Exhibit 10.1

ECB BANCORP, INC.

2008 OMNIBUS EQUITY PLAN

ARTICLE 1

PURPOSE AND EFFECTIVE DATE

1.1    Purpose. The purpose of this 2008 Omnibus Equity Plan of ECB Bancorp,
Inc. (“ECB”), is to promote ECB’s long-term financial success and increase
stockholder value by providing officers and employees the opportunity to acquire
an ownership interest in ECB and enabling ECB and its related entities to
attract and retain the services of those officers and employees upon whom the
successful conduct of its business depends.

1.2    Effective Date. This Plan shall be effective when it is adopted by ECB’s
Board of Directors and thereafter approved by the affirmative vote of ECB’s
stockholders in accordance with applicable rules and procedures, including those
in Internal Revenue Code Section 422 and Treasury Regulation Section 1.422-3.
Any award granted under this Plan before stockholder approval shall be null and
void if stockholders do not approve the Plan within 12 months after the Plan’s
adoption by ECB’s Board of Directors. Subject to Article 11, the Plan shall
continue until the tenth anniversary of the date it is approved by ECB’s Board
of Directors.

ARTICLE 2

DEFINITIONS

When used in this Plan, the following words, terms, and phrases have the
meanings given in this Article 2 unless another meaning is expressly provided
elsewhere in this document or is clearly required by the context. When applying
these definitions and any other word, term, or phrase used in this Plan, the
form of any word, term, or phrase shall include any and all of its other forms.

2.1    Award means a grant of (a) the right under Article 6 to purchase ECB
common stock at a stated price during a specified period of time (an “Option”),
which Option may be (i) an Incentive Stock Option that on the date of the Award
is identified as an Incentive Stock Option, satisfies the conditions imposed
under Internal Revenue Code Section 422, and is not later modified in a manner
inconsistent with Internal Revenue Code Section 422 or (ii) a Nonqualified Stock
Option, meaning any Option that is not an Incentive Stock Option, (b) Restricted
Stock, meaning shares of ECB common stock granted to a Participant contingent
upon satisfaction of conditions described in Article 7, or (c) Performance
Shares, meaning shares of ECB common stock granted to a Participant contingent
upon satisfaction of conditions described in Article 8.

2.2    Award Agreement means the written or electronic agreement between ECB and
each Participant containing the terms and conditions of an Award and the manner
in which it will or may be settled if earned. If there is a conflict between the
terms of this Plan and the terms of the Award Agreement, the terms of this Plan
shall govern.

2.3    Covered Employee means those Employees, including Officers, whose
compensation is or likely will be subject to limited deductibility under
Internal Revenue Code Section 162(m) as of the last day of any calendar year.

2.4    Employee means any person who, on any applicable date, is a common law
employee of ECB or a Related Entity. A worker who is not classified as a common
law employee but who is subsequently reclassified as a common law employee of
ECB or a Related Entity for any reason and on any basis shall be treated as a
common law employee solely from the date reclassification occurs.
Reclassification shall not be applied retroactively for any purpose of this
Plan. An Employee shall not cease to be an Employee in the case of any leave of
absence approved by ECB, provided that, for purposes of Incentive Stock Options,
no such leave may exceed ninety (90) days, unless reemployment upon expiration
of such leave is guaranteed by statute or contract.

 

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2.5    Exercise Price means the amount, if any, a Participant must pay to
exercise an Award.

2.6    Fair Market Value means the value of one share of ECB common stock,
determined according to the following rules: (a) if ECB common stock is traded
on an exchange or on an automated quotation system giving closing prices, the
reported closing price on the relevant date if it is a trading day and otherwise
on the next trading day, (b) if ECB common stock is traded over-the-counter with
no reported closing price, the mean between the highest bid and the lowest asked
prices on that quotation system on the relevant date if it is a trading day and
otherwise on the next trading day, or (c) if neither clause (a) nor clause
(b) applies, the fair market value as determined by the Plan Committee in good
faith and, to the extent applicable, consistent with the rules and valuation
methods prescribed under Internal Revenue Code Section 422 and Section 409A and
related regulations, and other applicable tax rules.

2.7    Internal Revenue Code means the Internal Revenue Code of 1986, as amended
or superseded after the date this Plan becomes effective under Section 1.2, and
any applicable rulings or regulations issued under the Internal Revenue Code of
1986.

2.8    Participant means an Employee to whom an Award is granted, for as long as
the Award remains outstanding.

2.9    Plan means this 2008 Omnibus Equity Plan, as amended from time to time.

2.10    Plan Committee means a committee of ECB’s Board of Directors consisting
entirely of individuals who (a) are outside directors as defined in Treasury
Regulation Section 1.162-27(e)(3)(i), (b) are non-employee directors within the
meaning of Rule 16b-3 under the Securities Exchange Act of 1934, (c) do not
receive remuneration from ECB or any Related Entity in any capacity other than
as a Director, except as permitted under Treasury Regulation
Section 1.162-27(e)(3), and (d) are independent directors within the meaning of
rules of The NASDAQ Stock Market, Inc. The Plan Committee shall consist of at
least three individuals.

2.11    Plan Year means ECB’s fiscal year.

2.12    Related Entity means an entity that is or becomes related to ECB through
common ownership, as determined under Internal Revenue Code Section 414(b) or
(c), but modified as permitted under Treasury Regulation
Section 1.409A-1(b)(5)(iii) as to Awards to which such regulation is applicable.

2.13    ECB Bancorp, Inc., or ECB, means ECB Bancorp, Inc., a North Carolina
corporation. Except for purposes of determining whether a Change in Control has
occurred (according to Article 10), the term ECB Bancorp, Inc., or ECB, also
means any corporation or entity that is a successor to ECB Bancorp, Inc., or
substantially all of its assets, and that assumes the obligations of ECB
Bancorp, Inc., under this Plan by operation of law or otherwise.

ARTICLE 3

PARTICIPATION

3.1    Awards to Employees. Consistent with the terms of the Plan and subject to
Section 3.2, the Plan Committee alone shall decide which Employees will be
granted Awards, shall specify the types of Awards granted to Employees, and
shall determine the terms upon which Awards are granted and may be earned. The
Plan Committee may establish different terms and conditions for each type of
Award granted to an Employee, for each Employee receiving the same type of
Award, and for the same Employee for each Award the Employee receives,
regardless of whether the Awards are granted at the same or different times. The
Plan Committee shall have exclusive authority to determine whether an Award
qualifies or is intended to qualify for the exemption from the deduction
limitations of Internal Revenue Code Section 162(m) for performance-based
compensation.

