Exhibit 10.08

STATE OF NORTH CAROLINA

COUNTY OF HYDE

SEVERANCE AND

CHANGE IN CONTROL AGREEMENT

THIS SEVERANCE AND CHANGE IN CONTROL AGREEMENT (the “Agreement”) is entered into
as of the     14th     day of December, 2009 (the “Effective Date”), by and
between THE EAST CAROLINA BANK (“ECB”) and JAMES J. BURSON (“Executive”).

W I T N E S S E T H:

WHEREAS, Executive was employed by ECB as its Executive Vice President and Chief
Revenue Officer effective on November 2, 2009, and in such position he shall be
expected to provide leadership and guidance in the growth and development of
ECB’s business; and,

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

WHEREAS, in connection with Executive’s initial employment, ECB has agreed
(1) to make payments or reimbursements to Executive for certain expenses
associated with the relocation of his residence, on the condition that Executive
repay a portion of those payments and reimbursements to ECB if Executive’s
employment with ECB terminates for certain reasons before December 31, 2011, and
(2) to make certain severance payments to Executive in the event of a
termination of Executive’s employment with ECB under certain specified
circumstances, and ECB and Executive desire to enter into this Agreement to set
forth the terms and conditions of those arrangements.

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

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

2.    Payment of Relocation Expenses.

(a) In connection with Executive’s employment with ECB, ECB has agreed to pay to
Executive, or to reimburse him for, certain expenses associated with the
relocation of his residence (collectively, the “Relocation Payments”),
including:

(i) commissions of up to 6% of the sales price of Executive’s residence located
at 1412 Loniker Drive, Raleigh, North Carolina, which are actually paid by
Executive in connection with the sale of that residence;

(ii) expenses actually paid by Executive on or before November 2, 2011,
associated with moving his household goods and furnishings in connection with
the initial relocation of his residence from Raleigh, North Carolina, to a
location within a 75-mile radius of ECB’s corporate offices in Engelhard, North
Carolina, provided, however, that Executive shall obtain and submit to ECB
estimates of charges for moving Executive’s household furnishings from three
separate independent moving companies, and the aggregate amount for which ECB
shall be obligated to reimburse Executive shall not exceed the lesser of
(A) $10,000 or (B) the average of those three separate estimates, plus $2,000;
and

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(iii) a lump sum payment of $12,000 which is intended to reimburse Executive for
temporary living expenses prior to the above relocation of his principal
residence.

(b) Executive agrees that, in the event his employment with ECB terminates or is
terminated prior to December 31, 2011, other than as a result of his death or
“Disability” (as that term is defined in Paragraph 6(b) below), or an
involuntary termination of his employment otherwise without “Cause” (as that
term is defined in Paragraph 6(a) below), then Executive will be obligated to
repay to ECB, within 30 days following the effective date of termination of
Executive’s employment (the “Termination Date”), a portion of the total
Relocation Payments previously paid to him by ECB based on the following
schedule:

 

If Executive’s

Employment Terminates:

   Percentage of
Total Relocation Payments
to be Repaid to ECB:

On or before 07/01/10

       100 %

After 07/01/10 but on or before 12/31/10

       75 %

After 12/31/10 but on or before 07/01/11

       50 %

After 07/01/11 but on or before 12/31/11

       25 %

After 12/31/11

       0 %

3.    Termination Without “Cause.” Subject to the limitations set forth herein
and to the right of Executive or ECB to terminate Executive’s employment at any
time, and except to the extent otherwise provided in Paragraph 4 in the case of
a “Change in Control” (as defined in that Paragraph), if, following the date of
this Agreement, and prior to November 2, 2012 (the “Severance Period”), ECB
terminates Executive’s employment without “Cause” (as defined in Paragraph 6(a))
other than as a result of Executive’s “Disability” (as defined in Paragraph 6(b)
below), Executive shall be entitled to receive from ECB, and ECB shall be
obligated to pay or cause to be paid to Executive, in a lump sum within 45 days
following the Termination Date, an amount equal to Executive’s base salary for
six months calculated at Executive’s base salary rate in effect on the
Termination Date; provided, however, that on November 2, 2012, and on November 2
of each year thereafter, and without any further action by ECB or Executive, the
Severance Period automatically shall be extended for one additional year unless
ECB gives written notice to Executive not less than six months prior to any such
date that the Severance Period will not be so extended. Unless sooner
terminated, following ECB’s giving of such written notice the Severance Period
and ECB’s obligations under this Paragraph 3 will expire on the November 2 next
following the giving of such notice.

