Exhibit 10.1


 





STATE OF NORTH CAROLINA





COUNTY OF HARNETT


 


EMPLOYMENT AGREEMENT


 


THIS EMPLOYMENT
AGREEMENT (the “Agreement”) is entered into by and among SELECT BANK & TRUST COMPANY, a North Carolina
banking corporation (the “Bank”), SELECT BANCORP, INC., a North Carolina business corporation (the “Company”)
and W. KEITH BETTS (the “Employee”) effective as of January 11, 2017 (the “Effective Date”).


 


W I T N E S S E T H:


 


WHEREAS, the
expertise and experience of Employee in the financial services industry are extremely valuable to the Company and the Bank; and


 


WHEREAS, it
is in the best interests of the Bank, the Company and the Company’s shareholders to maintain an experienced and sound executive
management team to manage the Bank and to further the Company’s overall strategies to protect and enhance the value of the
shareholders’ investments; and


 


WHEREAS, the
Bank, the Company and Employee desire to enter into this Agreement to establish the scope, terms and conditions of Employee’s
employment by the Bank; and


 


WHEREAS, the
Bank, the Company and Employee desire to enter into this Agreement to also provide Employee with security in the event of a change
in control of the Bank and to ensure the continued loyalty of Employee during any such change in control in order to maximize shareholder
value as well as the continued safe and sound operation of the Bank.


 


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


 






     


     


    

  


1.       Employment.
The Bank hereby agrees to employ Employee, and Employee hereby agrees to serve as an officer of both the Bank and the Company,
all upon the terms and conditions stated herein. As an officer of the Bank and the Company, Employee will (i) serve as Executive
Vice President and Chief Banking Officer, and (ii) have such other duties and responsibilities, and render to the Bank and the
Company such other management services, as are customary for persons in Employee’s position or as shall otherwise be reasonably
assigned to him from time to time by the Bank and/or the Company. Employee shall faithfully and diligently discharge his duties
and responsibilities under this Agreement and shall use his best efforts to implement the policies established by the Bank and
the Company. Employee agrees to devote such number of hours of his working time and endeavors to the employment granted hereunder
as the parties hereto shall deem to be necessary to discharge his duties hereunder, and, for so long as employment hereunder shall
exist, Employee shall not engage in any other occupation which requires a significant amount of Employee’s personal attention
during the Bank’s regular business hours or which otherwise interferes with Employee’s attention to or performance
of his duties and responsibilities as an officer of the Bank and the Company except with the prior written consent of the Bank
or the Company. However, nothing herein contained shall restrict or prevent Employee from personally, and for Employee’s
own account, trading in stocks, bonds, securities, real estate or other forms of investment for Employee’s own benefit so
long as said activities do not interfere with Employee’s attention to or performance of his duties and responsibilities as
an officer of the Bank and the Company, and provided further, that such activities do not amount, in the Bank’s sole discretion,
to direct competition with the Bank.


  


2.       Compensation.
For all services rendered by Employee to the Bank and the Company under this Agreement, the Bank shall pay Employee a base salary
at a rate of Two Hundred Ten Thousand and 00/100 Dollars ($210,000.00) per annum. The rate of such salary shall be reviewed by
the Board of Directors of the Bank not less often than annually during the Term (as defined below) of this Agreement and may be
increased, but not decreased, during the Term hereof unless such decrease is part of a corporate plan for all similarly situated
employees. Salary paid under this Agreement shall be payable not less frequently than monthly on the Bank’s regularly scheduled
paydays in accordance with the Bank’s payroll practices and procedures. All compensation of Employee shall be subject to
customary withholding taxes and such other employment taxes or deductions as are required by law or properly requested by Employee.


 


3.       Participation
in Retirement and Employee Benefit Plans; Fringe Benefits. Subject to the terms and conditions of this Agreement, Employee
shall be entitled to participate in any and all employee benefit programs and compensation plans from time to time maintained by
the Bank and available to other similarly-situated employees of the Bank, all in accordance with the terms and conditions (including
eligibility requirements) of such programs and plans of the Bank, resolutions of the Bank’s Board of Directors establishing
such programs and plans, and the Bank’s normal practices and established policies regarding such programs and plans. Employee
acknowledges and agrees that the Bank has the unilateral right to amend, modify or terminate its employee benefit plans or policies
at any time during the Term, with or without prior notice, subject to applicable law.


