EXHIBIT 10.1

STATE OF NORTH CAROLINA

COUNTY OF HYDE

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the “Agreement”) is entered into as of the 26th day
of August, 2009 (the “Effective Date”), by and between A. DWIGHT UTZ
(“Executive”), THE EAST CAROLINA BANK (the “Bank”) and ECB BANCORP, INC.
(“Bancorp”).

WITNESSETH:

WHEREAS, Executive currently is employed by the Bank as its President and Chief
Executive Officer and has been elected as President and Chief Executive Officer
of Bancorp; and

WHEREAS, the Bank desires and has agreed to continue to employ Executive as its
President and Chief Executive Officer, and Executive desires and has agreed to
continue in the employment of the Bank; and

WHEREAS, the Bank and Executive desire to set forth the terms and conditions of
Executive’s continued employment with the Bank in a written agreement and, for
that purpose, the Bank and Executive have agreed to enter into this Agreement;
and

WHEREAS, Bancorp has agreed to join as a party to this Agreement for purposes of
its separate agreements set forth herein.

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,
the Bank, Bancorp and Executive hereby agree as follows:

1. Employment. The Bank agrees to continue to employ Executive, and Executive
accepts continued employment with the Bank, upon the terms and conditions stated
in this Agreement. For so long as Executive is employed by and serves as
President and Chief Executive Officer of the Bank, Bancorp agrees that Executive
also will be elected and serve as President and Chief Executive Officer of
Bancorp. As an employee and officer of the Bank, and as an officer of Bancorp,
Executive will (a) serve as President and Chief Executive Officer of the Bank
and Bancorp and/or in such other or additional executive position or positions
as shall be specified from time to time by the Bank’s and Bancorp’s Boards of
Directors, (b) promote the Bank and Bancorp and their business and engage in
business development activities on the Bank’s and Bancorp’s behalf, and (c) have
such functional managerial duties, responsibilities and authority consistent
with his position and/or as shall be assigned to him by the Bank’s and Bancorp’s
Boards of Directors from time to time.

2. Term. Subject to the right of either Executive or the Bank to terminate
Executive’s employment at any time as provided herein, the term of Executive’s
employment with the Bank under this Agreement (the “Term of Employment”) shall
be for a period beginning on the Effective Date and ending on July 1, 2012 (the
“Expiration Date”); provided, however, that on July 1, 2010, and on July 1 of
each year thereafter, and without any further action by the Bank or Executive,
the Expiration Date and Term of Employment automatically shall be extended for
one

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additional year unless the Bank gives written notice to Executive not less than
six months prior to any such date that the Expiration Date and Term of
Employment will not be so extended. Unless sooner terminated as provided in this
Agreement, following the Bank’s giving of such written notice the Term of
Employment will expire on the Expiration Date, as it may previously have been
extended as described above. If, following the Expiration Date or other
termination of this Agreement, Executive remains employed by the Bank, such
employment shall be on an “at will” basis.

3. Cash Compensation; Incentive Compensation Plans. For all services rendered by
Executive as an officer and employee of the Bank under this Agreement, during
the Term of Employment the Bank shall pay Executive a base salary at an initial
annual rate of TWO HUNDRED FORTY-FIVE THOUSAND AND NO/100S DOLLARS ($245,000.00)
(“Base Salary”), which will increase to an annual rate of TWO HUNDRED FIFTY-NINE
THOUSAND SEVEN HUNDRED AND NO/100S DOLLARS ($259,700.00) effective on January 1,
2010, if Executive remains actively employed by the Bank on that date.
Thereafter, the Bank’s Board of Directors will review Executive’s Base Salary at
least annually and, subject to the recommendation of its Compensation Committee,
the Board may, at its sole discretion, increase Executive’s Base Salary rate
from time to time during the Term of Employment. Base Salary paid under this
Agreement shall be payable in accordance with the Bank’s normal payroll policies
and procedures in effect from time to time.

Executive shall not be entitled to receive any separate or additional base
salary or other cash compensation for his services as an officer of Bancorp.

Subject to the other terms of this Agreement (specifically including Paragraphs
11, 12 and 13 below), during the Term of Employment Executive shall be eligible
to participate in any bonus, stock-based compensation or other incentive
compensation plans maintained by the Bank from time to time and in which the
Bank’s and Bancorp’s executive officers are participants; provided, however,
that the terms of those plans, the level of Executive’s participation, and the
terms and amount of payments, compensation or awards he may receive thereunder,
shall be within the sole discretion of the Bank’s and Bancorp’s Boards of
Directors and subject to applicable restrictions under the “CPP Rules” (as that
term is defined in Paragraph 11).

4. Employee Benefit Plans; Fringe Benefits; Income Taxes.

(a) Benefit Plans. During the Term of Employment, Executive shall be eligible to
participate in any and all employee benefit plans or programs maintained by or
for the Bank that are generally available to and which cover all the Bank’s
employees, subject to the rules applicable to such plans or programs prevailing
from time to time. Except as otherwise specifically provided herein, Executive’s
participation in such plans and programs and entitlement to benefits (including
vacation and other leave) shall be subject to and in accordance with the terms
and conditions (including eligibility requirements) of and laws and regulations
applicable to such plans and programs, resolutions of the Bank’s Board of
Directors establishing such plans and programs, and the Bank’s normal practices
and established policies regarding such plans and programs; provided, however,
that Executive shall be eligible to receive two weeks of paid vacation during
2009, and four weeks of paid vacation during each calendar year thereafter.

