Exhibit 10.20


 


Salary
continuation Agreement


 


This Salary Continuation
Agreement (the “Agreement”), by and between First South Bank, located in Washington, North Carolina (the “Employer”),
and Bruce W. Elder (the “Executive”), made this 3rd day of June, 2014, formalizes the agreements and understanding
between the Employer and the Executive.


 


WITNESSETH:


 


WHEREAS, the Executive
is employed by the Employer;


 


WHEREAS, the Employer
recognizes the valuable services the Executive has performed for the Employer and wishes to encourage the Executive’s continued
employment and to provide the Executive with additional incentive to achieve corporate objectives;


 


WHEREAS, the Employer
wishes to provide the terms and conditions upon which the Employer shall pay additional retirement benefits to the Executive;


 


WHEREAS, the Employer
and the Executive intend this Agreement shall at all times be administered and interpreted in compliance with Code Section 409A;
and


 


WHEREAS, the Employer
intends this Agreement shall at all times be administered and interpreted in such a manner as to constitute an unfunded nonqualified
deferred compensation arrangement, maintained primarily to provide supplemental retirement benefits for the Executive, a member
of select group of management or highly compensated employee of the Employer.


 


NOW THEREFORE, in consideration
of the premises and of the mutual promises herein contained, the Employer and the Executive agree as follows:


 


ARTICLE 1


DEFINITIONS


 


For the purpose of
this Agreement, the following phrases or terms shall have the indicated meanings:


 


1.1           “Accrued
Benefit” means the dollar value of the liability that should be accrued by the Employer, under Generally Accepted Accounting
Principles, for the Employer’s obligation to the Executive under this Agreement, calculated by applying Accounting Standards
Codification 710-10 and the Discount Rate.


 


1.2           “Administrator”
means the Board or its designee.


 


1.3           “Affiliate”
means any business entity with whom the Employer would be considered a single employer under Section 414(b) and 414(c) of the Code.
Such term shall be interpreted in a manner consistent with the definition of “service recipient” contained in Code
Section 409A.


 




    	 



    	 



    

 


1.4           “Beneficiary”
means the person or persons designated in writing by the Executive to receive benefits hereunder in the event of the Executive’s
death.


 


1.5           “Board”
means the Board of Directors of the Employer.


 


1.6           “Cause”
means any of the following acts or circumstances: gross negligence or gross neglect of duties to the Employer; conviction of a
felony or of a gross misdemeanor involving moral turpitude in connection with the Executive’s employment with the Employer;
or fraud, disloyalty, dishonesty or willful violation of any law or significant Employer policy committed in connection with the
Executive's employment and resulting in a material adverse effect on the Employer.


 


1.7           “Change
in Control” means a change in the ownership or effective control of the Employer, or in the ownership of a substantial
portion of the assets of the Employer, as such change is defined in Code Section 409A and regulations thereunder.


 


1.8           “Claimant”
means a person who believes that he or she is being denied a benefit to which he or she is entitled hereunder.


 


1.9           “Code”
means the Internal Revenue Code of 1986, as amended.


 


1.10         “Disability”
means a condition of the Executive whereby the Executive either: (i) is unable to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to
last for a continuous period of not less than 12 months, or (ii) is, by reason of any medically determinable physical or mental
impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months,
receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees
of the Employer. The Administrator will determine whether the Executive has incurred a Disability based on its own good faith determination
and may require the Executive to submit to reasonable physical and mental examinations for this purpose. The Executive will also
be deemed to have incurred a Disability if determined to be totally disabled by the Social Security Administration or in accordance
with a disability insurance program, provided that the definition of disability applied under such disability insurance program
complies with the initial sentence of this Section.


 


1.11         “Discount
Rate” means the rate used by the Administrator for determining the Accrued Benefit. The initial Discount Rate is five
per cent (5.0%). The Administrator may adjust the Discount Rate to maintain the rate within reasonable standards according to Generally
Accepted Accounting Principles and applicable bank regulatory guidance.


