Exhibit 10.01

STATE OF NORTH CAROLINA

COUNTY OF HYDE

SEVERANCE AND

CHANGE IN CONTROL AGREEMENT

THIS SEVERANCE AND CHANGE IN CONTROL AGREEMENT (the “Agreement”) is entered into
as of the 29th day of March, 2010 (the “Effective Date”), by and between THE
EAST CAROLINA BANK (“ECB”) and THOMAS M. CROWDER (“Executive”).

W I T N E S S E T H:

WHEREAS, Executive was employed by ECB as its Executive Vice President and Chief
Financial Officer effective on February 8, 2010, and in such position he shall
be expected to provide leadership and guidance in the growth and development of
ECB’s business; and,

WHEREAS, Executive’s experience and knowledge of banking operations is expected
to be of benefit to ECB in the continuation of its business, and, for that
reason, ECB desires to retain Executive’s services as an officer and employee of
ECB; and

WHEREAS, in connection with Executive’s initial employment, ECB has agreed,
subject to the conditions and limitations described herein, (1) to make certain
severance payments to Executive in the event of a termination of Executive’s
employment with ECB under certain specified circumstances, (2) to advance funds
to Executive for the payment of expenses associated with the relocation of his
residence, subject to Executive’s agreement to repay those funds to ECB, and ECB
and Executive desire to enter into this Agreement to set forth the terms and
conditions of those arrangements.

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

1. Effective Date of Agreement. This Agreement shall be effective on the
Effective Date set out above and shall remain in effect until terminated as
provided herein.

2. Termination Without “Cause.” Subject to the limitations set forth in this
Agreement and to the right of ECB to terminate Executive’s employment at any
time and for any reason satisfactory to ECB, and except to the extent otherwise
provided in Paragraph 3 in the case of a “Change in Control” (as defined in that
Paragraph), if, following the date of this Agreement, and prior to February 8,
2012, ECB terminates Executive’s employment without “Cause” (as defined in
Paragraph 6(a)) other than as a result of Executive’s “Disability” (as defined
in Paragraph 6(b) below), Executive shall be entitled to receive from ECB, and
ECB shall be obligated to pay or cause to be paid to Executive, in a lump sum
within 45 days following the date Executive’s employment is terminated (the
“Termination Date”), an amount equal to Executive’s base salary for six months
calculated at Executive’s base salary rate in effect on the Termination Date.

Notwithstanding anything in this Agreement to the contrary, to the extent that
Executive is entitled to payments under Paragraph 3(a) below, then those
payments shall be in lieu of the payment provided for under this Paragraph 2,
and in no event shall Executive be entitled to receive payments under both
Paragraphs.

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3. Change in Control.

(a) Notwithstanding the provisions of Paragraph 2 to the contrary, and subject
to the limitations set forth in this Agreement, if at the effective time of, or
any time within twelve months following, a “Change in Control” (as defined in
Paragraph 3(b) below):

(i) ECB terminates Executive’s employment without “Cause” (as defined in
Paragraph 6(a) below) other than as a result of Executive’s “Disability” (as
defined in Paragraph 6(b) below); or

(ii) a “Termination Event” (as defined in Paragraph 3(c) below) occurs and,
thereafter, Executive voluntarily terminates his own employment with ECB,
following the giving of written notice to ECB and an opportunity for ECB to cure
or remedy the Termination Event, in the manner described in Paragraph 3(e)
below,

then Executive shall be entitled to receive from ECB, and ECB shall be obligated
to pay or cause to be paid to Executive, an amount equal to 1.50 times
Executive’s “base amount” as that term is defined in Section 280G of the
Internal Revenue Code of 1986, as amended (the “Code”), payable in eighteen
equal monthly installments which shall begin within 45 days following the
Termination Date and be made on the same schedule as Executive’s base salary was
being paid by ECB on the Termination Date.

In addition, if Executive chooses to exercise his rights to purchase continued
individual health, dental or other insurance coverages under ECB’s group
insurance plans pursuant to the Consolidated Omnibus Budget Reconciliation Act
(“COBRA”), ECB shall reimburse Executive for the cost of his continued
individual insurance coverages for eighteen months or, if less, the maximum
period during which such coverages are available to Executive under COBRA.

