Exhibit
10.15




CHANGE-IN-CONTROL PROTECTIVE
AGREEMENT




THIS
AGREEMENT entered into this 8th day of
July, 2002 (the “Effective Date”), by and between First South Bank (the “Bank”),
First South Bancorp, Inc. (the “Company”), and Paul S. Jaber (the
“Employee”).




WHEREAS,
the Employee has commenced employment with the Bank effective this date, and the
Bank deems it to be in its best interest to enter into this Agreement as an
additional incentive to the Employee to continue as an employee of the Bank;
and




WHEREAS,
the parties desire by this writing to set forth their understanding as to their
respective rights and obligations in the event a change of control occurs with
respect to the Bank or the Company.




NOW,
THEREFORE, the undersigned parties agree as follows:




1.         Defined
Terms




When used
anywhere in the Agreement, the following terms shall have the meaning set forth
herein.




(a)           “Change in Control” shall
mean any one of the following events: (i) the acquisition of ownership, holding
or power to vote more than 25% of the voting stock of the Bank or the Company,
(ii) the acquisition of the ability to control the election of a majority of the
Bank’s or the Company’s directors, (iii) the acquisition of a controlling
influence over the management or policies of the Bank or of the Company by any
person or by persons acting as a “group” (within the meaning of Section 13(d) of
the Securities Exchange Act of 1934), or (iv) during any period of two
consecutive years, individuals (the “Continuing Directors”) who at the beginning
of such period constitute the Board of Directors of the Bank or of the Company
(the “Existing Board”) cease for any reason to constitute at least two-thirds
thereof, provided that any individual whose election or nomination for election
as a member of the Existing Board was approved by a vote of at least two-thirds
of the Continuing Directors then in office shall be considered a Continuing
Director. Notwithstanding the foregoing, the Company’s ownership of the Bank
shall not of itself constitute a Change in Control for purposes of the
Agreement. For purposes of this paragraph only, the term “person” refers to an
individual or a corporation, partnership, trust, association, joint venture,
pool, syndicate, sole proprietorship, unincorporated organization or any other
form of entity not specifically listed herein.




(b)           “Code” shall mean the
Internal Revenue Code of 1986, as amended from time to time, and as interpreted
through applicable rulings and regulations in effect from time to
time.




(c)           “Code §280G Maximum” shall
mean the product of 2.99 and the Employee’s “base amount” as defined in Code
§280G(b)(3).




(d)           “Good Reason” shall mean any
of the following events, which has not been consented to in advance by the
Employee in writing: (i) the requirement that the Employee move his personal
residence, or perform his principal executive functions, more than thirty (30)
miles from his primary office as of the date of the Change in Control; (ii) a
material reduction in the Employee’s base compensation as in effect on the date
of the Change in Control or as the same may be increased from time to time;
(iii) the failure by the Bank or the Company to continue to provide the Employee
with compensation and benefits provided for on the date of the Change in
Control, as the same may be increased from time to time, or with benefits
substantially similar to those provided to him under any of the employee benefit
plans in which the Employee now or hereafter becomes a participant, or the
taking of any action by the Bank or the Company which would directly or
indirectly reduce any of such benefits or deprive the Employee of any material
fringe benefit enjoyed by him at the time of the Change in Control; (iv) the
assignment to the Employee of duties and responsibilities materially different
from those normally associated with his position; (v) a failure to elect or
reelect the Employee to the Board of Directors of the Bank or the Company, if
the Employee is serving on such Board on the date of the Change in Control; (vi)
a material diminution or reduction in the Employee’s responsibilities or
authority (including reporting responsibilities) in connection with his
employment with the Bank or the Company; or (vii) a material reduction in the
secretarial or other administrative support of the Employee.





(e)           “Just Cause” shall mean, in
the good faith determination of the Bank’s Board of Directors, the Employee’s
personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty
involving personal profit, intentional failure to perform stated duties, willful
violation of any law, rule or regulation (other than traffic violations or
similar offenses) or final cease-and-desist order, or material breach of any
provision of this Agreement. The Employee shall have no right to receive
compensation or other benefits for any period after termination for Just Cause.
No act, or failure to act, on the Employee’s part shall be considered “willful”
unless he has acted, or failed to act, with an absence of good faith and without
a reasonable belief that his action or failure to act was in the best interest
of the Bank and the Company.




