EX-10.4



 Exhibit 10.4 

BANK OF THE CAROLINAS CORPORATION 

135 Boxwood Village Drive 

Mocksville, North Carolina 27028 

July 15, 2014 
 Bridge Equities III, LLC

 c/o SunBridge Capital Management 
 5425 Wisconsin Ave., Ste
701 
 Chevy Chase, MD 20815 
 Ladies and Gentlemen: 

Reference is made to that certain Stock Purchase Agreement, dated as of July 15, 2014 (the “Purchase Agreement”), between Bank
of the Carolinas Corporation, a North Carolina corporation (the “Company”) and the purchasers identified on the signature pages thereto (the “Purchasers”). In connection with the execution and delivery of the Purchase Agreement,
the Company and Bridge Equities III, LLC (“BEQIII”) are contemporaneously entering into this agreement (the “Side Letter Agreement”) and, as such, the parties hereto acknowledge and agree that this Side Letter Agreement shall
remain in full force and effect notwithstanding the execution and delivery of the Purchase Agreement. Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to such terms in the Purchase Agreement. 

The Company and BEQIII hereby agree as follows: 

1. Board Appointment. Following the Closing, BEQIII shall be entitled to have one (1) representative designated by BEQIII appointed to the Board
of Directors of the Company; provided, that BEQIII shall, and shall cause each of its designated representatives who may have access to any of the information made available at any meeting of the Company’s Board of Directors or provided by the
Company to its Board of Directors to, hold in confidence and not disclose or use, directly or indirectly, any such information, other than in connection with BEQIII’s investment in the Company 

2. Reimbursement for Legal Expenses. The Company shall pay the reasonable legal fees and expenses of counsel to BEQIII and its investment manager FJ
Capital Management, LLC (“FJ Manager”), not to exceed $20,000, incurred by BEQIII or FJ Manager in connection with the transactions contemplated by the Transaction Documents, which amount shall be paid directly by the Company to counsel
for BEQIII or FJ Manager at the Closing or paid by the Company to such counsel upon termination of the Purchase Agreement so long as such termination did not occur as a result of a material breach by BEQIII of any of its obligations under the
Purchase Agreement. 
 3. Certain Relationships. The Company acknowledges that (a) BEQIII is a party to an Investment Management
Agreement with FJ Manager, pursuant to which FJ Manager manages certain investments for BEQIII, (b) FJ Manager also manages certain investments for FJ Capital Long/Short Equity Fund LLC (“FJ Fund”) and (c) as of the date
hereof, the Investor’s affiliate, Bridge Equities, LLC, owns approximately 70% of the outstanding equity interests in FJ Fund. 
 The Company further
acknowledges that the Rock Creek Group, LP (“Rock Creek”) is a party to an Investment Management Agreement with FJ Manager pursuant to which FJ Manager sub-manages, on a discretionary basis, a segregated investment portfolio of the Rock
Creek Wilson Fund, SPC, Ltd. on behalf of Rock Creek. 







 Notwithstanding anything contained in the Purchase Agreement to the contrary, the Company agrees that the
relationships between BEQIII, FJ Manager, FJ Fund, and Rock Creek described above will not be deemed to breach any representation, warranty, or covenant contained in the Purchase Agreement. 

4. Governing Law. This Side Letter Agreement and all acts and transactions pursuant hereto shall be governed, construed and interpreted in
accordance with the laws of the State of Delaware without giving effect to principles of conflicts of laws. 
 5. Conflicting Terms. This Side Letter
Agreement constitutes a valid and binding agreement of the Company and BEQIII and shall survive the execution and delivery of the Purchase Agreement. In the event of any conflict between the provisions of this Side Letter Agreement and the
provisions of the Purchase Agreement, the provisions of this Side Letter Agreement shall prevail and be given effect. 
 6. Counterparts. This Side
Letter Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, with the same effect as if all parties had signed the same document. All such counterparts will be deemed an original, will be
construed together and will constitute one and the same instrument. 
 **Signatures on Next Page** 







 IN WITNESS WHEREOF, the parties have executed this Side Letter Agreement as of the date first
above written. 
  

			
	Very truly yours,
	
	BANK OF THE CAROLINAS CORPORATION
		
	By:	 	 /s/ Stephen R. Talbert

	Name:	 	Stephen R. Talbert
	Title:	 	CEO and President


 ACCEPTED AND AGREED as of 

the date first written above by the undersigned, 
 thereunto duly
authorized 
  

					
	BRIDGE EQUITIES III, LLC
	By:	 	SunBridge Manager, LLC
	Its:	 	Managing Member
			
		 	By:	 	 /s/ Timothy B. Peterson

		 	Name:	 	Timothy B. Peterson
		 	Title:	 	Vice President