Notwithstanding anything in this Agreement to the contrary, to the extent that
Executive is entitled to payments under Paragraph 4(a)(i) below as a result of a
termination of his employment without “Cause,” then those payments shall be in
lieu of the payment provided for under this Paragraph 3, and in no event shall
Executive be entitled to receive payments under both Paragraphs.

4.    Change in Control.

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

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

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(ii) a “Termination Event” (as defined in Paragraph 4(c) below) occurs and,
thereafter, Executive voluntarily terminates his own employment with ECB,
following the giving of written notice to ECB and an opportunity for ECB to cure
or remedy the Termination Event, in the manner described in Paragraph 4(e)
below; then (subject to the limitations set forth herein) Executive shall be
entitled to receive from ECB, and ECB shall be obligated to pay or cause to be
paid to Executive, an amount equal to 1.50 times Executive’s “base amount” as
that term is defined in Section 280G of the Internal Revenue Code of 1986, as
amended (the “Code”), payable in eighteen equal monthly installments which shall
begin within 45 days following the Termination Date and be made on the same
schedule as Executive’s base salary was being paid by ECB on the Termination
Date.

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

Notwithstanding anything in this Agreement to the contrary, to the extent that
Executive is entitled to payments under Paragraph 4(a)(i) above as a result of a
termination of his employment without “Cause,” then those payments shall be in
lieu of the payment provided for under Paragraph 3 above, and in no event shall
Executive be entitled to receive payments under both Paragraphs.

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

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

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

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

However, notwithstanding anything contained herein to the contrary, for purposes
of this Agreement the term “Change in Control” shall not include a transaction
approved by ECB’s or Bancorp’s Board of Directors that results in ECB or Bancorp
merging with, transferring its assets to, or becoming the subsidiary of, a
corporation or entity newly formed at the direction of ECB’s or Bancorp’s Board
of Directors for the purpose of such transaction (including a corporation or
entity so formed for the purpose of serving as ECB’s or Bancorp’s parent bank
holding company), and in connection with which transaction the holders
possessing,

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

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

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

(ii) Executive’s life insurance, medical or hospitalization insurance,
disability insurance, or similar plans or benefits (including any retirement
plan) being provided by ECB to Executive as of the effective date of the Change
in Control are materially reduced in their level, scope, or coverage, or any
such insurance, plans, or benefits are eliminated without being replaced with
substantially similar plans or benefits, unless such reduction or elimination
applies proportionately to all salaried employees of ECB who participated in
such plans or benefits prior to such Change in Control;

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

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

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

(d) If, prior to the effective date of a Change in Control, but following the
date on which ECB’s or Bancorp’s Board of Directors takes action to approve an
agreement (including any definitive agreement or an agreement in principle)
relating to that Change in Control, Executive’s employment is terminated by ECB
without Cause, thereby obligating ECB to make a lump sum payment to Executive as
described in Paragraph 3 above, and if that Change in Control later becomes
effective, then the amount payable to Executive with respect to the termination
of his employment shall be as described in Paragraph 4(a)(i) above rather than
the amount described in Paragraph 3; provided, however, that:

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(i) if ECB previously shall have paid to Executive the lump sum payment
described in Paragraph 3, then the aggregate amount of the monthly payments for
which ECB shall be obligated under Paragraph 4(a)(i) shall be reduced by the
amount of that lump sum payment, and the remaining amount for which ECB shall be
obligated shall be payable as described in Paragraph 4(a); and,

(ii) if, following the termination of his employment, Executive chose to
exercise his rights to purchase continued individual health, dental or other
insurance coverages under ECB’s group insurance plans pursuant to “COBRA,” ECB
shall be obligated to reimburse Executive for that coverage as provided above in
Paragraph 4(a) above.