(f)           “Protected Period” shall mean
the period that begins on the date six months before a Change in Control and
ends on the later of the second annual anniversary of the Change in Control or
the expiration date of this Agreement.




(g)           “Trust”
shall mean a grantor trust designed in accordance with Revenue Procedure 92-64
and having a trustee independent of the Bank and the Company.




2.         Trigger
Events




The
Employee shall be entitled to collect the severance benefits set forth in
Section 3 of this Agreement in the event that (i) the Employee voluntarily
terminates employment within 90 days of an event that both occurs during the
Protected Period and constitutes Good Reason, or (ii) the Bank, the Company, or
their successor(s) in interest terminate the Employee’s employment for any
reason other than Just Cause during the Protected Period.




3.         Amount of Severance
Benefit




If the
Employee becomes entitled to collect severance benefits pursuant to Section 2
hereof, the Bank shall pay the Employee a severance benefit equal to one and one
half times the Employee’s base annual salary in effect when the Protected Period
begins. In no event, however, will this amount exceed the difference between (i)
the Code §280G Maximum and (ii) the sum of any other “parachute payments” (as
defined under Code §280G(b)(2)) that the Employee receives on account of the
Change in Control. Said sum shall be paid in one lump sum within ten (10) days
of the later of the date of the Change in Control and the Employee’s last day of
employment with the Bank or the Company.




In the
event that the Employee and the Bank agree that the Employee has collected an
amount exceeding the Code §280G Maximum, the parties may jointly agree in
writing that such excess shall be treated as a loan ab initio which the
Employee shall repay to the Bank, on terms and conditions mutually agreeable to
the parties, together with interest at the applicable federal rate provided for
in Section 7872(f)(2)(B) of the Code.









4.         Funding of Grantor Trust
upon Change in Control


Not later
than ten business days after a Change in Control, the Bank shall (i) deposit in
a Trust an amount equal to the amount of the severance benefit as defined in
Section 3 hereof, unless the Employee has previously provided a written release
of any claims under this Agreement, and (ii) provide the trustee of the Trust
with a written direction to hold said amount and any investment return thereon
in a segregated account for the benefit of the Employee, and to follow the
procedures set forth in the next paragraph as to the payment of such amounts
from the Trust. Upon the earlier of the Trust’s final payment of all amounts due
under the following paragraph or the date 27 months after the Change in Control,
the trustee of the Trust shall pay to the Bank the entire balance remaining in
the segregated account maintained for the benefit of the Employee. The Employee
shall thereafter have no further interest in the Trust.




During
the 27-consecutive month period after a Change in Control, the Employee may
provide the trustee of the Trust with a written notice requesting that the
trustee pay to the Employee an amount designated in the notice as being payable
pursuant to this Agreement. Within three business days after receiving said
notice, the trustee of the Trust shall send a copy of the notice to the Bank via
overnight and registered mail return receipt requested. On the fifth (5th)
business day after mailing said notice to the Bank, the trustee of the Trust
shall pay the Employee the amount designated therein in immediately available
funds, unless prior thereto the Bank provides the trustee with a written notice
directing the trustee to withhold such payment. In the latter event, the trustee
shall submit the dispute to non-appealable binding arbitration for a
determination of the amount payable to the Employee pursuant to this Agreement,
and the Bank shall pay the costs of such arbitration. The trustee shall choose
the arbitrator to settle the dispute, and such arbitrator shall be bound by the
rules of the American Arbitration Association in making his determination. The
parties and the trustee shall be bound by the results of the arbitration and,
within 3 days of the determination by the arbitrator, the trustee shall pay from
the Trust the amounts required to be paid to the Employee and/or the Bank, and
in no event shall the trustee be liable to either party for making the payments
as determined by the arbitrator.




