Document:

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                                  Exhibit 10.23

                              EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (this "Agreement") made and effective as of the
8th day of February, 2002, by and between ENCORE MEDICAL CORPORATION, a Delaware
corporation (the "Company"), and Paul Douglas Chapman (the "Employee").

     In consideration of the mutual promises contained herein, and of other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Employee agree as follows:

                                    ARTICLE 1
                                   EMPLOYMENT

     1.1 Employment Term. The Company hereby employs the Employee for a primary
term commencing on the date set forth above and, subject to earlier termination
as provided in Section 1.5 hereof, ending December 31, 2003 (the "Employment
Term"). Employee agrees to accept such employment and to perform the services
specified herein, all upon the terms and conditions hereinafter stated.

     1.2 Duties. The Employee shall serve in the capacity as Executive Vice
President - President, Chattanooga Group of the Company, or in such other
capacity as the Company may in its sole discretion direct, and shall report to,
and be subject to the general direction and control of, the Chief Executive
Officer of the Company. It is further understood and agreed that any
modification in or expansion of Employee's duties hereunder shall not, unless
specifically agreed in writing by Company, result in any modification in,
increase or decrease of Employee's compensation referred to in Section 1.4
hereof.

     1.3 Extent of Service. The Employee shall devote his full time, attention,
and energy to the business of the Company and, except as may be specifically
permitted by the Company and approved by the Chief Executive Officer of the
Company, shall not be engaged in any other business activity while in the employ
of the Company.

     1.4 Compensation

          1.4.1 Salary. The Company shall pay to the Employee a base salary at
a rate of not less than Two Hundred Ten Thousand Dollars ($210,000) per year, or
at such greater rate as the Board of Directors of the Company shall from time to
time determine (the "Base Salary"). The Base Salary shall be subject to review
on no less than an annual basis, beginning January 1, 2003. Such salary is to be
payable in installments in accordance with the payroll policies of the Company
in effect from time to time during the Employment Term.

          1.4.2 Other Benefits. The Employee shall be entitled to such vacation
days, sick days, insurance and other fringe benefit programs (including pension,
profit-sharing, bonus and

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stock plans, if any) as are established for all other executive employees of the
Company, on the same basis as such other employees are entitled thereto, it
being understood that the establishment, termination, or change of any such
program shall be at the instance of the Company, in exercise of its sole
discretion, from time to time, and any such termination or change in any such
program shall not affect this Agreement.

     1.5 Termination.

          1.5.1 Termination by Employee. At any time after one (1) year from the
commencement of the Employment Term, Employee may terminate this Agreement on
thirty (30) days' prior written notice.

          1.5.2 Termination by Company. Prior to the end of the Employment Term,
the Company may upon ten (10) days' prior written notice discharge the Employee
with or without cause at its sole option without any further liability hereunder
to the Employee or his estate; provided, however, in the event such termination
was without cause, the Company shall be required to pay the Employee, at the
time of his discharge, an amount equal to (a) one (1) year's Base Salary, (b) an
amount equal to the bonus that the Employee earned in the prior fiscal year of
the Company, in addition to any accrued, but unpaid Base Salary. In addition, if
such termination is before August 8, 2003, the Employee shall also be entitled
to (a) Base Salary for the period from termination to August 8, 2003; (b)
payment of any bonus to which he otherwise would have been entitled during or
with respect to the period from termination to August 8, 2003; (3) continuation
of insurance and other fringe benefit programs during such period, to the extent
permitted by such programs; and (4) the Company shall be obligated to provide
outplacement services to Employee at an outplacement agency selected by the
Company at a cost not to exceed $8,000. In no event shall the cost of
outplacement services be payable directly to Employee. The Employee will have no
further liability hereunder to the Company except pursuant to Article 2 and
Section 3.2 hereof. In the event such termination was with cause, the Company
shall only be required to pay the Employee, at the time of his discharge, an
amount equal to any accrued, but unpaid Base Salary. For purposes of this
Agreement, a "discharge for cause" shall mean a discharge resulting from
Employee having (i) failed or refused to follow legal and reasonable policies or
directives established and previously given to Employee in writing by Company,
(ii) willfully failed to attend to his duties after ten (10) days prior written
notice of failure to so act, (iii) committed acts amounting to gross negligence
or willful misconduct to the material detriment of Company, or (iv) otherwise
materially breached any of the terms or provisions of this Agreement after ten
(10) days prior written notice of such material breach and failure to cure such
breach. Employee shall be deemed to have been discharged for cause upon delivery
to Employee of a "Notice of Termination" stating the "Date of Termination" and
specifying the particulars of the conduct justifying discharge for cause.