 


1.12         
“Early Termination” means Separation from Service after the completion of five (5) Plan Years and before Normal
Retirement Age except when such Separation from Service occurs within twenty-four (24) months following a Change in Control or
due to termination for Cause.


 




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1.13         “Effective
Date” means May 1, 2014.


 


1.14         “ERISA”
means the Employee Retirement Income Security Act of 1974, as amended.


 


1.15         “Normal
Retirement Age” means the date the Executive attains age sixty-five (65).


 


1.16         “Plan
Year” means each twelve (12) month period commencing on January 1 and ending on December 31 of each year. The initial
Plan Year shall commence on the Effective Date and end on the following December 31.


 


1.17         “Schedule
A” means the schedule attached hereto and made a part hereof. Schedule A shall be updated upon a change to any of the
benefits described in Article 2 hereof.


 


1.18         “Separation
from Service” means a termination of the Executive’s employment with the Employer and its Affiliates for reasons
other than death or Disability. A Separation from Service may occur as of a specified date for purposes of the Agreement even if
the Executive continues to provide some services for the Employer or its Affiliates after that date, provided that the facts and
circumstances indicate that the Employer and the Executive reasonably anticipated at that date that either no further services
would be performed after that date, or that the level of bona fide services the Executive would perform after such date (whether
as an employee or as an independent contractor) would permanently decrease to no more than twenty percent (20%) of the average
level of bona fide services performed over the immediately preceding thirty-six (36) month period (or the full period during which
the Executive performed services for the Employer, if that is less than thirty-six (36) months). A Separation from Service will
not be deemed to have occurred while the Executive is on military leave, sick leave, or other bona fide leave of absence if the
period of such leave does not exceed six (6) months or, if longer, the period for which a statute or contract provides the Executive
with the right to reemployment with the Employer. If the Executive’s leave exceeds six (6) months but the Executive is not
entitled to reemployment under a statute or contract, the Executive incurs a Separation of Service on the next day following the
expiration of such six (6) month period. In determining whether a Separation of Service occurs the Administrator shall take into
account, among other things, the definition of “service recipient” and “employer” set forth in Treasury
regulation §1.409A-1(h)(3). The Administrator shall have full and final authority, to determine conclusively whether a Separation
from Service occurs, and the date of such Separation from Service.


 


1.19         “Specified
Employee” means an individual that satisfies the definition of a “key employee” of the Employer as such term
is defined in Code §416(i) (without regard to Code §416(i)(5)), provided that the stock of the Employer is publicly traded
on an established securities market or otherwise, as defined in Code §1.897-1(m). If the Executive is a key employee at any
time during the twelve (12) months ending on December 31, the Executive is a Specified Employee for the twelve (12) month period
commencing on the first day of the following April.


 




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ARTICLE 2


PAYMENT OF BENEFITS


 


2.1           Normal
Retirement Benefit. Upon Separation from Service after Normal Retirement Age, the Employer shall pay the Executive an annual
benefit in the amount of Twenty-Eight Thousand Dollars ($28,000) in lieu of any other benefit hereunder. The annual benefit will
be paid in equal monthly installments commencing the month following Separation from Service and continuing for fifteen (15) years,
subject to the conditions and limitations hereinafter set forth.


 


2.2           Early
Termination Benefit. If Early Termination occurs, the Employer shall pay the Executive the Early Termination annual benefit
shown on Schedule A for the Plan Year ending immediately prior to Separation from Service in lieu of any other benefit hereunder.
The annual benefit will be paid in equal monthly installments commencing the month following Normal Retirement Age and continuing
for fifteen (15) years.


 


2.3           Disability
Benefit. In the event the Executive suffers a Disability prior to Normal Retirement Age the Employer shall pay the Executive
the Disability annual benefit shown on Schedule A for the Plan Year ending immediately prior to Disability in lieu of any other
benefit hereunder. The annual benefit will be paid in equal monthly installments commencing the month following Normal Retirement
Age and continuing for fifteen (15) years.