 

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3.2    Conditions of Participation. By accepting an Award, each Participant
agrees (a) to be bound by the terms of the Award Agreement relating to the Award
and the Plan and to comply with other conditions imposed by the Plan Committee,
and (b) that the Plan Committee (or ECB’s Board of Directors, as appropriate)
may amend the Plan and the Award Agreements without any additional consideration
if necessary to comply with or avoid penalties arising under Internal Revenue
Code Section 409A or any other Section of the Code, even if the amendment
reduces, restricts, or eliminates rights that were granted under the Plan, the
Award Agreement, or both before the amendment.

ARTICLE 4

ADMINISTRATION

4.1    Duties. The Plan Committee is responsible for administering the Plan and
shall have all powers appropriate and necessary for that purpose. Consistent
with the Plan’s objectives, ECB’s Board of Directors and the Plan Committee may
adopt, amend, and rescind rules and regulations relating to the Plan to protect
ECB’s and its Related Entities’ interests. Consistent with the Plan’s
objectives, ECB’s Board of Directors and the Plan Committee shall have complete
discretion to make all other decisions necessary or advisable for the
administration and interpretation of the Plan. Actions of ECB’s Board of
Directors and the Plan Committee shall be final, binding, and conclusive for all
purposes and upon all persons.

4.2    Delegation of Duties. In its sole discretion, ECB’s Board of Directors
and the Plan Committee may delegate ministerial duties associated with the Plan
to any person that it deems appropriate, including an Employee. However, neither
ECB’s Board of Directors nor the Plan Committee shall delegate a duty it must
discharge to comply with the conditions for exemption of performance-based
compensation from the deduction limitations of Section 162(m).

4.3    Award Agreement. As soon as administratively practical after the date an
Award is made, the Plan Committee or ECB’s Board of Directors shall prepare and
deliver an Award Agreement to each affected Participant. The Award Agreement
shall:

(a) describe the terms of the Award, including the type of Award and when and
how it may be exercised or earned,

(b) state the Exercise Price, if any, associated with the Award,

(c) state how the Award will or may be settled,

(d) describe (i) any conditions that must be satisfied before the Award may be
exercised or earned, (ii) any objective restrictions placed on the Award and any
performance-related conditions and performance criteria that must be satisfied
before those restrictions will be released, and (iii) any other applicable terms
and conditions affecting the Award.

4.4    Restriction on Repricing. Regardless of any other provision of this Plan
or an Award Agreement, neither ECB’s Board of Directors nor the Plan Committee
may reprice (as defined under rules of the New York Stock Exchange or The NASDAQ
Stock Market) any Award unless the repricing is approved in advance by ECB’s
stockholders acting at a meeting.

ARTICLE 5

LIMITS ON STOCK SUBJECT TO AWARDS

5.1    Number of Authorized Shares of Stock. Subject to any adjustments required
by Section 5.4, the maximum number of shares of ECB common stock that may be
subject to Awards under this Plan is 200,000. ECB shall at all times during the
term of this Plan reserve and keep available the number of shares of its common
stock as shall be sufficient to satisfy the requirements of the Plan. The common
stock issued pursuant to the Plan may be unissued shares or reacquired shares,
bought on the market or otherwise.

 

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5.2    Award Limits and Annual Participant Limits.

(a)    Award Limits. Of the total shares authorized under Section 5.1, up to a
maximum of 200,000 shares may be reserved for issuance under Incentive Stock
Options.

(b)    Annual Participant Limits. The aggregate number of shares of ECB common
stock underlying Awards granted under this Plan to any Participant in any Plan
Year, regardless of whether the Awards are thereafter canceled, forfeited, or
terminated, shall not exceed 15,000 shares. This annual limitation is intended
to include the grant of all Awards, including but not limited to Awards
representing performance-based compensation described in Internal Revenue Code
Section 162(m)(4)(C).

5.3    Share Accounting. For purposes of calculating the maximum number of
shares of common stock that may be issued under the Plan:

(a) When cash is used by the Participant as full payment for shares issued upon
exercise of a Nonqualified Stock Option or an Incentive Stock Option or as
payment for the purchase of Restricted Stock or Performance Shares, all the
shares issued (including the shares, if any, withheld for tax withholding
requirements) shall be counted;

(b) Any shares of common stock subject to a Stock Option which for any reason
terminates or expires unexercised, or shares granted in connection with a
Performance Share Award that are unearned and, thus, never issued, shall again
be available for issuance under the Plan.

5.4    Adjustment in Capitalization. If, after the Effective Date, there is a
stock dividend or stock split, recapitalization (including payment of an
extraordinary dividend), merger, consolidation, combination, spin-off,
distribution of assets to stockholders, exchange of shares or other similar
corporate change affecting ECB common stock, then consistent with the applicable
provisions of Internal Revenue Code Sections 162(m), 409A, 422, and 424 and
associated regulations and to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under this Plan, the Plan
Committee shall, in a manner the Plan Committee considers equitable, adjust
(a) the number of Awards that may or will be granted to Participants during a
Plan Year, (b) the aggregate number of shares of ECB common stock available for
Awards under Section 5.1 or subject to outstanding Awards, as well as any
share-based limits imposed under this Plan, (c) the respective Exercise Price,
number of shares, and other limitations applicable to outstanding or
subsequently granted Awards, and (d) any other factors, limits, or terms
affecting any outstanding or subsequently granted Awards.

ARTICLE 6

STOCK OPTIONS

6.1    Grant of Options. Subject to the terms of the Plan, at any time during
the term of this Plan the Plan Committee may grant Incentive Stock Options and
Nonqualified Stock Options to Employees. Unless an Award Agreement provides
otherwise, Options awarded under this Plan are intended to satisfy the
requirements for exclusion from coverage under Internal Revenue Code
Section 409A to the extent Section 409A is applicable to those Options as of the
date of their issuance, and all such Option Award Agreements shall be construed
and administered consistent with that intention.

