Document:

Amended Salary Continuation Agreement btw the Company & R. Craig Patterson

 Exhibit 10.5 
 MIDCAROLINA BANK 
 RESTATED SALARY CONTINUATION AGREEMENT 
 THIS RESTATED SALARY CONTINUATION AGREEMENT (this “Agreement”) is made and entered into as of this 27th day of May, 2008, by and between
MidCarolina Bank, a bank chartered under North Carolina law (the “Bank”), and Robert C. Patterson, its Senior Vice President and Chief Credit Officer (the “Executive”), 
 WHEREAS, the Bank and the Executive are parties to an Amended Salary Continuation Agreement dated December 8, 2006 which provides salary
continuation benefits to the Executive pursuant to an unfunded, non-qualified benefit plan; and 
 WHEREAS, certain changes to the
Agreement are required under Internal Revenue Code Section 409A so that the Executive will not be subject to the imposition of excise taxes under Section 409A; and 
 WHEREAS, further changes to the Agreement are necessary to accurately reflect the current intent of the parties; and 
 WHEREAS, none of the conditions or events included in the definition of the term “golden parachute payment” that is set forth in section
18(k)(4)(A)(ii) of the Federal Deposit Insurance Act [12 U.S.C. 1828(k)(4)(A)(ii)] and in Federal Deposit Insurance Corporation Rule 359.1(f)(1)(ii) [12 CFR 359.1(f)(1)(ii)] exists or, to the best knowledge of the Bank, is contemplated insofar as
the Bank is concerned; and 
 WHEREAS, the Bank and the Executive intend that this Agreement shall amend and restate in its entirety
the December 8, 2006 Amended Salary Continuation Agreement, which shall have no further force or effect. 
 NOW THEREFORE, in
consideration of these premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Executive and the Bank hereby agree as follows. 
 Article 1 
 Definitions 
 The following words and phrases used in this Agreement have the meanings specified. 
 1.1 “Accrual Balance” means the liability that should be accrued by the Bank under generally accepted accounting principles
(“GAAP”) for the Bank’s obligation to the Executive under this Agreement, by applying Accounting Principles Board Opinion No. 12, as amended by Statement of Financial Accounting Standards No. 106, and the calculation method
and discount rate specified hereinafter. The Accrual Balance shall be calculated assuming a level principal amount and interest as the discount rate is accrued each period. The principal accrual is determined such that when it is credited with
interest each month, the Accrual Balance at Normal Retirement Age equals the present value of the normal retirement benefits. The discount rate means the rate used by the Plan Administrator for determining the Accrual Balance. The rate is 

 
based on the yield on a 20-year corporate bond rated Aa by Moody’s, rounded to the nearest  1/4%. The initial discount rate is 6.50%. In its sole discretion, the Plan Administrator may adjust the discount rate to maintain the rate within reasonable standards
according to GAAP. 
 1.2 “Beneficiary” means each designated person, or the estate of the deceased Executive,
entitled to benefits, if any, upon the death of the Executive, determined according to Article 4. 
 1.3 “Beneficiary Designation
Form” means the form established from time to time by the Plan Administrator that the Executive completes, signs, and returns to the Plan Administrator to designate one or more Beneficiaries. 
 1.4 “Change in Control” shall mean any of the following, each of which shall be construed in a manner that is consistent with the
definition of a “change in control event” for purposes of Internal Revenue Code Section 409A and the Regulations thereunder: 
 (a) Change in Ownership: The date of acquisition by a person or by persons acting as a group of capital stock of the Bank or of MFC, which when added to the stock already owned by that person or the persons
acting as a group, constitutes more than 50% of the fair market value or more than 50% of the total voting power of the Bank or of MFC; provided that the person or persons acting as a group did not own more than 50% of the fair market value or total
voting power of the Bank or MFC, respectively, prior to such acquisition. 
 For purposes of determining whether there has
been a change in ownership, persons shall not be considered to be acting as a group simply because they purchase or own stock at the same time or as a result of the same public offering. Persons will be considered to be acting as a group if they are
owners of a corporation which enters into a merger, consolidation, purchase of stock or similar business transaction with the Bank or MFC. If a person is a shareholder of the Bank or MFC and also of the other corporation that enters into business
transaction with the Bank or MFC, respectively, he shall be treated as acting as a group only with respect to the ownership of the Bank or MFC and not with respect to the ownership interest in the other corporation. 
 (b) Change in Effective Control: The date any one person or more than one person acting as a group acquires (or has acquired during
the 12-month period ending on the date of the most recent acquisition by such person or persons) stock of MFC possessing more than 50% of the total voting power of the stock of MFC. 
 For purposes of determining whether there has been a change in effective control, persons shall not be considered to be acting as a group
simply because they purchase or own stock at the same time or as a result of the same public offering. Persons will be considered to be acting as a group if they are owners of a corporation which enters into a merger, consolidation, purchase of
stock or similar business transaction with MFC. If a person is a shareholder of MFC and also of the other corporation that enters into purchase transaction with MFC, he shall be treated as acting as a group only with respect to the ownership of MFC
and not with respect to the ownership interest in the other corporation. 
  

 2 

 (c) Change in Board Composition: The date a majority of the members of MFC’s
Board of Directors are replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of MFC’s Board of Directors prior to the date of the appointment or election. 
 (d) Change in Ownership of Assets: The date a person or persons acting as a group acquires (or has acquired during the 12-month
period ending on the date of the most recent acquisition) assets of the Bank that have a total gross fair market value exceeding 50% of the total fair market value of all of the assets of the Bank, determined immediately before such acquisition or
acquisitions; provided that the acquirer is not a related person as defined in Regs. § 1. 409A-3(i)(5)(vii)(B). Gross fair market value of the assets shall be determined without regard to any liabilities associated with such assets. 

Persons will not be considered to be acting as a group solely because they acquire assets of the Bank at the same time; however,
persons will be considered to be acting as a group if they are owners of a corporation which enters into a merger, consolidation, purchase of assets or similar business transaction with the Bank or MFC. If a person, including an entity shareholder,
owns stock in both corporations that enter into a merger, consolidation, purchase or acquisition of assets or similar transaction, the shareholder shall be considered as acting as a group with other shareholders only to the extent of the ownership
of the corporation before the transaction giving rise to the change and not with respect to the ownership interest in the other corporation. 
 1.5 “Disability” means the Executive is either (a) 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 no less than 12 months; or (b) 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 no less than 12 months, receiving income replacement benefits for a period of not less than 3 months under a disability plan covering employees of the Bank. Disability shall be determined by a physician chosen by or acceptable to the Bank, in its
reasonable discretion. A determination by the Social Security Administration that the Executive is totally and permanently disabled shall also be a sufficient determination of Disability provided the Executive submits to the Bank proof of the Social
Security Administration’s determination. 
 1.6 “Early Termination” means Termination of Employment before Normal
Retirement Age for reasons other than death, Disability, Termination for Cause or following a Change in Control. 
 1.7 “Early
Termination Date” means the date on which Early Termination occurs. 
 1.8 “Good Reason” means: 
 (a) a material reduction in the Executive’s base compensation; 
 (b) a material reduction in the Executive’s authority, duties or responsibilities; 
 (c) a material
reduction in the budget over which the Executive has authority; 
  

 3 

 (d) a material change in the geographic location at which the Executive must perform services; or

 (e) any other action or inaction that constitutes a material breach by the Bank of any employment agreement between the Bank and the
Executive; 
 Provided, however, the Executive shall be required to give written notice to the Bank of the occurrence of the applicable event
described in this Section 1.8 within sixty (60) days of the initial occurrence of the event, and the Bank shall have a period of thirty (30) days from the receipt of the notice to remedy the matter. If the Executive fails to give such
notice or if the event is so remedied, there shall not be Good Reason. 
 1.9 “Intentional,” for purposes of this Agreement,
no act or failure to act on the part of the Executive shall be deemed to have been intentional if it was due primarily to an error in judgment or negligence. An act or failure to act on the Executive’s part shall be considered intentional if it
is not in good faith and if it is without a reasonable belief that the action or failure to act is in the best interests of the Bank. 
 1.10
“MFC” means MidCarolina Financial Corporation, a North Carolina corporation which currently owns 100% of the capital stock of the Bank. 
 1.11 “Normal Retirement Age” means the Executive’s 65th birthday. 
 1.12 “Normal Retirement
Date” means the date of Termination of Employment occurring on or after attainment of Normal Retirement Age. 
 1.13 “Plan
Administrator” means the plan administrator described in Article 8. 
 1.14 “Plan Year” means a twelve-month period
commencing on January 1 and ending on December 31 of each year. 
 1.15 “Termination for Cause” means the Bank
terminates the Executive’s employment for any of the following reasons — 
 (a) the Executive’s gross
negligence or gross neglect of duties or intentional and material failure to perform stated duties after written notice thereof, or 
 (b) disloyalty or dishonesty by the Executive in the performance of his or her duties, or a breach of the Executive’s fiduciary duties for personal profit, in any case whether in his or her capacity as a director or officer, or