                                    ARTICLE 2
                  NON-COMPETITION AND DISCLOSURE OF INFORMATION

     2.1 Non-competition. Employee acknowledges that his services to be rendered
hereunder are of a special and unusual character which have a unique value to
Company, the loss

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of which cannot adequately be compensated by damages in an action at law. In
view of the unique value to Company of the services of Employee for which
Company has contracted hereunder, and because of the confidential information to
be obtained by or disclosed to Employee, and as a material inducement to Company
to enter into this Agreement, and to pay to Employee the compensation referred
to in Section 1.4 hereof, Employee covenants and agrees that during Employee's
employment hereunder and for a period of one (1) year after he ceases to be
employed by Company, Employee shall not (a) directly or indirectly, solicit
business from, divert business from, or attempt to convert to other methods of
using the same or similar products or services as provided by Company, any
client, account or location of Company with which Employee has had any contact
as a result of his employment by Company hereunder; (b) engage in or carry on,
directly or indirectly, either for himself, as a member of a partnership, or as
a stockholder (except as limited partner or stockholder of less than one percent
(1%) of the issued and outstanding limited partnership interests or stock of a
publicly held partnership or corporation whose gross assets exceed $l,000,000),
as an investor, lender, guarantor, landlord, manager, officer, or director of
any person, partnership, corporation, or other entity (other than the Company or
its subsidiaries), or as an employee, agent, associate, broker, or consultant of
any person, partnership, corporation, or other entity (other than the Company or
its subsidiaries), any business (or segment of a business if such business
operates in more than one segment of the orthopedic industry) that competes with
any operations of the Company, as they exist at the time of Employee's
termination, within an one hundred (100)-mile radius of any geographic area
where Company is actually engaged in business, or maintains sales or service
representatives or employees; or (c) directly or indirectly, solicit for
employment or employ any employee of Company.

     2.2 Disclosures of Information. The Employee acknowledges that in the
course of his employment by the Company, he will receive certain trade secrets,
programs, methods of operation, financial information, lists of customers, and
other confidential information and knowledge concerning the businesses of the
Company (hereinafter collectively referred to as "Information") that the Company
desires to protect. As a material inducement to Company to enter into this
Agreement, and to pay to Employee the compensation referred to in Section 1.4
hereof, Employee covenants and agrees that he shall not, at any time during or
following the term of his employment hereunder, directly or indirectly, divulge
or disclose, for any purpose whatsoever, any of such Information which has been
obtained by or disclosed to him as a result of his employment by Company. The
Employee further agrees that he will at no time use the Information in competing
with the Company. Upon termination of this Agreement, the Employee shall
surrender to the Company all lists, books, financial information, records,
literature, products, papers, documents, writings, and other property produced
by him or coming into his possession by or through his employment relating to
the Information, and the Employee agrees that all such materials will at all
times remain the property of the Company. In the event of a breach or threatened
breach by Employee of any of the provisions of this Article 2, Company, in
addition to and not in limitation of any other rights, remedies or damages
available to Company at law or in equity, shall be entitled to a permanent
injunction in order to prevent or to restrain any such breach by Employee, or by
Employee's partners, agents, representatives, servants, employers, employees
and/or any and all persons directly or indirectly acting for or with him.

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     2.3 Accounting for Profits. Employee covenants and agrees that if he shall
violate any of his covenants or agreements under Article 2 hereof, Company shall
be entitled to an accounting and repayment of all profits, compensation,
commissions, remunerations or benefits which Employee directly or indirectly has
realized and/or may realize as a result of, growing out of or in connection with
any such violation; such remedy shall be in addition to and not in limitation of
any injunctive relief or other rights or remedies to which Company is or may be
entitled at law or in equity or under this Agreement.

     2.4 Reasonableness of Restrictions.

          2.4.1 Employee has carefully read and considered the provisions of
Article 2 hereof and, having done so, agrees that the restrictions set forth in
such Article (including, but not limited to, the time period of restriction and
the geographical areas of restriction set forth in Article 2 hereof) are fair
and reasonable and are reasonably required for the protection of the interest of
Company, its officers, directors and other employees.

          2.4.2 In the event that, notwithstanding the foregoing, any of the
provisions of Article 2 hereof shall be held to be invalid or unenforceable, the
remaining provisions thereof shall nevertheless continue to be valid and
enforceable as though the invalid or unenforceable parts had not been included
therein. In the event that any provision of Article 2 relating to time period
and/or areas of restriction shall be declared by a court of competent
jurisdiction to exceed the maximum time period or areas such court deems
reasonable and enforceable, said time period and/or areas of restriction shall
be deemed to become and thereafter be the maximum time period and/or areas which
such court deems reasonable and enforceable.

