FIDELITY BANKSHARES, INC.

                              EMPLOYMENT AGREEMENT
                                       FOR
                                VINCE A. ELHILOW

     This Agreement  (this  "Agreement")  is made effective as of the ___ day of
December,  2005 by and between  Fidelity  Bankshares,  Inc. (the  "Company"),  a
Delaware  corporation,  with its principal  administrative  office at 205 Datura
Street, West Palm Beach, Florida 33401, and Vince A. Elhilow ("Executive").

     WHEREAS,  Executive  is  currently  employed  as the  President  and  Chief
Executive  Officer of the  Company  and of  Fidelity  Federal  Bank & Trust (the
"Bank"), and the Company is the sole stockholder of the Bank; and

     WHEREAS,  the Company and Executive are parties to an employment  agreement
dated January 1, 2004; and

     WHEREAS,  the Bank and  Executive  have entered into an updated  employment
agreement dated December __, 2005 (the "Bank  Employment  Agreement")  governing
the terms and conditions of Executive's employment by the Bank; and

     WHEREAS,  new Section 409A of the Internal Revenue Code ("Code"),  which is
initially  effective in 2005,  has deemed  certain  employment  agreements to be
deferred compensation, subject to its provisions; and

     WHEREAS,  the  Company  and  Executive  desire at this  time to update  the
employment agreement to, among other things, comply with Code Section 409A.

     NOW, THEREFORE,  in consideration of the mutual covenants herein contained,
and upon the other terms and conditions hereinafter provided, the parties hereby
agree as follows:

1.   POSITION AND RESPONSIBILITIES

     During the period of his employment hereunder, Executive agrees to serve as
President and Chief Executive Officer of the Bank and the Company, respectively.
During said period, Executive also agrees to serve as a director of the Bank and
the Company  and, if elected,  as an officer and director of any  subsidiary  or
affiliate of the Company.  Failure to reelect  Executive as President  and Chief
Executive  Officer of the Company  without the consent of  Executive  during the
term of this Agreement shall constitute a breach of this Agreement.

2.   TERMS AND DUTIES

     (a) The period of Executive's  employment  under this Agreement shall begin
as of the date first above written and shall continue for  thirty-six  (36) full
calendar months  thereafter.  Commencing on the first  anniversary  date of this
Agreement   ("Anniversary   Date")  and  continuing  on  each  Anniversary  Date
thereafter,  this  Agreement  shall renew for an  additional  year such that the
remaining  term shall be three (3) years unless  written  notice of  non-renewal


<PAGE>

("Non-Renewal  Notice") is provided to  Executive  at least thirty (30) days and
not more than sixty (60) days prior to any such Anniversary  Date, in which case
his employment  shall cease at the end of thirty-six (36) months  following such
Anniversary Date. Prior to each notice period for non-renewal, the disinterested
members  of the Board of  Directors  of the  Company  ("Board")  will  conduct a
comprehensive  performance  evaluation  and review of Executive  for purposes of
determining  whether to extend the Agreement,  and the results  thereof shall be
included in the minutes of the Board's meeting.

     (b) During the period of his  employment  hereunder,  except for periods of
absence  occasioned by illness,  reasonable  vacation  periods,  and  reasonable
leaves of absence,  Executive  shall  faithfully  perform his duties  hereunder,
including  activities and services  related to the  organization,  operation and
management of the Bank and the Company.

     (c) Notwithstanding anything herein to the contrary, Executive's employment
with the Company may be terminated  by the Company or Executive  during the term
of this  Agreement,  subject  to the terms  and  conditions  of this  Agreement.
However,  Executive shall not perform,  in any respect,  directly or indirectly,
during the pendency of his temporary or permanent suspension or termination from
the  Company,  duties and  responsibilities  as  President  and Chief  Executive
Officer of the Bank.

3.   COMPENSATION AND REIMBURSEMENT

     (a) The  compensation  specified under this Agreement shall  constitute the
salary and  benefits  paid for the duties  described  in Section 2. The  Company
shall pay Executive as  compensation a salary of not less than $465,000 per year
("Base  Salary").  Such Base Salary shall be payable  monthly,  or in accordance
with the  normal  payroll  practices  of the  Bank.  During  the  period of this
Agreement,  Executive's  Base Salary  shall be reviewed at least  annually;  the
first such review will be made no later than  January 31 of each year during the
term of this  Agreement and shall be effective  from the first day of said month
through the end of the  calendar  year.  Such  review  shall be  conducted  by a
Committee designated by the Board, and the Board may increase, but not decrease,
Executive's  Base Salary (any  increase  in Base Salary  shall  become the "Base
Salary" for purposes of this Agreement). In addition to the Base Salary provided
in  this  Section  3(a),  the  Company  shall  provide  Executive  at no cost to
Executive  with all such other  benefits as are provided  uniformly to permanent
full-time employees of the Company and/or the Bank.

     (b) The  Company  will  provide  Executive  with  employee  benefit  plans,
arrangements  and  perquisites   substantially  equivalent  to  those  in  which
Executive was participating or otherwise deriving benefit from immediately prior
to the  beginning  of the term of this  Agreement,  and the  Company  will  not,
without  Executive's  prior  written  consent,  make any  changes in such plans,
arrangements or perquisites which would adversely affect  Executive's  rights or
benefits thereunder. Without limiting the generality of the foregoing provisions
of this Section 3(b),  Executive  will be entitled to  participate in or receive
benefits under any employee benefit plans of the Bank or the Company  including,
but not limited to, retirement  plans,  supplemental  retirement plans,  pension
plans,   profit-sharing   plans,   stock  option  and  restricted  stock  plans,
health-and-accident  plans, medical coverage and any other employee benefit plan
or  arrangement  made  available by the Bank and/or the Company in the future to


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<PAGE>

its senior  executives and key management  employees,  subject to and on a basis
consistent with the terms,  conditions and overall  administration of such plans
and  arrangements.  Executive  will be entitled to  incentive  compensation  and
bonuses  as  provided  in any  plan of the  Company  and/or  the  Bank in  which
Executive is eligible to  participate.  Nothing paid to Executive under any such
plan or arrangement will be deemed to be in lieu of other  compensation to which
Executive is entitled under this Agreement.