6.2    Exercise Price. Except as necessary to implement Section 6.7, each Option
shall have an Exercise Price per share at least equal to the Fair Market Value
of a share of ECB common stock on the date of grant. However, the Exercise Price
per share shall be at least 110% of the Fair Market Value of a share of ECB
common stock on the date of grant for any Incentive Stock Option granted to an
Employee who, on the date of grant, owns (as defined in Internal Revenue Code
Section 424(d)) ECB common stock possessing more than 10% of the total combined
voting power of all classes of stock (or the combined voting power of any
Related Entity), determined according to rules issued under Internal Revenue
Code Section 422.

 

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6.3    Exercise of Options. Subject to any terms, restrictions, and conditions
specified in the Plan, and unless specified otherwise in the Award Agreement,
Options shall be exercisable at the time or times specified in the Award
Agreement, and they may become exercisable as to portions of the shares covered
by Options at intervals during a stated period of time, but no Incentive Stock
Option may be exercised more than ten years after the date on which it is
granted, nor more than five years after the date on which it is granted to an
Employee who on the date of grant owns (as defined in Internal Revenue Code
Section 424(d)) ECB common stock possessing more than 10% of the total combined
voting power of all classes of stock or the combined voting power of any Related
Entity, determined under rules issued under Internal Revenue Code Section 422.

6.4    Incentive Stock Options. Despite any provision in this Plan to the
contrary:

(a) no provision of this Plan relating to Incentive Stock Options shall be
interpreted, amended, or altered, nor shall any discretion or authority granted
under the Plan be exercised, in a manner that is inconsistent with Internal
Revenue Code Section 422 or, without the consent of the affected Participant, to
cause any Incentive Stock Option to fail to qualify for the federal income tax
treatment provided by Internal Revenue Code Section 421;

(b) no Employee may be granted Incentive Stock Options under this Plan if the
aggregate Fair Market Value (determined as of the date the Option is granted and
taking into account such Option) of stock of ECB and its Related Entities with
respect to which Incentive Stock Options (as defined in Section 422 of the Code)
are exercisable for the first time by such Employee during any calendar year,
under this and all other plans of ECB and its Related Entitles, would exceed one
hundred thousand dollars ($100,000) (or other amount specified in Internal
Revenue Code Section 422(d)), determined under rules issued under Internal
Revenue Code Section 422;

(c) no Incentive Stock Option shall be granted to a person who is not an
Employee on the grant date; and

(d) all Incentive Stock Options held by a Participant shall terminate upon
termination of the Participant’s employment with either ECB or its Related
Entity, provided, that such period may be extended in the Award Agreement
pursuant to the following: (i) subject to the terms of Section 9.1, for an
additional period not to exceed ninety (90) days upon termination of the
Participant’s employment with ECB or its Related Entities other than as a result
of death or disability; (ii) for an additional period not to exceed one (1) year
upon termination of the Participant’s employment with ECB or its Related
Entities as a result of death; and (iii) for an additional period not to exceed
one (1) year upon termination of the Participant’s employment with ECB or its
Related Entities as a result of disability (within the meaning of
Section 22(e)(3) of the Code and as defined in the Incentive Stock Option
Agreement);

6.5    Exercise Procedures and Payment for Options. The Exercise Price
associated with each Option must be paid according to procedures described in
the Award Agreement. These procedures may allow either of the following payment
methods: (a) payment in cash or a cash equivalent or (b) surrender by the
Participant of unrestricted shares of ECB common stock he or she has owned for
at least six months before the exercise date as partial or full payment of the
Exercise Price, either by actual delivery of the shares or by attestation, with
each share valued at the Fair Market Value of a share of ECB common stock on the
exercise date. In its sole discretion the Plan Committee may withhold its
approval for any method of payment for any reason, including but not limited to
concerns that the proposed method of payment will result in adverse financial
accounting treatment, adverse tax treatment for ECB or the Participant, or a
violation of the Sarbanes-Oxley Act of 2002, as amended from time to time, and
related regulations and guidance. A Participant may exercise an Option solely by
sending to the Plan Committee or its designee a completed exercise notice in the
form prescribed by the Plan Committee along with payment, or designation of an
approved payment procedure, of the Exercise Price.

6.6    Holding Period. For so long as ECB remains a reporting company (meaning
that it has a class of equity securities registered under the Exchange Act),
shares of ECB common stock acquired upon exercise of an Option shall not be sold
or otherwise transferred before the expiration of six (6) months from the date
such Option is granted.

6.7    Substitution of Options. In ECB’s discretion, persons who become
Employees as a result of a transaction described in Internal Revenue Code
Section 424(a) may receive Options in exchange for options granted by their
former employer or the former Related Entity subject to the rules and procedures
prescribed under Section 424.

 

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6.8    Rights Associated With Options. A Participant holding an unexercised
Option shall have no voting or dividend rights associated with shares underlying
the unexercised Option. The Option shall be transferable solely as provided in
Section 13.1. Unless otherwise specified in the Award Agreement or as otherwise
specifically provided in the Plan, ECB common stock acquired upon exercise of an
Option shall have all dividend and voting rights associated with ECB common
stock and shall be transferable, subject to applicable federal securities laws,
applicable requirements of any national securities exchange or system on which
shares of ECB common stock are then listed or traded, and applicable blue sky or
state securities laws.

ARTICLE 7

RESTRICTED STOCK

7.1    Award of Restricted Stock. Subject to the terms, restrictions, and
conditions specified in the Plan and the associated Award Agreement, at any time
during the term of this Plan the Plan Committee may award shares of Restricted
Stock to Employees. Restricted Stock may be awarded at no cost or at a price per
share determined by the Plan Committee, which may be less than the Fair Market
Value of a share of ECB common stock on the date of grant.

7.2    Earning Restricted Stock. Subject to the terms, restrictions, and
conditions specified in the Plan and the associated Award Agreement, and unless
otherwise specified in the Award Agreement:

(a) terms, restrictions, and conditions imposed on Restricted Stock awarded to
Participants shall lapse as described in the Award Agreement, and any Award
Agreement may provide for a schedule under which terms, restrictions and
conditions lapse as to portions of the shares included in an Award at intervals
during a stated period of time;

(b) during the period in which satisfaction of the conditions imposed on
Restricted Stock is to be determined, the share certificates for such Restricted
Stock and any shares of ECB common stock issuable as a dividend or other
distribution on the Restricted Stock shall be held by ECB,

(c) at the end of the period in which satisfaction of the conditions imposed on
Restricted Stock is to be determined, (i) the Restricted Stock, or any
applicable portion thereof, shall be forfeited to the extent that terms,
restrictions, and conditions described in the Award Agreement are not satisfied
(with a refund, without interest, of any consideration paid by the Participant),
and (ii) subject to the terms of Section 13.4, the certificates evidencing the
Restricted Stock, or any applicable portion thereof, shall be released by ECB
and distributed to the Participant as soon as practicable after the last day of
the period in which satisfaction of the conditions imposed on Restricted Stock
is to be determined to the extent that terms, restrictions, and conditions
specified in the Award Agreement are satisfied. Any Restricted Stock Award
relating to a fractional share of ECB common stock shall be rounded to the next
whole share when settled.