                                    ARTICLE 3
                               EMPLOYEE INVENTIONS

     3.1 Employee Inventions. Employee shall promptly disclose to the Company or
its designee any and all ideas, inventions, works of authorship (including, but
not limited to computer programs, software and documentation), improvements,
discoveries, developments, or innovations (hereinafter referred to as "said
inventions"), whether patentable or unpatentable, copyrightable or
uncopyrightable, made, developed, worked on, or conceived by Employee, either
solely or jointly with others, whether or not reduced to drawings, written
description, documentation, models, or other tangible form: (a) during the
Employment Term that relate to, or arise out of, any developments, services,
research, or products of, or pertain to the business of, the Company and (b) for
a period of six (6) months after termination of the Employment Term, said
inventions that relate to, or arise out of, any developments, services,
research, or products that Employee has been concerned with during the term of
his employment.

     3.2 Assignment. Employee hereby assigns and agrees to assign to the
Company, its successors and assigns, Employee's entire right, title, and
interest in and to any of said inventions. All of said inventions shall
forthwith and without further consideration become and be the exclusive property
of the Company, it successors and assigns.

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     3.3 Cooperation. Employee shall, without further compensation, do all
lawful things, including, but not limited to, maintaining invention records that
shall be the property of the Company, rendering assistance, giving of evidence
and testimony, and executing necessary documents, as requested, to enable the
Company to file and obtain patents in the United States and foreign countries on
any of said inventions, as well as to protect the Company's interest in any of
said inventions.

                                    ARTICLE 4
                                  MISCELLANEOUS

     4.1 Notices. All notices, requests, consents, and other communications
under this Agreement shall be in writing and shall be deemed to have been
delivered on the date personally delivered or on the date mailed, postage
prepaid, by certified mail, return receipt requested, or telegraphed or telexed
and confirmed if addressed to the respective parties as follows: (a) if to the
Employee to the address set forth below, and (b) if to the Company to Encore
Medical Corporation, 9800 Metric Blvd., Austin, Texas 78758 ATTENTION: Chairman
of the Board. Either party hereto may designate a different address by providing
written notice of such new address to the other party hereto.

     4.2 Specific Performance. The Employee acknowledges that a remedy at law
for any breach or attempted breach of Section 1.3 and Article 2 of this
Agreement will be inadequate, and agrees that the Company shall be entitled to
specific performance and injunctive and other equitable relief in case of any
such breach or attempted breach, and further agrees to waive any requirement for
the securing or posting of any bond in connection with the obtaining of any such
injunctive or any other equitable relief. In the event the Company brings legal
action to enforce its rights hereunder, the Employee shall pay all of the
Company's court costs and legal fees and expenses arising out of such action if
the Company prevails in such action.

     4.3 Severability. Whenever possible, each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.

     4.4 Assignment. This Agreement may not be assigned by the Employee. Neither
the Employee nor his spouse shall have any right to commute, encumber, or
otherwise dispose of any right to receive payments hereunder, it being the
intention of the parties that such payments and the rights thereto are
nonassignable and nontransferable. This Agreement is only assignable by the
Company to a parent, subsidiary, successor or other affiliate of the Company.

     4.5 Binding Effect. Subject to the provisions of Section 4.4 of this
Agreement, this Agreement shall be binding upon and inure to the benefit of the
parties hereto, the Employee's heirs and personal representatives, and the
successors and assigns of the Company.

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     4.6 Governing Law. This Agreement shall be construed and enforced in
accordance with and governed by the laws of the State of Texas.

     4.7 Entire Agreement; Amendment. This Agreement contains the entire
understanding between the parties, and there are no agreements or understandings
among the parties except as set forth herein. The Employee represents and
warrants to the Company that at the time of execution of this Agreement he is
not a party to any other employment agreement. Employee further represents and
warrants that he neither has any proprietary information of any other business
nor is he providing any other business' proprietary information to the Company.
No alteration or modification of this Agreement shall be valid except by
subsequent written instrument executed by the parties hereto. No waiver by
either party of any breach by the other party of any provision or condition of
this Agreement in one circumstance shall be deemed a waiver of such provision or
condition in any other circumstances or be deemed a waiver of any other
provision or condition. The section and paragraph headings in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.