     (c) In  addition  to the  benefits  provided  under  paragraph  (b) of this
Section,  Executive and his spouse shall be entitled to  continuing  health care
coverage upon Executive's retirement or other termination of employment with the
Company, other than termination for Cause, which coverage shall be fully paid by
the Company and shall be  substantially  similar to the  coverage  provided  for
Executive and his spouse prior to Executive's  termination  of employment.  Such
health care coverage  shall survive the  termination  of, or expiration of, this
Agreement,  and shall  continue for the  lifetime of each of  Executive  and his
spouse,  provided however, that upon each such person's eligibility for Medicare
coverage,  the Company shall provide  health care coverage to such person at the
highest level of coverage provided or made available by the American Association
of Retired Persons (AARP) to its members  residing in the locale where Executive
resides,  which coverage shall be supplemental  to his or her Medicare  coverage
for his or her lifetime.

     (d) The Company shall pay or reimburse  Executive for all reasonable travel
and  other  reasonable   expenses   incurred  by  Executive  in  performing  his
obligations under this Agreement and may provide such additional compensation in
such form and such amounts as the Board may from time to time determine.

4.   OUTSIDE ACTIVITIES

     Executive  may  serve as a member of the board of  directors  of  business,
community and  charitable  organizations,  subject to the approval of the Board,
provided that in each case such service shall not materially  interfere with the
performance  of his duties  under this  Agreement  or present  any  conflict  of
interest.  Such service to and participation in outside  organizations  shall be
presumed  for these  purposes  to be for the  benefit  of the  Company,  and the
Company shall reimburse Executive his reasonable expenses associated therewith.

5.   WORKING FACILITIES AND EXPENSES

     Executive's  principal  place  of  employment  shall  be at  the  Company's
principal  executive  offices.  The  Company  shall  provide  Executive,  at his
principal place of employment,  with a private office and other support services
and facilities  that are suitable to his position with the Company and necessary
or  appropriate  in  connection  with the  performance  of his duties under this
Agreement.  The Company shall provide  Executive with an automobile  suitable to
the position of President and Chief Executive  Officer of the Company,  and such
automobile  may be used by  Executive  in  carrying  out his  duties  under this
Agreement as well as for his personal use. The Company shall reimburse Executive
for the cost of maintenance,  use and servicing of such automobile.  The Company
shall also reimburse  Executive for his ordinary and necessary business expenses
incurred in connection  with the performance of his duties under this Agreement,
including, without limitation,  travel and reasonable entertainment expenses and
fees for  memberships  in such clubs and  organizations  that  Executive and the
Board  mutually  agree are necessary and  appropriate to further the business of
the Company.  Reimbursement of such expenses shall be made upon  presentation to
the Company of an itemized  account of the  expenses in such form as the Company
may reasonably require.


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<PAGE>

6.   PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION OR CHANGE IN CONTROL

     The  provisions  of this  Section  shall in all  respects be subject to the
terms and conditions stated in Sections 9 and 17.

     (a) The  provisions of this Section 6(a) shall apply upon the occurrence of
an  Event  of  Termination  (as  herein  defined)  during  Executive's  term  of
employment  under  this  Agreement.  As used in this  Agreement,  an  "Event  of
Termination" shall mean and include any one or more of the following:

     (i) the  termination  by the Bank or the Company of  Executive's  full-time
employment hereunder for any reason other than (A) Disability or Retirement,  as
defined in Section 7 below, or (B) Termination for Cause as defined in Section 8
hereof; or

     (ii) Executive's resignation from the Company's employ, upon any

          (A)     failure to elect or reelect or to appoint or reappoint
                  Executive as President and Chief Executive Officer of the Bank
                  and/or the Company,

          (B)     material change in Executive's function, duties, or
                  responsibilities, which change would cause Executive's
                  position to become one of lesser responsibility, importance,
                  or scope from the position and attributes thereof described in
                  Section 1 above,

          (C)     relocation of Executive's principal place of employment by
                  more than 30 miles from its location at the effective date of
                  this Agreement,

          (D)     liquidation or dissolution of the Bank or Company other than
                  liquidations or dissolutions that are caused by
                  reorganizations that do not affect the status of Executive, or

          (E)     breach of this Agreement by the Company.

Upon the occurrence of any event described in clauses (ii) (A), (B), (C), (D) or
(E) above,  Executive  shall have the right to elect to terminate his employment
under this  Agreement by  resignation  upon sixty (60) days prior written notice
given within a reasonable  period of time not to exceed four (4) calendar months
after the initial event giving rise to said right to elect.  Notwithstanding the
preceding sentence, in the event of a continuing breach of this Agreement by the
Company,  Executive, after giving due notice within the prescribed time frame of
an initial event specified above, shall not waive any of his rights solely under
this  Agreement  and this  Section  by  virtue of the fact  that  Executive  has
submitted his  resignation but has remained in the employment of the Company and
is engaged in good faith  discussions  to  resolve  any  occurrence  of an event
described in clauses (A), (B), (C), (D) or (E) above.