7.3    Rights Associated With Restricted Stock. During the period in which
satisfaction of the conditions imposed on Restricted Stock is to be determined,
and unless the Restricted Stock Award Agreement specifies otherwise, Restricted
Stock may not be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated. Except as otherwise required for compliance with the conditions
for exemption of performance-based compensation from the deduction limitations
of Internal Revenue Code Section 162(m) and except as otherwise required by the
terms of the applicable Award Agreement, during the period in which satisfaction
of the conditions imposed on Restricted Stock is to be determined each
Participant to whom Restricted Stock is issued may exercise full voting rights
associated with that Restricted Stock and shall be entitled to receive all
dividends and other distributions on that Restricted Stock; provided, however,
that if a dividend or other distribution is paid in the form of shares of ECB
common stock, those shares shall also be considered Restricted Stock. The
certificate evidencing such shares shall be held by ECB, and the shares shall be
subject to the same restrictions on transferability and forfeitability as the
shares of Restricted Stock to which the dividend or distribution relates.

7.4    Internal Revenue Code Section 83(b) Election. The Plan Committee may
provide in an Award Agreement that the Award of Restricted Stock is conditioned
upon the Participant making or refraining from making an election under Internal
Revenue Code Section 83(b). If a Participant makes an election under Internal
Revenue Code Section 83(b) concerning a Restricted Stock Award, the Participant
must promptly file a copy of the election with ECB.

 

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ARTICLE 8

PERFORMANCE SHARES

8.1    Award of Performance Shares. Subject to the terms, restrictions, and
conditions specified in the Plan and the Award Agreement, at any time during the
term of this Plan the Plan Committee may award Performance Shares to Employees.
Performance Shares shall be earned and issued based on performance objectives
set forth in the Award Agreement being met, which objectives shall consist of
one or more of the criteria specified in Section 8.2 (the “Performance
Criteria”). Determination of the specific Performance Criteria and the related
measurement periods or other factors which apply to Performance Shares granted
to a Participant, and of whether any or all such Performance Criteria have been
achieved, shall be made by the Plan Committee, in its sole discretion, and its
determinations shall be final and binding on the Participant. Performance Shares
shall be awarded for issuance only after the Performance Criteria have been met.
Performance Shares may be awarded (a) to Covered Employees in a manner that
qualifies as performance-based compensation under Internal Revenue Code
Section 162(m) or (b) to Employees who are not Covered Employees in any manner
reasonably determined by the Plan Committee. Unless an Award Agreement provides
otherwise, Performance Shares awarded under this Plan are intended to satisfy
the requirements for exclusion from coverage under Internal Revenue Code
Section 409A and the respective Award Agreements shall be construed and
administered consistent with that intention.

8.2    Performance Criteria.

(a) Performance Shares that are intended to qualify as performance-based
compensation under Internal Revenue Code Section 162(m) may be earned based on
goals or objectives specified by the Plan Committee relating to one or more or
any combination of the following Performance Criteria, which may be applied
solely with reference to ECB, to a Related Entity, to ECB and a Related Entity,
or relatively between ECB, a Related Entity, or both and one or more unrelated
entities –

(1) net earnings or net income (before or after taxes),

(2) earnings per share,

(3) deposit or asset growth,

(4) net operating income,

(5) return measures (including return on assets and equity),

(6) fee income,

(7) earnings before or after taxes, interest, depreciation and/or amortization,

(8) interest spread,

(9) productivity ratios,

(10) share price, including but not limited to growth measures and total
stockholder return,

(11) expense targets,

(12) credit quality,

(13) efficiency ratio,

(14) market share,

(15) customer satisfaction,

(16) net income after cost of capital, or

(17) any other factors the Plan Committee considers relevant and appropriate

(b) Performance Shares awarded to Participants who are not Covered Employees may
be earned based on one or more or any combination of the Performance Criteria
listed in Section 8.2(a).

 

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(c) Different Performance Criteria may be applied to individual Employees or to
groups of Employees and, as specified by the Plan Committee, may be based on the
results achieved (i) separately by ECB or any Related Entity, (ii) by any
combination of ECB and Related Entities, or (iii) by any combination of
segments, products, or divisions of ECB and Related Entities.

(d) The Plan Committee shall make appropriate adjustments of Performance
Criteria to reflect the effect on any Performance Criteria of any stock dividend
or stock split affecting ECB common stock, a recapitalization (including without
limitation payment of an extraordinary dividend), merger, consolidation,
combination, spin-off, distribution of assets to stockholders, exchange of
shares, or similar corporate change. Also, the Plan Committee shall make a
similar adjustment to any portion of a Performance Criterion that is not based
on ECB common stock but that is affected by an event having an effect similar to
those just described. As permitted under Internal Revenue Code Section 162(m),
the Plan Committee may make appropriate adjustments of Performance Criteria to
reflect a substantive change in an Employee’s job description or assigned duties
and responsibilities.

(e) Performance Criteria shall be established in an Award Agreement as soon as
administratively practicable after the criteria are established, but in the case
of Covered Employees no later than the earlier of: (i) 90 days after the
beginning of the applicable Performance Period and (ii) the expiration of 25% of
the applicable period in which satisfaction of the applicable Performance
Criteria is to be determined.