Executive acknowledges that the terms and provisions of the Bank’s employee
benefit plans and programs from time to time may be determined only by reading
the actual plan documents under which the Bank or the plan administrator, as
applicable, may make certain administrative determinations with discretion, and
that the Bank reserves the right to modify or terminate each plan or program and
any benefits provided thereunder.

 

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(b) Long Term Care Insurance. During the Term of Employment, the Bank will pay,
or reimburse Executive for, premiums for existing long-term care insurance
policies covering Executive and his spouse (policy numbers U000875677 and
U02611242) issued through the Federal Long Term Care Insurance Program
administered by Long Term Care Partners, LLC for John Hancock Life Insurance
Company and Metropolitan Life Insurance Company.

(c) Automobile. During the Term of Employment, the Bank will provide Executive
with the use of an automobile which shall be purchased and owned, or leased, in
the name of the Bank. The selection of that automobile, and any periodic
replacement thereof, shall be within the discretion of the Bank’s Board of
Directors.

(d) Expense Reimbursement. Subject to and in accordance with its normal
accounting and reimbursement policies and procedures in effect from time to
time, the Bank will reimburse Executive for reasonable travel and other
business-related expenses incurred in connection with the performance of his
duties under this Agreement.

(e) Income Taxes. All cash or other compensation payable or provided to
Executive under this Agreement shall be subject to customary withholding of
taxes and such other deductions or withholdings as are required by law or
customary for the Bank’s employees. Executive shall be solely responsible for
any income or other taxes (including excise taxes) owed on account of his
receipt from the Bank or Bancorp of any compensation or benefits under this
Agreement and, to the extent that the Bank reasonably believes itself obligated
to do so, the Bank and Bancorp may withhold any such taxes from cash or other
compensation payable to Executive.

5. Standards of Performance and Conduct. During the Term of Employment,
Executive shall:

(a) unless otherwise approved in writing by the Board of Directors, remain a
full-time resident of Hyde County and reside within a 20-mile radius of
Engelhard, North Carolina;

(b) faithfully and diligently discharge his obligations under this Agreement and
perform the duties associated with his positions with the Bank and Bancorp, or
otherwise assigned to him from time to time by the Bank’s or Bancorp’s Board of
Directors, in a manner which is competent and reasonably satisfactory to the
Boards of Directors;

(c) devote his full business time, attention, skill and efforts to the
performance of his assigned duties as an officer of the Bank and Bancorp,
subject to reasonable absences during periods of illness, vacation and other
permitted leaves of absence consistent with the Bank’s personnel policies and
procedures; provided, however, that subject to the terms of and any prior
approval required by the “Code of Conduct” (as defined below), and to the other
terms of this Agreement, Executive may devote personal time to service as a
director or member of, or an advisor to, other organizations, to charitable and
community activities, and to managing his personal investments, so long as those
activities do not materially interfere with the performance of his duties under
this Agreement and are not in conflict with, or adverse to, the interests of the
Bank or Bancorp;

(d) comply with and use his best efforts to implement the Bank’s and Bancorp’s
policies and procedures currently in effect or as are established from time to
time by the Bank’s or Bancorp’s Board of Directors; and

(e) at all times and in all material respects, comply with any code of conduct
or ethics policies applicable to Executive and/or the Bank’s and Bancorp’s
employees, officers and directors in general, as in effect as of the Effective
Date or as may be adopted, amended or supplemented from time to time subsequent
thereto (the “Code of Conduct”), and with all federal and state statutes, and
all rules, regulations, administrative orders, statements of policy, and other

 

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pronouncements or standards promulgated thereunder, which are applicable to the
Bank and Bancorp and their officers, employees, directors, business, and
operations.

6. Nomination for Election as a Director. Executive currently serves as a
director of Bancorp and the Bank. Until the Expiration Date or, if earlier,
termination of Executive’s service as the Bank’s and Bancorp’s President and
Chief Executive Officer, at the end of each term of office as a director of
Bancorp, Bancorp’s Board of Directors will nominate Executive for reelection for
a new term as a director of Bancorp at Bancorp’s next annual meeting of
shareholders; and, subject to his reelection by shareholders as a director of
Bancorp, Bancorp (in its capacity as the Bank’s sole shareholder) will reelect
Executive each year as a director of the Bank; provided, however, that, at the
end of any term of office, Bancorp’s Board of Directors shall not be obligated
to nominate Executive for reelection by shareholders as a director of Bancorp,
and Bancorp shall not be obligated to reelect him as a director of the Bank,
unless he satisfies all then current qualification and eligibility requirements
pertaining to Bancorp’s and the Bank’s directors under applicable laws or
regulations and Bancorp’s and the Bank’s Bylaws. Following his nomination each
year by the Board of Directors, Executive’s service as a director of Bancorp
shall be subject to his election by a vote of Bancorp’s shareholders.