 






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In addition to the other
compensation and benefits described in this Agreement, and subject to this Paragraph 3, the Bank agrees as follows:


 


(i)       The
Bank shall permit Employee to take and accrue twenty-five (25) days of paid vacation leave per year (and not such other amount
of vacation leave as provided for by the Bank’s policy for all other employees) pursuant to the Bank’s vacation policies
and procedures as they may be instituted from time to time. Such vacation leave shall be in addition to federal banking holidays,
which shall be paid holidays, and ten days of annual sick-leave. Such vacation leave will accrue in accordance with the Bank’s
vacation policies and procedures, or monthly in the absence of any policies. Any payout of or roll over from one calendar year
to the next of accrued, unused vacation leave will be in accordance with the Bank’s then current vacation policies and procedures.
Allotted vacation leave and sick leave shall be pro-rated for the calendar year in which employment commences.


 


(ii)       The
Bank shall reimburse Employee for all reasonable expenses incurred by him in the performance of his duties under this Agreement
and documented to the reasonable satisfaction of the Bank pursuant to established policies and shall provide Employee with a monthly
allowance for travel-related expenses equal to One Thousand and 00/100 Dollars ($1,000.00) per month.


 


(iii)     The
Bank, subject to applicable eligibility requirements, shall provide Employee major medical insurance coverage under a policy at
least equivalent to the major medical insurance coverage, if any, generally provided to active full-time employees of the Bank
from time to time.


 


(iv)     The
Bank shall permit Employee to participate in incentive or bonus compensation plans existing on the date of this Agreement or adopted
by the Bank during the Term of this Agreement and available to similarly-situated employees of the Bank. The Bank’s incentive
or bonus compensation programs and plans may be amended or terminated at any time in the discretion of the Bank.


 


(v)      The
Bank shall permit Employee to participate (to the extent permissible under applicable laws and regulations) in all savings, pension
and retirement plans, policies and programs available to similarly-situated employees of the Bank. Without limiting the foregoing,
such plans shall include the Bank’s 401(k) Savings Plan.


 






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4.       Term.
Unless sooner terminated as provided in this Agreement and subject to the right of either Employee or the Bank to terminate Employee’s
employment at any time as provided herein, the initial term of this Agreement and Employee’s employment with the Bank hereunder
shall be for a period commencing on the Effective Date and continuing for a period of three (3) years. Upon the first anniversary
of the Effective Date, and upon each subsequent anniversary of the same, the term of this Agreement shall automatically be extended
for an additional one (1) year period under the terms and conditions set forth herein, unless written notice is provided by either
party to the other party no later than sixty (60) days prior to such anniversary and the expiration of the then current term (the
“Current Term”), notifying the other party that this Agreement shall not be further extended. The initial three (3)
year term of this Agreement and each additional one (1) year renewal year will be referred to herein collectively as the “Term.”


 


5.       Confidentiality;
Noncompetition. Employee hereby acknowledges and agrees that (i) in the course of his service as an officer of the Bank
and the Company, he will gain substantial knowledge of and familiarity with the Bank’s and the Company’s customers
and their dealings with such customers, and other information concerning the Bank’s and the Company’s business, all
of which constitutes valuable assets and privileged information that is particularly sensitive due to the fiduciary responsibilities
inherent in the banking business; and, (ii) in order to protect the Bank’s and the Company’s interest in and to assure
them the benefit of their business, it is reasonable and necessary to place certain restrictions on Employee’s ability to
compete against the Bank and the Company and on his disclosure of information about the Bank’s and the Company’s business
and customers. For that purpose, and in consideration of the Bank’s and the Company’s agreements contained herein,
Employee covenants and agrees as provided below.