8.3    Earning Performance Shares. Except as otherwise provided in the Plan or
the Award Agreement, at the end of each applicable measurement period in which
satisfaction of the Performance Criteria is to be determined, the Plan Committee
shall certify that the Performance Criteria have or have not been satisfied,
after which the following shall occur:

(a) To the extent the Plan Committee certifies that the Performance Criteria
were not satisfied, then the Award shall terminate as to all or the portion of
the Performance Shares associated with Performance Criteria certified as not
having been satisfied, and those Performance Shares shall never be issued;

(b) To the extent the Plan Committee certifies that the Performance Criteria
have been satisfied, then all or the portion of the Performance Shares
associated with Performance Criteria certified as having been satisfied shall,
subject to the terms of Section 13.4, be issued to the Participant in the form a
certificate for shares of ECB common stock (unless otherwise specified in the
Award Agreement) on or before the later of (i) the 15th day of the third month
after the end of the Participant’s taxable year in which the Plan Committee
certifies that the related Performance Criteria are satisfied and (ii) the 15th
day of the third month after the end of ECB’s taxable year in which the Plan
Committee certifies that the related Performance Criteria were satisfied.
However, the Performance Shares may be distributed later if ECB reasonably
determines that compliance with that schedule is not administratively practical
and if the distribution is made as soon as practical.

8.4    Rights Associated with Performance Shares. During the measurement period
in which satisfaction of the Performance Criteria is to be determined with
respect to Performance Shares awarded to a Participant, (i) the Performance
Shares shall remain unissued; (ii) the right to receive the Performance Shares
upon issuance may not be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated, (iii) the Participant shall have no voting rights
with respect to the unissued Performance Shares, and (iv) the Participant shall
have no right to receive dividends or other distributions with respect to the
unissued Performance Shares.

8.5.    Internal Revenue Code Section 83(b) Election. The Plan Committee may
provide in an Award Agreement that the grant of any Performance Shares shall be
conditioned upon the Participant making or refraining from making an election
under Internal Revenue Code Section 83(b). If a Participant makes an election
under Internal Revenue Code Section 83(b) concerning a Performance Share Award,
the Participant must promptly file a copy of the election with ECB.

 

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ARTICLE 9

TERMINATION

9.1    Termination for Cause.

(a) If a Participant’s employment with ECB is terminated for Cause, or if in
ECB’s judgment a basis for termination for Cause exists, all Awards held by the
Participant that are outstanding shall be forfeited, regardless of whether the
Awards are exercisable and regardless of whether the Participant’s employment
with ECB or a Related Entity actually terminates, except that (i) Restricted
Stock that is no longer subject to forfeiture, and (ii) Performance Shares for
which the Performance Criteria have been met, and (iii) shares received in
connection with Options that have been exercised, shall not be affected by
termination for Cause.

(b) The term “Cause” shall mean one or more of the acts described in this
Section 9.1(b):

(1) an act of fraud, intentional misrepresentation, embezzlement,
misappropriation, or conversion by the Participant of the assets or business
opportunities of ECB or a Related Entity,

(2) conviction of the Participant of or plea by the Participant of guilty or no
contest to a felony or a misdemeanor,

(3) violation by the Participant of the written policies or procedures of ECB or
the Related Entity with which the Participant is employed, including but not
limited to violation of ECB’s or the Related Entity’s code of ethics,

(4) unless disclosure is inadvertent, disclosure to unauthorized persons of any
confidential information not in the public domain relating to ECB’s or a Related
Entity’s business, including all processes, inventions, trade secrets, computer
programs, technical data, drawings or designs, information concerning pricing
and pricing policies, marketing techniques, plans and forecasts, new product
information, information concerning methods and manner of operations, and
information relating to the identity and location of all past, present, and
prospective customers and suppliers,

(5) intentional breach of any contract (including without limitation any
employment, confidentiality or inventions agreement) with or violation of any
legal obligation owed to ECB or a Related Entity,

(6) dishonesty relating to the duties owed by the Participant to ECB or a
Related Entity or any breach of a fiduciary duty held by the Participant with
respect to ECB or a Related Entity,

(7) the Participant’s willful and continued refusal to substantially perform
assigned duties, other than refusal resulting from sickness or illness or while
suffering from an incapacity due to physical or mental illness, including a
condition that does or may constitute a disability,

(8) the Participant’s willful engagement in gross misconduct materially and
demonstrably injurious to ECB or a Related Entity,

(9) the Participant’s breach of any term of this Plan or an Award Agreement,

(10) intentional cooperation with a party attempting a Change in Control of ECB,
unless ECB’s Board of Directors approves or ratifies the Participant’s action
before the Change in Control or unless the Participant’s cooperation is required
by law,

(11) any action that constitutes “cause” for termination as defined in any
written agreement between the Participant and ECB or a Related Entity.

However, Cause shall not be deemed to exist merely because the Participant is
absent from active employment during periods of paid time off, consistent with
the applicable paid time-off policy of ECB or its Related Entity with which the
Participant is employed, as the case may be, sickness or illness or while
suffering from an incapacity due to physical or mental illness, including a
condition that does or may constitute a disability, or other period of absence
approved by ECB or its Related Entity, as the case may be. The Plan Committee
shall have the sole discretion to determine whether any condition constitutes a
disability for purposes of the Plan or this Section 9.1.

 

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9.2    Termination for any Other Reason. Unless specified otherwise by the Plan
Committee at the time an Award is granted and set forth in the Award Agreement,
or in this Plan, and except as provided in Section 9.1, when a Participant’s
employment terminates for any reason, the portions of the Participant’s
outstanding Options that are unvested and unexercisable, and the portions of the
Participant’s Restricted Stock Awards that at such time are subject to
forfeiture, and the portions of the Participant’s Performance Share Awards that
have not been earned, shall be forfeited. Options that are exercisable when
termination occurs shall be forfeited if not exercised before the earlier of
(a) the expiration date specified in the Award Agreement, (b) any other time
(including the date of termination), or after any number of days following the
date of termination, as specified in the Award Agreements pertaining to those
Options.

