EX-10.6



 Exhibit 10.6 

BANK OF THE CAROLINAS CORPORATION 

135 Boxwood Village Drive 

Mocksville, North Carolina 27028 

July 15, 2014 
 Sandler O’Neill Asset
Management 
 150 East 52nd Street, 30th Floor 
 New York, NY
10028 
 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 the Purchasers named on Schedule A hereto (the “Sandler Purchasers”) 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 each Sandler Purchaser hereby agree as follows: 

1. Board Observation Rights. Following the Closing, for so long as a Sandler Purchaser, together with its Affiliates and Persons who share a common
discretionary investment adviser with such Sandler Purchaser, owns 1% or more of all of the outstanding shares of Common Stock (counting for such purposes all shares of Common Stock into or for which any securities owned by such Sandler Purchaser
are directly or indirectly convertible or exercisable) or until Sandler O’Neill Asset Management no longer wants to have Board Observation Rights, Sandler O’Neill Asset Management shall be entitled to have one (1) representative
attend (either in person or telephonically) all meetings of the Board of Directors of the Company in a nonvoting observer capacity, which will include the right and ability to participate in discussions of the Board, the right to receive notice of
all meetings of the Company’s Board of Directors and the right to receive copies of all notices, minutes, written consents, and other materials that it provides to members of the Board, at the same time so provided to the Board; provided, that
Sandler O’Neill Asset Management shall, and shall cause each of its 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, hold in confidence and not disclose or use, directly or indirectly, any such information, other than in connection with Sandler O’Neill Asset Management’s investment in the Company; provided further, that the Company reserves
the right not to provide information to Sandler O’Neill Asset Management or its representatives and to exclude them from any meeting or portion thereof if attendance at such meeting by them would adversely affect the attorney-client privilege
between the Company and its counsel or if any of Sandler O’Neill Asset Management or its representatives is or becomes a competitor, or affiliated in any manner with a competitor, of the Company (but must disclose to Sandler O’Neill Asset
Management that the Board is having such a meeting). 
 2. Conflicting Terms. This Side Letter Agreement constitutes a valid and binding agreement of
the Company and the Sandler Purchasers 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. 







 3. 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. 

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 T. Talbert
	Title:	 	CEO and President


 ACCEPTED AND AGREED as of 

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

					
	SANDLER O’NEILL ASSET MANAGEMENT
		
	By:	 	 /s/ Terry Maltese

		 	Name:	 	Terry Maltese
		 	Title:	 	President & CEO