 


2.4           Change
in Control Benefit. If a Change in Control occurs, followed within twenty-four (24) months by Separation of Service prior to
Normal Retirement Age, the Employer shall pay the Executive an annual benefit in the amount of Twenty-Eight Thousand Dollars ($28,000)
in lieu of any other benefit hereunder. The annual benefit will be paid in equal monthly installments commencing the month following
Normal Retirement Age and continuing for fifteen (15) years.


 


2.5           Death
Prior to Separation from Service and Disability. In the event the Executive dies prior to Separation from Service and
Disability, the Employer shall pay the Beneficiary an annual benefit in the amount of Twenty-Eight Thousand Dollars ($28,000) in
lieu of any other benefit hereunder. The annual benefit will be paid in equal monthly installments commencing the month following
the Executive’s death and continuing for fifteen (15) years.


 


2.6           Death
after Separation from Service or Disability and before Normal Retirement Age. In the event the Executive dies after Separation
from Service or Disability, and before Normal Retirement Age, the Employer shall pay the Beneficiary an annual benefit in the amount
of Twenty-Eight Thousand Dollars ($28,000) in lieu of any other benefit hereunder. The annual benefit will be paid in equal monthly
installments commencing the month following the Executive’s death and continuing for fifteen (15) years.


 




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2.7           Death
Subsequent to Commencement of Benefit Payments. In the event the Executive dies while receiving payments, but prior to receiving
all payments due and owing hereunder, the Employer shall pay the Beneficiary the same amounts at the same times as the Employer
would have paid the Executive had the Executive survived.


 


2.8           Termination
for Cause. If the Employer terminates the Executive’s employment for Cause, then the Executive shall not be entitled
to any benefits under the terms of this Agreement.


 


2.9           Restriction
on Commencement of Distributions.  Notwithstanding any provision of this Agreement to the contrary, if the Executive is
considered a Specified Employee at the time of Separation from Service, the provisions of this Section shall govern all distributions
hereunder. Distributions which would otherwise be made to the Executive due to Separation from Service shall not be made during
the first six (6) months following Separation from Service. Rather, any distribution which would otherwise be paid to the Executive
during such period shall be accumulated and paid to the Executive in a lump sum on the first day of the seventh month following
Separation from Service, or if earlier, upon the Executive’s death. All subsequent distributions shall be paid as they would
have had this Section not applied.


 


2.10         Acceleration
of Payments. Except as specifically permitted herein, no acceleration of the time or schedule of any payment may be made hereunder.
Notwithstanding the foregoing, payments may be accelerated, in accordance with the provisions of Treasury Regulation §1.409A-3(j)(4)
in the following circumstances: (i) as a result of certain domestic relations orders; (ii) in compliance with ethics agreements
with the federal government; (iii) in compliance with the ethics laws or conflicts of interest laws; (iv) in limited cashouts (but
not in excess of the limit under Code §402(g)(1)(B)); (v) to pay employment-related taxes; or (vi) to pay any taxes that may
become due at any time that the Agreement fails to meet the requirements of Code Section 409A.


 


2.11         Delays
in Payment by Employer. A payment may be delayed to a date after the designated payment date under any of the circumstances
described below, and the provision will not fail to meet the requirements of establishing a permissible payment event. The delay
in the payment will not constitute a subsequent deferral election, so long as the Employer treats all payments to similarly situated
Participants on a reasonably consistent basis.


 


(a)          Payments
subject to Code Section 162(m). If the Employer reasonably anticipates that the Employer’s deduction with respect to
any distribution under this Agreement would be limited or eliminated by application of Code Section 162(m), then to the extent
deemed necessary by the Employer to ensure that the entire amount of any distribution from this Agreement is deductible, the Employer
may delay payment of any amount that would otherwise be distributed under this Agreement. The delayed amounts shall be distributed
to the Executive (or the Beneficiary in the event of the Executive’s death) at the earliest date the Employer reasonably
anticipates that the deduction of the payment of the amount will not be limited or eliminated by application of Code Section 162(m).