 


(a)       Covenant
Not to Compete. Employee will not “Compete” (as defined below), directly or indirectly, with the Bank and the
Company within the “Relevant Market” (as defined below) as follows:


 






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(i)       if
this Agreement is terminated by the Bank without “Cause” (as defined in Paragraph 6(d) hereof), Employee shall not
“Compete” for the period of time Employee is receiving “Separation Benefits” pursuant to Paragraph 6(e)
of this Agreement; or


 


(ii)       if
this Agreement is terminated by Employee for any reason (including, but not limited to, resignation or retirement) or expires in
accordance with its terms pursuant to Paragraph 4, Employee shall not “Compete” for the twelve (12) month period immediately
following the date of termination of Employee’s employment with the Bank.


 


In addition to the foregoing
covenant, Employee expressly agrees not to “Compete” with the Bank and the Company during the Term of this Agreement
and, if the Term of this Agreement shall expire in accordance with its terms, during any period of employment with the Bank or
the Company thereafter that Employee shall remain employed by the Bank or the Company. If the Term of this Agreement shall expire
and Employee remains employed by the Bank thereafter, the non-compete period referenced in subparagraph 5(a)(ii) shall commence
upon the date of termination of Employee’s employment with the Bank.


 


For the purposes of this
Paragraph 5, the following terms shall have the meanings set forth below:


 


Compete. 
The term “Compete” means: (i) soliciting or securing deposits from any Person residing in the Relevant Market for any
Financial Institution; (ii) soliciting any Person residing in the Relevant Market to become a borrower from any Financial Institution
with which such Person has no prior relationship or assisting (other than through the performance of ministerial or clerical duties)
any Financial Institution with which such Person has no prior relationship in making loans to any such Person; (iii) inducing or
attempting to induce any Person who was a Customer of the Bank on the date of termination of Employee’s employment with the
Bank, to change such Customer’s depository, loan and/or other banking relationship from the Bank to another Financial Institution;
(iv) acting as a consultant, officer, director, independent contractor, or employee of any Financial Institution that has its main
or principal office in the Relevant Market, 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, business or operation of any office
of such Financial Institution located in the Relevant Market; (v) communicating to any Financial Institution the names or addresses
or any financial information concerning any Person who was a Customer of the Bank at the date of Employee’s termination of
employment with the Bank; (vi) inducing or attempting to induce any person who is an employee of the Bank or the Company on the
date of termination of Employee’s employment with the Bank to terminate such person’s employment with the Bank or the
Company; or (vii) holding a position based in or with responsibility for all or part of the Relevant Market, with any Financial
Institution, whether as employee, consultant, or otherwise, (A) in which Employee will have duties, or will perform or be expected
to perform services for such Financial Institution, that is or are the same as or substantially similar to the position held by
Employee or those duties or services actually performed by Employee for the Bank within the twelve (12) month period immediately
preceding the termination of Employee’s employment with the Bank, or (B) in which Employee will use or disclose or be reasonably
expected to use or disclose any Confidential Information of the Bank or the Company for the purpose of providing, or attempting
to provide, such Financial Institution with a competitive advantage in relation to the Bank or the Company.


 






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Customer.
The term “Customer” means (A) any Person with whom, as of the effective date of termination of this Agreement or during
Employee’s employment with the Bank, the Bank has or has had a depository, loan and/or other banking relationship, or (B)
any Person with whom, as of the effective date of termination of this Agreement or during the last twelve (12) months of Employee’s
employment with the Bank, the Bank has or has had a depository, loan and/or other banking relationship and with whom Employee had
dealings on behalf of the Bank in the course of his employment with the Bank.


 


Financial Institution.
The term “Financial Institution” means: (A) any federal or state chartered bank, savings bank, savings and loan association
or credit union, or any holding company for or corporation that owns or controls any such entity; (B) any subsidiary of any federal
or state chartered bank, savings bank, savings and loan association or credit union; and/or (C) any other Person engaged in the
business of making loans of any type or receiving deposits, other than the Bank.


 


Person.
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: (A) New Hanover County, North Carolina; (B) Johnston County, North Carolina; (C)
Wake County, North Carolina; (D) Cumberland County, North Carolina; (E) Harnett County, North Carolina; and (F) within a fifteen
(15) mile radius of any full-service branch of the Bank in existence at the time Employee’s employment with the Bank
is terminated.