                                            COMPANY:

                                            ENCORE MEDICAL CORPORATION

                                            By:  /s/ Kenneth W. Davidson
                                                     Kenneth W. Davidson, Chief
                                                     Executive Officer

                                            EMPLOYEE:

                                            /s/ Paul Douglas Chapman
                                            PAUL DOUGLAS CHAPMAN

                                            Address:   1006 Hanover Street
                                                       Chattanooga, TN  37405

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                                                                   Exhibit 10(v)

                     EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN

                               EXECUTIVE AGREEMENT

     THIS AGREEMENT is made and entered into this 10th day of March, 2003, by
and between the Carolina Bank, a bank organized and existing under the laws of
the State of North Carolina (hereinafter referred to as the "Bank"), and Robert
T. Braswell, an Executive of the Bank (hereinafter referred to as the
"Executive").

     WHEREAS, the Executive is now in the employ of the Bank and has for many
years faithfully served the Bank. It is the consensus of the Board of Directors
(hereinafter referred to as the "Board") that the Executive's services have been
of exceptional merit, in excess of the compensation paid and an invaluable
contribution to the profits and position of the Bank in its field of activity.
The Board further believes that the Executive's experience, knowledge of
corporate affairs, reputation and industry contacts are of such value, and the
Executive's continued services so essential to the Bank's future growth and
profits, that it would suffer severe financial loss should the Executive
terminate their services;

     ACCORDINGLY, the Board has adopted the Carolina Bank Executive Supplemental
Retirement Plan (hereinafter referred to as the "Executive Plan") and it is the
desire of the Bank and the Executive to enter into this Agreement under which
the Bank will agree to make certain payments to the Executive upon the
Executive's retirement or to the Executive's beneficiary(ies) in the event of
the Executive's death pursuant to the Executive Plan;

     FURTHERMORE, it is the intent of the parties hereto that this Executive
Plan be considered an unfunded arrangement maintained primarily to provide
supplemental retirement benefits for the Executive, and be considered a
non-qualified benefit plan for purposes of the Employee Retirement Security Act
of 1974, as amended ("ERISA"). The Executive is fully advised of the Bank's
financial status and has had substantial input in the design and operation of
this benefit plan; and

     NOW THEREFORE, in consideration of services the Executive has performed in
the past and those to be performed in the future, and based upon the mutual
promises and covenants herein contained, the Bank and the Executive agree as
follows:

I.   DEFINITIONS

     A.   Effective Date:

          The Effective Date of the Executive Plan shall be December 24, 2002.

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     B.   Plan Year:

          Any reference to the "Plan Year" shall mean a calendar year from
          January 1st to December 31st. In the year of implementation, the term
          "Plan Year" shall mean the period from the Effective Date to December
          31st of the year of the Effective Date.

     C.   Retirement Date:

          Retirement Date shall mean retirement from service with the Bank that
          becomes effective on the first day of the calendar month following the
          month in which the Executive reaches age sixty-five (65) or such later
          date as the Executive may actually retire.

     D.   Early Retirement Date:

          Early Retirement Date shall mean a retirement from service which is
          effective prior to the Normal Retirement Age stated herein, provided
          the Executive has attained age sixty-two (62).

     E.   Termination of Service:

          Termination of Service shall mean the Executive's voluntary
          resignation of service by the Executive or the Bank's discharge of the
          Executive without cause, prior to the Early Retirement Date
          (Subparagraph I [D]).

     F.   Index Retirement Benefit:

          The Index Retirement Benefit for each Executive in the Executive Plan
          for each Plan Year shall be equal to the excess (if any) of the Index
          (Subparagraph I [G]) for that Plan Year over the Opportunity Cost
          (Subparagraph I [H]) for that Plan Year.

     G.   Index:

          The Index for any Plan Year shall be the aggregate annual after-tax
          income from the life insurance contract(s) described hereinafter as
          defined by FASB Technical Bulletin 85-4. This Index shall be applied
          as if such insurance contract(s) were purchased on the Effective Date
          of the Executive Plan.

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          Insurance Company:            Mass Mutual Life Insurance Company
          Policy Form:                  Adjustable Life
          Policy Name:                  Strategic Life Executive
          Insured's Age and Sex:        51, Male
          Riders:                       None
          Ratings:                      None
          Option:                       Level
          Face Amount:                  $1,093,925
          Premiums Paid:                $446,500
          Number of Premium Payments:   Single
          Assumed Purchase Date:        December 24, 2002

          Insurance Company:            Southland Life Insurance Company
          Policy Form:                  Flexible Premium Adjustable Life
          Policy Name:                  Max Universal Life
          Insured's Age and Sex:        51, Male
          Riders:                       None
          Ratings:                      None
          Option:                       Level
          Face Amount:                  $1,202,592
          Premiums Paid:                $446,500
          Number of Premium Payments:   Single
          Assumed Purchase Date:        December 24, 2002

          If such contracts of life insurance are actually purchased by the
          Bank, then the actual policies as of the dates they were actually
          purchased shall be used in calculations under this Executive Plan. If
          such contracts of life insurance are not purchased or are subsequently
          surrendered or lapsed, then the Bank shall receive annual policy
          illustrations that assume the above-described policies were purchased
          or had not subsequently surrendered or lapsed. Said illustration shall
          be received from the respective insurance companies and will indicate
          the increase in policy values for purposes of calculating the amount
          of the Index.