Notwithstanding anything in this Agreement to the contrary, to the extent that
Executive is entitled to payments under this Paragraph 3(a), then those payments
shall be in lieu of the payment provided for under Paragraph 2 above, and in no
event shall Executive be entitled to receive payments under both Paragraphs.

(b) For purposes of this Agreement, but only to the extent consistent with the
definition of the term “change in control” under Section 409A of the Internal
Revenue Code of 1986, as amended, and regulations promulgated thereunder, as
applicable (“Section 409A”), a “Change in Control” shall be deemed to have
occurred if, after the Effective Date:

(i) any “Person” (as such term is defined in Sections 3(a)(9) and 13(d)(3) of
the Securities Exchange Act of 1934, as amended), directly or indirectly,
acquires beneficial ownership of more than 50% of any class of voting securities
entitled to vote in the election of directors of ECB or ECB’s parent holding
company, ECB Bancorp, Inc. (“Bancorp”), or in any manner acquires control of the
election of a majority of the directors of ECB or Bancorp (excluding ECB or
Bancorp themselves, any wholly-owned subsidiary of ECB or Bancorp, or any
employee benefit plan sponsored or maintained by ECB or Bancorp);

(ii) ECB or Bancorp consolidates or merges with or into another corporation, or
otherwise is reorganized, where ECB or Bancorp is not the resulting or surviving
corporation in such transaction, unless the transaction involves only two or
more of ECB, Bancorp and/or a wholly-owned subsidiary of ECB or Bancorp; or

(iii) all or substantially all of ECB’s or Bancorp’s assets are sold or
otherwise transferred to or acquired by any other corporation, association or
other person, entity, or group.

However, notwithstanding anything contained herein to the contrary, for purposes
of this Agreement the term “Change in Control” shall not include a transaction
approved by ECB’s or Bancorp’s Board of Directors that results in ECB or Bancorp
merging with, transferring its assets to, or becoming the subsidiary of, a
corporation or entity newly formed at the direction of ECB’s or Bancorp’s Board
of

 

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Directors for the purpose of such transaction (including a corporation or entity
so formed for the purpose of serving as ECB’s or Bancorp’s parent bank holding
company), and in connection with which transaction the holders possessing,
directly or indirectly, a majority of the shares entitled to vote in the
election of Bancorp’s directors immediately before the transaction or series of
related transactions (other than those who exercise statutory rights of dissent
and appraisal) will hold, directly or indirectly, a majority of the shares
entitled to vote in the election of directors of the surviving or transferee
entity immediately after the transaction or series of related transactions.
Further, and notwithstanding the other provisions of this Agreement, a
transaction or event shall not be considered a Change in Control if, prior to
the consummation or occurrence of such transaction or event, ECB and Executive
agree in writing that the same shall not be treated as a Change in Control for
purposes of this Agreement, in which event Executive shall be deemed to have
forever waived all right to any payment under this Agreement as a result of that
transaction or event, but not to any future transaction or event.

(c) For purposes of this Agreement, but only to the extent consistent with the
definition of the term “good reason termination” under Section 409A, a
“Termination Event” shall be deemed to have occurred if, without his express
written consent:

(i) Executive’s annual Base Salary rate is materially reduced below the annual
rate in effect as of the effective date of the Change in Control or as the same
shall have been increased from time to time following such effective date;

(ii) Executive’s life insurance, medical or hospitalization insurance,
disability insurance, or similar plans or benefits (including any retirement
plan) being provided by ECB to Executive 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 without being replaced with
substantially similar plans or benefits, unless such reduction or elimination
applies proportionately to all salaried employees of ECB who participated in
such plans or benefits prior to such Change in Control;

(iii) Executive is transferred to a job location which is more than 75 miles (by
most direct highway route) from his principal work location at the effective
date of the Change in Control; or

(iv) (A) if ECB continues to exist as a separate entity following the Change in
Control, Executive’s duties or responsibilities are materially reduced such that
he no longer serves in the same position with ECB that he occupied immediately
prior to the Change in Control, or (B) if as a result of the Change in Control
ECB no longer exists as a separate entity, Executive’s duties or
responsibilities are materially reduced such that he is not designated as and
does not serve as an executive officer of ECB’s “Successor” (as that term is
defined in Paragraph 6(c) below) or report directly to the Successor’s Chairman,
President, or Chief Executive Officer.