 




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(b)          Payments
that would violate Federal securities laws or other applicable law. A payment may be delayed where the Employer reasonably
anticipates that the making of the payment will violate Federal securities laws or other applicable law provided that the payment
is made at the earliest date at which the Employer reasonably anticipates that the making of the payment will not cause such violation.
The making of a payment that would cause inclusion in gross income or the application of any penalty provision of the Internal
Revenue Code is not treated as a violation of law.


 


(c)          Solvency.
Notwithstanding the above, a payment may be delayed where the payment would jeopardize the ability of the Employer to continue
as a going concern.


 


2.12         Treatment
of Payment as Made on Designated Payment Date. Solely for purposes of determining compliance with Code Section 409A, any payment
under this Agreement made after the required payment date shall be deemed made on the required payment date provided that such
payment is made by the latest of: (i) the end of the calendar year in which the payment is due; (ii) the 15th day of
the third calendar month following the payment due date; (iii) if Employer cannot calculate the payment amount on account of administrative
impracticality which is beyond the Executive’s control, the end of the first calendar year which payment calculation is practicable;
and (iv) if Employer does not have sufficient funds to make the payment without jeopardizing the Employer’s solvency, in
the first calendar year in which the Employer’s funds are sufficient to make the payment.


 


2.13         Facility
of Payment. If a distribution is to be made to a minor, or to a person who is otherwise incompetent, then the Administrator
may make such distribution: (i) to the legal guardian, or if none, to a parent of a minor payee with whom the payee maintains his
or her residence; or (ii) to the conservator or administrator or, if none, to the person having custody of an incompetent payee.
Any such distribution shall fully discharge the Employer and the Administrator from further liability on account thereof.


 


2.14         Excise
Tax Gross Up. In the event any payment described herein, when added to all other amounts or benefits provided to or on behalf
of the Executive in connection with his Separation from Service would result in the imposition of an excise tax under Code Section
4999, the Employer will pay the Executive an additional cash payment (the “Gross-Up Payment”) in an amount such that
the after-tax proceeds of the Gross-Up Payment (including any income tax or excise tax on the Gross-Up Payment) will be equal to
the amount of the excise tax.


 




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2.15         Changes
in Form of Timing of Benefit Payments. The Employer and the Executive may, subject to the terms hereof, amend this Agreement
to delay the timing or change the form of payments. Any such amendment:


 


(a)          must
take effect not less than twelve (12) months after the amendment is made;


(b)          must,
for benefits distributable due solely to the arrival of a specified date, or on account of Separation from Service or Change in
Control, delay the commencement of distributions for a minimum of five (5) years from the date the first distribution was originally
scheduled to be made;


(c)          must,
for benefits distributable due solely to the arrival of a specified date, be made not less than twelve (12) months before distribution
is scheduled to begin; and


(d)          may
not accelerate the time or schedule of any distribution.


 


ARTICLE 3


BENEFICIARIES


 


3.1           Designation
of Beneficiaries. The Executive may designate any person to receive any benefits payable under the Agreement upon the Executive’s
death, and the designation may be changed from time to time by the Executive by filing a new designation. Each designation will
revoke all prior designations by the Executive, shall be in the form prescribed by the Administrator, and shall be effective only
when filed in writing with the Administrator during the Executive’s lifetime. If the Executive names someone other than the
Executive’s spouse as a Beneficiary, the Administrator may, in its sole discretion, determine that spousal consent is required
to be provided in a form designated by the Administrator, executed by the Executive’s spouse and returned to the Administrator.
The Executive’s beneficiary designation shall be deemed automatically revoked if the Beneficiary predeceases the Executive
or if the Executive names a spouse as Beneficiary and the marriage is subsequently dissolved.