 






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(b)       Confidentiality
Covenant. Employee covenants and agrees that any and all data, figures, projections, estimates, lists, files, records,
documents, manuals or other such materials or information (financial or otherwise) relating to the Company or the Bank or their
banking business, regulatory examinations, financial results and condition, lending and deposit operations, customers (including
lists of the Bank’s customers and information regarding their accounts and business dealings with the Bank), policies and
procedures, computer systems and software, shareholders, directors and employees (herein referred to as “Confidential Information”)
are proprietary to the Company and the Bank and are valuable, special and unique assets of the Company’s and the Bank’s
business to which Employee will have access during his employment with the Bank. Employee agrees that (i) all such Confidential
Information shall be considered and kept as the confidential, private and privileged records and information of the Company and
the Bank, and (ii) at all times during the term of his employment with the Bank and 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 Employee of his duties on
behalf of the Bank and the Company or otherwise pursuant to the direct, written authorization of the Bank or the Company, as applicable,
Employee will not: divulge any such Confidential Information to any other Person or Financial Institution; remove any such Confidential
Information in written or other recorded form from the Bank’s premises; or make any use of any Confidential Information for
his own purposes or for the benefit of any Person or Financial Institution other than the Bank or the Company, as applicable. However,
the term Confidential Information does not include any information that: (i) at the time of disclosure is generally known to, or
readily ascertainable by, the public; (ii) becomes known to the public (provided that Employee was not responsible, directly or
indirectly, for permitting such Confidential Information to enter the public domain without the Bank’s or the Company’s
consent, as applicable); or (iii) is obtained by Employee from a third party which or who is not obligated under an agreement of
confidentiality with respect to such information. Any trade secrets of the Bank or the Company will be entitled to all of the protections
and benefits under the North Carolina Trade Secrets Protection Act and any other applicable law. If any information that the Bank
or the Company deems to be a trade secret is found by a court of competent jurisdiction not to be a trade secret, such information
will, nevertheless, be considered Confidential Information for purposes of this Agreement. Confidential Information encompasses
all formats in which information is preserved, whether electronic, print, or any other form, including all originals, copies, notes,
or other reproductions or replicas thereof. The restriction in this Paragraph 5(b) will not apply to any information that Employee
is required to disclose by law, provided that Employee (i) notifies the Bank and the Company, as applicable, of the existence and
terms of such obligation, (ii) gives the Bank and the Company, as applicable, a reasonable opportunity to seek a protective or
similar order to prevent or limit such disclosure, and (iii) only discloses that information actually required to be disclosed.
Provided, however, nothing in this Agreement prohibits Employee from reporting possible violations of federal law
or regulation to any governmental agency or entity, including but not limited to the Department of Justice, the Securities
and Exchange Commission, the Congress, and any agency Inspector General, or making other disclosures that are protected
under the whistleblower provisions of federal law or regulation. Employee does not need the prior authorization of the
Bank or the Company to make any such reports or disclosures and Employee is not required to notify the Bank or the
Company that Employee has made such reports or disclosures.


 






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(c)       Remedies
for Breach.  Employee understands and agrees that a breach or violation by him of the covenants contained in Paragraph
5(a) and 5(b) of this Agreement will be deemed a material breach of this Agreement and will cause irreparable injury to the Bank
and the Company, and that it would be difficult to ascertain the amount of monetary damages that would result from any such violation.
In the event of Employee’s actual or threatened breach or violation of the covenants contained in Paragraph 5(a) or 5(b),
the Bank and the Company, as applicable, shall be entitled to bring a civil action seeking an injunction restraining Employee from
violating or continuing to violate those covenants or from any threatened violation thereof, or for any other legal or equitable
relief relating to the breach or violation of such covenant. Employee agrees that, if the Bank or the Company institutes any action
or proceeding against Employee 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, Employee shall be deemed to have waived the claim or defense that the Bank or the
Company, as applicable, has 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 the Company of any such right, remedy, power or privilege
shall not preclude the Bank or the Company or their respective successors or assigns from pursuing any other remedy or exercising
any other right, power or privilege available to them 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 the Company.