 (c) intentional wrongful damage by the Executive to the business or property of the Bank or its affiliates, including
without limitation, the reputation of the Bank, which in the judgment of the Bank causes or is likely to cause material harm to the Bank or affiliates, or 
 (d) a willful violation by the Executive of any applicable law or significant policy of the Bank or an affiliate that, in the Bank’s judgment, results in an adverse effect 

  

 4 

 
on the Bank or the affiliate, regardless of whether the violation leads to criminal prosecution or conviction. For purposes of this Agreement, applicable
laws include any statute, rule, regulatory order, statement of policy, or final cease-and-desist order of any governmental agency or body having regulatory authority over the Bank, or 
 (e) the occurrence of any event that results in the Executive being excluded from coverage, or having coverage limited for the Executive
as compared to other executives of the Bank, under the Bank’s blanket bond or other fidelity or insurance policy covering its directors, officers, or employees, or 
 (f) the Executive is removed from office or permanently prohibited from participating in the Bank’s affairs by an order issued under
section 8(e)(4) or section 8(g)(1) of the Federal Deposit Insurance Act, 12 U.S.C. 1818(e)(4) or (g)(1), or 
 (g) conviction
of the Executive for or plea of nolo contendere to a felony or conviction of or plea of nolo contendere to a misdemeanor involving moral turpitude, or the actual incarceration of the Executive for 45 consecutive days or more.

 1.16 “Termination of Employment” means the Executive ceases to be employed by the Bank, MFC or any member of their
controlled group of corporations, (as defined in Treas. Regs. Sec. 1-409A-1(h)(3)), for any reason other than because of a bona fide leave of absence, as defined in Treas. Regs. Sec. 1-409A-1(h)(1). 
 Article 2 
 Lifetime Benefits 

 2.1 Normal Retirement Benefit. For Termination of Employment on or after the Normal Retirement Age for reasons other than death,
the Bank shall pay to the Executive the benefit described in this Section 2.1 instead of any other benefit under this Agreement. 
 2.1.1 Amount of Benefit. The annual benefit under this Section 2.1 is $70,000. 
 2.1.2 Payment of Benefit. The
Bank shall pay the annual benefit to the Executive in 12 equal monthly installments on the first day of each month beginning immediately after the expiration of six (6) months after Normal Retirement Date and continuing for the Executive’s
lifetime. 
 2.2 Early Termination Benefit. After Early Termination, the Bank shall pay to the Executive the benefit described in this
Section 2.2 instead of any other benefit under this Agreement. 
 2.2.1 Amount of Benefit. The benefit under this
Section 2.2 is the vested Early Termination annual benefit amount set forth on Schedule A for the Plan Year ending immediately before the Early Termination Date. 
 2.2.2 Payment of Benefit. The Bank shall pay the annual benefit to the Executive in 12 equal monthly installments on the first day of each month beginning with the later of (a) the calendar month
immediately after the Executive attains the Normal Retirement Age or (b) the calendar month beginning immediately after the expiration of six (6) months after Early Termination. The annual benefit shall be paid to the Executive for his
lifetime. 
  

 5 

 2.3 Disability Benefit. After Termination of Employment because of Disability before Normal
Retirement Age, the Bank shall pay to the Executive the benefit described in this Section 2.3 instead of any other benefit under this Agreement. 
 2.3.1 Amount of Benefit. The benefit under this Section 2.3 is the Disability annual benefit amount set forth on Schedule A for the Plan Year ended immediately before the date on which Termination of
Employment occurs. 
 2.3.2 Payment of Benefit. The Bank shall pay the Disability benefit to the Executive in 12 equal monthly
installments on the first day of each month beginning with the calendar month immediately following the expiration of six (6) months from the Executive’s Termination of Employment. The annual benefit shall be paid to the Executive for his
or her lifetime. 
 2.4 Change-in-Control Benefit. If the Executive has an involuntary Termination of Employment within 12 months
after a Change in Control, or if an event constituting Good Reason occurs within 12 months after a Change in Control and, after giving the required notice and after expiration of the cure period without such cure, the Executive terminates employment
for Good Reason within 30 days after expiration of the cure period, the Bank shall pay to the Executive the benefit described in this Section 2.4 instead of any other benefit under this Agreement. No benefits shall be payable under this
Agreement if the Executive’s employment is terminated under circumstances described in Article 5 of this Agreement. 
 2.4.1 Amount
of Benefit: The benefit under this Section 2.4 is the Normal Retirement Age Accrual Balance required by Section 2.1, without discount for the time value of money. 
 2.4.2 Payment of Benefit: The Bank shall pay the Change-in-Control benefit under Section 2.4 of this Agreement to the Executive in one lump
sum on the first business day occurring after expiration of the six (6) month period immediately following such Termination of Employment. 
 2.5 Change-in-Control Payout of Normal Retirement Benefit, Early Termination Benefit, or Disability Benefit Being Paid to the Executive at the Time of a Change in Control. If a Change in Control occurs at any time during the salary
continuation benefit payment period, and if at the time of that Change in Control the Executive is receiving the benefit provided by Section 2.1.2, 2.2.2, or 2.3.2, the Bank shall pay the remaining salary continuation benefits to the Executive
in a single lump sum within three days after the Change in Control. The lump-sum payment due to the Executive as a result of a Change in Control shall be an amount equal to the Accrual Balance amount corresponding to that particular benefit then
being paid. If a Change in Control occurs after a Termination of Employment other than for Cause but before payment of the benefits to the Executive is to commence under Section 2.1.2, 2.2.2 or 2.3.2, then the salary continuation benefits shall
be paid to the Executive in a lump sum on the date payment of the benefits would otherwise commence had there been no Change in Control. The lump-sum payment due to the Executive as a result of a Change in Control shall be an amount equal to the
Accrual Balance amount corresponding to that particular benefit to be paid. 
  

 6 

 2.6 Contradiction in Terms of Agreement and Schedule A. If there is a contradiction in the terms
of this Agreement and Schedule A attached hereto concerning the actual amount of a particular benefit due to the Executive under Section 2.2, 2.3, or 2.4 hereof, then the actual amount of the benefit set forth in this Agreement shall control.

 Article 3 
 Death
Benefits 
 3.1 Death During Active Service. Except as provided in Section 5.2, if the Executive dies in active service to
the Bank before the Normal Retirement Age, the Bank shall pay to the Executive’s Beneficiary (a) a lump sum payment equal to the Accrual Balance at the time of the Executive’s death, and (b) the benefit described in the Split
Dollar Agreement attached to this Agreement as Addendum A. 
 3.2 Death after Termination of Employment. If the Executive dies after
Termination of Employment and the Executive is entitled to the normal retirement benefit provided by Section 2.1, the Early Termination benefit provided by Section 2.2, or the Disability benefit provided by Section 2.3, the Bank shall
pay to the Executive’s Beneficiary a lump sum payment equal to the Accrual Balance remaining at the time of the Executive’s death; provided, however, that no benefits under this Agreement shall be paid or payable to the Executive or the
Executive’s Beneficiary if this Agreement is terminated according to Article 5. 
 Article 4 
 Beneficiaries 
 4.1 Beneficiary
Designations. The Executive shall have the right to designate at any time a Beneficiary to receive any benefits payable under this Agreement upon the death of the Executive. The Beneficiary designated under this Agreement may be the same as or
different from the beneficiary designation under any other benefit plan of the Bank in which the Executive participates. 
 4.2
Beneficiary Designation: Change. The Executive shall designate a Beneficiary by completing, dating and signing the Beneficiary Designation Form and delivering it to the Plan Administrator or its designated agent prior to the
Executive’s death. The Executive’s Beneficiary designation shall be deemed automatically revoked if the Executive names a spouse as Beneficiary and the marriage is subsequently dissolved. The Executive shall have the right to change a
Beneficiary by completing, dating, signing, and filing the Beneficiary Designation Form prior to the Executive’s death and otherwise complying with the terms of the Beneficiary Designation Form and the Plan Administrator’s rules and
procedures. Upon the acceptance by the Plan Administrator of a new Beneficiary Designation Form, all Beneficiary designations previously filed shall become null and void. The Plan Administrator shall be entitled to rely on the last Beneficiary
Designation Form filed by the Executive and accepted by the Plan Administrator before the Executive’s death. 
 4.3
Acknowledgment. No designation or change in designation of a Beneficiary shall be effective until received, accepted, and acknowledged in writing by the Plan Administrator or its designated agent. 
  