                                       4
<PAGE>

     (b) The  provisions  of this  Section  6(b) and 6(d)  shall  apply upon the
occurrence of a Change in Control during the term of this  Agreement,  including
extensions  hereof.  In the event of a Change in Control  of the  Company or the
Bank,  Executive  shall be entitled to the  payments  set forth in Section  6(d)
hereof.  For purposes of this  Agreement,  a Change in Control of the Company or
the Bank shall mean (i) a change in  ownership  of the Company or the Bank under
paragraph (1) below, or (ii) a change in effective control of the Company or the
Bank  under  paragraph  (2)  below,  or (iii) a  change  in the  ownership  of a
substantial portion of the assets of the Company or the Bank under paragraph (3)
below:

     (1) Change in the  ownership  of the  Company or the Bank.  A change in the
ownership  of the  Company  or the Bank  shall  occur  on the date  that any one
person,  or more  than one  person  acting as a group (as  defined  in  Proposed
Treasury  Regulation  Section   1.409A-3(g)(5)(v)(B)  or  subsequent  guidance),
acquires ownership of stock of the corporation that, together with stock held by
such person or group,  constitutes more than 50 percent of the total fair market
value or total voting power of the stock of such corporation.

     (2) Change in the effective control of the Company or the Bank. A change in
the  effective  control of the  Company or the Bank shall occur on the date that
either (i) any one person, or more than one person acting as a group (as defined
in Proposed  Treasury  Regulation  Section  1.409A-3(g)(5)(v)(B)  or  subsequent
guidance),  acquires (or has acquired  during the 12-month  period ending on the
date of the most recent  acquisition  by such person or  persons)  ownership  of
stock of the corporation possessing 35 percent or more of the total voting power
of the  stock  of  such  corporation;  or  (ii) a  majority  of  members  of the
corporation's  board of  Directors  is replaced  during any  12-month  period by
Directors  whose  appointment  or election is not  endorsed by a majority of the
members  of the  corporation's  board  of  Directors  prior  to the  date of the
appointment or election,  provided that this  sub-section  (ii) is  inapplicable
where a majority shareholder of the Company or the Bank is another corporation.

     (3) Change in the  ownership of a  substantial  portion of the Company's or
the Bank's  assets.  A change in the ownership of a  substantial  portion of the
Company or the Bank's  assets  shall occur on the date that any one  person,  or
more  than one  person  acting  as a group  (as  defined  in  Proposed  Treasury
Regulation Section  1.409A-3(g)(5)(v)(B)  or subsequent guidance),  acquires (or
has acquired  during the 12-month  period  ending on the date of the most recent
acquisition by such person or persons) assets from the  corporation  that have a
total  gross  fair  market  value  equal to or more than 40 percent of the total
gross fair market value of (i) all of the assets of the Company or the Bank,  or
(ii) the value of the assets being  disposed of,  either of which is  determined
without regard to any liabilities associated with such assets.

     (4) For all purposes  hereunder,  the definition of Change in Control shall
be  construed  to be  consistent  with the  requirements  of  Proposed  Treasury
Regulation Section 1.409A-3(g) or subsequent guidance.


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<PAGE>

     (c) Upon the occurrence of an Event of  Termination,  as defined in Section
6(a)(i) or (ii), on the Date of  Termination,  as defined in Section 9(b) or, if
different,  within  the time  frame set forth in any  sub-paragraph  below,  the
Company  shall pay,  provide  or credit to  Executive  (or,  in the event of his
subsequent death, his beneficiary or  beneficiaries,  or his estate, as the case
may be):

     (i)  his  earned  but  unpaid  salary  as of the  date  of  termination  of
employment with the Company and the benefits to which he would be entitled as of
the date of termination  as a former  employee under the Company's or the Bank's
employee benefit plans and programs and compensation plans and programs;

     (ii) as severance pay or liquidated  damages, or both, a sum equal to three
(3) times the sum of (A) the  highest  annual  rate of Base  Salary  and (B) the
highest annual bonus awarded to Executive during the prior three years.  Payment
of the amount  required  hereunder  shall be made no later than the first day of
the seventh month following Executive's  Separation from Service if Executive is
a Specified  Employee and such delay is required by Code Section 409A. For these
purposes,  the terms  "Specified  Employee" and "Separation  from Service" shall
have the meaning  required by Code  Section  409A.  Such  payments  shall not be
reduced in the event Executive obtains other employment following termination of
employment;

     (iii)  at  the  Company's  expense,  continued  medical,  dental  and  life
insurance  coverage  substantially  identical to the coverage  maintained by the
Company or the Bank for Executive prior to his  termination of employment.  Such
medical and dental coverage shall continue for the lifetime of each of Executive
and his spouse as  provided  in Section  3(c)  hereof,  and such life  insurance
coverage shall cease thirty-six (36) months following the Event of Termination;

     (iv) any outstanding  unvested stock options or shares of restricted  stock
of the Company that have been awarded to him, which shall become fully vested as
of his termination of employment;

     (v) within  sixty (60) days (or within  such  shorter  period to the extent
that  information  can be reasonably be obtained)  following his  termination of
employment  with the  Company,  a lump sum  payment  in an  amount  equal to the
present  value of the Company  and/or the Bank's  contributions  that would have
been made on Executive's  behalf under the Bank's 401(k) Plan and employee stock
ownership plan (and any other defined  contribution  plan maintained by the Bank
or the Company) if he had  continued  working for the Company and the Bank for a
thirty-six (36) month period  following his termination  earning the Base Salary
that  would  have been  achieved  during the  remaining  unexpired  term of this
Agreement (assuming,  if a Change in Control has occurred,  that the annual Base
Salary  increases at the rate of six percent  (6%) per year on each  Anniversary
Date over the remaining  unexpired term of the Agreement) and making the maximum
amount of employee  contributions  permitted,  if any, under such plan or plans,
where such  present  values are to be  determined  using a discount  rate of six
percent (6%);