 


Notwithstanding anything
contained herein to the contrary, Employee agrees that the provisions of Paragraph 5(a) and 5(b) above and the remedies provided
in this Paragraph 5(c) for a breach by Employee 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 the Company under the Trade Secrets Protection Act contained in Article 24, Chapter 66
of the North Carolina General Statutes, or any other 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. Notwithstanding
the foregoing nondisclosure obligations, pursuant to 18 U.S.C. Section 1833(b), Employee shall not be held criminally or civilly
liable under any federal or state trade secret law for the disclosure of a trade secret that is made: (i) in confidence to a federal,
state, or local government official, either directly or indirectly, or to an attorney, and solely for the purpose of reporting
or investigating a suspected violation of law; or (ii) in a complaint or other document filed in a lawsuit or other proceeding,
if such filing is made under seal.


 






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(d)       Survival
of Covenants. Employee’s covenants and agreements and the Bank’s and the Company’s rights and remedies
provided for in this Paragraph 5 shall survive any termination of this Agreement or Employee’s employment with the Bank for
any cause or reason.


 


(e)       Return
of Property. Upon the termination of Employee’s employment with the Bank, or at any time upon request of the Bank
or the Company, as applicable, the Employee will immediately return to the Bank and the Company, as applicable, all Confidential
Information in any form along with all personal property belonging to the Bank or the Company that is in Employee’s possession
or control, including, without limitation, all records, papers, files, drawings, notes, specifications, marketing materials, software,
reports, proposals, equipment, or any other device, material, document or possession, however obtained, including any and all copies
of the foregoing (all of which materials are referred to herein as “Bank Property”). Such Bank Property shall be returned
in the same condition as when provided to Employee, reasonable wear and tear excepted.


 


6.       Termination
and Termination Pay.


 


(a)       Employee’s
employment under this Agreement may be terminated at any time by Employee upon sixty (60) days prior written notice to the Bank.
Upon such termination, Employee shall be entitled to receive compensation through the effective date of such termination; provided,
however, that the Bank, in its sole discretion, may elect for Employee not to serve out part or all of said notice period.


 


(b)       Employee’s
employment under this Agreement shall be automatically terminated upon the death of Employee during the Term of this Agreement
on the date of his death. Upon any such termination, Employee’s estate shall be entitled to receive any compensation due
to Employee computed through the last day of the calendar month in which his death shall have occurred but which remains unpaid.


 


(c)       Employee’s
employment under this Agreement shall be automatically terminated in the event of the “Disability” of Employee. For
purposes of this Agreement, the term “Disability” shall mean the Employee is unable to perform the essential functions
of his job by reason of illness, physical or mental disability or other incapacity, with or without a reasonable accommodation
for more than ninety (90) days (which need not be consecutive) within any twelve (12) month period; provided, however, nothing
herein shall give the Bank the right to terminate Employee prior to discharging its obligations to Employee, if any, under the
Family and Medical Leave Act, the Americans with Disabilities Act, or any other applicable law. Upon any such termination, Employee
has no further rights to receive payments for compensation or benefits under this Agreement, with the exception of any vested benefits
of Employee under any employee benefits plan of the Bank or the Company and payment for any accrued, unpaid salary through the
date of termination.


 


(d)       The
Bank may terminate Employee’s employment at any time for “Cause” (as defined below). Any termination of Employee’s
employment which is for “Cause” shall mean that Employee has no further rights to receive payments for compensation
or benefits under this Agreement, with the exception of any vested benefits of Employee under any employee benefits plan of the
Bank or the Company and payment for any accrued, unpaid salary through the date of termination.