ARTICLE 10

EFFECT OF A CHANGE IN CONTROL

10.1    Definition of Change in Control. The term “Change in Control” shall have
the meaning given in any written agreement between the Participant and ECB or
any Related Entity. However, if an Award is subject to Internal Revenue Code
Section 409A, the term Change in Control shall have the meaning given in
Section 409A. If an Award is not subject to Internal Revenue Code Section 409A,
and if the term Change in Control is not defined in a written agreement between
the Participant and ECB or a Related Entity, any of the following events
occurring on or after the date this Plan becomes effective under Section 1.2
shall constitute a Change in Control:

(a)    Change in Board Composition. A Change in Control shall be deemed to have
occurred if individuals who constitute ECB’s Board of Directors on the date this
Plan becomes effective under Section 1.2 (the “Incumbent Directors”) cease for
any reason to constitute at least a majority of the Board of Directors. A person
who becomes a Director after the Effective Date of this Plan and whose election
or nomination for election is approved by a vote of at least two-thirds (2/3) of
the Incumbent Directors on the Board of Directors shall be deemed to be an
Incumbent Director. The necessary two-thirds (2/3) approval may take the form of
a specific vote on that person’s election or nomination, or approval of ECB’s
proxy statement in which the person is named as a nominee for Director without
written objection by Incumbent Directors to the nomination. A person elected or
nominated as a Director of ECB initially as the result of an actual or
threatened director-election contest or any other actual or threatened
solicitation of proxies by or on behalf of any person other than ECB’s Board of
Directors shall never be deemed an Incumbent Director unless at least two-thirds
(2/3) of the Incumbent Directors specifically vote to treat that person as an
Incumbent Director.

(b)    Significant Ownership Change. A Change in Control shall be deemed to have
occurred if any person directly or indirectly is or becomes the beneficial owner
of securities, the combined voting power which securities in the election of
ECB’s Directors is:

(1) 50% or more of the combined voting power of all of ECB’s outstanding
securities eligible to vote for the election of ECB’s Directors,

(2) 25% or more, but less than 50%, of the combined voting power of all of ECB’s
outstanding securities eligible to vote in the election of ECB’s Directors,
except that an event described in this paragraph (b)(2) shall not constitute a
Change in Control if it is the result of any of the following acquisitions of
ECB’s securities:

(A) by ECB or a Related Entity, reducing the number of ECB securities
outstanding (unless the person thereafter becomes the beneficial owner of
additional securities that are eligible to vote in the election of ECB’s
Directors, increasing the person’s beneficial ownership by more than one
percent),

(B) by or through an employee benefit plan sponsored or maintained by ECB or a
Related Entity and described (or intended to be described) in Internal Revenue
Code Section 401(a),

(C) by or through an equity compensation plan maintained by ECB or a Related
Entity, including this Plan and any program described in Internal Revenue Code
Section 423,

(D) by an underwriter temporarily holding securities in an offering of
securities,

(E) in a Non-Control Transaction, as defined in Section 10.1(c), or

 

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(F) in a transaction (other than one described in Section 10.1(c)) in which
securities eligible to vote in the election of ECB’s Directors are acquired from
ECB, if a majority of the Incumbent Directors approves a resolution providing
expressly that the acquisition shall not constitute a Change in Control.

(c) Merger. A Change in Control shall be deemed to have occurred upon
consummation of a merger, consolidation, share exchange, or similar form of
corporate transaction involving ECB or a Related Entity requiring approval of
ECB’s stockholders, whether for the transaction or for the issuance of
securities in the transaction (a “Business Combination”), unless immediately
after the Business Combination:

(1) more than 50% of the total voting power of either (i) the corporation
resulting from consummation of the Business Combination (the “Surviving
Corporation”) or, if applicable, (ii) the ultimate parent corporation that
directly or indirectly beneficially owns 100% of the voting securities eligible
to elect directors of the Surviving Corporation (the “Parent Corporation”) is
represented by securities that were eligible to vote in the election of ECB’s
Directors and that were outstanding immediately before the Business Combination
(or, if applicable, represented by securities into which the ECB securities were
converted in the Business Combination), and that voting power among the holders
thereof is in substantially the same proportion as the voting power of
securities eligible to vote in the election of ECB’s Directors among the holders
thereof immediately before the Business Combination,

(2) no person (other than any employee benefit plan sponsored or maintained by
the Surviving Corporation or the Parent Corporation or any employee stock
benefit trust created by the Surviving Corporation or the Parent Corporation)
directly or indirectly is or becomes the beneficial owner of 25% or more of the
total voting power of the outstanding voting securities eligible to elect
directors of the Parent Corporation (or, if there is no Parent Corporation, the
Surviving Corporation), and

(3) at least a majority of the members of the Board of Directors of the Parent
Corporation (or, if there is no Parent Corporation, the Surviving Corporation)
were Incumbent Directors when the initial agreement providing for the Business
Combination was approved by ECB’s Board of Directors.

A Business Combination satisfying all of the criteria specified in clauses (1),
(2), and (3) of this Section 10.1(c) shall constitute a “Non-Control
Transaction,” or

(d) Sale of Assets. A Change in Control shall be deemed to have occurred if
ECB’s stockholders approve a plan of complete liquidation or dissolution of ECB
or a sale of all or substantially all of its assets, but in any case only if
ECB’s assets are transferred to an entity not owned directly or indirectly by
ECB, a Related Entity or ECB’s stockholders.

10.2    Effect of Change in Control. If a Change in Control occurs, the Plan
Committee shall have the right in its sole discretion to –

(a) accelerate the exercisability of any or all Options, despite any limitations
contained in the Plan or Award Agreement,

(b) accelerate the vesting of Restricted Stock or Performance Shares, despite
any limitations contained in the Plan or Award Agreement,

(c) cancel any or all outstanding Awards in exchange for the kind and amount of
shares of the surviving or new corporation, cash, securities, evidences of
indebtedness, other property, or any combination thereof that the holder of the
Award would have received upon consummation of the Change in Control transaction
(the “Acquisition Consideration”) had the Option, Restricted Stock or
Performance Shares been exercised or converted into shares of ECB common stock
before the transaction, less the applicable exercise or purchase price,

(d) cause the holders of any or all Awards to have the right during the term of
the Awards to receive upon exercise of the Award the Acquisition Consideration
receivable upon consummation of the transaction by a holder of the number of
shares of ECB common stock that might have been obtained upon exercise or
conversion of all or any portion thereof, less the applicable exercise or
purchase price therefore, or to convert the Award into a stock option,
restricted stock or performance shares relating to the surviving or new
corporation in the transaction, or

 

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(e) take such other action as it deems appropriate to preserve the value of the
Award to the Participant.

The Plan Committee may provide for any of the foregoing actions in an Award
Agreement in advance, may provide for any of the foregoing actions in connection
with the Change in Control, or both.

For purposes of this Plan the term “person” shall be as defined in
Section 3(a)(9) and as used in Sections 13(d)(3) and 14(d) (2) of the Securities
Exchange Act of 1934, and the terms “beneficial owner” and “beneficial
ownership” shall have the meaning given in the Securities and Exchange
Commission’s Rule 13d-3 under the Securities Exchange Act of 1934.