 7 

 4.4 No Beneficiary Designation. If the Executive dies without a valid beneficiary designation, or
if all designated Beneficiaries predecease the Executive, then the Executive’s spouse shall be the designated Beneficiary. If the Executive has no surviving spouse, the benefits shall be paid to the personal representative of the
Executive’s estate. 
 4.5 Facility of Payment. If a benefit is payable to a minor, to a person declared incapacitated, or to a
person incapable of handling the disposition of his or her property, the Bank may pay such benefit to the guardian, legal representative, or person having the care or custody of the minor, incapacitated person, or incapable person. The Bank may
require proof of incapacity, minority, or guardianship as it may deem appropriate before distribution of the benefit. Distribution shall completely discharge the Bank from all liability for the benefit. 
 Article 5 
 General Limitations 

 5.1 Termination for Cause. Notwithstanding any provision of this Agreement to the contrary, the Bank shall not pay any benefit
under this Agreement, and this Agreement shall terminate upon the Executive’s Termination of Employment as a result of Termination for Cause. Likewise, no benefits shall be paid under the Split Dollar Agreement attached to this Agreement as
Addendum A, and the Split Dollar Agreement also shall terminate, upon Termination of Employment as a result of Termination for Cause. 
 5.2
Misstatement. No benefits shall be paid under this Agreement or under the Split Dollar Agreement attached as Addendum A if the Executive makes any material misstatement of fact on any application or resume provided to the Bank or on any
application for benefits provided by the Bank. 
 5.3 Removal. If the Executive is removed from office or permanently prohibited from
participating in the Bank’s affairs by an order issued under section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act, 12 U.S.C. 1818(e)(4) or (g)(1), all obligations of the Bank under this Agreement shall terminate as of the effective
date of the order. 
 5.4 Default. Notwithstanding any provision of this Agreement to the contrary, if the Bank is in
“default” or “in danger of default,” as those terms are defined in section 3(x) of the Federal Deposit Insurance Act, 12 U.S.C. 1813(x), all obligations under this Agreement shall terminate. 
 5.5 FDIC Open-Bank Assistance. All obligations under this Agreement shall terminate, except to the extent determined that continuation of the
contract is necessary for the continued operation of the Bank, when the Federal Deposit Insurance Corporation enters into an agreement to provide assistance to or on behalf of the Bank under the authority contained in Federal Deposit Insurance Act
section 13(c). 12 U.S.C. 1823(c). Rights of the parties that have already vested shall not be affected by such action, however. 
  

 8 

 Article 6 
 Claims and Review Procedures 
 6.1 Claims Procedure. A person or beneficiary
(“claimant”) who has not received benefits under the Agreement that he or she believes should be paid shall make a claim for such benefits as follows 
 6.1.1 Initiation — Written Claim. The claimant initiates a claim by submitting to the Bank a written claim for the benefits. 
 6.1.2 Timing of Bank Response. The Bank shall respond to the claimant within 90 days after receiving the claim. If the Bank determines that special circumstances require additional time for processing the
claim, the Bank may extend the response period by an additional 90 days by notifying the claimant in writing before the end of the initial 90-day period that an additional period is required. The notice of extension must state the special
circumstances and the date by which the Bank expects to render its decision. 
 6.1.3 Notice of Decision. If the Bank denies the claim
in whole or in part, the Bank shall notify the claimant in writing of the denial. The Bank shall write the notification in a manner calculated to be understood by the claimant. The notification shall set forth — 
  

	 	6.1.3.1	the specific reasons for the denial, 

  

	 	6.1.3.2	a reference to the specific provisions of the Agreement on which the denial is based, 

  

	 	6.1.3.3	a description of any additional information or material necessary for the claimant to perfect the claim and an explanation of why it is needed, 

  

	 	6.1.3.4	an explanation of the Agreement’s review procedures and the time limits applicable to such procedures, and 

  

	 	6.1.3.5	a statement of the claimant’s right to bring a civil action under ERISA section 502(a) following an adverse benefit determination on review, 

 6.2 Review Procedure. If the Bank denies all or any part of the claim, the claimant shall have the opportunity for a full and fair review by the
Bank of the denial, as follows - 
 6.2.1 Initiation — Written Request. To initiate the review, within 60 days after
receiving the Bank’s notice of denial the claimant must file with the Bank a written request for review. 
 6.2.2 Additional
Submissions — Information Access. The claimant shall then have the opportunity to submit written comments, documents, records, and other information relating to the claim. Upon request and free of charge, the Bank shall also provide the
claimant 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. 
  

 9 

 6.2.3 Considerations on Review. In considering the review, the Bank shall take into account all
materials and information the claimant submits relating to the claim, without regard to whether the information was submitted or considered in the initial benefit determination. 
 6.2.4 Timing of Bank Response. The Bank shall respond in writing to the claimant within 60 days after receiving the request for review. If the
Bank determines that special circumstances require additional time for processing the claim, the Bank may extend the response period by an additional 60 days by notifying the claimant in writing before the end of the initial 60-day period that an
additional period is required. The notice of extension must state the special circumstances and the date by which the Bank expects to render its decision. 
 6.2.5 Notice of Decision. The Bank shall notify the claimant in writing of its decision on review. The Bank shall write the notification in a manner calculated to be understood by the claimant. The notification
shall set forth— 
  

	 	6.2.5.1	the specific reason for the denial, 

  

	 	6.2.5.2	a reference to the specific provisions of the Agreement on which the denial is based, 

  

	 	6.2.5.3	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 

  

	 	6.2.5.4	a statement of the claimant’s right to bring a civil action under ERISA section 502(a), 

 Article 7 
 Miscellaneous 
 7.1 Amendments and Termination. This Agreement may be amended or terminated by the Bank, except that no amendment or termination may be made
without the written agreement of the Executive if the amendment or termination would reduce or eliminate a vested, accrued benefit of the Executive or would have a materially adverse impact on the Executive’s reasonably expected economic
benefit under this Agreement (including, by way of example and not by limitation, the Change of Control Benefit described in Sections 2.4, 2.4.1 and 2.4.2), with the exception of a termination occurring under Article 5 or an amendment required in
order to comply with applicable law. 
 7.2 Binding Effect. This Agreement shall bind the Executive, the Bank, and their
beneficiaries, survivors, executors, successors, administrators, and transferees. 
 7.3 No Guarantee of Employment. This Agreement is
not an employment policy or contract. It does not give the Executive the right to remain an employee of the Bank, nor does it interfere with the Bank’s right to discharge the Executive. It also does not require the Executive to remain an
employee nor interfere with the Executive’s right to terminate employment at any time. 
  

 10 

 7.4 Non-Transferability. Benefits under this Agreement cannot be sold, transferred, assigned,
pledged, attached, or encumbered in any manner. 
 7.5 Successors; Binding Agreement. The Bank will require any successor (whether
direct or indirect, by purchase, merger, consolidation, or otherwise) to all or substantially all of the business or assets of the Bank, by an assumption agreement in form and substance satisfactory to the Executive, to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the Bank would be required to perform this Agreement if no such succession had occurred. The Bank’s failure to obtain an assumption agreement before effectiveness of any such
succession shall be a breach of this Agreement and shall entitle the Executive to the Change-in-Control benefit provided in Section 2.4. 
 7.6 Tax Withholding. The Bank shall withhold any taxes that are required to be withheld from the benefits provided under this Agreement. 
 7.7 Applicable Law. This Agreement and all rights hereunder shall be governed by the laws of the State of North Carolina, except to the extent preempted by the laws of the United States of America. 