 






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For purposes of this
Agreement, the Bank shall have “Cause” to terminate Employee’s employment upon:


 


(i)       A
determination by the Bank, in good faith, that Employee (A) has breached in any material respect any of the terms or conditions
of this Agreement or any other agreement between Employee and the Bank or the Company, or (B) is engaging or has engaged
in willful conduct which is materially detrimental to the business prospects of the Bank or which has had or likely will have a
material adverse effect on the Bank’s business or reputation. Prior to any termination by the Bank of Employee’s employment
for a breach, failure to perform or conduct described in this subparagraph (i), the Bank shall give Employee written notice which
describes such breach, failure to perform or conduct and if during a period of thirty (30) days following such notice Employee
cures or corrects the same to the reasonable satisfaction of the Bank, then this Agreement shall remain in full force and effect.
However, notwithstanding the above, if the Bank has given written notice to Employee on a previous occasion of the same or a substantially
similar breach, failure to perform or conduct, or of a breach, failure to perform or conduct which the Bank determines in good
faith to be of substantially similar import, or if the Bank determines in good faith that the then current breach, failure to perform
or conduct is not reasonably curable, then termination under this subparagraph (i) shall be effective immediately and Employee
shall have no right to cure such breach, failure to perform or conduct.


 


(ii)       The
violation by Employee 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 any of its affiliates or subsidiaries
(a “Regulatory Authority,” including without limitation the Board of Governors of the Federal Reserve System, the Federal
Reserve Bank of Richmond, the Federal Deposit Insurance Corporation, the North Carolina Commissioner of Banks, or any other banking
regulator having legal jurisdiction over the Bank or the Company), which results from Employee’s gross 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 any of its affiliates or subsidiaries or to the Bank’s reputation;


 


(iii)       The
commission in the course of Employee’s employment with the Bank of an act of fraud, embezzlement, theft, or proven personal
dishonesty (whether or not resulting in criminal prosecution or conviction);


 


(iv)       The
conviction of Employee 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 Employee
from serving as an employee or executive officer of, or a party affiliated with, the Bank or its bank holding company;


 






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


 


(vi)    The occurrence
of any event that results in Employee being excluded from coverage, or having coverage limited as to Employee as compared to other
covered officers or employees, under the Bank’s then current “blanket bond” or other fidelity bond or insurance
policy covering its directors, officers or employees.


 


(e)       The
Bank may terminate Employee’s employment at any time for any reason without Cause. Subject to the terms of this Paragraph
6(e), in the event Employee’s employment with the Bank is terminated by the Bank without Cause (and not due to expiration
of the Term pursuant to Paragraph 4, Employee’s death as provided for in Paragraph 6(b) or Employee’s Disability as
provided for in Paragraph 6(c)), and provided: (i) Employee has not breached this Agreement; (ii) Employee signs and does not revoke
within sixty (60) days after the termination date a general release of claims against the Bank, in form and substance satisfactory
to the Bank (the “Release”); (iii) Employee is not entitled to receive the payments or benefits specified in Paragraph
8 related to a Change in Control Termination; and (iv) Employee’s termination is a “separation from service”
within the meaning of Treasury Regulation § 1.409A-1(h), then the Bank will provide Employee with the following benefits,
referred to herein as the “Separation Benefits”: the continued payment of Employee’s then-current base salary,
less applicable federal, state and local payroll taxes and other withholdings required by law or authorized by Employee (the “Separation
Pay”), for the remainder of the Current Term. The first installment of the Separation Pay will be on the Bank’s first
regular payday occurring sixty (60) days after the termination date, and will include Separation Pay for the period from the termination
date through the payment date. The remaining installments will be paid over time in accordance with the Bank’s normal payroll
practices for its employees. The Separation Benefits under this Agreement shall be in lieu of and replace Employee’s right
to severance under any other Bank agreement, plan or program. Notwithstanding the foregoing, if Employee is entitled to receive
the Separation Benefits but violates any provisions of this Agreement or any other agreement entered into by Employee and the Bank
after termination of employment, the Bank will be entitled to immediately stop paying any further installments of the Separation
Benefits.


 






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7.       Additional
Regulatory Requirements. Notwithstanding anything contained in this Agreement to the contrary, it is understood and agreed
that the Bank (or its successors in interest) shall not be required to make any payment or take any action under this Agreement
if (a) the Bank 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 the Bank such payment or action (i) would be prohibited by or would
violate any provision of state or federal law applicable to the Bank or the Company, including without limitation the Federal Deposit
Insurance Act and Chapters 53 and 53C of the North Carolina General Statutes 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.