In no event will Executive be entitled to receive the payments called for under
both Paragraph 3 and Paragraph 4(a)(i), or an aggregate amount of payments in
excess of the amount described in Paragraph 4(a).

(e) In order to terminate his employment and become entitled to any payments
under Section 4(a)(ii) of this Agreement, the Termination Event which gives rise
to his right to terminate must occur within twelve months following the date the
Change in Control becomes effective, and Executive must, within 30 days
following the occurrence of the Termination Event, give written notice to ECB
describing the Termination Event and Executive’s intention to terminate his
employment (a “Notice of Termination Event”). Following its receipt of
Executive’s Notice of Termination Event, ECB shall have a period of 30 days
within which it may cure or remedy the Termination Event (the “Cure Period”). A
Termination Event shall be deemed to have occurred on the date such action or
event giving rise to the Termination Event is implemented or takes effect or, if
later, on the date on which notice of the action or event is given to Executive.

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

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

(a) This Agreement provides for payments to Executive only in the limited
circumstances described in Paragraphs 2, 3 and 4 above and, except as
specifically provided in those paragraphs, Executive shall have no rights, and
ECB shall have no obligations, under this Agreement in any other circumstances
or in connection with any other terminations of Executive’s employment.

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

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

6.    Other Definitions.

(a) For purposes of this Agreement, ECB shall have “Cause” to terminate
Executive’s employment if:

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

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

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

(iv) Executive is convicted of any felony or any criminal offense involving
dishonesty or breach of trust, there occurs any event described in Section 19 of
the Federal Deposit Insurance Act or any other event or circumstance which
disqualifies Executive from serving as an employee, officer or director of, or a
party affiliated with, ECB or Bancorp; or,

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Executive becomes unacceptable to, or is removed, suspended, or prohibited from
participating in the conduct of ECB’s or Bancorp’s affairs (or if proceedings
for that purpose are commenced), by any Regulatory Authority; or

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

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

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

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

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

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

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

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

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

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

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

(d) Expense Reimbursement. To the extent Executive is entitled to the
reimbursement of any expenses or in-kind benefits under the provisions of this
Agreement that is subject to Section 409A, the right to such reimbursement or
benefit shall not be subject to exchange for another benefit and such
reimbursement shall be paid by ECB no later than two and one-half months after
the year in which the expense is incurred, except as otherwise provided in
Section 409A.

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

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

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

(a) Prohibited Payments; Authority to Modify Agreement. In no event shall ECB
have any obligation to make any payment, or provide any compensation (whether in
the form of cash, stock or otherwise) or other benefit to Executive (including
without limitation any “Golden Parachute Payment,” as that term is defined in
the CPP Rules, or any other payment or benefit payable in connection with or
following any termination of Executive’s employment), to the extent that ECB’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 ECB’s Board of Directors or its Compensation
Committee, any provision of this Agreement, or any such payment, compensation or
benefit which ECB is or becomes obligated to pay or provide to Executive under
this Agreement, would violate or be prohibited by or inconsistent with the CPP
Rules, then the Board or that Committee shall have the authority, exercisable
unilaterally and without 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’s or Committee’s power to modify this Agreement shall be effective for
so long as ECB and Bancorp are subject to the CPP Rules. The Board’s or
Committee’s action modifying this Agreement may, but need not, be in the form of
a written amendment or supplement to this Agreement, or in the form of a duly
adopted resolution.

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

(c) Waiver. Executive hereby acknowledges and agrees that, for as long as
Bancorp is a participant in the CPP, ECB and Bancorp will be bound by the CPP
Rules, and any implementing guidance issued by the U.S. Treasury or other
federal agencies. Executive hereby grants the waiver required by the U.S.
Treasury to release the United States and ECB and Bancorp from any claims that
Executive might otherwise have as a result of any modification of

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this Agreement as provided above, and agrees to execute such other documents as
ECB, Bancorp or the U.S. Treasury may require to evidence this waiver.