          In either case, references to the life insurance contracts are merely
          for purposes of calculating a benefit. The Bank has no obligation to
          purchase such life insurance and, if purchased, the Executive and the
          Executive's beneficiary(ies) shall have no ownership interest in such
          policy and shall always have no greater interest in the benefits under
          this Executive Plan than that of an unsecured creditor of the Bank.

     H.   Opportunity Cost:

          The Opportunity Cost for any Plan Year shall be calculated by taking
          the sum of the amount of premiums for the life insurance policies
          described in

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          the definition of "Index" plus the amount of any after-tax benefits
          paid to the Executive pursuant to the Executive Plan (Paragraph II
          hereinafter) plus the amount of all previous years' after-tax
          Opportunity Cost, and multiplying that sum by the three (3) year
          average after-tax yield of a one-year Treasury bill.

     I.   Change of Control:

          Change of Control means the cumulative transfer of more than fifty
          percent (50%) of the voting stock of the Bank from the Effective Date
          of this Executive Plan. For the purposes of this Executive Plan,
          transfers on account of deaths or gifts, transfers between family
          members or transfers to a qualified retirement plan maintained by the
          Bank shall not be considered in determining whether there has been a
          Change of Control.

     J.   Normal Retirement Age:

          Normal Retirement Age shall mean the date on which the Executive
          attains age sixty-five (65).

     K.   Benefit Accounting:

          The Bank shall account for the benefit provided herein using the
          regulatory accounting principles of the Bank's primary federal
          regulator. The Bank shall establish an accrued liability retirement
          account for the Executive into which appropriate reserves shall be
          accrued.

II.  INDEX BENEFITS

     A.   Retirement Benefits:

          Subject to Subparagraph II (E) hereinafter, an Executive who remains
          in the employ of the Bank until the Normal Retirement Age
          (Subparagraph I [J]) shall be entitled to receive an annual benefit
          amount equal to the amount set forth in Exhibit A-1. Said payments
          shall be made monthly (1/12th of the annual benefit) and shall
          commence thirty (30) days following the Executive's retirement and
          shall continue until the Executive attains age seventy-six (76). Upon
          completion of the aforestated payments and commencing subsequent
          thereto and subject to Subparagraph II (A) (i) hereinbelow, the Index
          Retirement Benefit (Subparagraph I [F]) for each Plan Year subsequent
          to the year in which the Executive attains age seventy-six (76), and
          including the remaining portion of the Plan Year in which the
          Executive attains age seventy-six (76) shall be paid to the Executive
          until the Executive's death.

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          (i)  The Index Retirement Benefit Adjustment:

               The Index Retirement Benefit payment as set forth hereinabove for
               the first Plan Year subsequent to the Executive attaining age
               seventy-six (76) shall be adjusted according to a number equal to
               the aggregate of the Index Retirement Benefit (Subparagraph I
               [F]) for each Plan Year from the Effective Date of this agreement
               until the Plan Year subsequent to the Executive attaining age
               seventy-six (76) over the aggregate of the benefit payments the
               Executive actually received under the terms of this Executive
               Plan through that date. For example, if the Executive retires at
               age sixty-five (65) and the aggregate annual benefits received by
               the Executive until the Plan Year the Executive attains age
               seventy-six (76) were $900,000.00, and the aggregate Index
               Retirement Benefits for each Plan Year from the Effective Date of
               this agreement to the Plan Year the Executive's attains age
               seventy-six (76) were $1,000,000.00 then the Executive's Index
               Retirement Benefit in the first Plan Year said payment is payable
               to the Executive would be increased by $100,000.00. If said
               number is a deficit, then the Index Retirement Benefit for the
               Plan Year when the Executive attains age seventy-six (76) and
               each subsequent Plan Year's benefit (if necessary) shall be
               reduced until the entire deficit has been recovered by the Bank.
               For each year thereafter, the Index Retirement Benefit payment
               shall be paid as set forth in Subparagraph I (E). For example, if
               the Executive retires at age sixty-five (65) and the aggregate
               annual benefits to be received by the Executive until the Plan
               Year the Executive attains age seventy-six (76) were
               $1,000,000.00, and the aggregate Index Retirement Benefits for
               each Plan Year from the Effective Date of this agreement to the
               Plan Year the Executive attains age seventy-six (76) were
               $900,000.00 and the Executive's Index Retirement Benefit was
               $90,000.00 in the first year, then the Executive would not
               receive any Index Retirement Benefit in the first year, and the
               second years' Index Retirement benefit would be reduced by
               $10,000.00.