     (vi) within  sixty (60) days (or within such  shorter  period to the extent
that  information  can  reasonably  be obtained)  following his  termination  of
employment  with the  Company  and/or the Bank,  a lump sum payment in an amount
equal to the excess,  if any, of (A) the present  value of the benefits to which
he would be entitled under the Supplemental  Executive  Retirement Plan (and any


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<PAGE>

other deferred  compensation plan for management or highly compensated employees
that are maintained by the Bank and/or the Company), if he had continued working
for the Company and the Bank for the thirty-six (36) month period  following his
termination  at the Base Salary and bonus that would have been  achieved  during
the remaining unexpired term of this Agreement (assuming, if a Change in Control
has occurred, that annual Base Salary and bonus each increase at the rate of six
percent (6%) per year on each Anniversary Date for the remaining  unexpired term
of the  Agreement)  over (B) the  present  value of the  benefits to which he is
actually  entitled under any such plan, as of the date of his  termination  with
the Company and/or the Bank, where the present values are to be determined using
a discount rate of six percent (6%) and the mortality  tables  prescribed  under
Section 72 of the Code.

     (d) Upon the occurrence of a Change in Control,  as defined in Section 6(b)
the Company  shall pay,  provide or credit to Executive  (or in the event of his
death, to his Beneficiary):

     (i) as severance pay or liquidated  damages,  or both, a sum equal to three
(3) times the sum of (A) the  highest  annual  rate of Base  Salary  and (B) the
highest annual bonus awarded to Executive during the prior three years.  Payment
of the amount  required  hereunder  shall be made in a lump sum on the effective
date of the Change in Control;

     (ii) at the Company's expense, continued medical, dental and life insurance
coverage  substantially  identical to the coverage maintained by the Bank and/or
the  Company for  Executive  prior to the Change in  Control.  Such  medical and
dental  coverage  shall  continue for the lifetime of each of Executive  and his
spouse as provided in Section 3(c) hereof,  and such life insurance  shall cease
thirty-six (36) months following the Executive's termination of employment;

     (iii) any outstanding  unvested stock options or shares of restricted stock
of the Company that have been awarded to him, which shall become fully vested as
of the effective date of the Change in Control;

     (iv) at the time of or within  sixty  (60)  days (or  within  such  shorter
period to the extent that information can be reasonably  obtained) following the
Change in Control, a lump sum payment in an amount equal to the present value of
the  Company's  and/or  the  Bank's  contributions  that would have been made on
Executive's  behalf under the Bank's  401(k) Plan and employee  stock  ownership
plan (and any other defined  contribution plan maintained by the Bank and/or the
Company)  if he had  continued  working  for  the  Bank  and the  Company  for a
thirty-six (36) month period following his termination,  earning the Base Salary
that  would  have been  achieved  during the  remaining  unexpired  term of this
Agreement (assuming,  if a Change in Control has occurred,  that the annual Base
Salary  increases at the rate of six percent  (6%) per year on each  Anniversary
Date over the remaining  unexpired term of the Agreement) and making the maximum
amount of employee  contributions  permitted,  if any, under such plan or plans,
where such  present  values are to be  determined  using a discount  rate of six
percent (6%) per year;

     (v) at the time of or within sixty (60) days (or within such shorter period
to the extent that information can reasonably be obtained)  following the Change
in Control,  a lump sum payment in an amount equal to the excess, if any, of (A)


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<PAGE>

the  present  value of the  benefits  to which he would be  entitled  under  the
Fidelity Federal Savings Bank of Florida Supplemental  Executive Retirement Plan
(and any other deferred  compensation plan for management or highly  compensated
employees  that  are  maintained  by the  Bank  and/or  the  Company)  if he had
continued  working for the Bank and the Company  for the  thirty-six  (36) month
period  following his  termination  at the Base Salary and bonus that would have
been achieved during the remaining  unexpired term of this Agreement  (assuming,
if a Change in Control  has  occurred,  that  annual  Base Salary and bonus each
increase at the rate of six percent (6%) per year on each  Anniversary  Date for
the remaining unexpired term of the Agreement) over (B) the present value of the
benefits to which he is actually entitled under any such plan, as of the date of
his termination  with the Company and/or the Bank,  where the present values are
to be  determined  using a discount  rate of six percent (6%) and the  mortality
tables prescribed under Section 72 of the Code.

     (e) Notwithstanding the preceding  paragraphs of this Section, in the event
that:

     (i) the aggregate  payments or benefits to be made or afforded to Executive
under said paragraphs (the "Parachute  Benefits")  would be deemed to include an
"excess  parachute  payment"  under  Section  280G of the Code or any  successor
thereto, and

     (ii)  if  such   Parachute   Benefits   were  reduced  to  an  amount  (the
"Non-Triggering  Amount"), the value of which is one dollar ($1.00) less than an
amount equal to the total amount of payments  permissible  under Section 280G of
the Code or any successor  thereto,  then the  Parachute  Benefits to be paid to
Executive shall be so reduced so as to be a Non-Triggering Amount.

     (f) Payments  under Section 6(d) and 6(e) above shall be made  irrespective
of whether  termination  of employment  has occurred.  Notwithstanding  anything
herein to the contrary,  Executive shall only be entitled to a payment under the
first to occur of an Event of  Termination  under  Section  6(c) or a Change  in
Control under  Section  6(d).  Payments  under one of these  alternatives  shall
preclude any payments under the other.

7.   TERMINATION UPON RETIREMENT, DISABILITY OR DEATH

     For purposes of this  Agreement,  termination by the Company of Executive's
employment  based on "Retirement"  shall mean termination in accordance with the
Company's  and/or  the  Bank's  retirement  policy  or in  accordance  with  any
retirement arrangement established with Executive's consent with respect to him.
Upon  termination of Executive upon  Retirement,  Executive shall be entitled to
all  benefits  under any  retirement  plan of the  Company or the Bank and other
plans to which Executive is a party.