7.8 Unfunded Arrangement. The Executive and Beneficiary are general unsecured creditors of the Bank for the payment of benefits under this
Agreement. The benefits represent the mere promise by the Bank to pay benefits. Rights to benefits are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by creditors.
Any insurance on the Executive’s life is a general asset of the Bank to which the Executive and Beneficiary have no preferred or secured claim. 
 7.9 One Benefit Only. Only one benefit shall be payable under this Agreement to the Executive or the Beneficiary, which shall be determined by the first event to occur for which benefits are payable hereunder.
No subsequent occurrence of an event shall entitle the Executive or Beneficiary to other or additional benefits under this Agreement; however the payments may be accelerated in accordance with the terms of Sections 2.5 or 3.2. 
 7.10 Entire Agreement. This Agreement and the Split Dollar Agreement attached as Addendum A constitute the entire agreement between the Bank and
the Executive concerning the subject matter hereof. No rights are granted to the Executive under this Agreement other than those specifically set forth herein. This Agreement restates, supersedes and replaces in its entirety any previous version of
the Agreement and each prior version shall be of no further force or effect. 
 7.11 Severability. If for any reason any provision of
this Agreement is held invalid, such invalidity shall not affect any other provision of this Agreement not held invalid, and each such other provision shall continue in full force and effect to the full extent consistent with law. If any provision
of this Agreement is held invalid in part, such invalidity shall not affect the remainder of the provision not held invalid, and the remainder of such provision together with all other provisions of this Agreement shall continue in full force and
effect to the full extent consistent with law. 
  

 11 

 7.12 Headings. Caption headings and subheadings herein are included solely for convenience of
reference and shall not affect the meaning or interpretation of any provision of this Agreement. 
 7.13 Notices. All notices,
requests, demands, and other communications hereunder shall be in writing and shall be deemed to have been duly given if delivered by hand or mailed, certified or registered mail, return receipt requested, with postage prepaid. Unless otherwise
changed by notice, notice shall be properly addressed to the Executive if addressed to the address of the Executive on the books and records of the Bank at the time of the giving of such notice, and properly addressed to the Bank if addressed to the
Board of Directors, MidCarolina Bank, 3101 South Church Street, Burlington, North Carolina 27215. 
 Article 8 
 Administration of Agreement 
 8.1
Plan Administrator Duties. This Agreement shall be administered by a Plan Administrator consisting of the board or such committee or person(s) as the board shall appoint. The Executive may be a member of the Plan Administrator. The Plan
Administrator shall also have the discretion and authority to (a) make, amend, interpret, and enforce all appropriate rules and regulations for the administration of this Agreement and (b) decide or resolve any and all questions, including
interpretations of this Agreement, as may arise in connection with the Agreement. 
 8.2 Agents. In the administration of this
Agreement, the Plan Administrator may employ agents and delegate to them such administrative duties as it sees fit (including acting through a duly appointed representative) and may from time to time consult with counsel, who may be counsel to the
Bank. 
 8.3 Binding Effect of Decisions. The decision or action of the Plan Administrator with respect to any question arising out of
or in connection with the administration, interpretation, and application of the Agreement and the rules and regulations promulgated hereunder shall be final and conclusive and binding upon all persons having any interest in the Agreement. No
Executive or Beneficiary shall be deemed to have any right, vested or nonvested, regarding the continued use of any previously adopted assumptions, including but not limited to the discount rate and calculation method described in Section 1.1.

 8.4 Indemnity of Plan Administrator. The Bank shall indemnify and hold harmless the members of the Plan Administrator against any
and all claims, losses, damages, expenses, or liabilities arising from any action or failure to act with respect to this Agreement, except in the case of willful misconduct by the Plan Administrator or any of its members. 
 8.5 Bank Information. To enable the Plan Administrator to perform its functions, the Bank shall supply full and timely information to the Plan
Administrator on all matters relating to the date and circumstances of the retirement, Disability, death, or Termination of Employment of the Executive and such other pertinent information as the Plan Administrator may reasonably require.

  

 12 

 IN WITNESS WHEREOF, the Executive and a duly authorized officer of the Bank have executed this
Salary Continuation Agreement as of the date first written above. 
  

							
	Executive:	 		 	Bank:
		 		 	MidCarolina Bank
				
	 /S/ Robert C. Patterson
	 		 	By	 	 /S/ Charles Canaday

				
	Robert C. Patterson	 		 	Its:	 	President
				
		 		 	And By:	 	 /S/ Chris Redcay

				
		 		 	Its:	 	Corp.Sec.

  

 13 

 BENEFICIARY DESIGNATION 
 MIDCAROLINA BANK 
 SALARY CONTINUATION AGREEMENT 
 I, Robert C. Patterson, designate the following as beneficiary of any death benefits under this Salary Continuation Agreement: 
  

			
	Primary:	 	  

	
	  

 If no Primary Beneficiary survives me, the death benefits shall be paid to the following Contingent Beneficiary:

  

			
	Contingent:	 	  

	
	  

 Note: If more than one person is named as the Primary Beneficiary or as the Contingent
Beneficiary, each shall receive an equal share of the death benefits unless a different percentage is specified on this form. 
 To
name a trust as beneficiary, please provide the name of the trustee(s) and the exact name and date of the trust agreement. 
 I
understand that I may change these beneficiary designations by filing a new written designation with the Bank. I further understand that the designations will be automatically revoked if the beneficiary predeceases me, or if I have named my spouse
as beneficiary and our marriage is subsequently dissolved. 
  

			
	Signature:	 	  

		 	Robert C. Patterson
		
	Date:	 	  

	
	Accepted by the Bank this 27th day of May, 2008.
		
	By:	 	  

		
	Print Name:	 	  

		
	Title:	 	  

  

 14 

 Plan Year Reporting 
 Salary Continuation Plan 
 Schedule A 
  
 Robert C. Patterson 
  

																							
	 Birth Dale: 8/24/1961
 Plan Anniversary Date: 1/1/2005
 Normal Retirement: 8/4/2026 , Age 65
 Normal Retirement Payment: Monthly for 17 years
	  	Early Termination	  	Disability	  	Change in Control
	  	Annual Benefit2
Amount Payable at
Normal Retirement Age	  	Annual Benefit2
Amount Payable at
Normal Retirement Age	  	Lump Sum Benefit
Amount Payable at
Separation from Service
	 Values
 us of
	  	Discount
Rate	 	 	Benefit
Level	  	Accrual
Balance	  	Vesting	 	 	Based On
Accrual	  	Vesting	 	 	Based On
Accrual	  	Vesting	 	 	Based On
Accrual
	  	(1)	 	 	(2)	  	(3)	  	(4)	 	 	(5)	  	(6)	 	 	(7)	  	(8)	 	 	(9)
	 Sep 2004
	  			 		  	65,768	  	60	%	 	15,816	  	100	%	 	26,361	  	100	%	 	65,768
	
	 9/30/2004 Accrual Balance Rollover

										
	 Dec 2004
	  	6.50	%	 	48,000	  	68,006	  	70	%	 	18,774	  	100	%	 	26,819	  	100	%	 	68,006
	 Dec 2005
	  	6.50	%	 	48,000	  	77,328	  	80	%	 	22,865	  	100	%	 	28,581	  	100	%	 	77,328
	 Dec 2006
	  	6.50	%	 	48,000	  	87,273	  	90	%	 	27.210	  	100	%	 	30,233	  	100	%	 	87,273
	 Dec 2007
	  	6.50	%	 	70,000	  	103,788	  	100	%	 	33,697	  	100	%	 	33,697	  	100	%	 	723,065
										