     B.   Early Retirement:

          Subject to Subparagraph II (E), should the Executive elect Early
          Retirement or be discharged without cause by the Bank subsequent to
          the Early Retirement Date [Subparagraph I (D)], the Executive shall be
          entitled to receive the annual benefit set forth in Exhibit A-2
          reduced by the full number of years the Executive retires early prior
          to Normal Retirement Age, times thirty-three and one third percent
          (33.33%) (For example, if the Executive retires at age 63, the annual
          benefit set forth in Exhibit A-2 shall be reduced by 66.66%: 63-65=2 X
          33.33). Said

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          payments shall be made monthly (1/12th of the annual benefit)
          commencing thirty (30) days following said early retirement and shall
          continue until the Executive attains age seventy-six (76). Upon
          completion of the aforestated payments and commencing subsequent
          thereto and subject to Subparagraph II (A) (i) hereinabove, the Index
          Retirement Benefit for each Plan Year subsequent to the year in which
          the Executive attains age seventy-six (76), and including the
          remaining portion of the Plan Year in which the Executive attains age
          seventy-six (76), shall be paid to the Executive until the Executive's
          death.

     C.   Termination of Service:

          Subject to Subparagraph II (E), should an Executive suffer a
          Termination of Service the Executive shall be entitled to receive the
          following percentage of the annual benefit set forth in Exhibit A-1
          that corresponds to the number of full years the Executive has been
          employed by the Bank since the date of first employment and the age of
          the Executive while employed by the Bank only (to a maximum of 75%).
          Said payments shall be made monthly (1/12th of the annual benefit) and
          shall commence thirty (30) days following the Executive's Normal
          Retirement Age (Subparagraph I [J] and shall continue until the
          Executive attains age seventy-six (76). Upon completion of the
          aforestated payments and commencing subsequent thereto and subject to
          Subparagraph II (A) (i) hereinabove the Index Retirement Benefit for
          each Plan Year subsequent to the year in which the Executive attains
          age seventy-six (76), and including the remaining portion of the Plan
          Year in which the Executive attains age seventy-six (76), shall be
          paid to the Executive until the Executive's death.

               Total Years of
           Employment and Age of
          Executive while employed         Vested Percentage
              by the Bank only           (to a maximum of 75%)
          ------------------------       ---------------------

          1-10 and prior to              7.5% per year
          attaining age 62 while         to a maximum of 75%
          employed by the Bank only

          Age 62 while employed          100% and the provisions of
          by the Bank only               Subparagraph II (B) would apply

     D.   Death:

          If the Executive dies while there is a balance in the Executive's
          accrued liability retirement account, then the unpaid balance shall be
          paid in a lump sum to the individual or individuals designated in
          writing by the Executive and filed with the Bank. In the absence of or
          a failure to

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          designate a beneficiary, the unpaid balance shall be paid in a lump
          sum to the personal representative of the Executive's estate. If, upon
          death, the Executive shall have received the total balance of the
          Executive's accrued liability retirement account, then no further
          benefit shall be due hereunder. In any event, upon the death of the
          Executive, the Executive's beneficiary shall no be entitled to receive
          any Index Retirement Benefit. Any death benefit payable hereunder
          shall be paid on the first day of the second month following the month
          of the Executive's death.

     E.   Discharge for Cause:

          Should the Executive be Discharged for Cause at any time, all benefits
          under this Executive Plan shall be forfeited. The term "for cause"
          shall mean any of the following that result in an adverse effect on
          the Bank: (i) gross negligence or gross neglect; (ii) the commission
          of a felony or gross misdemeanor involving moral turpitude, fraud, or
          dishonesty; (iii) the willful violation of any law, rule, or
          regulation (other than a traffic violation or similar offense); (iv)
          an intentional failure to perform stated duties; or (v) a breach of
          fiduciary duty involving personal profit. If a dispute arises as to
          discharge "for cause," such dispute shall be resolved by arbitration
          as set forth in this Executive Plan.

     F.   Death Benefit:

          Except as set forth above, there is no death benefit provided under
          this Agreement.