However, notwithstanding the other provisions of this Agreement, an event shall
not be considered a Termination Event if, prior to the occurrence of such event,
ECB and Executive agree in writing that the same shall not be treated as a
Termination Event for purposes of this Agreement, in which event Executive shall
be deemed to have forever waived all right to any payment under this Agreement
as a result of that event, but not to any future such event.

(d) If, prior to the effective date of a Change in Control, but following the
date on which ECB’s or Bancorp’s Board of Directors takes action to approve an
agreement (including any definitive agreement or an agreement in principle)
relating to that Change in Control, Executive’s employment is terminated by ECB
without Cause, thereby obligating ECB to make a lump sum payment to Executive as
described in Paragraph 2 above, and if that Change in Control later becomes
effective, then the amount payable to Executive with respect to the termination
of his employment shall be as described in Paragraph 3(a)(i) above rather than
the amount described in Paragraph 2; provided, however, that:

 

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(i) if ECB previously shall have paid to Executive the lump sum payment
described in Paragraph 2, then the aggregate amount of the monthly payments for
which ECB shall be obligated under Paragraph 3(a)(i) shall be reduced by the
amount of that lump sum payment, and the remaining amount for which ECB shall be
obligated shall be payable as described in Paragraph 3(a); and,

(ii) if, following the termination of his employment, Executive chose to
exercise his rights to purchase continued individual health, dental or other
insurance coverages under ECB’s group insurance plans pursuant to “COBRA,” ECB
shall be obligated to reimburse Executive for that coverage as provided above in
Paragraph 3(a) above.

In no event will Executive be entitled to receive the payments called for under
both Paragraph 2 and Paragraph 3(a)(i), or an aggregate amount of payments in
excess of the amount described in Paragraph 3(a).

(e) In order to terminate his employment and become entitled to any payments
under Section 3(a)(ii) of this Agreement, the Termination Event which gives rise
to his right to terminate must occur within twelve months following the date the
Change in Control becomes effective, and Executive must, within 30 days
following the occurrence of the Termination Event, give written notice to ECB
describing the Termination Event and Executive’s intention to terminate his
employment (a “Notice of Termination Event”). Following its receipt of
Executive’s Notice of Termination Event, ECB shall have a period of 30 days
within which it may cure or remedy the Termination Event (the “Cure Period”). A
Termination Event shall be deemed to have occurred on the date such action or
event giving rise to the Termination Event is implemented or takes effect or, if
later, on the date on which notice of the action or event is given to Executive.

If Executive gives a Notice of Termination Event to ECB and the Termination
Event is not cured or remedied by ECB during the Cure Period, then, unless
Executive previously has given written notice to ECB as provided below that he
withdraws the Notice of Termination Event and waives the Termination Event, the
Termination Date shall be deemed to be the earlier of (i) the expiration date of
the Cure Period, or (ii) the date following Executive’s receipt of the written
notice from ECB in which it notifies Executive that it will not cure or remedy
the Termination Event, and Executive’s employment will terminate on that
date. If Executive does not give the required Notice of Termination Event within
the 30-day period following the occurrence of a Termination Event as described
above, or if Executive gives the required Notice of Termination Event within the
30-day notice period and the Termination Event is cured or remedied by ECB
within the Cure Period or, prior to the end of the Cure Period, Executive gives
written notice to ECB that he withdraws his Notice of Termination Event and
waives the Termination Event, then Executive thereafter shall have no right to
any payment hereunder with respect to that Termination Event, but he shall
retain rights, if any, hereunder with respect to any other or further
Termination Event as to which such notice period has not expired.

4. Advance for Payment of Relocation Expenses. In connection with Executive’s
employment with ECB, ECB agrees to advance to Executive, within ten days
following the date of this Agreement, the sum of $51,000 for the purpose of his
payment of expenses he incurs in connection with the relocation of his principal
residence, including without limitation moving expenses, travel expenses and
temporary living expenses. Executive agrees to repay to ECB the amount advanced
to him as described above, together with interest on that amount computed daily
at a rate of 2.69% per annum, upon demand by ECB at any time; provided, however,
that Executive and ECB agree as follows.