     In the event Executive is unable to perform his duties under this Agreement
on a  full-time  basis for a period of six (6)  consecutive  months by reason of
illness or other physical or mental disability  ("Disability"),  the Company may
terminate  this  Agreement,  provided  that the  Company  shall  continue  to be
obligated  to pay  Executive  his  Base  Salary  for the  remaining  term of the
Agreement,  or one year,  whichever is the longer  period of time,  and provided
further that any amounts  actually paid to Executive  pursuant to any disability
insurance or other  similar such program  which the Company  and/or the Bank has


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<PAGE>

provided  or may  provide  on behalf of its  employees  generally  or its senior
executives or pursuant to any workman's or social  security  disability  program
shall  reduce  the  compensation  to be  paid  to  Executive  pursuant  to  this
paragraph.

     In the event of  Executive's  death during the term of the  Agreement,  his
estate,  legal  representatives or named beneficiaries (as directed by Executive
in writing) shall be paid  Executive's Base Salary as defined in Section 3(a) at
the rate in  effect at the time  Executive's  death for a period of one (1) year
from the date of Executive's death.

8.   TERMINATION FOR CAUSE

     The  term  "Termination  for  Cause"  shall  mean  termination  because  of
Executive's personal dishonesty, incompetence, willful misconduct, any breach of
fiduciary duty involving personal profit, intentional failure to perform stated
duties, willful violation of any material law, rule, or regulation (other than
minor traffic violations or similar offenses) or final cease-and-desist order,
or material breach of any provision of this Agreement. In determining
incompetence, the acts or omissions shall be measured against standards
generally prevailing in the savings institution industry. For purposes of this
paragraph, no act or failure to act on the part of Executive shall be considered
"willful" unless done, or omitted to be done, by Executive not in good faith and
without reasonable belief that Executive's action or omission was in the best
interest of the Company. Notwithstanding the foregoing, Executive shall not be
deemed to have been Terminated for Cause unless and until there shall have been
delivered to him a copy of a resolution duly adopted by the affirmative vote of
not less than three-fourths of the members of the Board at a meeting of the
Board called and held for that purpose (after reasonable notice to Executive and
an opportunity for him, together with counsel, to be heard before the Board),
finding that in the good faith opinion of the Board, Executive was guilty of
conduct justifying Termination for Cause and specifying the particulars thereof
in detail. Executive shall not have the right to receive compensation or other
benefits for any period after Termination for Cause. Any stock options granted
to Executive under any stock option plan of the Bank, the Company or any
subsidiary or affiliate thereof, shall become null and void effective upon
Executive's receipt of Notice of Termination for Cause pursuant to Section 9
hereof, and shall not be exercisable by Executive at any time subsequent to such
Termination for Cause.

9.   NOTICE

     (a) Any  purported  termination  by the  Company or by  Executive  shall be
communicated by Notice of Termination to the other party hereto. For purposes of
this  Agreement,  a "Notice of  Termination"  shall mean a written  notice which
shall indicate the specific termination  provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances  claimed to
provide a basis for termination of Executive's employment under the provision so
indicated.

     (b) "Date of  Termination"  shall  mean (A) if  Executive's  employment  is
terminated  for  Disability,  thirty (30) days after a Notice of  Termination is
given (provided that he shall not have returned to the performance of his duties
on a  full-time  basis  during  such  thirty  (30) day  period),  and (B) if his
employment is terminated for any other reason,  the date specified in the Notice
of Termination (which, in the case of a Termination for Cause, shall not be less
than thirty (30) days from the date such Notice of Termination is given).


                                       9
<PAGE>

     (c) If, within thirty (30) days after any Notice of  Termination  is given,
the party  receiving such Notice of Termination  notifies the other party that a
dispute exists concerning the termination, except upon the voluntary termination
by Executive,  in which case the Date of Termination shall be the date specified
in the Notice, the Date of Termination shall be the date on which the dispute is
finally  determined,  either by mutual  written  agreement of the parties,  by a
binding arbitration award, or by a final judgment, order or decree of a court of
competent  jurisdiction (the time for appeal having expired and no appeal having
been  perfected)  and  provided  further that the Date of  Termination  shall be
extended  by a notice of dispute  only if such notice is given in good faith and
the party  giving  such notice  pursues  the  resolution  of such  dispute  with
reasonable  diligence.  Notwithstanding  the pendency of any such  dispute,  the
Company will continue to pay Executive his full  compensation in effect when the
notice giving rise to the dispute was given (including, but not limited to, Base
Salary) and continue Executive as a participant in all compensation, benefit and
insurance  plans in which he was  participating  when the notice of dispute  was
given,  until the dispute is finally resolved in accordance with this Agreement,
provided  such dispute is resolved  within the term of this  Agreement.  If such
dispute is not resolved within the term of the Agreement,  the Company shall not
be  obligated,   upon  final  resolution  of  such  dispute,  to  pay  Executive
compensation  and other  payments  accruing  beyond  the term of the  Agreement.
Amounts  paid under  this  Section  shall be offset  against or reduce any other
amounts due under this Agreement.

10.  POST-PAYMENT OBLIGATIONS

     (a) All payments and benefits to Executive  under this  Agreement  shall be
subject to Executive's  compliance with paragraph (b) of this Section during the
term of this  Agreement  and for one (1)  full  year  after  the  expiration  or
termination hereof.

     (b) Executive shall, upon reasonable  notice,  furnish such information and
assistance to the Company  and/or the Bank as may  reasonably be required by the
Company and/or the Bank in connection  with any litigation in which it or any of
its  subsidiaries  or  affiliates  is, or may become,  a party.