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

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

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

(b) in the opinion of counsel to ECB, such payment or action (i) would be
prohibited by or would violate any provision of state or federal law applicable
to ECB or Bancorp, including without limitation the Federal Deposit Insurance
Act, as now in effect or hereafter amended, (ii) would be prohibited by or would
violate any applicable rules, regulations, orders or statements of policy,
whether now existing or hereafter promulgated, of any Regulatory Authority, or
(iii) otherwise would be prohibited by any Regulatory Authority.

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

12.    Taxes; Required Withholdings. Executive shall be solely responsible for
any and all federal, state and local income and other taxes (including excise
taxes) owed on account of his or her receipt of the payments or benefits
provided for in this Agreement. To the extent that ECB reasonably believes
itself obligated to do so, it may withhold any such taxes from payments made to
Executive hereunder. If the amount of any such taxes that ECB believes itself
required to withhold and transmit to any governmental or taxing authority
exceeds the amount of any payments then due and payable under this Agreement and
from which such withholding may be made, then ECB may require that Executive pay
to it the full amount of any such taxes then due and, if Executive shall fail to
make such payment, ECB may itself advance and pay the amount of those taxes and
recover any such payments by offset against future payments due under this
Agreement.

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

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14.    Modification; Waiver; Amendments. Except as otherwise provided in
Paragraphs 7, 8, 9 or 10 above, no provision of this Agreement may be modified,
waived, or discharged unless such waiver, modification, or discharge is agreed
to in writing and signed by the parties hereto. No waiver by either party
hereto, at any time, of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party, shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No amendments or
additions to this Agreement shall be binding unless in writing and signed by
both parties, except as herein otherwise provided.

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

16.    Severability. The provisions of this Agreement shall be deemed severable
and the invalidity or unenforceability of any provision shall not affect the
validity or enforceability of the other provisions hereof.

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

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

 

If to ECB:    If to Executive:

The East Carolina Bank

35080 U.S. Highway 264

Engelhard, NC 27824

Attention: Compensation Committee

  

James J. Burson

The East Carolina Bank

35080 U.S. Highway 264

Engelhard, NC 27824

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

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

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

 

THE EAST CAROLINA BANK By:   /s/ A. Dwight Utz President and Chief Executive
Officer

 

EXECUTIVE

/s/ James J. Burson

  (SEAL)      James J. Burson  

ND: 4841-5918-4904, v. 1

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AMENDMENT NO. 1 TO

SEVERANCE AND CHANGE IN CONTROL AGREEMENT

BETWEEN JAMES J. BURSON AND THE EAST CAROLINA BANK

DATED DECEMBER 14, 2009

THIS AMENDMENT NO. 1 TO SEVERANCE AND CHANGE IN CONTROL AGREEMENT (the
“Agreement”) is entered into as of the 4th day of January, 2011 (the “Effective
Date”), by and between THE EAST CAROLINA BANK (“ECB”) and JAMES J. BURSON
(“Executive”).

W I T N E S S E T H:

WHEREAS, in connection with Executive’s employment by ECB, Executive and ECB
previously entered into a Severance and Change in Control Agreement dated
December 14, 2009 (the Agreement”), under which, among other things, ECB agreed
to make payments or reimbursements to Executive for certain expenses associated
with the relocation of his residence, on the condition that Executive repay a
portion of those payments and reimbursements to ECB if Executive’s employment
with ECB terminated for certain reasons before December 31, 2011; and

WHEREAS, Executive and ECB now desire to modify the Agreement as described in
this Amendment No. 1.