(a) On each February 8 following the date of this Agreement, beginning on
February 8, 2011 (each such date referred to as an “Anniversary Date”), if
Executive remains employed by ECB on that Anniversary Date, ECB will forgive a
portion of the unpaid balance of Executive’s payment obligation to ECB under
this Paragraph 4 equal to $17,000 plus accrued but unpaid interest thereon at
the above rate from the date of this Agreement through that Anniversary Date,
with the effect

 

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of this subparagraph 4(a) being that, if Executive remains employed by ECB on
February 8, 2013, Executive’s full obligation under this Paragraph 4 will have
been forgiven by ECB.

(b) If, prior to February 8, 2013, ECB terminates Executive’s employment without
“Cause” (as defined below in Paragraph 6(a) below) other than as a result of
Executive’s Disability, or Executive dies while employed by ECB, ECB will
forgive the full amount of Executive’s remaining unpaid obligation under this
Paragraph 4, including all accrued but unpaid interest thereon.

(c) If, prior to February 8, 2013, Executive resigns from his employment with
ECB, or his employment with ECB terminates or is terminated, voluntarily or
involuntarily (including as a result of Executive’s Disability), other than as
described in this Paragraph 4(b) above, then Executive shall be obligated to pay
to ECB the then-current outstanding and unforgiven balance of Executive’s
payment obligation under this Paragraph 4, together with unpaid accrued
interest, in full within 60 days following termination of Executive’s
employment. If Executive fails to make any such payment to ECB following ECB’s
written demand therefor, ECB may deduct all or part of such unpaid amount from,
or setoff all or part of such unpaid amount against, any amounts or obligation
owed by ECB to Executive, provided that such deduction or setoff is permissible
under and effected in accordance with Treasury Regulation 1.409A-3(j)(4)(xiii).

Executive acknowledges and agrees that, except as provided in this Paragraph 4,
ECB shall have no obligation for the payment of, or to reimburse him for, any
such relocation expenses incurred by him.

5. Exclusions; Full Satisfaction. Notwithstanding anything contained herein to
the contrary, Executive and ECB expressly agree as follows.

(a) This Agreement provides for payments to Executive in connection with the
termination of his employment with ECB only in the limited circumstances
described in Paragraphs 2 and 3 above and, except as otherwise specifically
provided in those paragraphs, Executive shall have no rights, and ECB shall have
no obligations, under this Agreement in any other circumstances or in connection
with any other terminations of Executive’s employment.

(b) Executive’s employment with ECB is on an “at will” basis and this Agreement
does not constitute an employment contract or an agreement by ECB to employ
Executive for any particular period of time or in any particular capacity.
Nothing in this Agreement is intended or should be interpreted to confer upon
Executive the right to continue in the employ of ECB or to interfere with or
restrict in any way the right of ECB to discharge Executive or terminate his
employment at any time or for any reason whatsoever, with or without Cause, and
without any obligation or liability to Executive except as herein provided, it
being the intent of the parties hereto only to provide for payment of the
severance benefits specified herein, and the forgiveness of Executive’s
obligation to ECB, in the event of the termination of Executive’s employment
with ECB under the limited circumstances described in Paragraphs 2, 3 and 4 of
this Agreement.

(c) Except with respect to Executive’s rights, if any, expressly provided for in
this Agreement and any separate written agreement pertaining to a payment or
benefit to be provided by ECB (including an agreement providing for any form of
stock-based compensation), the payments to Executive provided for in this
Agreement shall satisfy and discharge in full all of Executive’s claims against
ECB arising out of any termination of Executive’s employment.

6. Other Definitions.

(a) For purposes of this Agreement, ECB or its “Successor” (as defined in
Subparagraph (c) below) shall have “Cause” to terminate Executive’s employment
if:

(i) a determination is made by ECB in good faith that Executive: (A) has
breached in any material respect any of the terms or conditions of this
Agreement, any employment agreement under which Executive is bound with ECB from
time to time, or of any officer or employee

 