 


8.       Change
in Control Payments and Benefits.


 


(a)       In
the event that:


 


(i)       During
the Term of this Agreement, (x) the Bank terminates Employee’s employment without Cause (and not due to expiration
of the Term pursuant to Paragraph 4, Employee’s death as provided for in Paragraph 6(b) or Employee’s Disability as
provided for in Paragraph 6(c)); or (y) Employee terminates such employment following a Termination Event; and


 


(ii)       such
termination pursuant to clause (x) or (y) of Paragraph 8(a)(i) above occurs within twelve (12) months after a Change in Control
(any such termination meeting the explicit requirements of both Paragraphs 8(a)(i) and 8(a)(ii) referred to hereinafter as a “Change
in Control Termination”), then Employee shall be entitled to receive the payments and benefits specified in this Paragraph
8. The date on which the Employee or Bank receives notice in accordance with Paragraph 6 of the termination of Employee’s
employment or Paragraph 8(e) of a Change in Control Termination, respectively, shall be deemed the Change in Control Termination
Date.


 






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(b)       For
the purposes of this Agreement, the term “Change in Control” shall mean a change in control event as defined in Treasury
Regulation § 1.409A-3(i)(5) promulgated under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”),
including a change in effective control of the Bank, a change in the ownership of the Bank, and a change in the ownership of a
substantial portion of the assets of the Bank, as such terms are defined in Treasury Regulation § 1.409A-3(i)(5).


 


(c)       For
purposes of this Agreement, the term “Termination Event” shall mean the occurrence of any of the following events:


 


(i)       Employee
is assigned any duties and/or responsibilities that are inconsistent with his position, duties, responsibilities, or status at
the time of the Change in Control or with his reporting responsibilities or titles with the Bank in effect at such time;


 


(ii)       Employee’s
annual base salary is reduced below the amount in effect as of the effective date of a Change in Control or as the same shall have
been increased from time to time following such effective date;


 


(iii)       Employee’s
life insurance, medical or hospitalization insurance, dental insurance, stock option plans, stock purchase plans, deferred compensation
plans, management retention plans, retirement plans, or similar plans or benefits being provided by the Bank to Employee 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, unless such reduction or elimination applies proportionately to all salaried employees of the Bank who participated
in such benefits prior to such Change in Control; or


 


(iv)       Employee
is transferred to a primary work location outside of New Hanover County, North Carolina without Employee’s express written
consent.


 


A Termination Event shall
be deemed to have occurred on the date such action or event is implemented or takes effect.


 


(d)       Upon
a Change in Control Termination, the Bank shall pay to Employee in a lump sum in cash on the earlier of (x) the first day
of the seventh month after the date of the Change in Control Termination Date or (y) the date of Employee’s death
an amount equal to two hundred percent (200%) of Employee’s base amount as defined in Section 280G(b)(3)(A) of the Code.


 






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(e)       Following
a Termination Event which gives rise to Employee’s rights hereunder, Employee shall have sixty (60) days from the date of
occurrence of the Termination Event to terminate his employment pursuant to this Paragraph 8. Any such termination shall be deemed
to have occurred only (i) upon delivery to the Bank or any successor thereto, of written notice of termination which describes
the Change in Control and Termination Event and (ii) the expiration of a thirty (30) day period during which the Bank (or its successor)
shall have failed to cure such Termination Event. If Employee does not so terminate his employment within the sixty (60) day period,
Employee shall thereafter have no further rights hereunder with respect to that Termination Event, but shall retain rights, if
any, hereunder with respect to any other Termination Event as to which such period has not expired.


 


(f)       It
is the intent of the parties hereto that all payments made pursuant to this Agreement be deductible by the Bank (or Company, as
applicable) for federal income tax purposes and not result in the imposition of an excise tax on Employee. Notwithstanding anything
contained in this Agreement to the contrary, any payments to be made to or for the benefit of Employee which are deemed to be "parachute
payments" as that term is defined in Section 280G(b)(2) of the Code, shall be modified or reduced to the extent deemed to
be necessary by the Bank's Board of Directors to avoid the imposition of an excise tax on Employee under Section 4999 of the Code
or the disallowance of a deduction to the Bank under Section 280G(a) of the Code.