III. RESTRICTIONS UPON FUNDING

     The Bank shall have no obligation to set aside, earmark or entrust any fund
     or money with which to pay its obligations under this Executive Plan. The
     Executive, their beneficiary(ies), or any successor in interest shall be
     and remain simply a general creditor of the Bank in the same manner as any
     other creditor having a general claim for matured and unpaid compensation.

     The Bank reserves the absolute right, at its sole discretion, to either
     fund the obligations undertaken by this Executive Plan or to refrain from
     funding the same and to determine the extent, nature and method of such
     funding. Should the Bank elect to fund this Executive Plan, in whole or in
     part, through the purchase of life insurance, mutual funds, disability
     policies or annuities, the Bank reserves the absolute right, in its sole
     discretion, to terminate such funding at any time, in whole or in part. At
     no time shall any Executive be deemed to have any lien nor right, title or
     interest in or to any specific funding investment or to any assets of the
     Bank.

     If the Bank elects to invest in a life insurance, disability or annuity
     policy upon the life of the Executive, then the Executive shall assist the
     Bank by freely submitting

                                       7

<PAGE>

     to a physical exam and supplying such additional information necessary to
     obtain such insurance or annuities.

IV.  CHANGE OF CONTROL

     Upon a Change of Control (Subparagraph I [I]), if the Executive
     subsequently suffers a Termination of Service (Subparagraph I [E]), then
     the Executive shall receive the benefits promised in this Executive Plan
     upon attaining Normal Retirement Age, as if the Executive had been
     continuously employed by the Bank until the Executive's Normal Retirement
     Age. The Executive will also remain eligible for all promised death
     benefits in this Executive Plan. In addition, no sale, merger, or
     consolidation of the Bank shall take place unless the new or surviving
     entity expressly acknowledges the obligations under this Executive Plan and
     agrees to abide by its terms.

V.   MISCELLANEOUS

     A.   Alienability and Assignment Prohibition:

          Neither the Executive, nor the Executive's surviving spouse, nor any
          other beneficiary(ies) under this Executive Plan shall have any power
          or right to transfer, assign, anticipate, hypothecate, mortgage,
          commute, modify or otherwise encumber in advance any of the benefits
          payable hereunder nor shall any of said benefits be subject to seizure
          for the payment of any debts, judgments, alimony or separate
          maintenance owed by the Executive or the Executive's beneficiary(ies),
          nor be transferable by operation of law in the event of bankruptcy,
          insolvency or otherwise. In the event the Executive or any beneficiary
          attempts assignment, commutation, hypothecation, transfer or disposal
          of the benefits hereunder, the Bank's liabilities shall forthwith
          cease and terminate.

     B.   Binding Obligation of the Bank and any Successor in Interest:

          The Bank shall not merge or consolidate into or with another bank or
          sell substantially all of its assets to another bank, firm or person
          until such bank, firm or person expressly agree, in writing, to assume
          and discharge the duties and obligations of the Bank under this
          Executive Plan. This Executive Plan shall be binding upon the parties
          hereto, their successors, beneficiaries, heirs and personal
          representatives.

     C.   Amendment or Revocation:

          It is agreed by and between the parties hereto that, during the
          lifetime of the Executive, this Executive Plan may be amended or
          revoked at any time or times, in whole or in part, by the mutual
          written consent of the Executive and the Bank.

                                       8

<PAGE>

     D.   Gender:

          Whenever in this Executive Plan words are used in the masculine or
          neuter gender, they shall be read and construed as in the masculine,
          feminine or neuter gender, whenever they should so apply.

     E.   Effect on Other Bank Benefit Plans:

          Nothing contained in this Executive Plan shall affect the right of the
          Executive to participate in or be covered by any qualified or
          non-qualified pension, profit-sharing, group, bonus or other
          supplemental compensation or fringe benefit plan constituting a part
          of the Bank's existing or future compensation structure.

     F.   Headings:

          Headings and subheadings in this Executive Plan are inserted for
          reference and convenience only and shall not be deemed a part of this
          Executive Plan.

     G.   Applicable Law:

          The validity and interpretation of this Agreement shall be governed by
          the laws of the State of North Carolina.

     H.   12 U.S.C. (S) 1828(k):

          Any payments made to the Executive pursuant to this Executive Plan, or
          otherwise, are subject to and conditioned upon their compliance with
          12 U.S.C. (S) 1828(k) or any regulations promulgated thereunder.

     I.   Partial Invalidity:

          If any term, provision, covenant, or condition of this Executive Plan
          is determined by an arbitrator or a court, as the case may be, to be
          invalid, void, or unenforceable, such determination shall not render
          any other term, provision, covenant, or condition invalid, void, or
          unenforceable, and the Executive Plan shall remain in full force and
          effect notwithstanding such partial invalidity.