	 Dec 2008
	  	6.50	%	 	70,000	  	121,409	  	100	%	 	36,944	  	100	%	 	36,944	  	100	%	 	723,065
	 Dec 2009
	  	6.50	%	 	70,000	  	140,210	  	100	%	 	39,987	  	100	%	 	39987	  	100	%	 	723 065
	 Dec 2010
	  	6.50	%	 	70,000	  	160,271	  	100	%	 	42,839	  	100	%	 	42,839	  	100	%	 	723,065
	 Dec 2011
	  	6.50	%	 	70,000	  	181,674	  	100	%	 	45,512	  	100	%	 	45,512	  	100	%	 	723,065
	 Dec 2012
	  	6,50	%	 	70,000	  	204,511	  	100	%	 	48,017	  	100	%	 	48,017	  	100	%	 	723,065
										
	 Dec 2013
	  	6,50	%	 	70,000	  	228,878	  	100	%	 	50,365	  	100	%	 	50,365	  	100	%	 	723,065
	 Dec 2014
	  	6,50	%	 	70,000	  	254,876	  	100	%	 	52,566	  	100	%	 	52,566	  	100	%	 	723,065
	 Dec 2015
	  	6,50	%	 	70,000	  	282,616	  	100	%	 	54,628	  	100	%	 	54,628	  	100	%	 	723,065
	 Dec 2016
	  	6.50	%	 	70,000	  	312,213	  	100	%	 	56,561	  	100	%	 	56,561	  	100	%	 	723,065
	 Dec 2017
	  	6.50	%	 	70,000	  	343,793	  	100	%	 	58,373	  	100	%	 	58,373	  	100	%	 	723,065
										
	 Dec 2018
	  	6.50	%	 	70,000	  	377,487	  	100	%	 	60,071	  	100	%	 	60,071	  	100	%	 	723,065
	 Dec 2019
	  	6.50	%	 	70,000	  	413,438	  	100	%	 	61,662	  	100	%	 	61,662	  	100	%	 	723,065
	 Dec 2020
	  	6.50	%	 	70,000	  	451,797	  	100	%	 	63,154	  	100	%	 	63,154	  	100	%	 	723,065
	 Dec 2021
	  	6.50	%	 	70,000	  	492,725	  	100	%	 	64,551	  	100	%	 	64,551	  	100	%	 	723,065
	 Dec 2022
	  	6,50	%	 	70,000	  	536,393	  	100	%	 	65,862	  	100	%	 	65,862	  	100	%	 	723,065
										
	 Dec 2023
	  	6.50	%	 	70,000	  	582,987	  	100	%	 	67,089	  	100	%	 	67,089	  	100	%	 	723,065
	 Dec 2024
	  	6,50	%	 	70,000	  	632,700	  	100	%	 	68,240	  	100	%	 	68,240	  	100	%	 	723,065

 Salary Continuation Plan for Mid Carolina Bank – Burlington, NC 
 1000801    334824    v0.36.52    12/04/2006:09    SCP-E,SD 

 Plan Year Reporting 
 Salary Continuation Plan 
 Schedule A 
  
 Robert C. Patterson 
  

																							
	 	  	 	 	 	 	  	 	  	Early Termination	  	Disability	  	Change in Control
	 Birth Dale: 8/24/1961
 Plan Anniversary Date: 1/1/2005
 Normal Retirement: 8/4/2026 , Age 65
 Normal Retirement Payment: Monthly for 17 years
	  	Annual Benefit2
Amount Payable
at
Normal Retirement Age	  	Annual Benefit2
Amount Payable
at
Normal Retirement Age	  	Lump Sum Benefit
Amount Payable at
Separation from Service
	 Values
 as of
	  	Discount
Rate	 	 	Benefit
Level	  	Accrual
Balance	  	Vesting	 	 	Based On
Accrual	  	Vesting	 	 	Based On
Accrual	  	Vesting	 	 	Based On
Accrual
	  	(1)	 	 	(2)	  	(3)	  	(4)	 	 	(5)	  	(6)	 	 	(7)	  	(8)	 	 	(9)
	 Dec 2025
	  	6.50	%	 	70,000	  	685,743	  	100	%	 	69,319	  	100	%	 	69,319	  	100	%	 	723,065
	 Aug 2026
	  	6.50	%	 	70,000	  	723,065	  	100	%	 	70,000	  	100	%	 	70,000	  	100	%	 	723,065
	
	 August 4, 2026 Retirement; September 1, 2026 First Payment Date

  

	 1
	 The first line reflects 12 months of data, January 2008 to December 2008. 

	 2
	 The annual benefit amount will be distributed in 12 equal monthly payments for a total of 204 monthly payments.

	 *
	 IF THERE IS A CONFLICT IN ANY TERMS OR PROVISIONS BETWEEN THIS SCHEDULE A AND THE AGREEMENT, THE TERMS AND PROVISIONS OF
THE AGREEMENT SHALL PREVAIL. IF A TRIGGERING EVENT OCCURS, REFER TO THE AGREEMENT TO DETERMINE THE ACTUAL BENEFIT AMOUNT BASED ON THE DATE OF THE EVENT. 

 Salary Continuation Plan for Mid Carolina Bank – Burlington, NC 
 1000801    334824    v0.36.52    12/04/2006:09    SCP-E,SDEmployment Agreement btw Charles T. Canaday Jr. and the Company

 Exhibit 10.6 
 NORTH CAROLINA 
 EMPLOYMENT AGREEMENT 
 ALAMANCE COUNTY 
 THIS EMPLOYMENT AGREEMENT (hereinafter the “Agreement”) is made as of the 27th day of May 2008, between
CHARLES T. CANADAY (hereinafter “Employee”), a resident of Alamance County, North Carolina and MIDCAROLINA BANK, a commercial bank formed under the laws of the State of North Carolina and having its principal place of business in Alamance
County, North Carolina (hereinafter “Bank” or “Employer”). 
 WITNESSETH: 
 WHEREAS, the Employee is employed as President and Chief Executive Officer of the Bank; and 
 WHEREAS, during the performance of his duties for the Bank, the Employee has access to proprietary and confidential information and know-how of the Bank
relating to its customers, its operations, and its strategic plans; and 
 WHEREAS, the Employee recognizes and understands that the
Employee’s employment creates a relationship of confidence and trust with respect to the Bank’s proprietary and confidential information; and 
 NOW, THEREFORE, in consideration of the mutual promises below, the parties agree as follows: 
 1.
Employment. The Bank hereby employs the Employee, and the Employee hereby accepts employment with the Bank, for the term set forth in Section 2 below, in the position and with the duties and responsibilities set forth in Section 3
below, and upon the other terms and conditions hereinafter stated. 

 2. Term. The initial term of this Agreement shall be for a period of three years commencing on
27 May 2008 and continuing until 26 May 2011, unless terminated sooner as provided in Section 14 hereof. On the first anniversary of the 27 May 2008 effective date of this Agreement, and on each anniversary thereafter, this
Agreement shall be extended automatically for one additional year, unless the Bank’s Board of Directors gives notice to the Employee in writing at least 30 days before the anniversary that the term of this Agreement will not be extended.
References herein to the term of this Agreement mean the initial term and extensions of the initial term. Unless terminated earlier, this Agreement shall terminate when the Employee reaches age 65. The Board’s decision not to extend the term of
this Agreement shall not, by itself, give the Employee any rights under this Agreement to claim an adverse change in his position, compensation or circumstances or otherwise to claim entitlement to severance or termination benefits under this
Agreement. 
 3. Position; Duties; Extent of Services. 
 (a) Position; Duties. The Employee shall serve as President and Chief Executive Officer. In this position, the Employee serves at
the will of the Board and shall have such responsibilities, duties and authority as are appropriate to his position and as may be assigned to him from time to time by the Board of Directors of the Bank. The Employee shall perform faithfully and
diligently his duties on behalf of the Bank and shall conduct himself at all times in such a manner as to maintain the good reputation of the Bank. 
  