11.  ADDITIONAL PAYMENTS RELATED TO A CHANGE IN CONTROL

     (a) In the  event  of a  Change  in  Control  of the  Bank or the  Company,
Executive  shall be entitled  to receive an amount  payable by the  Company,  in
addition to any  compensation  or benefits paid by the Bank pursuant to the Bank
Employment Agreement,  which amount shall equal the difference,  if any, between
(i) the  amount  that  would  be paid by the  Bank  under  the  Bank  Employment
Agreement  without  regard to any  reduction  that may be  required by reason of
Section  6(c) of the Bank  Employment  Agreement,  and (ii) the  amount  that is
actually paid by the Bank under the terms of the Bank Employment Agreement.

     (b) In  addition,  in each  calendar  year that  Executive  is  entitled to
receive  payments  or  benefits  under  the  provisions  of the Bank  Employment
Agreement,  this Agreement  and/or a Company or Bank sponsored  employee benefit


                                       10
<PAGE>

plan, the  independent  accountants of the Company shall  determine if an excess
parachute  payment  (as  defined  in  Section  4999 of the  Code)  exists.  Such
determination  shall be made after taking any reductions  permitted  pursuant to
Section 280G of the Code and the regulations  thereunder.  Any amount determined
to be an excess  parachute  payment  after taking into  account such  reductions
shall be hereafter  referred to as the "Initial  Excess  Parachute  Payment." As
soon as  practicable  after a Change in Control,  the Initial  Excess  Parachute
Payment shall be determined. For purposes of this determination, Executive shall
be deemed to pay federal  income taxes at the highest  marginal  rate of federal
income tax  (including,  but not limited to, the  Alternative  Minimum Tax under
Code  Sections  55-59,  if  applicable)  and  state  and local  income  tax,  if
applicable,  at the highest  marginal rate of taxation in the state and locality
of Executive's residence on the date such payment is payable, net of the maximum
reduction in the federal income taxes which could be obtained from any available
deduction of such state and local taxes.  Any  determination  by the independent
accountants shall be binding on the Company and Executive.  Within five (5) days
after such determination, the Company shall pay Executive, subject to applicable
withholding  requirements  under applicable state or federal law an amount equal
to:

     (i) twenty (20) percent of the Initial  Excess  Parachute  Payment (or such
other amount equal to the tax imposed under Section 4999 of the Code), and

     (ii)  such  additional  amount  (tax  allowance)  as  may be  necessary  to
compensate  Executive  for the payment by Executive of state and federal  income
and excise  taxes on the payment  provided  under Clause (i) and on any payments
under this Clause (ii). In computing such tax allowance,  the payment to be made
under Clause (i) shall be multiplied by the "gross up percentage"  ("GUP").  The
GUP shall be determined as follows:

                                    Tax Rate
                              GUP = ----------
                                   1- Tax Rate

The Tax Rate for  purposes of  computing  the GUP shall be the highest  marginal
federal  and  state  income  and  employment-related  tax  rate,  including  any
applicable  excise tax rate,  applicable  to  Executive in the year in which the
payment under Clause (i) is made.

     (c) Notwithstanding  the foregoing,  if it shall subsequently be determined
in a final judicial determination or a final administrative  settlement to which
Executive  is a party  that the excess  parachute  payment as defined in Section
4999 of the Code,  reduced as described  above,  is  different  from the Initial
Excess Parachute  Payment (such different amount being hereafter  referred to as
the  "Determinative  Excess Parachute  Payment") then the Company's  independent
accountants shall determine the amount (the "Adjustment  Amount") Executive must
pay to the  Company  or the  Company  must  pay to  Executive  in  order  to put
Executive (or the Company, as the case may be) in the same position as Executive
(or the  Company,  as the case may be)  would  have been if the  Initial  Excess
Parachute Payment had been equal to the Determinative  Excess Parachute Payment.
In determining the Adjustment  Amount,  the independent  accountants  shall take
into account any and all taxes (including any penalties and interest) paid by or
for Executive or refunded to Executive or for  Executive's  benefit.  As soon as
practicable  after the  Adjustment  Amount has been so  determined,  the Company
shall pay the  Adjustment  Amount to  Executive  or  Executive  shall  repay the
Adjustment  Amount  to the  Company,  as the case may be.  The  purpose  of this
paragraph is to assure that (i) Executive is not reimbursed  more for the golden


                                       11
<PAGE>

parachute  excise tax than is  necessary  to make him  whole,  and (ii) if it is
subsequently  determined that additional  golden parachute excise tax is owed by
him, additional reimbursement payments will be made to him to make him whole for
the additional excise tax.

     (d) In each  calendar  year that  Executive  receives  payments or benefits
under the Bank Employment  Agreement  and/or this Agreement  and/or a Company or
Bank sponsored  employee  benefit plan,  Executive shall report on his state and
federal  income  tax  returns  such   information  as  is  consistent  with  the
determination  made by the  independent  accountants of the Company as described
above. The Company shall indemnify and hold Executive  harmless from any and all
losses, costs and expenses (including without limitation,  reasonable attorney's
fees,  interest,  fines and penalties)  that Executive  incurs as a result of so
reporting  such  information.  Executive  shall  promptly  notify the Company in
writing whenever  Executive  receives notice of the institution of a judicial or
administrative  proceeding,  formal  or  informal,  in  which  the  federal  tax
treatment  under  Section  4999 of the Code of any amount paid or payable  under
this  Section is being  reviewed or is in  dispute.  The  Company  shall  assume
control at its expense over all legal and accounting  matters pertaining to such
federal  tax  treatment  (except  to the extent  necessary  or  appropriate  for
Executive to resolve any such proceeding with respect to any matter unrelated to
amounts paid or payable  pursuant to this  contract).  Executive shall cooperate
fully with the Company in any such  proceeding.  Executive  shall not enter into
any  compromise or settlement or otherwise  prejudice any rights the Company may
have in connection therewith without prior consent of the Company.