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codes of conduct, or ethics, employment or other policies of ECB that apply to
Executive or to ECB’s officers and/or employees generally from time to time,
(B) fails in any material respect to perform or discharge his duties or
responsibilities of employment in a manner that is competent and reasonably
satisfactory to ECB’s Board of Directors, and such failure under this clause is
not corrected or cured by Executive to ECB’s reasonable satisfaction (which
shall not be unreasonably withheld by ECB) within 30 days following written
notice thereof to Executive), or (C) is engaging or has engaged in willful
misconduct or conduct which is detrimental in any material respect to the
business or business prospects of ECB or Bancorp or which has had or likely will
have an adverse effect on ECB’s or Bancorp’s business or reputation;

(ii) Executive materially violates any applicable federal or state law, or any
applicable rule, regulation, order, or statement of policy promulgated by any
governmental agency or authority having jurisdiction over ECB or Bancorp (a
“Regulatory Authority,” including but not limited to the North Carolina
Commissioner of Banks, the Federal Deposit Insurance Corporation, the Federal
Reserve Board, the Securities and Exchange Commissioner, or any other
regulator), that results from Executive’s negligence, willful misconduct, or
intentional disregard of such law, rule, regulation, order, or policy statement
and results in any substantial damage, monetary or otherwise, to ECB or Bancorp
to their reputation;

(iii) during the course of Executive’s employment with or service as an officer
of ECB or Bancorp, Executive commits an act of fraud, embezzlement, theft, or
proven personal dishonesty (whether or not such act or charge results in
criminal indictment, charges, prosecution, or conviction);

(iv) Executive is convicted of any felony or any criminal offense involving
dishonesty or breach of trust, there occurs any event described in Section 19 of
the Federal Deposit Insurance Act or any other event or circumstance which
disqualifies Executive from serving as an employee, officer or director of, or a
party affiliated with, ECB or Bancorp; or, Executive becomes unacceptable to, or
is removed, suspended, or prohibited from participating in the conduct of ECB’s
or Bancorp’s affairs (or if proceedings for that purpose are commenced), by any
Regulatory Authority; or

(v) Executive is excluded by the carrier or underwriter from coverage under
ECB’s and Bancorp’s then current “blanket bond” or other fidelity bond or
insurance policy covering its or their employees, officers, and directors, or
there occurs any event that ECB believes, in good faith, will result in
Executive being excluded from such coverage, or having coverage limited as to
Executive as compared to other covered employees, officers or directors,
pursuant to the terms and conditions of such “blanket bond” or other fidelity
bond or insurance policy.

(b) “Disability” shall mean a mental or physical impairment that, in the sole
opinion of ECB’s Board of Directors, renders Executive unable to perform the
essential functions of his employment for a period of 90 days or more.

(c) “Successor” refers to any Person or entity (corporate or otherwise) into
which ECB (or any such Successor) shall be merged or consolidated or to which
all or substantially all ECB’s (or any such Successor’s) assets shall be
transferred in any manner. For purposes of this Agreement, all references to ECB
shall include any such Successor to ECB which shall have assumed and become
liable for ECB’s obligations hereunder (whether such assumption is by agreement,
operation of law, or otherwise).

7. Section 280G Matters. It is the intent of the parties hereto that all
payments made pursuant to this Agreement be deductible by ECB for federal income
tax purposes to the maximum extent permissible under applicable law and
regulations, and that no such payments result in the imposition of an excise tax
on Executive. For that purpose, and notwithstanding anything contained in this
Agreement to the contrary, Executive and ECB agree as follows.

 

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(a) Modification or Reduction of “Parachute Payments.” If the Compensation
Committee of ECB’s Board of Directors, based upon the advice of ECB’s
independent certified public accountants or legal counsel, reasonably believes
that any payments to be made to or for the benefit of Executive under this
Agreement on account of a Change in Control (whether separately or in
combination with other payments or benefits to be made or provided to or for the
benefit of Executive pursuant to any other agreements or arrangements) would be
deemed to be “parachute payments” as that term is defined in
Section 280G(b)(2)(A) of the Code, without regard to Section 280G(e) of the
Code, then the payments provided for under this Agreement or any such other
payments or benefits may be modified or reduced in amount by ECB to the extent
(but only to the extent) which, based on the advice of ECB’s independent
certified public accountants or legal counsel, the Compensation Committee in
good faith deems to be necessary to avoid the imposition of excise taxes on
Executive under Section 4999 of the Code and the disallowance of a deduction to
ECB under Section 280G(a) of the Code.