5.         Term of the
Agreement




This
Agreement shall remain in effect for the period commencing on the Effective Date
and ending on the earlier of (i) the date 12 months after the Effective Date,
and (ii) the date on which the Employee terminates employment with the Bank;
provided that the Employee’s rights hereunder shall continue following the
termination of this employment with the Bank under any of the circumstances
described in Section 2 hereof. Additionally, on each annual anniversary date
from the Effective Date, the term of this Agreement shall be extended for an
additional one-year period beyond the then effective expiration date provided
the Board of Directors of the Bank determines in a duly adopted resolutions that
the performance of the Employee has met the requirements and standards of the
Board, and that this Agreement shall be extended.




6.         Termination or Suspension
Under Federal Law




(a) Any
payments made to the Employee pursuant to this Agreement, or otherwise, are
subject to and conditioned upon their compliance with 12 U.S.C. Section 1828(k)
and any regulations promulgated thereunder.




(b)           If
the Employee is removed and/or permanently prohibited from participating in the
conduct of the Bank’s affairs by an order issued under Sections 8(e)(4) or
8(g)(1) of the Federal Deposit Insurance Act (“FDIA”) (12 U.S.C. 1818(e)(4) or
(g)(1)), all obligations of the Bank under this Agreement shall terminate, as of
the effective date of the order, but the vested rights of the parties shall not
be affected.




(c)           If
the Bank is in default (as defined in Section 3(x)(1) of FDIA), all obligations
under this Agreement shall terminate as of the date of default; however, this
Paragraph shall not affect the vested rights of the parties.





(d)           If
a notice served under Section 8(e)(3) or (g)(1) of the FDIA (12 U.S.C.
1818(e)(3) and (g)(1)) suspends and/or temporarily prohibits the Employee from
participating in the conduct of the Bank’s affairs, the Bank’s obligations under
this Agreement shall be suspended as of the date of such service, unless stayed
by appropriate proceedings. If the charges in the notice are dismissed, the Bank
may in its discretion (i) pay the Employee all or part of the compensation
withheld while its contract obligations were suspended, and (ii) reinstate (in
whole or in part) any of its obligations which were suspended.




7.         Expense
Reimbursement




In the
event that any dispute arises between the Employee and the Bank as to the terms
or interpretation of this Agreement, whether instituted by formal legal
proceedings or otherwise, including any action that the Employee takes to
enforce the terms of this Agreement or to defend against any action taken by the
Bank or the Company, the Employee shall be reimbursed for all costs and
expenses, including reasonable attorneys’ fees, arising from such dispute,
proceedings or actions, provided that the Employee shall obtain a final judgment
in favor of the Employee in a court of competent jurisdiction or in binding
arbitration under the rules of the American Arbitration Association. Such
reimbursement shall be paid within ten (10) days of Employee’s furnishing to the
Bank or the Company written evidence, which may be in the form, among other
things, of a cancelled check or receipt, of any costs or expenses incurred by
the Employee.




8.         Successors and
Assigns




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




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




9.         Amendments




No
amendments or additions to this Agreement shall be binding unless made in
writing and signed by all of the parties, except as herein otherwise
specifically provided.




10.       Applicable
Law




Except to
the extent preempted by federal law, the laws of the State of North Carolina
shall govern this Agreement in all respects, whether as to its validity,
construction, capacity, performance or otherwise.




11.       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.




12.       Entire
Agreement




This
Agreement, together with any understanding or modifications thereof as agreed to
in writing by the parties, shall constitute the entire agreement between the
parties hereto.





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




ATTEST:
                    
                    FIRST
      SOUTH BANK/s/ William L. Wall
                    
                    By:
                    /s/ Thomas A. VannSecretary
                    
                    
                    It’s
      PresidentATTEST:
                    
                    FIRST
      SOUTH BANCORP, INC./s/ William L. Wall
                    
                    By:
                    /s/ Thomas A. VannSecretary
                    
                    
                    It’s
      PresidentWITNESS:
                    
                    EMPLOYEE/s/ Janet B. Woolard
                    
                    /s/ Paul S. JaberPaul
      S.
Jaber