In the event that Executive’s employment with the Bank, or his service as
President and Chief Executive Officer of the Bank and Bancorp, under this
Agreement terminates for any reason, Executive’s service as a director of
Bancorp and the Bank also will terminate, and Executive hereby tenders his
resignation as a director of Bancorp and the Bank effective as of the date of
any such termination of his employment or service as President and Chief
Executive Officer.

7. Termination and Termination Pay. Subject to the limitations set forth in
Paragraphs 11, 12 and 13 below, and except to the extent otherwise provided in
Paragraph 8 in the case of a “Change in Control” (as defined in that Paragraph),
Executive’s and the Bank’s rights and obligations with respect to termination of
the Term and Employment and Executive’s employment under this Agreement shall be
as described in this Paragraph.

(a) By Executive. The Term of Employment and Executive’s employment under this
Agreement may be terminated at any time by Executive upon 30 days’ written
notice to the Bank. Upon such termination, Executive shall be entitled to
receive Base Salary earned under this Agreement through the effective date of
such termination but which remains unpaid (and which shall be paid on or before
the end of the Bank’s then current pay period) and, thereafter, the Bank shall
have no further obligations (for any payments, benefits or otherwise) under this
Agreement.

(b) Death, Retirement or Disability. The Term of Employment and Executive’s
employment under this Agreement automatically shall be terminated upon his
death, “Retirement” or, subject to the Bank’s obligations and Executive’s rights
under Title I of the Americans with Disabilities Act, Section 504 of the
Rehabilitation Act, and the Family and Medical Leave Act, if applicable, and any
other applicable federal, state or local laws, “Disability” during the Term of
Employment. Upon any such termination, Executive (or, in the case of Executive’s
death, his estate) shall be entitled to receive any Base Salary Executive shall
have earned through the date of such termination but which remains unpaid (and
which shall be paid on or before the end of the Bank’s then current pay period),
and, thereafter, the Bank shall have no further obligations (for any payments,
benefits or otherwise) under this Agreement.

“Retirement” shall mean a termination of Executive’s employment with the Bank
which is treated as a retirement (whether early, normal or delayed retirement)
under the terms of any qualified retirement benefit plan generally applicable to
the Bank’s salaried employees and in

 

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which Executive is a participant, or any other termination of employment that
Executive and the Bank mutually agree in writing to treat as a Retirement.

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

(c) By the Bank. The Bank may terminate the Term of Employment and Executive’s
employment under this Agreement at any time for “Cause” (as defined below) or
without Cause.

Upon any such termination by the Bank under this Paragraph 7(c) without Cause
(other than under the circumstances described in Paragraph 8 below), Executive
shall be entitled to receive from the Bank, and the Bank shall be obligated to
pay or cause to be paid to Executive, continued Base Salary for the then current
unexpired Term of Employment (without any further extensions) at a rate equal to
100% of Executive’s Base Salary rate in effect at the time of the termination of
Executive’s employment (which payments shall be made on the same schedule as
Executive’s Base Salary was paid by the Bank during the Term of
Employment). Except as provided in Paragraph 8 below, the above payment shall be
in lieu of any other payments or benefits provided for in this Agreement and,
with the exception of the above payments, upon any such termination without
Cause Executive shall have no further rights, and the Bank shall have no further
obligations (for any payments, benefits or otherwise), under this Agreement.

Upon any such termination with Cause, Executive shall be entitled to receive
Base Salary earned under this Agreement through the effective date of such
termination but which remains unpaid (and which shall be paid on or before the
end of the Bank’s then current pay period) and, thereafter, Executive shall have
no further rights, and the Bank shall have no further obligations (for any
payments, benefits or otherwise), under this Agreement.

For purposes of this Paragraph 7(c), the Bank shall have “Cause” to terminate
Executive’s employment if: 

(i) (A) Executive has breached in any material respect any of the terms or
conditions of this Agreement or of the Code of Conduct, or has failed in any
material respect to perform or discharge his duties or responsibilities of
employment in the manner provided herein (provided however, that such a breach
or failure, other than a breach of the Code of Conduct, shall not give the Bank
“Cause” to terminate Executive’s employment if such breach or failure is
corrected or cured by Executive to the Bank’s reasonable satisfaction (which
shall not be unreasonably withheld by the Bank) within 30 days following written
notice thereof to Executive), or (B) Executive is engaging or has engaged in
willful misconduct or conduct which is detrimental in any material respect to
the business or business prospects of the Bank or Bancorp or which has had or
likely will have an adverse effect on the Bank’s or Bancorp’s business or
reputation;

(ii) The material violation by Executive of 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 the Bank or
Bancorp, 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 (a “Regulatory
Authority”), 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 the Bank or
Bancorp to their reputation;

(iii) The commission in the course of Executive’s employment with or service as
an officer of the Bank or Bancorp of an act of fraud, embezzlement, theft, or
proven

 

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personal dishonesty (whether or not such act or charge results in criminal
indictment, charges, prosecution, or conviction);

(iv) The conviction of Executive of any felony or any criminal offense involving
dishonesty or breach of trust, or the occurrence of 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, the Bank or Bancorp; or, in the
event Executive becomes unacceptable to, or is removed, suspended, or prohibited
from participating in the conduct of the Bank’s or Bancorp’s affairs (or if
proceedings for that purpose are commenced), by any Regulatory Authority; or

(v) The exclusion of Executive by the carrier or underwriter from coverage under
the Bank’s and Bancorp’s then current “blanket bond” or other fidelity bond or
insurance policy covering its or their employees, officers, and directors, or
the occurrence of any event that the Bank 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.