 


(g)       Employee’s
rights and benefits under this Paragraph 8 shall survive any termination of this Agreement or Employee’s employment.


 


9.       Successors
and Assigns.


 


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


 


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


 


10.       Modification;
Waiver; Amendments. 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 any party, at any time, of any breach by another
party 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. This Agreement contains
the entire agreement and understanding by and between the parties with respect to the terms described herein, and any representations,
promises, agreements or understandings, written or oral, not herein contained shall be of no force or effect. No amendments or
additions to this Agreement shall be binding unless in writing and signed by the parties, except as herein otherwise provided.


 






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11.     Applicable
Law; Venue. This Agreement shall be governed in all respects, whether as to validity, construction, capacity, performance
or otherwise, by the laws of North Carolina, except to the extent that federal law shall be deemed to apply. The parties agree
that any litigation arising out of or related to this Agreement or Employee’s employment by the Bank will be brought exclusively
in any state or federal court in Harnett County, North Carolina. Each party (i) consents to the personal jurisdiction of said
courts, (ii) waives any venue or inconvenient forum defense to any proceeding maintained in such courts, and (iii) agrees not
to bring any proceeding arising out of or relating to this Agreement or Employee’s employment by the Bank in any other court.


 


12.     Severability.
Each provision of this Agreement is severable from every other provision of this Agreement. Any provision of this Agreement
that is determined by any court of competent jurisdiction to be invalid or unenforceable will not affect the validity or enforceability
of any other provision. Any provision of this Agreement held invalid or unenforceable only in part or degree will remain in full
force and effect to the extent not held invalid or unenforceable.


 


13.     Section
409A Compliance. Employee and the Bank intend that their exercise of authority or discretion under this Agreement shall
comply with Section 409A of the Code. In that regard, if any provision of this Agreement is ambiguous as to its satisfaction of
the requirements of Section 409A, such provision shall nevertheless be applied in a manner consistent with those requirements.
The Bank shall maintain to the maximum extent practicable the original intent of the applicable provision without subjecting Employee
to additional tax or interest, and the Bank shall not be required to incur additional compensation expense as a result of the
reformed provision. If any payment, compensation or other benefit required by the Agreement is to be paid in a series of installment
payments, each individual payment in the series shall be considered a separate payment for purposes of Section 409A. References
in this Agreement to Section 409A of the Code include rules, regulations, and guidance of general application issued by the Department
of Treasury under Section 409A of the Code.


 


14.    Counterparts.
This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument. A facsimile or electronic transmission of a signed counterpart of this Agreement
will be sufficient to bind the party or parties whose signature(s) appear thereon.


 




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IN WITNESS WHEREOF,
the parties have executed this Agreement under seal and in such form as to be binding as of the Effective Date.


 





	 	SELECT BANCORP, INC.
	 	 	 	 
	 	 	 	 
	 	By	/s/ William H. Hedgepeth, II	 (seal)
	 	Name:	William L. Hedgepeth, II	 
	 	Title:	President and Chief Executive Officer	 



 


	ATTEST:	 
	 	 
	 	 
	/s/ Brenda B. Bonner	 
	Brenda B. Bonner, Secretary	 



 


	 	SELECT BANK & TRUST COMPANY
	 	 	 	 
	 	 	 	 
	 	By	/s/ William L. Hedgepeth, II	 (seal)
	 	Name:	William L. Hedgepeth, II	 
	 	Title:	President and Chief Executive Officer	 



 


	ATTEST:	 
	 	 
	 	 
	/s/ Brenda B. Bonner	 
	Brenda B. Bonner, Secretary	 



 





	 	EMPLOYEE	 
	 	 	 
	 	 	 
	 	/s/ W. Keith Betts	(seal)
	 	W. Keith Betts	 







 







 








[Signature Page to Employment Agreement]


 








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