ARTICLE 11

AMENDMENT, MODIFICATION AND TERMINATION OF PLAN

ECB may terminate, suspend, or amend the Plan at any time without stockholder
approval, unless stockholder approval is necessary to satisfy applicable
requirements imposed by (a) Rule 16b-3 under the Securities Exchange Act of
1934, or any successor rule or regulation, (b) the Internal Revenue Code, which
requirements may include without limitation qualification of an Award as
performance-based compensation under Internal Revenue Code Section 162(m) and
compliance with requirements under Internal Revenue Code Section 422, or (c) any
securities exchange, market, or other quotation system on or through which ECB’s
securities are listed or traded. However, no Plan amendment shall (a) result in
the loss of a Plan Committee member’s status as a “non-employee director,” as
that term is defined in Rule 16b-3 under the Securities Exchange Act of 1934 or
any successor rule or regulation, (b) cause the Plan to fail to satisfy the
requirements imposed by Rule 16b-3, or (c) without the affected Participant’s
consent (and except as specifically provided otherwise in this Plan or the Award
Agreement), adversely affect any Award granted before the amendment,
modification, or termination. Despite any provision in the Plan, including this
Article 11, to the contrary, ECB shall have the right to amend the Plan and any
Award Agreements without the consent of or additional consideration to affected
Participants if amendment is necessary to comply with or avoid penalties arising
under Internal Revenue Code Section 409A or any other section of the Code, even
if the amendment reduces, restricts, or eliminates rights granted under the
Plan, the Award Agreement, or both, before the amendment.

ARTICLE 12

ISSUANCE OF SHARES AND SHARE CERTIFCATES

12.1    Issuance of Shares. ECB shall issue or cause to be issued shares of its
common stock as soon as practicable upon exercise or conversion of an Award that
is payable in shares of ECB common stock after compliance with the terms set
forth in this Article 12. No shares shall be issued until full payment is made,
if payment is required by the terms of the Award. In the case of an Option or
Performance Shares, until a stock certificate evidencing the shares is issued,
no right to vote or receive dividends or any other rights as a stockholder shall
exist for the shares of ECB common stock to be issued. Issuance of shares of
common stock shall be evidenced by a computerized or manual entry in the stock
records of ECB or of a duly authorized transfer agent of ECB, which records are
established to evidence the issuance of shares of ECB common stock and are
binding on all parties, unless manifest error exists. Issuance may also be
evidenced by the issuance of a stock certificate.

12.2    Delivery of Share Certificates. ECB shall not be required to issue any
shares or deliver any certificates until all of the following conditions are
fulfilled:

(a) payment in full for the shares and for any tax withholding,

(b) completion of any registration or other qualification of the shares the Plan
Committee in its discretion deems necessary or advisable under any Federal or
state laws or under the rulings or regulations of the Securities and Exchange
Commission or any other regulating body,

(c) if ECB common stock is listed on The NASDAQ Stock Market or another
exchange, admission of the shares to listing on The NASDAQ Stock Market or the
other exchange,

 

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(d) if the offer and sale of shares of ECB common stock is not registered under
the Securities Act of 1933, qualification of the offer and sale under an
available registration exemption under the Securities Act of 1933,

(e) obtaining any approval or other clearance from any Federal or state
governmental agency the Plan Committee, in its discretion, determines to be
necessary or advisable. The inability of ECB to obtain from any regulatory body
having jurisdiction the authority deemed by ECB’s counsel to be necessary for
the lawful issuance of any shares of its common stock hereunder shall relieve
ECB of any liability in respect of the nonissuance or sale of such stock as to
which such requisite authority shall not have been obtained; and

(f) the Plan Committee is satisfied that the issuance and delivery of shares of
ECB common stock under this Plan complies with applicable Federal, state, or
local law, rule, regulation, or ordinance or any rule or regulation of any other
regulating body, for which the Plan Committee may seek approval of ECB’s
counsel.

ECB shall not be required to register any Option, any common stock to be issued
pursuant to the exercise of any Option, or any common stock otherwise issued
pursuant to the grant of any Award, under the Securities Act of 1933 of any
other laws or regulations to which ECB’s securities may be subject

12.3    Applicable Restrictions on Shares. Shares of ECB common stock issued may
be subject to such stock transfer orders and other restrictions as the Plan
Committee may determine are necessary or advisable under any applicable Federal
or state securities law rules, regulations and other requirements, the rules,
regulations and other requirements of The NASDAQ Stock Market or any stock
exchange upon which ECB common stock is listed, and any other applicable Federal
or state law. Certificates for the common stock may bear any restrictive legends
the Plan Committee considers appropriate.

ARTICLE 13

MISCELLANEOUS

13.1    Assignability. Except as described in this Section or as provided in
Section 13.2, an Award may not be transferred except by will or by the laws of
descent and distribution, and an Award may be exercised during the Participant’s
lifetime solely by the Participant or by the Participant’s guardian or legal
representative. However, with the permission of the Plan Committee a Participant
or a specified group of Participants may transfer Awards other than Incentive
Stock Options to a revocable inter vivos trust of which the Participant is the
settlor, or may transfer Awards other than Incentive Stock Options to a member
of the Participant’s immediate family, a revocable or irrevocable trust
established solely for the benefit of the Participant’s immediate family, a
partnership or limited liability company whose only partners or members are
members of the Participant’s immediate family, or an organization described in
Internal Revenue Code Section 501(c)(3). An Award transferred to one of these
permitted transferees shall continue to be subject to all of the terms and
conditions that applied to the Award before the transfer and to any other rules
prescribed by the Plan Committee. A permitted transferee may not retransfer an
Award except by will or by the laws of descent and distribution, and the
transfer by will or by the laws of descent and distribution must be a transfer
to a person who would be a permitted transferee according to this Section 13.1.

13.2    Beneficiary Designation. Each Participant may name a beneficiary or
beneficiaries to receive or to exercise any vested Award that is unpaid or
unexercised at the Participant’s death. Beneficiaries may be named contingently
or successively. Unless otherwise provided in the beneficiary designation, each
designation made shall revoke all prior designations made by the same
Participant. A beneficiary designation must be made on a form prescribed by the
Plan Committee and shall not be effective until filed in writing with the Plan
Committee. If a Participant has not made an effective beneficiary designation,
the deceased Participant’s beneficiary shall be his or her surviving spouse or,
if none, the deceased Participant’s estate. None of ECB, its Board of Directors,
or the Plan Committee is required to infer a beneficiary from any other source.
The identity of a Participant’s designated beneficiary shall be based solely on
the information included in the latest beneficiary designation form completed by
the Participant and shall not be inferred from any other evidence.