8. Change in Control of the Bank.

(a) Notwithstanding anything contained in Paragraph 7 to the contrary, and
subject to the limitations set forth in Paragraphs 11, 12 and 13 below, if:

(i) at the effective time of or any time within 18 months following a “Change in
Control” (as defined below), the Bank terminates Executive’s employment without
Cause (as defined in Paragraph 7(c) above) and such termination occurs prior to
the Expiration Date, or

(ii) at the effective time of or any time within 18 months following a “Change
in Control” (as defined below), a “Termination Event” (as defined below) occurs
prior to the Expiration Date and, thereafter, Executive voluntarily terminates
his own employment with the Bank, following the giving of written notice to the
Bank and an opportunity for the Bank to cure or remedy the Termination Event, in
the manner described in Paragraph 8(f) below, then (subject to the limitations
set forth herein) Executive shall be entitled to receive from the Bank, and the
Bank shall be obligated to pay or cause to be paid to Executive, an amount equal
to 2.99 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 36
equal monthly installments which shall begin within 45 days following the
“Termination Date” (as defined below) and be made on the same schedule as
Executive’s Base Salary was paid by the Bank during the Term of Employment. In
addition, if Executive chooses to exercise his rights to purchase continued
individual health, dental or other insurance coverages under the Bank’s group
insurance plans pursuant to the Consolidated Omnibus Budget Reconciliation Act
(“COBRA”), the Bank shall reimburse Executive for the cost of his continued
individual insurance coverages for 18 months or, if less, the maximum period
during which such coverages are available to Executive under COBRA, but not
longer than the unexpired Term of Employment hereunder. The above payment shall
be in lieu of any other payments provided for in this Agreement (including,
without limitation, the payments provided for in Paragraph 7 above), and, with
the exception of the above payments, upon any such termination following a
Change in Control, Executive shall have no further rights, and the Bank shall
have no further obligations, under this Agreement. For purposes of this
Agreement, the “Termination Date” will be the effective date of the termination
of Executive’s employment which gives rise to the Bank’s payment obligation
under this Paragraph 8.

 

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(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” (for purposes of this Paragraph 8, 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 the Bank or Bancorp, or in any manner acquires control of the election of a
majority of the directors of the Bank or Bancorp (excluding the Bank, Bancorp,
any wholly-owned subsidiary of the Bank or Bancorp, or any employee benefit plan
sponsored or maintained by the Bank or Bancorp); or

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

(iii) all or substantially all the Bank’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 the Bank’s or Bancorp’s Board of Directors that results in the Bank
or Bancorp merging with, transferring its assets to, or becoming the subsidiary
of, a corporation or entity newly formed at the direction of the Bank’s or
Bancorp’s Board of Directors for the purpose of such transaction (including a
corporation or entity so formed for the purpose of serving as the Bank’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
Paragraph 8, a transaction or event shall not be considered a Change in Control
if, prior to the consummation or occurrence of such transaction or event, the
Bank 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 Paragraph 8, all references to the Bank or Bancorp
shall include any “Successor” (as defined below) to the Bank or Bancorp which
shall have assumed and become liable for the Bank’s or Bancorp’s respective
obligations hereunder (whether such assumption is by agreement, operation of
law, or otherwise). “Successor” refers to any Person or entity (corporate or
otherwise) into which the Bank or Bancorp (or any such Successor) shall be
merged or consolidated or to which all or substantially all the Bank’s or
Bancorp’s (or any such Successor’s) assets shall be transferred in any manner.

(d) For purposes of this Paragraph 8, 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:

 

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(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 the Bank to Executive as of the effective date of the
Change in Control are 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 such that the reduction or elimination
constitutes a material breach by the Bank (or any Successor) of the terms of
this Agreement, unless such reduction or elimination applies proportionately to
all salaried employees of the Bank 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 the Bank or Bancorp 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 the
Bank or Bancorp that he occupied immediately prior to the Change in Control, or
(B) if as a result of the Change in Control the Bank or Bancorp 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 the Bank’s or Bancorp’s Successor or report directly to the
Successor’s Chairman, President, or Chief Executive Officer.

However, notwithstanding the other provisions of this Paragraph 8, an event
shall not be considered a Termination Event if, prior to the occurrence of such
event, the Bank 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.