In the event the amounts of any payments or benefits are required to be reduced
pursuant to this Paragraph 7, the last payments in time shall be reduced first,
and if any payments to be reduced otherwise would be made at the same time,
payments or benefits other than cash shall be reduced first.

(b) Survival of Covenants. Executive’s covenants and agreements and ECB’s rights
provided for in this Paragraph 7 shall survive and remain fully in effect
following any termination of Executive’s employment with ECB.

8. Section 409A Matters. Executive and ECB intend for this Agreement to comply
with Section 409A. For that purpose, and notwithstanding anything contained in
this Agreement to the contrary, Executive and ECB agree as follows.

(a) Interpretation of Defined Terms. The terms used in this Agreement shall be
defined and interpreted in a manner that is consistent with Section 409A and, in
the event of any ambiguity in any of the terms or provisions of this Agreement,
those terms or provisions shall be interpreted in a manner so as to comply with
the applicable requirements of Section 409A.

(b) Treatment of Installment Payments. To the extent Executive is entitled to a
series of installment payments under the provisions of this Agreement, such
series of installment payments shall be treated as a series of separate payments
for purposes of Section 409A, as applicable.

(c) Requirement of “Separation from Service;” Payments to “Specified Employees.”
In the case of a payment upon the termination of Executive’s employment, no
payment shall be made under this Agreement unless the termination of employment
constitutes a “separation from service” under Section 409A, and, if ECB
determines that Executive is a “specified employee” within the meaning of
Section 409A on the date of any such separation from service (the “Separation
from Service Date”), then (i) any installment payments (including reimbursement
for expenses) which ECB is obligated to pay to Executive under this
Agreement that would result in a tax, interest, and/or penalties under
Section 409A if paid during the first six months after the Separation from
Service Date shall be delayed and accumulated by ECB and the accumulated amount
shall be payable to Executive in a lump sum on the date that is six months and
one week after the Separation from Service Date, with any additional installment
payments for which ECB is obligated after that six-month period being payable on
the same schedule as Executive’s Base Salary was being paid by ECB on the
Separation from Service Date, and (ii) any lump-sum payment (including
reimbursement for expenses) which ECB is obligated to pay to Executive under
this Agreement that would result in a tax, interest, and/or penalties under
Section 409A if paid during the first six months after the Separation from
Service Date shall be delayed and be payable to Executive in a lump sum on the
date that is six months and one week after the Separation from Service Date.

(d) Expense Reimbursement. To the extent Executive is entitled to the
reimbursement of any expenses or in-kind benefits under the provisions of this
Agreement that is subject

 

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to Section 409A, the right to such reimbursement or benefit shall not be subject
to exchange for another benefit and such reimbursement shall be paid by ECB no
later than two and one-half months after the year in which the expense is
incurred, except as otherwise provided in Section 409A.

(e) Authority to Modify Agreement. This Agreement may be amended at any time by
ECB, without Executive’s consent, to the extent necessary to comply with, and
avoid the imposition on Executive of an excise tax under, Section 409A;
provided, however, that in the event the terms of this Agreement, any payments
made hereunder, or any action or inaction by ECB with respect thereto, shall be
deemed not to comply with Section 409A, ECB shall not be liable to Executive for
any income or excise taxes or any other amounts imposed on or payable by
Executive with respect to any payments made hereunder or for any actions,
decisions or determinations made by ECB in good faith.

(f) Survival of Covenants. Executive’s covenants and agreements and ECB’s rights
provided for in this Paragraph 8 shall survive and remain fully in effect
following any termination of Executive’s employment with ECB.

9. Compliance with CPP Rules. Executive understands and agrees that Bancorp is a
participant in the U.S. Department of the Treasury’s TARP Capital Purchase
Program (the “CPP”), and, as a result, ECB and Bancorp are bound by applicable
law, rules, regulations and guidance restricting or pertaining to the
compensation of officers and employees of CPP participants which are now in
effect or may later be established (including but not limited to the rules and
guidance currently set forth in interim final rules appearing at 31 C.F.R. Part
30 promulgated under Sections 101(a)(1), 101(c)(5) and 111 of the Emergency
Economic Stabilization Act of 2008, as amended by the American Recovery and
Reinvestment Act of 2009) (collectively, the “CPP Rules”). Executive and ECB
intend for this Agreement and payments and benefits payable to Executive
hereunder to comply with the CPP Rules and, for that purpose, and
notwithstanding anything contained in this Agreement to the contrary, Executive
and ECB agree as follows.