 


3.2           Absence
of Beneficiary Designation. In the absence of a valid Beneficiary designation, or if, at the time any benefit payment is due
to a Beneficiary, there is no living Beneficiary validly named by the Executive, the Employer shall pay the benefit payment to
the Executive’s spouse. If the spouse is not living then the Employer shall pay the benefit payment to the Executive’s
living descendants per stirpes, and if there no living descendants, to the Executive’s estate. In determining the
existence or identity of anyone entitled to a benefit payment, the Employer may rely conclusively upon information supplied by
the Executive’s personal representative, executor, or administrator.


 


ARTICLE
4


ADMINISTRATION


 


4.1           Administrator
Duties. The Administrator shall be responsible for the management, operation, and administration of the Agreement. When making
a determination or calculation, the Administrator shall be entitled to rely on information furnished by the Employer, Executive
or Beneficiary. No provision of this Agreement shall be construed as imposing on the Administrator any fiduciary duty under ERISA
or other law, or any duty similar to any fiduciary duty under ERISA or other law.


 




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4.2           Administrator
Authority. The Administrator shall enforce this Agreement in accordance with its terms, shall be charged with the general administration
of this Agreement, and shall have all powers necessary to accomplish its purposes.


 


4.3           Binding
Effect of Decision. The decision or action of the Administrator with respect to any question arising out of or in connection
with the administration, interpretation or application of this Agreement and the rules and regulations promulgated hereunder shall
be final, conclusive and binding upon all persons having any interest in this Agreement.


 


4.4           Compensation,
Expenses and Indemnity. The Administrator shall serve without compensation for services rendered hereunder. The Administrator
is authorized at the expense of the Employer to employ such legal counsel and/or recordkeeper as it may deem advisable to assist
in the performance of its duties hereunder. Expense and fees in connection with the administration of this Agreement shall be paid
by the Employer.


 


4.5           Employer
Information. The Employer shall supply full and timely information to the Administrator on all matters relating to the Executive’s
compensation, death, Disability or Separation from Service, and such other information as the Administrator reasonably requires.


 


4.6           Termination
of Participation. If the Administrator determines in good faith that the Executive no longer qualifies as a member of a select
group of management or highly compensated employees, as determined in accordance with ERISA, the Administrator shall have the right,
in its sole discretion, to cease further benefit accruals hereunder.


 


4.7           Compliance
with Code Section 409A. The Employer and the Executive intend that the Agreement comply with the provisions of Code Section
409A to prevent the inclusion in gross income of any amounts deferred hereunder in a taxable year prior to the year in which amounts
are actually paid to the Executive or Beneficiary. This Agreement shall be construed, administered and governed in a manner that
affects such intent, and the Administrator shall not take any action that would be inconsistent therewith.


 


ARTICLE 5


Claims
and Review Procedures


 


5.1           Claims
Procedure. A Claimant who has not received benefits under this Agreement that he or she believes should be distributed shall
make a claim for such benefits as follows.


 




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(a)          Initiation
– Written Claim. The Claimant initiates a claim by submitting to the Administrator a written claim for the benefits.
If such a claim relates to the contents of a notice received by the Claimant, the claim must be made within sixty (60) days
after such notice was received by the Claimant. All other claims must be made within one hundred eighty (180) days of the
date on which the event that caused the claim to arise occurred. The claim must state with particularity the determination desired
by the Claimant.


(b)          Timing
of Administrator Response. The Administrator shall respond to such Claimant within ninety (90) days after receiving
the claim. If the Administrator determines that special circumstances require additional time for processing the claim, the Administrator
can extend the response period by an additional ninety (90) days by notifying the Claimant in writing, prior to the end of the
initial ninety (90) day period, that an additional period is required. The notice of extension must set forth the special circumstances
and the date by which the Administrator expects to render its decision.


(c)          Notice
of Decision. If the Administrator denies part or all of the claim, the Administrator shall notify the Claimant in writing of
such denial. The Administrator shall write the notification in a manner calculated to be understood by the Claimant. The notification
shall set forth: (i) the specific reasons for the denial; (ii) a reference to the specific provisions of this Agreement on which
the denial is based; (iii) a description of any additional information or material necessary for the Claimant to perfect the claim
and an explanation of why it is needed; (iv) an explanation of this Agreement’s review procedures and the time limits applicable
to such procedures; and (v) a statement of the Claimant’s right to bring a civil action under ERISA Section 502(a) following
an adverse benefit determination on review.