(e) If, prior to the effective time of a Change in Control, but following the
date on which the Bank’s or Bancorp’s Board of Directors takes action to approve
an agreement (including any definitive agreement or an agreement in principle)
relating to the Change in Control, Executive’s employment is terminated by the
Bank without Cause, thereby obligating the Bank to make monthly payments to
Executive as described in Paragraph 7(c) above, and if that Change in Control
later becomes effective, then, for purposes of this Agreement, the amount
payable to Executive with respect to the termination of his employment shall be
as described in Paragraph 8(a)(i) above rather than the amount described in
Paragraph 7(c), but the number and aggregate amount of the monthly payments owed
by the Bank under Paragraph 8(a)(i) shall be reduced by the number and aggregate
amount of payments previously made to Executive under Paragraph 7(c) and if,
following the termination of his employment, Executive chose to exercise his
rights to purchase continued individual health, dental or other insurance
coverages under the Bank’s group insurance plans pursuant to “COBRA,” the Bank
shall be obligated to reimburse Executive for that coverage as provided above in
Paragraph 8(a) above. Monthly payments under this Paragraph 8(e) shall be
payable on the same schedule as payments previously were being made to Executive
under Paragraph 7(c).

If Executive’s employment is terminated by the Bank without Cause more than 18
months following the effective time of a Change in Control, then, to the extent
that this Agreement remains in effect, any amount payable to Executive with
respect to the termination of his employment shall be solely as described in
Paragraph 7(c) above.

 

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In no event will Executive be entitled to receive the payments called for under
both Paragraph 7(c) and Paragraph 8(a)(i) or an aggregate amount of payments in
excess of the amount described in Paragraph 8(a)(i).

(f) In order to terminate his employment and become entitled to any payments
under Section 8(a)(ii) of this Agreement, the Termination Event which gives rise
to his right to terminate must occur within 18 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 the
Bank 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, the Bank 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 the Bank and the Termination
Event is not cured or remedied by the Bank during the Cure Period, then, unless
Executive previously has given written notice to the Bank as provided below that
he withdraws the Notice of Termination Event and waives the Termination Event,
the Termination Date shall 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 the Bank in which it notifies Executive that it will not cure or remedy the
Termination Event. 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 the Bank within the Cure Period or, prior to the end of the Cure
Period, Executive gives written notice to the Bank 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.

(g) It is the intent of the parties hereto that all payments made pursuant to
this Agreement be deductible by the Bank for federal income tax purposes 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. Notwithstanding anything contained in this Agreement to the contrary,
if the Compensation Committee of the Bank’s Board of Directors, based upon the
advice of the Bank’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 to be made 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 may be modified or reduced in amount by the Bank to the extent (but
only to the extent) which, based on the advice of the Bank’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
the Bank under Section 280G(a) of the Code.

In the event the amounts of any payment are required to be reduced pursuant to
this Paragraph 8(g), 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
other than cash shall be reduced first.

 

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9. Full Satisfaction. Executive hereby expressly agrees and covenants that,
except with respect to Executive’s rights, if any, expressly provided for in any
separate written agreement pertaining to a payment or benefit to be provided by
the Bank or Bancorp in connection with his employment or service as a director
(including an agreement providing for an stock-based award granted to
Executive), the payments, compensation and benefits received by Executive under
this Agreement shall satisfy and discharge in full all of Executive’s claims
against the Bank or Bancorp for payment for the services rendered by Executive
as an officer, employee or director of the Bank and/or Bancorp.

10. Noncompetition; Confidentiality.

(a) General. Executive hereby acknowledges and agrees that (i) the Bank and
Bancorp have made, and will continue to make, significant investments in the
development of the Bank’s business in the geographic area identified below as
the “Relevant Market” and, as a result, will have a valuable economic interest
in the Bank’s business in the “Relevant Market” which they are entitled to
protect; (ii) in the course of his service as an employee of the Bank, Executive
will gain substantial knowledge of and familiarity with the Bank’s customers and
its dealings with them, and other information concerning the Bank’s businesses,
all of which will constitute valuable assets and privileged information
belonging to the Bank; and (iii) in order to protect the Bank’s and Bancorp’s
interest in their business, it is reasonable and necessary to place certain
restrictions on Executive’s ability to compete against the Bank and on his
disclosure of information about the Bank’s and Bancorp’s business and
customers. For that purpose, and in consideration of the Bank’s and Bancorp’s
agreements contained herein, Executive covenants and agrees as provided below.

(b) Covenant Not to Compete. During the “Restriction Period” (as defined below),
Executive shall not “Compete” (as defined below), directly or indirectly, with
the Bank.

For purposes of this Paragraph 10, the following terms shall have the meanings
set forth below:

Compete. The term “Compete” means:

(i) soliciting any Person who was a Customer of the Bank on or within 90 days
preceding the date of termination of Executive’s employment with the Bank to
become a depositor in or a borrower from any other Financial Institution, to
obtain any other service or product from any other Financial Institution, or to
change any depository, loan, and/or other banking relationship of the Customer
from the Bank to another Financial Institution

(ii) acting as a consultant, officer, director, advisory director, organizer,
independent contractor, or employee of or to, or acquiring or maintaining more
than a 1% passive investment in, any Financial Institution that has its main or
principal office in the Relevant Market (as defined below), or, in acting in any
such capacity with any other Financial Institution, to maintain an office or be
employed at or assigned to or to have any direct involvement in the management,
supervision, business, marketing activities, solicitation of business for or
operation of any office of such Financial Institution located in the Relevant
Market;

(iii) communicating to any Financial Institution the names or addresses or any
financial information concerning any Person who was a Customer of the Bank on or
within 90 days preceding the date of termination of Executive’s employment with
the Bank; or

(iv) soliciting any person who was an employee or officer of the Bank or Bancorp
on or within 90 days preceding the date of termination of Executive’s employment
with the Bank to become an employee or officer of any other Financial
Institution.