(a) Prohibited Payments; Authority to Modify Agreement. In no event shall ECB
have any obligation to make any payment, or provide any compensation (whether in
the form of cash, stock or otherwise) or other benefit to Executive (including
without limitation any “Golden Parachute Payment,” as that term is defined in
the CPP Rules, or any other payment or benefit payable in connection with or
following any termination of Executive’s employment), or to forgive any portion
of Executive’s obligation under Paragraph 4 above, to the extent that ECB’s
Board of Directors or its Compensation Committee determines, in its sole
judgment, that such payment, compensation, forgiveness, or other benefit would
violate or be prohibited by or inconsistent with the CPP Rules.

If, in the sole judgment of ECB’s Board of Directors or its Compensation
Committee, any provision of this Agreement, or any such payment, forgiveness,
compensation or benefit which ECB is or becomes obligated to pay or provide to
Executive under this Agreement, would violate or be prohibited by or
inconsistent with the CPP Rules, then the Board or that Committee shall have the
authority, exercisable unilaterally and without Executive’s consent, to modify
any or all of the provisions of this Agreement, or to reduce or eliminate any
such payment, forgiveness, compensation or other benefit, to the extent the
Board or Committee, in its sole judgment, considers necessary in order to comply
with the CPP Rules, and, in such event, Executive shall have no right and ECB
shall have to obligation with respect to such payment, forgiveness, compensation
or other benefit to the extent it is reduced or eliminated as provided above.

The Board’s or Committee’s power to modify this Agreement shall be effective for
so long as ECB and Bancorp are subject to the CPP Rules. The Board’s or
Committee’s action modifying this Agreement may, but need not, be in the form of
a written amendment or supplement to this Agreement, or in the form of a duly
adopted resolution.

(b) Recovery of Bonus and Incentive Compensation. If, in the sole judgment of
ECB’s Board of Directors or its Compensation Committee, any payment or benefit
paid or provided to

 

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Executive under this Agreement that the Board or Committee deems to be a “Bonus”
or “Incentive Compensation” (as those terms are defined in the CPP Rules) was
based on materially inaccurate financial statements or on any other materially
inaccurate performance criteria, that payment or benefit shall not have been
earned by Executive, shall be subject to recovery by ECB, and shall be repaid by
Executive to ECB within 15 days after written demand by ECB. Executive’s
repayment obligations shall survive termination of this Agreement and shall be
effective for as long as ECB and Bancorp are subject to applicable CPP Rules.

(c) Waiver. Executive hereby acknowledges and agrees that, for as long as
Bancorp is a participant in the CPP, ECB and Bancorp will be bound by the CPP
Rules, and any implementing guidance issued by the U.S. Treasury or other
federal agencies. Executive hereby grants the waiver required by the U.S.
Treasury to release the United States and ECB and Bancorp from any claims that
Executive might otherwise have as a result of any modification of this
Agreement, or any reduction or elimination of any payment, forgiveness,
compensation or other benefit, as provided above, and agrees to execute such
other documents as ECB, Bancorp or the U.S. Treasury may require to evidence
this waiver.

(d) Survival of Covenants. Executive’s covenants and agreements and ECB’s rights
provided for in this Paragraph 9 shall survive and remain fully in effect
following any termination of Executive’s employment with ECB.

10. Additional Regulatory Requirements. Notwithstanding anything contained in
this Agreement to the contrary, and in addition to the provisions of Paragraphs
7, 8 and 9 above, it is understood and agreed that ECB (or any of its successors
in interest) shall not be required to make any payment or take any other action
under this Agreement if:

(a) it is declared by any Regulatory Authority to be insolvent, in default or
operating in an unsafe or unsound manner; or if

(b) in the opinion of counsel to ECB, such payment or action (i) would be
prohibited by or would violate any provision of state or federal law applicable
to ECB or Bancorp, 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.

Executive’s covenants and agreements and ECB’s rights provided for in this
Paragraph 10 shall survive and remain fully in effect following any termination
of Executive’s employment with ECB.