12.  NON-COMPETITION

     (a) Upon any termination of Executive's employment hereunder,  other than a
termination  (whether  voluntary or  involuntary) in connection with a Change in
Control,  as a result of which the Company  and/or the Bank is paying  Executive
the benefits entitled to Executive under Section 6 of this Agreement,  Executive
agrees not to compete  with the Bank  and/or the Company for a period of one (1)
year  following such  termination in any city,  town or county in which the Bank
and/or the  Company  has an office or has filed an  application  for  regulatory
approval to establish an office,  determined  as of the  effective  date of such
termination,  except as agreed to pursuant to a  resolution  duly adopted by the
Board.  Executive  agrees that during such period and within said area,  cities,
towns and counties, Executive shall not work for or advise, consult or otherwise
serve  with,  directly  or  indirectly,  any entity  whose  business  materially
competes with the depository,  lending or other business  activities of the Bank
and/or the Company.  The parties hereto,  recognizing  that  irreparable  injury
would  result to the Bank and/or the  Company,  its business and property in the
event of Executive's breach of this Subsection 12(a), agree that in the event of
any such breach by Executive,  the Bank and/or the Company would be entitled, in
addition  to any other  remedies  and damages  available,  to an  injunction  to
restrain  the  violation  hereof by  Executive,  Executive's  partners,  agents,
employers,  employees  and all  persons  acting for or with  Executive.  Nothing
herein  shall be  construed  as  prohibiting  the Bank and/or the  Company  from
pursuing  any other  remedies  available to the Bank and/or the Company for such
breach or threatened breach, including the recovery of damages from Executive.


                                       12
<PAGE>

     (b)  Executive  recognizes  and  acknowledges  that  the  knowledge  of the
business  activities  and plans  for  business  activities  of the  Company  and
affiliates  thereof,  as it may exist from time to time, is a valuable,  special
and unique asset of the business of the Company.  Executive will not,  during or
after the term of his employment,  disclose any knowledge of the past,  present,
planned or considered  business  activities of the Company or affiliates thereof
to any  person,  firm,  corporation,  or other  entity for any reason or purpose
whatsoever  (except for such disclosure as may be required to be provided to any
federal  banking  agency  with  jurisdiction  over the  Company  or  Executive).
Notwithstanding the foregoing,  Executive may disclose any knowledge of banking,
financial and/or economic principles, concepts or ideas which are not solely and
exclusively  derived from the business plans and activities of the Company,  and
Executive may disclose any  information  regarding the Bank or the Company which
is otherwise publicly  available.  In the event of a breach or threatened breach
by Executive of the provisions of this Section,  the Company will be entitled to
an injunction  restraining  Executive from disclosing,  in whole or in part, the
knowledge of the past, present, planned or considered business activities of the
Company or  affiliates  thereof,  or from  rendering any services to any person,
firm,  corporation or other entity to whom such knowledge,  in whole or in part,
has been  disclosed or is  threatened to be  disclosed.  Nothing  herein will be
construed as prohibiting the Company from pursuing any other remedies  available
to the Company for such breach or threatened  breach,  including the recovery of
damages from Executive.

13.  SOURCE OF PAYMENTS; NO DUPLICATION OF PAYMENTS

     (a) All payments provided in this Agreement shall be timely paid in cash or
check from the general funds of the Company.

     (b) Notwithstanding any provision here to the contrary,  to the extent that
payments and benefits as provided by this Agreement,  are paid to or received by
Executive under the Bank Employment  Agreement,  such payments and benefits paid
by the Bank will be subtracted from any amount due  simultaneously  to Executive
under similar provisions of this Agreement.

     (c) For financial  statement  purposes,  ongoing payments  pursuant to this
Agreement and the Bank Employment  Agreement  (collectively,  the  "Agreements")
shall  be  allocated  by the  Company  and the  Bank  on a  quarterly  basis  in
proportion to the services  rendered to the Company and the Bank,  respectively.
Termination payments made pursuant to the provisions of Section 6 of each of the
Agreements  shall be charged  and paid in  accordance  with the terms of Section
6(c) of the Bank Employment Agreement and Section 11 of this Agreement.

14.  NO EFFECT ON EMPLOYEE BENEFITS PLANS OR PROGRAMS

     The termination of Executive's employment during the term of this Agreement
or thereafter,  whether by the Company or by Executive,  shall have no effect on
the vested rights of the Executive  under the Company's or the Bank's  qualified
or non-qualified retirement,  pension, savings, thrift,  profit-sharing or stock
bonus plans,  group life, health (including  hospitalization,  medical and major
medical),  dental,  accident and long term  disability  insurance plans or other
employee benefit plans or programs,  or compensation  plans or programs in which
Executive was a participant.


                                       13
<PAGE>

15.  NO ATTACHMENT

     (a) Except as  required  by law,  no right to receive  payments  under this
Agreement  shall be  subject to  anticipation,  commutation,  alienation,  sale,
assignment,  encumbrance,  charge,  pledge, or  hypothecation,  or to execution,
attachment,  levy, or similar process or assignment by operation of law, and any
attempt,  voluntary  or  involuntary,  to affect any such action  shall be null,
void, and of no effect.

     (b) This  Agreement  shall be binding  upon,  and inure to the  benefit of,
Executive and the Company and their respective successors and assigns.

16.  ENTIRE AGREEMENT; MODIFICATION AND WAIVER

     (a) This  Agreement and the Bank  Employment  Agreement  contain the entire
agreement  of the  Executive,  the Company and the Bank  relating to the subject
matter  hereof,  and  supercede in its  entirety  any and all prior  agreements,
understandings  or  representations  relating  to  the  subject  matter  hereof,
including,  but not limited to, that certain  employment  agreement  between the
Bank and Executive dated January 7, 1994.