 

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Customer. The term “Customer of the Bank” means any Person with whom the Bank
has a depository or loan relationship, and/or to whom the Bank provides any
other service or product.

Financial Institution. The term “Financial Institution” means (i) any federal or
state chartered bank, savings bank, savings and loan association, or credit
union (a “Depository Institution”), (ii) any holding company for, or corporation
that owns or controls, any Depository Institution (a “Holding Company”),
(iii) any subsidiary or service corporation of any Depository Institution or
Holding Company, or any entity controlled in any way by any Depository
Institution or Holding Company, or (iv) any other Person engaged in the business
of making loans of any type, soliciting or taking deposits, or providing any
other service or product that is provided by the Bank or one of its affiliated
corporations.

Person. For purposes of this Paragraph 10, the term “Person” means any natural
person or any corporation, partnership, proprietorship, joint venture, limited
liability company, trust, estate, governmental agency or instrumentality,
fiduciary, unincorporated association, or other entity.

Relevant Market. The term “Relevant Market” means:

(i) Hyde County, North Carolina;

(ii) the counties contiguous thereto; and

(iii) the area within a radius of 25 miles (as measured by normal and customary
route of travel using U.S. designated public highways) from any principal or
branch office maintained by the Bank on the date of termination of Executive’s
employment with the Bank.

Restriction Period. The term “Restriction Period” means the period commencing on
the Effective Date and ending 24 months following the effective date of any
termination of Executive’s employment with the Bank, whether by Executive or by
the Bank, for any reason, and whether before or after the Expiration Date;
provided, however, that in the case of a termination of Executive’s employment
by the Bank without Cause pursuant to Paragraph 7(c) or 8(a)(i) above, or
Executive’s termination of his employment pursuant to Paragraph 8(a)(ii) above,
the Restriction Period shall be for any longer period during which the Bank is
obligated for continued payments of Base Salary to Executive under that
Paragraph, but shall expire upon a default by the Bank in making those payments
of Base Salary. Notwithstanding anything contained herein to the contrary, in
the event any such payment of Base Salary is not made by the Bank by its due
date, the Bank shall not be considered to be in default with respect to that
payment unless it shall fail to make that payment within ten days after its
receipt of written notice from Executive that the payment has not been made.

(c) Confidentiality Covenant. Executive covenants and agrees that any and all
data, figures, projections, estimates, lists, files, records, documents,
manuals, or other such materials or information (whether financial or otherwise,
and including any files, data, or information maintained electronically, on
microfiche, or otherwise) relating to the Bank or Bancorp and either of their
lending and deposit operations and related business, regulatory examinations,
financing sources, financial results and condition, Customers (including lists
of Customers and former customers and information regarding their accounts and
business dealings with the Bank), prospective customers, contemplated
acquisitions (whether of business or assets), ideas, methods, marketing
investigations, surveys, research, policies and procedures, computer systems and
software, shareholders, employees, officers, and directors (herein referred to
as “Confidential Information”) are confidential and proprietary to the Bank and
Bancorp and are valuable, special, and unique assets of the Bank’s and Bancorp’s
business which are not directly

 

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reproducible from any other source and to which Executive has had access as an
officer of the Bank and Bancorp and will have access during his continued
employment with the Bank.

Executive agrees that (i) all such Confidential Information shall be considered
and kept as the confidential, private, and privileged records and information of
the Bank and Bancorp, and (ii) during the Term of Employment, and at all times
following the termination of this Agreement or his employment for any reason,
and except as shall be required in the course of the performance by Executive of
his duties on behalf of the Bank and Bancorp or otherwise pursuant to the
direct, written authorization of the Bank or Bancorp, Executive will not:
divulge any such Confidential Information to any other Person; remove any such
Confidential Information in written or other recorded form from the Bank’s or
Bancorp’s premises; or make any use of any Confidential Information for his own
purposes or for the benefit of any Person other than the Bank or
Bancorp. However, this Paragraph 10(c) shall not apply to any Confidential
Information which then is in the public domain (provided that Executive was not
responsible, directly or indirectly, for permitting such Confidential
Information to enter the public domain without the Bank’s consent), or which is
obtained by Executive from a third party which or who is not obligated under an
agreement of confidentiality with respect to such information and who did not
acquire such Confidential Information in a manner which constituted a violation
of the covenants contained in this Paragraph 10(c) or which otherwise breached
any duty of confidentiality. Further, the above obligations of confidentiality
shall not prohibit the disclosure of any such Confidential Information by
Executive to the extent such disclosure is required by subpoena or order of a
court or regulatory authority of competent jurisdiction or to the extent that,
in the reasonable opinion of legal counsel to Executive, disclosure otherwise is
required by law.