11. Termination of Agreement. Except as provided in Paragraphs 7, 8, 9 and 10
above, this Agreement automatically shall terminate and become null and void
upon any termination of Executive’s employment with ECB; provided, however,
that, in the case of a termination of Executive’s employment which results in an
obligation on the part of ECB to make payments as provided for under Paragraphs
2 or 3(a) above, or to forgive all or any portion of Executive’s obligation
under Paragraph 4, or which results in an obligation on the part of Executive to
repay to ECB all or a portion of the amount advanced to him as described in
Paragraph 4, those obligations of ECB and/or Executive shall remain in effect
until fully discharged by payment or other required action by ECB and/or
Executive; and, except as provided above, following any such termination of this
Agreement, the Agreement shall be of no further force or effect and Executive
shall have no further rights hereunder.

12. Taxes; Required Withholdings. Executive shall be solely responsible for any
and all federal, state and local income and other taxes (including excise and
employment taxes) owed on account of his or her receipt of the payments or
benefits under Paragraphs 2 and 3, or the forgiveness of any portion of his
obligation under Paragraph 4, of this Agreement. To the extent that ECB
reasonably believes itself obligated to do so, it may withhold any such taxes
from payments made to Executive hereunder. If the amount of any such taxes that
ECB believes itself required to withhold and transmit to

 

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any governmental or taxing authority exceeds the amount of any payments then due
and payable under this Agreement and from which such withholding may be made, or
if no payments are then due and payable under this Agreement from which such
withholding may be made, then ECB may require that Executive pay to it the full
amount of any such taxes then due and, if Executive shall fail to make such
payment, ECB may itself advance and pay the amount of those taxes and recover
any such payments by offset against future payments due to Executive under this
Agreement or otherwise.

13. Successors and Assigns. This Agreement shall inure to the benefit of and be
binding upon ECB and any corporate or other Successor to ECB, and Executive’s
heirs, successors and assigns. However, notwithstanding anything contained
herein to the contrary, neither Executive nor Executive’s estate or any
designated beneficiary shall have any right to sell, assign, transfer or
otherwise convey the right to receive any payment under this Agreement. To the
extent permitted by law, no benefits payable under this Agreement shall be
subject to the claim of any creditor of Executive, Executive’s estate or any
designated beneficiary, or to any legal process by any creditor of any such
person.

14. Modification; Waiver; Amendments. Except as otherwise provided in
Paragraphs 7, 8, 9 or 10 above, no provision of this Agreement may be modified,
waived, or discharged unless such waiver, modification, or discharge is agreed
to in writing and signed by the parties hereto. 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 amendments or
additions to this Agreement shall be binding unless in writing and signed by
both parties, except as herein otherwise provided.

15. Applicable Law. The parties hereto agree that without regard to principles
of conflicts of laws, the internal laws of the State of North Carolina shall
govern and control the validity, interpretation, performance and enforcement of
this Agreement.

16. 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.

17. Headings. The section and paragraph headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

18. Notices. Except as otherwise may be provided herein, all notices, claims,
certificates, requests, demands and other communications hereunder shall be in
writing and shall be deemed to have been duly given when hand delivered or sent
by facsimile transmission by one party to the other, or when deposited by one
party with the United States Postal Service, postage prepaid, and addressed to
the other party at his or its designated address listed below, or at such other
address as such other party shall have designated in a written notice given as
provided in this Paragraph:

 

If to ECB:

 

The East Carolina Bank

35080 U.S. Highway 264

Engelhard, NC 27824

Attention: Compensation Committee

  

If to Executive:

 

Thomas M. Crowder

The East Carolina Bank

35080 U.S. Highway 264

Engelhard, NC 27824

19. Counterparts. This Agreement may be executed in any number of counterparts,
and each such counterpart hereof shall be deemed an original instrument, but all
such counterparts together shall constitute but one agreement.

20. Entire Agreement. This Agreement contains the entire understanding and
agreement of the parties, and there are no agreements, promises, warranties,
covenants or undertakings other than those expressly set forth or referred to
herein.

 

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IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year
first hereinabove written.

 

THE EAST CAROLINA BANK By:  

/S/ A. Dwight Utz

       President and Chief Executive Officer EXECUTIVE  

       /S/ Thomas M. Crowder

  (SEAL)        Thomas M. Crowder  

 

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