 

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13.3    No Implied Rights to Awards or Continued Services. No Employee has any
claim or right to be granted an Award under this Plan, and there is no
obligation of uniformity of treatment of Employees under this Plan. Nothing in
the Plan shall or shall be construed to guarantee that any Participant will
receive a future Award. Neither this Plan nor any Award shall be construed as
giving any individual any right to continue as an Employee of ECB or a Related
Entity. Neither the Plan nor any Award shall constitute a contract of
employment, and ECB expressly reserves to itself and all Related Entities the
right at any time to terminate Employees free from liability or any claim under
this Plan.

13.4    Tax Withholding. Each Participant shall be responsible for all federal,
state, local or other taxes of any nature as shall be imposed pursuant to any
law or governmental regulation or ruling on or related to any Award granted
hereunder or action taken with respect thereto, or on any income which a
Participant is deemed to recognize in connection with an Award. If the Committee
shall determine to its reasonable satisfaction that ECB or any of its Related
Entities is required to pay or withhold the whole or any part of any estate,
inheritance, income, or other tax with respect to or in connection with any
Award or action taken with respect thereto, then ECB or such Related Entity
shall have the full power and authority to withhold and pay such tax out of any
shares of common stock being purchased by or delivered to the Participant or
from the Participant’s salary or any other funds otherwise payable to the
Participant, or, prior to and as a condition of exercising an Option or the
delivery of any common stock to the Participant in connection with any other
Award, ECB may require that the Participant pay to it in cash or otherwise the
amount of any such tax which ECB, in good faith, believes it or its related
Entity is required to withhold.

13.5    Indemnification. Each individual who is or was a member of ECB’s Board
of Directors or Plan Committee shall be indemnified and held harmless by ECB
against and from any loss, cost, liability, or expense that may be imposed upon
or reasonably incurred by him or her in connection with or resulting from any
claim, action, suit, or proceeding to which he or she may be made a party or in
which he or she may be involved by reason of any action taken or not taken under
the Plan as a Director of ECB or as a Plan Committee member and against and from
any and all amounts paid, with ECB’s approval, by him or her in settlement of
any matter related to or arising from the Plan as a ECB Director or as a Plan
Committee member or paid by him or her in satisfaction of any judgment in any
action, suit or proceeding relating to or arising from the Plan against him or
her as a ECB Director or as a Plan Committee member, except in relation to
matters as to which it shall be adjudged in such action, suit or proceeding that
such Committee member is liable for gross negligence or willful misconduct in
the performance of his duties. In order to receive indemnification such director
must give ECB an opportunity at its expense to handle and defend the matter
before he or she undertakes to handle and defend it in his or her own behalf.
The right of indemnification described in this Section is not exclusive and is
independent of any other rights of indemnification to which the individual may
be entitled under ECB’s organizational documents, by contract, as a matter of
law, or otherwise.

13.6    No Limitation on Compensation. Nothing in the Plan shall be construed to
limit the right of ECB to establish other plans or to pay compensation to
Employees in cash or property in a manner not expressly authorized under the
Plan.

13.7    Governing Law. The Plan and all agreements hereunder shall be construed
in accordance with and governed by the laws, other than laws governing conflict
of laws, of the State of North Carolina. This Plan is not intended to be
governed by the Employee Retirement Income Security Act of 1974, and the Plan
shall be construed and administered in a manner that is consistent with that
intention.

13.8    No Impact on Benefits. Plan Awards are not compensation for purposes of
calculating a Participant’s rights under any employee benefit plan that does not
specifically require the inclusion of Awards in benefit calculations.

13.9    Securities and Exchange Commission Rule 16b-3. The Plan is intended to
comply with all applicable conditions of Securities and Exchange Commission Rule
16b-3 under the Securities Exchange Act of 1934, as that rule may be amended
from time to time. All transactions involving a Participant who is subject to
beneficial ownership reporting under Section 16(a) of the Securities Exchange
Act of 1934 shall be subject to the conditions set forth in Rule 16b-3,
regardless of whether the conditions are expressly set forth in this Plan, and
any provision of this Plan that is contrary to Rule 16b-3 shall not apply to
that Participant.

 

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13.10    Internal Revenue Code Section 162(m). The Plan is intended to comply
with applicable requirements of Section 162(m) for exemption of
performance-based compensation from the deduction limitations of Section 162(m).
Unless the Plan Committee expressly determines otherwise, any provision of this
Plan that is contrary to those Section 162(m) exemption requirements shall not
apply to an Award that is intended to qualify for the exemption for
performance-based compensation. In the event the Performance Shares become
subject to the Section 162(m) compensation limit (“Limit”) upon vesting, the
Plan Committee may delay the distribution of such shares to the Participant to a
date upon which the Limit is inapplicable to the Performance Shares. However,
the Performance Shares shall be distributed upon the earlier of (a) the tax year
in which there is a reasonable anticipation that the Limit will become
inapplicable to the Performance Shares and (b) the tax year in which the
Participant separates from service with ECB.

13.11    Successors. All obligations of ECB under Awards granted under this Plan
are binding on any successor to ECB, whether as a result of a direct or indirect
purchase, merger, consolidation, or otherwise of all or substantially all of the
business or assets of ECB.

13.12    Severability. If any provision of this Plan or the application thereof
to any person or circumstances is held to be illegal or invalid for any reason,
the illegality or invalidity shall not affect the remaining parts of this Plan
or other applications, and this Plan is to be construed and enforced as if the
illegal or invalid provision had not been included.

13.13    No Golden Parachute Payments. Despite any provision in this Plan or in
an Award Agreement to the contrary, ECB shall not be required to make any
payment under this Plan or an Award Agreement that would be a prohibited golden
parachute payment within the meaning of Section 18(k) of the Federal Deposit
Insurance Act or which would be a nondeductible payment within the meaning of
Internal Revenue Code Section 280G.

13.14    Use of Proceeds. Proceeds from the sale of stock pursuant to Options or
from the sale of Restricted Stock or Performance Shares shall constitute general
funds of ECB.

 

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