 2 

 (b) Extent of Services. Except as noted in this Section 3(b), during his
employment hereunder, the Employee shall devote his full time and undivided attention during normal business hours to the business and affairs of the Bank and its affiliates. 
 4. Compensation. In consideration of the services to be rendered by the Employee to the Bank and in consideration of the Employee’s other
covenants hereunder, the Employee will receive the compensation provided on Exhibit A, payable at such intervals as may be established by the Bank from time to time for payments to its employee generally, which compensation shall be subject to
adjustment from time to time in the Board’s discretion. 
 5. Employee Benefits. The Employee will be entitled to participate, in
accordance with the provisions thereof, in the employee benefit plans made available by the Bank to its employees generally. In addition, in recognition of his position, Employee shall receive the benefits provided on Exhibit A, which benefits shall
be subject to adjustment from time to time in the Board’s discretion. 
 6. Expenses. The Employee shall be entitled to receive
reimbursement by the Bank for all reasonable out-of-pocket expenses incurred by the Employee in connection with the performance of his services hereunder. The Employee’s right to reimbursement hereunder shall, however, be subject to such
policies and procedures as may be established by the Bank from time to time for its senior level employees, which policies and procedures may include advance approval with respect to any particular expenditure. 
 7. Definitions. 
 (a)
The “Restricted Period” shall mean a period of two years immediately following the date that Employee’s employment with the Bank ends. Employee acknowledges and agrees that the two year period is reasonable and appropriate to meet the
limited purposes of this Agreement. 
  

 3 

 (b) The term “Restricted Area” shall mean the following areas in North
Carolina: 
 (i) Alamance and Guilford Counties; 
 (ii) Alamance, Guilford and all counties contiguous with Alamance or Guilford County; and 
 (iii) The area within a 15-mile radius of any full-service banking office of the Bank as of the date on which the Employee’s
employment with the Bank terminates. 
 (c) The term “Confidential Information” shall mean: information about
(i) the business and financial operations of the Bank or its affiliates; (ii) the customers or prospective customers of the Bank or its affiliates; (iii) the products, processes, techniques, research data, and strategies of the Bank
or its affiliates, (iv) any trade secrets, discoveries, or improvements to the processes or products of the Bank or its affiliates. Confidential Information shall not include information to the extent that the same: (i) is now in, or later
enters, the public domain through no fault of Employee, (ii) was known to Employee prior to the disclosure by the Bank or any of its affiliates, customers or suppliers, or any entity with which the Bank then has an agreement to hold
confidential certain information provided by such entity, and such knowledge can be supported by written documentation supplied by Employee, or (iii) was rightfully obtained by Employee from a third party in rightful possession of such
information other than from any of the Bank’s affiliates, customers or suppliers, or any entity with which the Bank then has an agreement to hold confidential certain information provided by such entity, during Employee’s employment by the
Bank. 
  

 4 

 (d) The term “Covered Entities” shall mean (i) the Bank, and any of its
affiliates, and (ii) any customers or suppliers of the Bank or any of its affiliates, with respect to Confidential Information of such customer or supplier which the Employee acquires through the Bank or one of its affiliates, or (iii) any
other entity which the Bank has entered into agreements to hold confidential certain information provided by such entity with respect to such information. 
 (e) The term “Competitive Activity” shall mean: 
 (i) securing deposits for any
Financial Institution from any person residing in, or business operating in, the Restricted Area. 
 (ii) providing Financial
Products or Service on behalf of any Financial Institution for any person residing in, or business operating in, the Restricted Area; or 
 (iii) assisting (other than through the performance of ministerial or clerical duties) any Financial Institution in providing Financial Products or Services to any Person residing in the Restricted Area; or

 (iv) inducing or attempting to induce any Person who was a Customer of the Bank at the date of the Employees’
termination of employment to seek the same financial products or services from another bank, savings association or other institution the business of which is engaging in activities that are financial in nature. 
 (f) The term “Financial Institution” means any bank, savings association, or bank or savings association holding company, or any
other institution, the business of which is 

  

 5 

 
engaging in activities that are financial in nature or incidental to such financial activities as described in section 4(k) of the Bank Holding Company Act
of 1956, other than the Bank or one of its affiliated corporations. 
 (g) “Financial Product or Service” means any
product or service that a Financial Institution or a financial holding company could offer by engaging in any activity that is financial in nature or incidental to such a financial activity under section 4(k) of the Bank Holding Company Act of 1956
and that is offered by the Bank or one of its affiliated corporations on the date of the Employee’s Termination of Employment, including but not limited to banking activities and activities that are closely related and a proper incident to
banking. 
 (h) “Customer” shall mean any person or business with whom the Bank had a depository and/or loan
relationship as of the date of the Employee’s termination of employment. 
 (i) “Change in Control” shall mean
any of the following, each of which shall be construed in a manner that is consistent with the definition of a “change in control event” for purposes of Internal Revenue Code Section 409A and the Regulations thereunder: 
 (a) Change in Ownership: The date of acquisition by a person or by persons acting as a group of capital stock of the Bank or of MidCarolina Financial
Corporation (herein “MFC”), which when added to the stock already owned by that person or the persons acting as a group, constitutes more than 50% of the fair market value or more than 50% of the total voting power of the Bank or of MFC;
provided that the person or persons acting as a group did not own more than 50% of the fair market value or total voting power of the Bank or MFC, respectively, prior to such acquisition. 
  

 6 

 For purposes of determining whether there has been a change in ownership, persons shall not be
considered to be acting as a group simply because they purchase or own stock at the same time or as a result of the same public offering. Persons will be considered to be acting as a group if they are owners of a corporation which enters into a
merger, consolidation, purchase of stock or similar business transaction with the Bank or MFC. If a person is a shareholder of the Bank or MFC and also of the other corporation that enters into business transaction with the Bank or MFC,
respectively, he shall be treated as acting as a group only with respect to the ownership of the Bank or MFC and not with respect to the ownership interest in the other corporation. 
 (b) Change in Board Composition: The date a majority of the members of MFC’s Board of Directors are replaced during any 12-month period by directors
whose appointment or election is not endorsed by a majority of the members of MFC’s Board of Directors prior to the date of the appointment or election. 
 (c) Change in Ownership of Assets: The date a person or persons acting as a group acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition) assets of the Bank that have a
total gross fair market value exceeding 50% of the total fair market value of all of the assets of the Bank, determined immediately before such acquisition or 

  

 7 

 
acquisitions; provided that the acquirer is not a related person as defined in Regs. § 1. 409A-3(i)(5)(vii)(B). Gross fair market value of the assets
shall be determined without regard to any liabilities associated with such assets. 
 Persons will not be considered to be acting as a group
solely because they acquire assets of the Bank at the same time; however, persons will be considered to be acting as a group if they are owners of a corporation which enters into a merger, consolidation, purchase of assets or similar business
transaction with the Bank or MFC. If a person, including an entity shareholder, owns stock in both corporations that enter into a merger, consolidation, purchase or acquisition of assets or similar transaction, the shareholder shall be considered as
acting as a group with other shareholders only to the extent of the ownership of the corporation before the transaction giving rise to the change and not with respect to the ownership interest in the other corporation. 
 (j) The term “Good Reason” means: 
 (a) a material reduction in the Employee’s base compensation; 
 (b) a material
reduction in the Employee’s authority, duties or responsibilities; 
 (c) a material reduction in the budget over which
the Employee has authority; 
 (d) a material change in the geographic location at which the Employee must perform services;
or 
 (e) any other action or inaction that constitutes a material breach by the Bank of any employment agreement between the
Bank and the Employee; 
  

 8 

 Provided, however, the Employee shall be required to give written notice to the Bank of the occurrence
of the applicable event described in this Section 7(j) within sixty (60) days of the initial occurrence of the event, and the Bank shall have a period of thirty (30) days from the receipt of the notice to remedy the matter. If the
Employee fails to give such notice or if the event is so remedied, there shall not be Good Reason. 
 8. Covenant Not to Compete.
Employee shall have access to Confidential Information during his employment with the Bank. To protect adequately such Confidential Information, Employee agrees as follows: 
 (a) During the term of his employment with the Bank, Employee shall not perform work for himself or for any other person, entity or
business, which is engaged in Competitive Activity without the prior written consent of the Chairman of the Board of Directors of the Bank after full disclosure, regardless of whether Employee is compensated for that work or not; and 
 (b) If, during the two year period immediately following a Change in Control, Employee’s employment with the Bank ends as a result of
(i) involuntary termination by the Bank except a Termination for Cause, or (ii) voluntary termination by Employee for Good Reason, then the Bank shall have no obligation to pay the compensation provided in Section 4 (exhibit A) above
beyond the date of termination. However, the Bank agrees to pay Employee the Special Consideration provided in Section 11(a) below, and Employee agrees 