(d) Reasonableness of Restrictions. In recognition of the nature of the Bank’s
business as a community-oriented financial institution, and Executive’s
continuing business development role as President and Chief Executive Officer of
the Bank, Executive acknowledges and agrees that he will play a vital role in
the Bank’s business development activities, and will have frequent contact with
and access to Confidential Information concerning all Customers of the Bank, in
all of the Bank’s banking markets Executive further acknowledges that the Bank
and Bancorp have and will continue to have a substantial economic interest in
the Bank’s business in the Relevant Market which this Paragraph 10 specifically
is intended to protect. Accordingly, Executive agrees that it is reasonable and
appropriate for the restrictive covenants set forth in this Paragraph 10 to
apply to all of the Bank’s banking markets and to all its Customers in those
markets, and that the Relevant Market and Restriction Period are limited in
scope to the geographic territory and period of time reasonably necessary to
protect the Bank’s and Bancorp’s economic interest and otherwise are reasonable
and proper.

In the event the Restriction Period or any other such time limitation is deemed
to be unreasonable by a court of competent jurisdiction, Executive hereby agrees
to submit to such reduction of the Restriction Period as the court shall deem
reasonable. In the event the Relevant Market is deemed by a court of competent
jurisdiction to be unreasonable, Executive hereby agrees that the Relevant
Market shall be reduced by excluding any separately identifiable and
geographically severable area necessary to make the remaining geographic
restriction reasonable, but this Paragraph 10 shall be enforced as to all other
areas included in the Relevant Market which are not so excluded. If any of the
restrictions set forth in this Paragraph 10 shall be declared invalid for any
reason whatsoever by a court of competent jurisdiction, the validity and
enforceability of the remainder of such restrictions shall not thereby be
adversely affected.

(e) Remedies for Breach. Executive understands and acknowledges that a breach or
violation by him of any of the covenants contained in Paragraphs 10(b) and 10(c)
shall be deemed a material breach of this Agreement and will cause substantial,
immediate, and irreparable injury to the Bank and Bancorp, and that the Bank and
Bancorp will have no adequate remedy at law for such breach or violation. In the
event of Executive’s actual or threatened

 

12

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breach or violation of the covenants contained in either such Paragraph, the
Bank and Bancorp shall be entitled to bring a civil action seeking, and shall be
entitled to, an injunction restraining Executive from violating or continuing to
violate such covenant or from any threatened violation thereof, or for any other
legal or equitable relief relating to the breach or violation of such
covenant. Executive agrees that, if the Bank or Bancorp institutes any action or
proceeding against Executive seeking to enforce any of such covenants or to
recover other relief relating to an actual or threatened breach or violation of
any of such covenants, Executive shall be deemed to have waived the claim or
defense that the Bank and Bancorp have an adequate remedy at law and shall not
urge in any such action or proceeding the claim or defense that such a remedy at
law exists. However, the exercise by the Bank or Bancorp of any such right,
remedy, power, or privilege shall not preclude the Bank or Bancorp, or their
successors or assigns from pursuing any other remedy or exercising any other
right, power, or privilege available to it for any such breach or violation,
whether at law or in equity, including the recovery of damages, all of which
shall be cumulative and in addition to all other rights, remedies, powers, or
privileges of the Bank and Bancorp.

Notwithstanding anything contained herein to the contrary, Executive agrees that
the provisions of Paragraphs 10(b) and 10(c) above and the remedies provided in
this Paragraph 10(e) for a breach by Executive shall be in addition to, and
shall not be deemed to supersede or to otherwise restrict, limit, or impair the
rights of the Bank or Bancorp under any state or federal law or regulation
dealing with or providing a remedy for the wrongful disclosure, misuse, or
misappropriation of trade secrets or other proprietary or confidential
information.

Executive acknowledges and agrees that his right to receive the payments set
forth in Paragraphs 7(c) and 8 above (to the extent Executive is otherwise
entitled to such payments) shall be conditioned upon Executive’s compliance with
the restrictions set forth in this Paragraph 10. In the event that Executive
breaches the provisions of Paragraphs 10(b) or 10(c), any obligation on the part
of the Bank to make any payment under Paragraphs 7(c) or 8 shall cease and no
further payments shall be due to Executive. However, the cessation of such
payments pursuant to this Paragraph 10(e) shall not relieve Executive from the
various covenants and agreements set forth in this Paragraph 10, nor shall it
affect the Bank’s right to pursue any other remedies as described herein.

(f) Survival of Covenants. Executive’s covenants and agreements and the Bank’s
and Bancorp’s rights and remedies provided for in this Paragraph 10 shall apply
during the Term of Employment and shall survive and remain fully in effect
following the Expiration Date or any actual termination of Executive’s
employment with the Bank, whether before or after the Expiration Date.

11. 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, the Bank 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, the Bank
and Bancorp 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,
the Bank and Bancorp agree as follows:

(a) Prohibited Payments; Authority to Modify Agreement. In no event shall the
Bank or Bancorp have any obligation to make any payment, or provide any
compensation

 

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(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), to the extent that
the Bank’s Board of Directors or its Compensation Committee determines, in its
sole judgment, that such payment, compensation or other benefit would violate or
be prohibited by or inconsistent with the CPP Rules.