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

1.    The text of Paragraph 2 (captioned “Advance for Payment of Relocation
Expenses”) of the Agreement hereby is deleted and is replaced in its entirety by
the following new Paragraph 2:

“2. Advance for Payment of Relocation Expenses. In connection with Executive’s
continued employment with ECB, ECB agrees to advance to Executive the sum of
$50,000 for the purpose of his payment of ongoing and future expenses incurred
in connection with the intended relocation of his principal residence, including
without limitation moving expenses, travel expenses and temporary living
expenses. Executive agrees to repay to ECB the amount advanced to him as
described above, together with interest on that amount computed daily at a rate
of 1.95% per annum, upon demand by ECB at any time; provided, however, that
Executive and ECB agree as follows.

        (a) On each January 4, beginning on January 4, 2012 (each such date
referred to as an “Anniversary Date”), if Executive remains employed by ECB on
that Anniversary Date, ECB will forgive a portion of the unpaid balance of
Executive’s payment obligation to ECB under this Paragraph 2 equal to $25,000
plus accrued interest thereon at the above rate from the date of this Agreement
through that Anniversary Date, with the effect of this Paragraph 2 being that,
if Executive remains employed by ECB on January 4, 2013, Executive’s full
obligation under this Agreement will have been forgiven by ECB.

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

        (c) If, prior to January 4, 2013, Executive resigns from his employment
with ECB, or his employment with ECB terminates or is terminated, voluntarily or
involuntarily (including as a result of Executive’s Disability), other than as
described in Paragraph 2(b) above, then Executive shall be obligated to pay to
ECB the then-current outstanding and unforgiven balance of Executive’s payment
obligation under this Paragraph 2, together with accrued interest, in full
within 60 days following termination of Executive’s employment. If Executive
fails to make any such payment to ECB following ECB’s written demand therefor,
ECB may deduct all or part of such unpaid amount from, or setoff all or part of
such unpaid amount against, any amounts or obligation owed by ECB to Executive,
provided that such deduction or setoff is permissible under and effected in
accordance with Treasury Regulation §1.409A-3(j)(4)(xiii) and Treasury
Regulation §1.409A-3(i)(2), if applicable.

        Executive acknowledges and agrees that, except as provided in this
Paragraph 2, ECB shall have no further obligation for the payment of, or to
reimburse him for, any such moving expenses, travel expenses, relocation
expenses or temporary living expenses incurred by him.”

2.    The text of Paragraph 9 (captioned “Compliance with CPP Rules”) of the
Agreement hereby is deleted and is replaced in its entirety by the following new
Paragraph 9:

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

        (a) Prohibited Payments; Authority to Modify Agreement. In no event
shall ECB have any obligation to forgive any portion of Executive’s obligation
under Paragraph 2 of this Agreement, or to make any payment, or in any manner
provide any compensation (whether in the form of cash, stock or otherwise) or
other benefit to Executive (including without limitation any “Golden Parachute
Payment,” as that term is defined in the CPP Rules, or any other payment or
benefit payable in connection with or following any termination of Executive’s
employment), to the extent that ECB’s Board of Directors or its Compensation
Committee determines, in its sole judgment, that such forgiveness, payment,
compensation or other benefit would violate or be prohibited by or inconsistent
with the CPP Rules.

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

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

        (b) Recovery of Bonus and Incentive Compensation. If, in the sole
judgment of ECB’s Board of Directors or its Compensation Committee, the
forgiveness of any portion of Executive’s obligation under Paragraph 2 of this
Agreement, or 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 reversal or recovery by ECB, and shall be repaid
by Executive to ECB within 15 days after written demand by ECB. Executive’s
repayment obligations shall survive termination of this Agreement and shall be
effective for as long as ECB and Bancorp are subject to applicable CPP Rules.

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

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

3.    Except as modified and amended as described in this Amendment No. 1, the
Agreement shall remain in full force and effect in accordance with its original
terms.

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IN WITNESS WHEREOF, the parties have executed this Amendment No. 1 as of the day
and year first hereinabove written.

 

THE EAST CAROLINA BANK By:   /s/ A. Dwight Utz   President and Chief Executive
Officer

 

EXECUTIVE

/s/ James J. Burson

  (SEAL)      James J. Burson  

ND: 4823-0769-6392, v. 1