 


5.2           Review
Procedure. If the Administrator denies part or all of the claim, the Claimant shall have the opportunity for a full and fair
review by the Administrator of the denial as follows.


 


(a)          Initiation
– Written Request. To initiate the review, the Claimant, within sixty (60) days after receiving the Administrator’s
notice of denial, must file with the Administrator a written request for review.


(b)          Additional
Submissions – Information Access. The Claimant shall then have the opportunity to submit written comments, documents,
records and other information relating to the claim. The Administrator shall also provide the Claimant, upon request and free of
charge, reasonable access to, and copies of, all documents, records and other information relevant (as defined in applicable ERISA
regulations) to the Claimant’s claim for benefits.


(c)          Considerations
on Review. In considering the review, the Administrator shall take into account all materials and information the Claimant
submits relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.


(d)          Timing
of Administrator Response. The Administrator shall respond in writing to such Claimant within sixty (60) days after receiving
the request for review. If the Administrator determines that special circumstances require additional time for processing the claim,
the Administrator can extend the response period by an additional sixty (60) days by notifying the Claimant in writing, prior to
the end of the initial sixty (60) day period, that an additional period is required. The notice of extension must set forth the
special circumstances and the date by which the Administrator expects to render its decision.


 




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(e)          Notice
of Decision. The Administrator shall notify the Claimant in writing of its decision on review. The Administrator shall write
the notification in a manner calculated to be understood by the Claimant. The notification shall set forth: (a) the specific reasons
for the denial; (b) a reference to the specific provisions of this Agreement on which the denial is based; (c) a statement that
the Claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records
and other information relevant (as defined in applicable ERISA regulations) to the Claimant’s claim for benefits; and (d)
a statement of the Claimant’s right to bring a civil action under ERISA Section 502(a).


 


ARTICLE 6


AMENDMENT AND TERMINATION


 


6.1           Agreement
Amendment Generally. Except as provided in Section 6.2, this Agreement may be amended only by a written agreement signed by
both the Employer and the Executive.


 


6.2           Amendment
to Insure Proper Characterization of Agreement. Notwithstanding anything in this Agreement to the contrary, the Agreement may
be amended by the Employer at any time, if found necessary in the opinion of the Employer, i) to ensure that the Agreement is characterized
as plan of deferred compensation maintained for a select group of management or highly compensated employees as described under
ERISA, ii) to conform the Agreement to the requirements of any applicable law or iii) to comply with the written instructions of
the Employer’s auditors or banking regulators.


 


6.3           Agreement
Termination Generally. Except as provided in Section 6.4, this Agreement may be terminated only by a written agreement signed
by the Company and the Executive. Such termination shall not cause a distribution of benefits under this Agreement. Rather, upon
such termination benefit distributions will be made at the earliest distribution event permitted under Article 2.


 


6.4           Effect
of Complete Termination. Notwithstanding anything to the contrary in Section 6.3, and subject to the requirements of Code Section
409A and Treasury Regulations §1.409A-3(j)(4)(ix), at certain times the Employer may completely terminate and liquidate the
Agreement. In the event of such a complete termination under subsection (a) or (c), the Employer shall pay Accrued Benefit to the
Executive. In the event of such a complete termination under subsection (b), the Employer shall pay the present value, calculated
using the Discount Rate, of the Change in Control benefit described in Section 2.4. Such complete termination of the Agreement
shall occur only under the following circumstances and conditions.


 




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(a)          Corporate
Dissolution or Bankruptcy. The Employer may terminate and liquidate this Agreement within twelve (12) months of a corporate
dissolution taxed under Code Section 331, or with the approval of a bankruptcy court pursuant to 11 U.S.C. §503(b)(1)(A),
provided that all benefits paid under the Agreement are included in the Executive’s gross income in the latest of: (i) the
calendar year which the termination occurs; (ii) the calendar year in which the amount is no longer subject to a substantial risk
of forfeiture; or (iii) the first calendar year in which the payment is administratively practicable.