     (b) This  Agreement may not be modified or amended  except by an instrument
in writing signed by the parties hereto.

     (c) No term or  condition  of this  Agreement  shall be deemed to have been
waived, nor shall there be any estoppel against the enforcement of any provision
of this Agreement,  except by written  instrument of the party charged with such
waiver or estoppel.  No such written waiver shall be deemed a continuing  waiver
unless specifically  stated therein,  and each such waiver shall operate only as
to the specific  term or condition  waived and shall not  constitute a waiver of
such term or condition for the future as to any act other than that specifically
waived.

17.  REGULATORY PROVISIONS

     Notwithstanding  anything herein contained to the contrary, any payments to
the  Executive  by the  Company  are  subject  to  and  conditioned  upon  their
compliance  with Section 18(k) of the Federal  Deposit  Insurance Act, 12 U.S.C.
Section 1828(k),  and the regulations  promulgated  thereunder in 12 C.F.R. Part
359.

18.  SEVERABILITY

     If, for any reason,  any  provision of this  Agreement,  or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this  Agreement or any part of such  provision not held so invalid,  and each
such other  provision and part thereof shall to the full extent  consistent with
law continue in full force and effect.

19.  HEADINGS FOR REFERENCE ONLY

     The headings of sections  and  paragraphs  herein are  included  solely for
convenience of reference and shall not control the meaning or  interpretation of
any of the provisions of this Agreement.


                                       14
<PAGE>

20.  GOVERNING LAW

     This  Agreement  shall be  governed by the laws of the State of Florida but
only to the extent not superseded by federal law.

21.  ARBITRATION

     Except as otherwise expressly provided elsewhere in this Agreement,  in the
event that any dispute  should  arise  between  the  parties as to the  meaning,
effect,  performance,  enforcement,  or other  issue  in  connection  with  this
Agreement, which dispute cannot be resolved by the parties, the dispute shall be
decided  by final  and  binding  arbitration  of a panel  of three  arbitrators.
Proceedings in arbitration and its conduct shall be governed by the rules of the
American Arbitration  Association ("AAA") applicable to commercial  arbitrations
(the "Rules") except as modified by this Section. The Employee shall appoint one
arbitrator,  the Company  shall appoint one  arbitrator,  and the third shall be
appointed by the two arbitrators  appointed by the parties. The third arbitrator
shall be impartial  and shall serve as chairman of the panel.  The parties shall
appoint  their  arbitrators  within  thirty  (30)  days  after  the  demand  for
arbitration is served, failing which the AAA promptly shall appoint a defaulting
party's  arbitrator,  and the two arbitrators  shall select the third arbitrator
within  fifteen  (15) days after their  appointment,  or if they cannot agree or
fail to so appoint,  then the AAA promptly  shall appoint the third  arbitrator.
The  arbitrators  shall render their decision in writing within thirty (30) days
after the close of  evidence  or other  termination  of the  proceedings  by the
panel,  and the  decision  of a majority of the  arbitrators  shall be final and
binding upon the parties, nonappealable, except in accordance with the Rules and
enforceable in accordance  with the Florida  Arbitration  Code or any applicable
successor legislation. Any hearings in the arbitration shall be held in the Palm
Beach County, Florida unless the parties shall agree upon a different venue, and
shall be private and not open to the public.  Each party shall bear the fees and
expenses of its arbitrator, counsel, and witnesses, and the fees and expenses of
the third  arbitrator  shall be shared equally by the parties.  The costs of the
arbitration,  including  the fees of AAA,  shall be  borne  as  directed  in the
decision of the panel.

22.  PAYMENT OF LEGAL FEES

     All  reasonable  legal fees paid or incurred by  Executive  pursuant to any
dispute or question of  interpretation  relating to this Agreement shall be paid
or reimbursed by the Company,  provided that the dispute or  interpretation  has
been settled by Executive  and the Company or has been  resolved in  Executive's
favor.

23.  INDEMNIFICATION

     During  the  term  of this  Agreement  and for a  period  of six (6)  years
thereafter,  the Company shall provide Executive (including his heirs, executors
and  administrators)  with  coverage  under a standard  directors  and  officers
liability  insurance policy at its expense,  and shall indemnify  Executive (and
his heirs,  executors and  administrators) to the fullest extent permitted under
Delaware law against all expenses and liabilities  reasonably incurred by him in
connection with or arising out of any action, suit or proceeding in which he may
be involved by reason of his having been a director,  officer or employee of the
Company  (whether or not he continues  to be a director,  officer or employee at
the  time  of  incurring  such  expenses  or  liabilities),  such  expenses  and
liabilities  to  include,  but not be limited  to,  judgments,  court  costs and
attorneys fees and the cost of reasonable  settlements (such settlements must be
approved by the Board of Directors of the Company).


                                       15
<PAGE>

24.  SUCCESSOR TO THE COMPANY

     The Company  shall  require any  successor or assignee,  whether  direct or
indirect,  by  purchase,   merger,   consolidation  or  otherwise,   to  all  or
substantially  all the business or assets of the Bank or the Company,  expressly
and  unconditionally  to assume and agree to perform the  Company's  obligations
under this Agreement, in the same manner and to the same extent that the Company
would be  required  to perform if no such  succession  or  assignment  had taken
place.

                     [Remainder of Page Intentionally Blank]








                                       16
<PAGE>


                                   SIGNATURES

     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by
its duly authorized officer, and Executive has signed this Agreement,  effective
as of the date first above written.


ATTEST:                               FIDELITY BANKSHARES, INC.



____________________                  By:
Secretary                                 -------------------------------------


WITNESS:                              EXECUTIVE:



____________________                  By:
                                          ------------------------------------
                                          Vince A. Elhilow
                                          President and Chief Executive Officer









                                       17