  

 9 

 
that, during the Restricted Period and within the Restricted Area, he will not, directly or indirectly, engage in Competitive Activity, whether as an owner,
advisor, employee, officer, director, manager, consultant, representative, agent, independent contractor or otherwise. 
 (c)
If, during the two year period immediately following a Change in Control, Employee’s employment with the Bank ends as a result of voluntary termination by Employee without Good Reason, then the Board of Directors of the Bank may, in its sole
discretion, elect whether the termination event triggers the Covenant Not to Compete in Section 8(b). In no event shall the Bank have any obligation to pay the compensation provided in Section 4 (exhibit A) above beyond the date of
termination. However, should the Board of Directors of the Bank elect to trigger the Covenant Not to Compete in Section 8(b), the Bank agrees to pay Employee the Special Consideration provided in Section 11(b) below. Should the Bank not
elect to trigger this Covenant Not to Compete, the Bank shall have no obligation to pay the Employee any compensation beyond the date his employment terminates. 
 (d) If the Bank terminates the Employee’s employment with the Bank other than for Cause, and there has been no Change in Control
within the preceding two years, the Board of Directors of the Bank may, in its sole discretion, elect whether the termination event triggers the Covenant Not to Compete in Section 8(b). Should the Board of Directors of the Bank elect to trigger
the Covenant Not to Compete in Section 8(b), the Bank agrees to pay Employee the Special Consideration provided in Section 11(b) below. 
 (e) If the Employee voluntarily terminates his own employment for any reason, and there has been no Change in Control within the preceding two years, then the Board of Directors of the Bank may, in its sole
discretion, elect whether the termination event triggers 

  

 10 

 
the Covenant Not to Compete in Section 8(b). In no event shall the Bank have any obligation to pay the compensation provided in Section 4 (exhibit
A) above beyond the date of termination. However, should the Board of Directors of the Bank elect to trigger the Covenant Not to Compete in Section 8(b), the Bank agrees to pay Employee the Special Consideration provided in Section 11(b)
below. Should the Bank not elect to trigger this Covenant Not to Compete, the Bank shall have no obligation to pay the Employee any compensation beyond the date his employment terminates. 
 The parties acknowledge and agree that given the nature of Employer’s business and Employee’s access to Employer’s proprietary, trade
secret and other Confidential Information, the scope of the covenants and the associated time and territory restrictions, which were arrived at as a result of arms-length bargaining, are reasonable and appropriate for the protection of
Employer’s legitimate business interests. Employee hereby waives the right to assert that any such restriction is unreasonable. 
 It is
the desire and intent of the parties that the provisions of this Section 8 shall be enforced to the fullest extent permitted under the laws and public policies of each jurisdiction in which enforcement is sought. Accordingly, if any particular
portion of this Section 8 shall be adjudicated to be invalid or unenforceable, such adjudication shall apply only with respect to the operation of that portion in the particular jurisdiction in which such adjudication is made, and all other
portions shall continue in full force and effect. 
 Nothing in this Agreement shall be construed to prevent Employee from, or require the
Bank’s consent for: (i) investing personal assets in businesses in such form or manner that will not require any services on the part of Employee in the operation or the affairs of the companies in which such 

  

 11 

 
investments are made and in which Employee participation is solely that of an investor; or (ii) purchasing securities in any corporation whose
securities are listed on a national securities exchange or regularly traded in the over-the-counter market, provided that Employee at no time owns, directly or indirectly, in excess of one percent (1%) of the outstanding stock of any class of
any such corporation engaged in a business competitive with that of the Bank 
 9. Confidentiality. To protect adequately the
Bank’s Confidential Information, in addition to the Covenant Not to Compete set forth herein, Employee agrees as follows: 
 (a) During the term of his employment with the Bank and forever thereafter, Employee will diligently protect against unauthorized disclosure and, except as may be necessary in the ordinary course of Employee’s employment with the Bank,
will not disclose any Confidential Information of the Bank or its affiliates. Employee agrees that he will not copy any such information or materials or divulge the same or any part thereof to any other person, firm, corporation or organization, or
use such information or materials, either for himself or for the benefit of any third party, whether in competition with the Bank or otherwise, except as necessary in the ordinary course of Employee’s employment by the Bank. 
 (b) Upon the termination of Employee’s employment, for whatever reason, or upon the prior demand of the Bank, Employee shall
immediately return to the Bank all Confidential Information and materials described above then in Employee’s possession or control. 
 10. Non-Inducement of Employees. During Employee’s employment hereunder, and for a period of two (2) years thereafter, Employee shall not, directly or indirectly, induce or aid others to induce an employee of Employer to
leave the employ of Employer or in any way interfere with the relationship between Employer and an employee of Employer. 
  

 12 

 11. Special Consideration. 
 (a) For purposes of this Section 11(a), “Special Consideration” is
defined as a sum equal to three times the Employee’s Average Annual Total Cash Compensation. The term “Annual Total Cash Compensation” in this Agreement means the sum of Employee’s base salary (prior to reduction for pre-tax
deferrals made under Employer’s 401(k) plan or cafeteria plan) plus cash bonuses awarded during the year. Average Annual Total Cash Compensation shall be computed by adding the Total Cash Compensation for each of the three calendar years
immediately preceding the calendar year in which the termination of employment occurs and dividing that sum by three. Payments will be made on a monthly basis at the rate of  1/24th of the gross amount per month over the two year Restricted Period. In the event of a
breach by Employee of any of the covenants of Section 8, 9 or 10, the Bank may terminate payment of any further consideration otherwise payable under this Agreement. 
 (b) For purposes of this Section 11(b), “Special Consideration” is
defined as two times the Employee’s Average Annual Total Cash Compensation at the time of termination of employment. Payments will be made on a monthly basis at the rate of  1/24th of the gross amount per month over the two year Restricted Period. In the event of a
breach by Employee of any of the covenants of Section 8, 9 or 10, the Bank may terminate payment of any further consideration otherwise payable under this Agreement. 
 12. Necessary and Reasonable Restrictions. Employee acknowledges and agrees that as the Bank’s President and Chief Executive Officer, he has
knowledge of the Bank’s most proprietary 

  

 13 

 
and valuable Confidential Information, and that he has unique insight into and knowledge of the skills, talents and capabilities of the Bank’s key
employees. Employee further acknowledges and agrees that the covenants contained in Sections 8, 9 and 10 are reasonable and necessary to protect the legitimate business interests of the Bank, in view of, among other things, the short duration of the
restrictions, the narrow scope of the restrictions, and the Bank’s interests in protecting its goodwill, valuable Confidential Information, trade secrets, and its business relationships with its suppliers, customers and other individuals or
entities necessary to the business of the Bank. 
 Employee agrees that his background and capabilities will allow him to seek and accept
employment acceptable to him without violation of the restrictions contained in this Agreement. Employee further acknowledges and agrees that his employment with the Bank and the compensation and benefits under this Agreement constitutes sufficient
consideration for his agreement to the non-competition and non-solicitation restrictions set forth in this Agreement. 
 13.
Remedies. The parties hereto agree that Employer would suffer irreparable harm that would not be adequately remedied by money damages should Employee breach any of the covenants or agreements contained in this Agreement. Therefore, in
the event of the actual or threatened breach by Employee of any of the provisions of Sections 8, 9 and 10 of this Agreement, Employer or its successors or assigns may, in addition and supplementary to any other rights and remedies existing in its
favor, including a claim for damages if supported by law, apply to any court of competent jurisdiction for specific performance or injunctive relief to enforce this Agreement or to prevent such violation. Employee agrees that these terms and
conditions are reasonable. 
  