(b)          Change
in Control. The Employer may terminate and liquidate this Agreement by taking irrevocable action to terminate and liquidate
within the thirty (30) days preceding or the twelve (12) months following a Change in Control. This Agreement will then be treated
as terminated only if all substantially similar arrangements sponsored by the Employer which are treated as deferred under a single
plan under Treasury Regulations §1.409A-1(c)(2) are terminated and liquidated with respect to each participant who experienced
the Change in Control so that the Executive and any participants in any such similar arrangements are required to receive all amounts
of compensation deferred under the terminated arrangements within twelve (12) months of the date the Employer takes the irrevocable
action to terminate the arrangements.


(c)          Discretionary
Termination. The Employer may terminate and liquidate this Agreement provided that: (i) the termination does not occur proximate
to a downturn in the financial health of the Employer; (ii) all arrangements sponsored by the Employer and Affiliates that would
be aggregated with any terminated arrangements under Treasury Regulations §1.409A-1(c) are terminated; (iii) no payments,
other than payments that would be payable under the terms of this Agreement if the termination had not occurred, are made within
twelve (12) months of the date the Employer takes the irrevocable action to terminate this Agreement; (iv) all payments are made
within twenty-four (24) months following the date the Employer takes the irrevocable action to terminate and liquidate this Agreement;
and (v) neither the Employer nor any of its Affiliates adopt a new arrangement that would be aggregated with any terminated arrangement
under Treasury Regulations §1.409A-1(c) if the Executive participated in both arrangements, at any time within three (3) years
following the date the Employer takes the irrevocable action to terminate this Agreement.


 


ARTICLE 7


MISCELLANEOUS


 


7.1           No
Effect on Other Rights. This Agreement constitutes the entire agreement between the Employer and the Executive as to the subject
matter hereof. No rights are granted to the Executive by virtue of this Agreement other than those specifically set forth herein.
Nothing contained herein will confer upon the Executive the right to be retained in the service of the Employer nor limit the right
of the Employer to discharge or otherwise deal with the Executive without regard to the existence hereof.


 




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7.2           State
Law. To the extent not governed by ERISA, the provisions of this Agreement shall be construed and interpreted according to
the internal law of the State of North Carolina without regard to its conflicts of laws principles.


 


7.3           Validity.
In case any provision of this Agreement shall be illegal or invalid for any reason, said illegality or invalidity shall not affect
the remaining parts hereof, but this Agreement shall be construed and enforced as if such illegal or invalid provision had never
been inserted herein.


 


7.4           Nonassignability.
Benefits under this Agreement cannot be sold, transferred, assigned, pledged, attached or encumbered in any manner.


 


7.5           Unsecured
General Creditor Status. Payment to the Executive or any Beneficiary hereunder shall be made from assets which shall continue,
for all purposes, to be part of the general, unrestricted assets of the Employer and no person shall have any interest in any such
asset by virtue of any provision of this Agreement. The Employer’s obligation hereunder shall be an unfunded and unsecured
promise to pay money in the future. In the event that the Employer purchases an insurance policy insuring the life of the Executive
to recover the cost of providing benefits hereunder, neither the Executive nor the Beneficiary shall have any rights whatsoever
in said policy or the proceeds therefrom.


 


7.6           Life
Insurance. If the Employer chooses to obtain insurance on the life of the Executive in connection with its obligations under
this Agreement, the Executive hereby agrees to take such physical examinations and to truthfully and completely supply such information
as may be required by the Employer or the insurance company designated by the Employer.