If, in the sole judgment of the Bank’s Board of Directors or its Compensation
Committee, any provision of this Agreement, or any such payment, compensation or
benefit which the Bank or Bancorp 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 the Executive’s consent, to
modify any or all of the provisions of this Agreement, or to reduce or eliminate
any such payment, 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.

The Board or Committee’s power to modify this Agreement shall be effective for
so long as Bancorp is 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
the Bank’s Board of Directors or its Compensation Committee, any payment or
benefit paid or provided to 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 the Bank or Bancorp, and shall be repaid by Executive to the Bank
within 15 days after written demand by the Bank. The Executive’s repayment
obligations shall survive termination of this Agreement and shall be effective
for as long as Bancorp is subject to applicable CPP Rules.

(c) Waiver. Executive hereby acknowledges and agrees that, for as long as
Bancorp is a participant in the CPP and is subject to the CPP Rules, the Bank
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 the Bank
and Bancorp from any claims that Executive might otherwise have as a result of
any modification of Agreement as provided above, and agrees to execute such
other documents as the U.S. Treasury may require to evidence this waiver.

(d) Survival of Covenants. Executive’s covenants and agreements and the Bank’s
and Bancorp’s rights provided for in this Paragraph 11 shall survive and remain
fully in effect following the Expiration Date or any actual termination of
Executive’s employment with the Bank, whether before or after the Expiration
Date.

12. Section 409A Matters. Executive, the Bank and Bancorp intend for this
Agreement to comply with Section 409A. For that purpose, and notwithstanding
anything contained in this Agreement to the contrary, Executive, the Bank and
Bancorp 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;

 

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(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 the Bank
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 the Bank 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 the Bank 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 the Bank is obligated after that six-month period
being payable on the same schedule as Executive’s Base Salary was being paid by
the Bank on the Separation from Service Date, and (ii) any lump-sum payment
(including reimbursement for expenses) which the Bank 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 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 the Bank no later than two and one-half months
after the year in which the expense is incurred, except as otherwise provided in
Section 409A; and.

(e) Authority to Modify Agreement. This Agreement may be amended at any time by
the Bank and Bancorp, 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 the Bank or Bancorp
with respect thereto, shall be deemed not to comply with Section 409A, neither
the Bank nor Bancorp shall 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
the Bank or Bancorp in good faith.

(f) Survival of Covenants. Executive’s covenants and agreements and the Bank’s
and Bancorp’s rights provided for in this Paragraph 12 shall survive and remain
fully in effect following the Expiration Date or any actual termination of
Executive’s employment with the Bank, whether before or after the Expiration
Date.

13. Additional Regulatory Requirements. Notwithstanding anything contained in
this Agreement to the contrary, and in addition to the provisions of Paragraphs
8(g), 11 and 12 above, it is understood and agreed that neither the Bank nor
Bancorp (nor any of their successors in interest) shall be required to make any
payment or take any 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

 

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

14. Effect of Termination. Except as otherwise provided below, upon the earlier
of the Expiration Date or the effective date of any actual termination of
Executive’s employment with the Bank under this Agreement for any reason, the
provisions of this Agreement, with the exception of the Bank’s obligations, if
any, for continued payments under Paragraphs 7(c) or 8 above, Executive’s
covenants contained in Paragraph 10 above, and the agreements of the parties
contained in Paragraphs 9, 11, 12 and 13 above, likewise shall terminate and be
of no further force or effect. The Bank’s payment obligations, if any, under
Paragraphs 7(c) or 8 above, Executive’s covenants contained in Paragraph 10
above, and the parties’ agreements in Paragraphs 9, 11, 12 and 13 above, shall
survive and remain in effect in accordance with their terms following the
Expiration Date and any actual termination of Executive’s employment.

15. Successors and Assigns.

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

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

16. Modification; Waiver; Amendments. Except as otherwise provided in
Paragraphs 8(g), 11 and 12 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.

17. 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.

18. 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.

19. 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.

20. 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

 

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prepaid, and addressed to the other party at 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 the Bank or Bancorp:   If to Executive:         The East Carolina Bank  
        A. Dwight Utz         35080 U.S. Highway 264           P. O. Box 396
        Engelhard, NC 27824           Engelhard, NC 27824         Attention:
Compensation Committee  

21. 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.

22. 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.

IN WITNESS WHEREOF, the Bank and Bancorp each has caused this Agreement to be
executed under seal by its duly authorized officer in pursuance of authority
duly given by its Board of Directors, and Executive has set hereunto his hand
and adopted as his seal the typewritten word “SEAL” appearing beside his name,
all as of the day and year first above written.

 

/S/ A. DWIGHT Utz

  (SEAL) A Dwight Utz  

 

THE EAST CAROLINA BANK By:  

/S/ R. S. SPENCER, Jr.

  R. S. Spencer, Jr. Its:   Chairman of the Board of Directors ECB BANCORP, INC.
By:  

/S/ R. S. SPENCER, Jr.

  R. S. Spencer, Jr. Its:   Chairman of the Board of Directors

 

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