 14 

 14. Termination. This Agreement shall be deemed terminated and the employment relationship between
Employee and the Bank shall be deemed severed upon the occurrence of any of the following: 
 (a) The Death of Employee. In
such event, the Bank shall pay to Employee’s estate the compensation which would otherwise be payable to Employee up to the end of the month in which his death occurs. 
 (b) “Termination for Cause” shall be defined for these purposes as: 
 i. A determination by the Board that Employee has breached or failed to perform, in any material respect, any of his duties of employment or the terms of
this Agreement. Employee may cure the breach, if curable, within a period of ten (10) business days after the Bank has given written notice of such breach to Employee, unless the Bank has given written notice to Employee on a previous occasion
of the same or a substantially similar breach; 
 ii. The violation by Employee of the rules and regulations governing the Bank promulgated
by the Federal Deposit Insurance Corporation or the North Carolina State Banking Commission, or any other legal duty, which violation results in damage to the Bank or its reputation; 
 iii. The suspension of Employee from office or temporary prohibition of Employee from participating in the conduct of the affairs of the Bank pursuant to
the direction of the North Carolina State Banking Commission or the Federal Deposit Insurance Corporation; 
  

 15 

 iv. Conviction of a felony or a misdemeanor determined by the Board of Directors to involve morale
turpitude; 
 v. Employee’s willful misconduct (including chronic substance abuse) or other conduct which is materially detrimental to
the business prospects of the Bank or which has had or is likely to have a materially adverse effect on the Bank’s business or reputation; 
 vi. Employee’s committing fraud, misappropriation or embezzlement in the performance of the Employee’s duties as an employee of the Bank, or its affiliates; or 
 vii. neglect of duties for which employed or misconduct in the performance of duties for which employed, all such facts to be determined in good faith by
the Board of Directors of the Bank. 
 (c) Upon permanent disability (partial or total) of Employee as defined in the
disability income insurance policy provided for Employee by the Bank; or 
 (d) Upon the expiration of the term stated in
Section 2 above. 
 15. Obligations. Upon termination of this Agreement for any reason, all rights and obligations of the parties
will cease without further liability effective as of the date of termination; provided, however, that this Agreement shall continue to be binding and effective as to any prior obligation still owed by either party and as to the post-termination
obligations set forth herein including, without limitation, the obligations of the parties under Sections 7, 8, 9, 10, 11, 12, 13, 14, 15, 19, 21 and 24 hereof. The Bank shall have no continuing obligation to pay the Employee’s compensation
provided in Section 4 above after the termination of the employment relationship between the Bank and the Employee unless the provisions of Section 8 apply. 
  

 16 

 16. Severability. If any provision or clause of this Agreement or portion thereof shall be held in
court or any other tribunal of competent jurisdiction to be unenforceable in such jurisdiction, the remainder of such provisions shall not thereby be affected and shall be given full effect without regard to the invalid portion. It is the intention
of the parties that, and the parties agree that, as an essential part of the bargained-for consideration of this Agreement, if any court construes any provision or clause of this Agreement, or any portion thereof, to be illegal, void or
unenforceable because of the duration or scope of such provision, or the area or matter covered thereby, such court shall reduce the duration, areas or matter of such provision and, in its reduced form, such provision shall then be enforceable to
the greatest extent permitted by law and shall be enforced. 
 17. Assignment. This Agreement shall inure to the benefit of the
parties hereto and their respective successors and permitted assigns. This Agreement may be assigned by Employer without the consent of Employee but may not be assigned by Employee. 
 18. Knowing Agreement. Employee agrees that his signature below indicates that he understands the contents of this Agreement, that he has had
ample opportunity to review the terms of this Agreement, and that he executes this Agreement of his own free will. 
 19. No-Waiver.
Failure by either Employer or Employee to exercise any remedy available to either party in the event of a default by the other shall not be deemed to be a waiver of any other default, or of any repetition of the initial default. 
 20. Amendments. No amendment or modification of this Agreement shall be deemed effective unless and until executed in writing by both parties
hereto. 
  

 17 

 21. Notices. All notices, requests, demands, and other communications hereunder shall be in
writing and shall be delivered by hand or mailed by registered or certified mail, return receipt requested, first class postage pre-paid, addressed as follows: 
  

 18 

 If to the Employee: 
 Charles T. Canaday 
 MidCarolina Bank 
 P.O. Box 968 
 Burlington, North Carolina
27216-0968 
 If to the Bank: 
 MidCarolina Bank 
 P.O. Box 968 
 Burlington, North Carolina 27216-0968 
 ATTN: CHAIRMAN OF THE BOARD 
 If delivered personally, the date on which a notice, request, instruction or document is delivered shall be the date on which such delivery is made and,
if delivered by mail, three (3) calendar days after the date on which such notice, request, instruction or document is mailed shall be the date of delivery unless a return receipt proves a different date. 
 22. Entire Agreement. This Agreement contains the entire agreement between Employee and Employer with reference to Employee’s employment by
Employer or its affiliates. 
 23. Pronouns. All pronouns and any variations thereof refer to the masculine, feminine or neuter,
singular or plural, as the context may require. 
 24. Governing Law. This Agreement shall be governed in accordance with the laws of
the State of North Carolina. Employee and Employer agree that any lawsuit based in whole or in part on any provision of this Employment Agreement shall only be brought in the state or federal courts located in Greensboro, Guilford County, North
Carolina, and Employer and Employee waive any defenses based upon personal jurisdiction or venue to such lawsuit brought in Greensboro, Guilford County, North Carolina. 
  

 19 

 25. Board Approval. This Agreement and any corrections, amendments, and addenda thereto, shall not
be effective or legally binding until they have been reviewed and signed by both Employee and by the Chairman of the Board of Directors of the Bank acting on behalf of the Board. 
 26. Compliance with Internal Revenue Code Section 409A. Employee and Employer both intend that their exercise of authority or discretion
under this Agreement shall comply with section 409A of the Internal Revenue Code of 1986. If, when Employee’s employment terminates Employee is a specified employee, as defined in section 409A of the Internal Revenue Code of 1986, and if any
payments or benefits under this Agreement will result in additional tax or interest to the Executive because of section 409A, then despite any provision of this Agreement to the contrary, Employee will not be entitled to the payments or benefits
until the earliest of: (a) the date that is at least six months after termination of Employee’s employment for reasons other than Employee’s death, (b) the date of Employee’s death, or (c) any earlier date that does not
result in additional tax or interest to Employee under section 409A. If any provision of this Agreement does not satisfy the requirements of section 409A, such provision shall be applied in a manner consistent with those requirements, despite any
contrary provision of this Agreement. If any provision of this Agreement would subject the Executive to additional tax or interest under section 409A, the Bank shall reform the provision. However, the Bank shall maintain to the maximum extent
practicable the original intent of the applicable provision without subjecting Employee to additional tax or interest, and the Bank shall not be required to incur any additional compensation or other expense as a result of the reformed provision.
References in this Agreement to section 409A of the Internal Revenue Code of 1986 include rules, regulations, and guidance of general application issued by the Department of the Treasury under Internal Revenue Code section 409A. 
  

 20 

 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first
written above. 
  

			
	EMPLOYEE:
	
	 /S/ Charles T. Canaday (SEAL)

	 Charles T. Canaday
	 	

 STATE OF NORTH CAROLINA 
 COUNTY OF ALAMANCE 
 I, Carole C. Johnson, a Notary Public of the County and State aforesaid certify
that Charles T. Canaday personally came before me this day and acknowledged the execution of the foregoing instrument. 
 Witness my
hand and official seal, this 27th day of May, 2008. 
  

	
	 /S/ Carole C. Johnson

	NOTARY PUBLIC
	
	 Carole C. Johnson

	 Typed Name

 My Commission Expires: 9/26/2009 
  

 21 

			
	MIDCAROLINA BANK
		
	 By:
	 	 /S/ Charles T. Canaday

	 Its
	 	Pres/CEO

 STATE OF NORTH CAROLINA 
 COUNTY OF ALAMANCE 
 I, Carole C. Johnson, a Notary Public for said County and State, do hereby
certify that Charles T. Canaday personally came before me this day and acknowledged that he is the Chairman of the Board of Directors of MIDCAROLINA BANK, and that by authority duly given, and as the act of the Bank, the foregoing instrument
was signed in its name. 
 Witness my hand and official seal, this 27th day of May, 2008. 
  

	
	 /S/ Carole C. Johnson

	NOTARY PUBLIC
	
	 Carole C. Johnson

	Typed Name

 My Commission Expires: 9/26/2009 
  

	
	CONFIRMED BY:
	
	 /S/ James R. Copland III

	Chairman of the Board of Directors of the Bank, pursuant to Section 25 hereof

  

 22

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00145-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00145-of-00352.parquet"}]]