 


7.7           Unclaimed
Benefits. The Executive shall keep the Employer informed of the Executive’s current address and the current address of
the Beneficiary. If the location of the Executive is not made known to the Employer within three years after the date upon which
any payment of any benefits may first be made, the Employer shall delay payment of the Executive’s benefit payment(s) until
the location of the Executive is made known to the Employer; however, the Employer shall only be obligated to hold such benefit
payment(s) for the Executive until the expiration of three (3) years. Upon expiration of the three (3) year period, the Employer
may discharge its obligation by payment to the Beneficiary. If the location of the Beneficiary is not made known to the Employer
by the end of an additional two (2) month period following expiration of the three (3) year period, the Employer may discharge
its obligation by payment to the Executive’s estate. If there is no estate in existence at such time or if such fact cannot
be determined by the Employer, the Executive and Beneficiary shall thereupon forfeit all rights to any benefits provided under
this Agreement.


 


7.8           Suicide
or Misstatement. No benefit shall be distributed hereunder if the Executive commits suicide within two (2) years after the
Effective Date, or if an insurance company which issued a life insurance policy covering the Executive and owned by the Employer
denies coverage (i) for material misstatements of fact made by the Executive on an application for life insurance, or (ii) for
any other reason.


 




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7.9           Removal.
Notwithstanding anything in this Agreement to the contrary, the Employer shall not distribute any benefit under this Agreement
if the Executive is subject to a final removal or prohibition order issued pursuant to Section 8(e) of the Federal Deposit Insurance
Act. Furthermore, any payments made to the Executive pursuant to this Agreement shall, if required, comply with 12 U.S.C. 1828,
FDIC Regulation 12 CFR Part 359 and any other regulations or guidance promulgated thereunder.


 


7.10         Notice.
Any notice, consent or demand required or permitted to be given to the Employer or Administrator under this Agreement shall be
sufficient if in writing and hand-delivered or sent by registered or certified mail to the Employer’s principal business
office. Any notice or filing required or permitted to be given to the Executive or Beneficiary under this Agreement shall be sufficient
if in writing and hand-delivered or sent by mail to the last known address of the Executive or Beneficiary, as appropriate. Any
notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark or
on the receipt for registration or certification.


 


7.11         Headings
and Interpretation. Headings and sub-headings in this Agreement are inserted for reference and convenience only and shall not
be deemed part of this Agreement. Wherever the fulfillment of the intent and purpose of this Agreement requires and the context
will permit, the use of the masculine gender includes the feminine and use of the singular includes the plural.


 


7.12         Alternative
Action. In the event it becomes impossible for the Employer or the Administrator to perform any act required by this Agreement
due to regulatory or other constraints, the Employer or Administrator may perform such alternative act as most nearly carries out
the intent and purpose of this Agreement and is in the best interests of the Employer, provided that such alternative act does
not violate Code Section 409A.


 


7.13         Coordination
with Other Benefits. The benefits provided for the Executive or the Beneficiary under this Agreement are in addition to any
other benefits available to the Executive under any other plan or program for employees of the Employer. This Agreement shall supplement
and shall not supersede, modify, or amend any other such plan or program except as may otherwise be expressly provided herein.


 


7.14         Inurement.
This Agreement shall be binding upon and shall inure to the benefit of the Employer, its successor and assigns, and the Executive,
the Executive’s successors, heirs, executors, administrators, and the Beneficiary.


 


7.15         Tax
Withholding. The Employer may make such provisions and take such action as it deems necessary or appropriate for the withholding
of any taxes which the Employer is required by any law or regulation to withhold in connection with any benefits under the Agreement.
The Executive shall be responsible for the payment of all individual tax liabilities relating to any benefits paid hereunder.


 




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7.16         Aggregation
of Agreement. If the Employer offers other non-account balance deferred compensation plans, this Agreement and those plans
shall be treated as a single plan to the extent required under Code Section 409A.


 


IN WITNESS WHEREOF,
the Executive and a representative of the Employer have executed this Agreement document as indicated below:


 


	Executive:	 	Employer:
	 	 	 	 
	/s/ Bruce W. Elder	 	By:	/s/ Linley H. Gibbs, Jr.
	 	 	Its: 	Chairman, Compensation Committee


 




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