONS

Notwithstanding anything herein contained to the contrary, any payments to the
Executive by the Company are subject to and conditioned upon their compliance
with Section 18(k) of the Federal Deposit Insurance Act, 12 U.S.C.
Section 1828(k), and the regulations promulgated thereunder in 12 C.F.R. Part
359.

18. SEVERABILITY

If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
law continue in full force and effect.

19. HEADINGS FOR REFERENCE ONLY

The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.

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20. GOVERNING LAW

This Agreement shall be governed by the laws of the State of Florida but only to
the extent not superseded by federal law.

21. ARBITRATION

Except as otherwise expressly provided elsewhere in this Agreement, in the event
that any dispute should arise between the parties as to the meaning, effect,
performance, enforcement, or other issue in connection with this Agreement,
which dispute cannot be resolved by the parties, the dispute shall be decided by
final and binding arbitration of a panel of three arbitrators. Proceedings in
arbitration and its conduct shall be governed by the rules of the American
Arbitration Association (“AAA”) applicable to commercial arbitrations (the
“Rules”) except as modified by this Section. The Employee shall appoint one
arbitrator, the Company shall appoint one arbitrator, and the third shall be
appointed by the two arbitrators appointed by the parties. The third arbitrator
shall be impartial and shall serve as chairman of the panel. The parties shall
appoint their arbitrators within thirty (30) days after the demand for
arbitration is served, failing which the AAA promptly shall appoint a defaulting
party’s arbitrator, and the two arbitrators shall select the third arbitrator
within fifteen (15) days after their appointment, or if they cannot agree or
fail to so appoint, then the AAA promptly shall appoint the third arbitrator.
The arbitrators shall render their decision in writing within thirty (30) days
after the close of evidence or other termination of the proceedings by the
panel, and the decision of a majority of the arbitrators shall be final and
binding upon the parties, nonappealable, except in accordance with the Rules and
enforceable in accordance with the Florida Arbitration Code or any applicable
successor legislation. Any hearings in the arbitration shall be held in the Palm
Beach County, Florida unless the parties shall agree upon a different venue, and
shall be private and not open to the public. Each party shall bear the fees and
expenses of its arbitrator, counsel, and witnesses, and the fees and expenses of
the third arbitrator shall be shared equally by the parties. The costs of the
arbitration, including the fees of AAA, shall be borne as directed in the
decision of the panel.

22. PAYMENT OF LEGAL FEES

All reasonable legal fees paid or incurred by Executive pursuant to any dispute
or question of interpretation relating to this Agreement shall be paid or
reimbursed by the Company, provided that the dispute or interpretation has been
settled by Executive and the Company or has been resolved in Executive’s favor.

23. INDEMNIFICATION

During the term of this Agreement and for a period of six (6) years thereafter,
the Company shall provide Executive (including his heirs, executors and
administrators) with coverage under a standard directors and officers liability
insurance policy at its expense, and shall indemnify Executive (and his heirs,
executors and administrators) to the fullest extent permitted under Delaware law
against all expenses and liabilities reasonably incurred by him in connection
with or arising out of any action, suit or proceeding in which he may be
involved by reason of his having been a director, officer or employee of the
Company (whether or not he

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continues to be a director, officer or employee at the time of incurring such
expenses or liabilities), such expenses and liabilities to include, but not be
limited to, judgments, court costs and attorneys fees and the cost of reasonable
settlements (such settlements must be approved by the Board of Directors of the
Company).

24. SUCCESSOR TO THE COMPANY

The Company shall require any successor or assignee, whether direct or indirect,
by purchase, merger, consolidation or otherwise, to all or substantially all the
business or assets of the Bank or the Company, expressly and unconditionally to
assume and agree to perform the Company’s obligations under this Agreement, in
the same manner and to the same extent that the Company would be required to
perform if no such succession or assignment had taken place.

[Remainder of Page Intentionally Blank]

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SIGNATURES

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its
duly authorized officer, and Executive has signed this Agreement, effective as
of the date first above written.

 

ATTEST:   FIDELITY BANKSHARES, INC.

/s/ Elizabeth Cook

  By:  

/s/ Vince A. Elhilow

Secretary     Vince A. Elhilow WITNESS:   EXECUTIVE:

/s/ Elizabeth Cook

  By:  

/s/ Vince A. Elhilow

    Vince A. Elhilow     President and Chief Executive Officer