     J.   Employment:

          No provision of this Executive Plan shall be deemed to restrict or
          limit any existing employment agreement by and between the Bank and
          the Executive, nor shall any conditions herein create specific
          employment rights to the Executive nor limit the right of the Employer
          to discharge the Executive with or without cause. In a similar
          fashion, no provision shall

                                       9

<PAGE>

          limit the Executive's rights to voluntarily sever the Executive's
          employment at any time.

VI.  ERISA PROVISION

     A.   Named Fiduciary and Plan Administrator:

          The "Named Fiduciary and Plan Administrator" of this Executive Plan
          shall be Carolina Bank, until its resignation or removal by the Board.
          As Named Fiduciary and Plan Administrator, the Bank shall be
          responsible for the management, control and administration of the
          Executive Plan. The Named Fiduciary may delegate to others certain
          aspects of the management and operation responsibilities of the
          Executive Plan including the employment of advisors and the delegation
          of ministerial duties to qualified individuals.

     B.   Claims Procedure and Arbitration:

          In the event a dispute arises over benefits under this Executive Plan
          and benefits are not paid to the Executive (or to the Executive's
          beneficiary(ies) in the case of the Executive's death) and such
          claimants feel they are entitled to receive such benefits, then a
          written claim must be made to the Named Fiduciary and Plan
          Administrator named above within sixty (60) days from the date
          payments are refused. The Named Fiduciary and Plan Administrator shall
          review the written claim and if the claim is denied, in whole or in
          part, they shall provide in writing within sixty (60) days of receipt
          of such claim the specific reasons for such denial, reference to the
          provisions of this Executive Plan upon which the denial is based and
          any additional material or information necessary to perfect the claim.
          Such written notice shall further indicate the additional steps to be
          taken by claimants if a further review of the claim denial is desired.
          A claim shall be deemed denied if the Named Fiduciary and Plan
          Administrator fail to take any action within the aforesaid sixty-day
          period.

          If claimants desire a second review they shall notify the Named
          Fiduciary and Plan Administrator in writing within sixty (60) days of
          the first claim denial. Claimants may review this Executive Plan or
          any documents relating thereto and submit any written issues and
          comments it may feel appropriate. In their sole discretion, the Named
          Fiduciary and Plan Administrator shall then review the second claim
          and provide a written decision within sixty (60) days of receipt of
          such claim. This decision shall likewise state the specific reasons
          for the decision and shall include reference to specific provisions of
          the Plan Agreement upon which the decision is based.

          If claimants continue to dispute the benefit denial based upon
          completed performance of this Executive Plan or the meaning and effect
          of the terms

                                       10

<PAGE>

          and conditions thereof, then claimants may submit the dispute to an
          arbitrator for final arbitration. The arbitrator shall be selected by
          mutual agreement of the Bank and the claimants. The arbitrator shall
          operate under any generally recognized set of arbitration rules. The
          parties hereto agree that they and their heirs, personal
          representatives, successors and assigns shall be bound by the decision
          of such arbitrator with respect to any controversy properly submitted
          to it for determination.

          Where a dispute arises as to the Bank's discharge of the Executive
          "for cause," such dispute shall likewise be submitted to arbitration
          as above described and the parties hereto agree to be bound by the
          decision thereunder.

VII. TERMINATION OR MODIFICATION OF AGREEMENT BY REASON OF CHANGES IN THE LAW,
     RULES OR REGULATIONS

     The Bank is entering into this Agreement upon the assumption that certain
     existing tax laws, rules and regulations will continue in effect in their
     current form. If any said assumptions should change and said change has a
     detrimental effect on this Executive Plan, then the Bank reserves the right
     to terminate or modify this Agreement accordingly. Upon a Change of Control
     (Subparagraph I [I]), this paragraph shall become null and void effective
     immediately upon said Change of Control.

     IN WITNESS WHEREOF, the parties hereto acknowledge that each has carefully
read this Agreement and executed the original thereof on the first day set forth
hereinabove, and that upon execution, each has received a conforming copy.

                                       CAROLINA BANK
                                       Greensboro, North Carolina

 /s/ Christine Burns-Fazzi             By: /s/ T. Allen Liles                CFO
----------------------------------        --------------------------------------
Witness                                                                    Title

 /s/ Christine Burns-Fazzi             /s/ Robert T. Braswell
----------------------------------     ----------------------------------
Witness                                Executive

                                       11

<PAGE>

                          BENEFICIARY DESIGNATION FORM
                         FOR THE EXECUTIVE SUPPLEMENTAL
                            RETIREMENT PLAN AGREEMENT

I.   PRIMARY DESIGNATION
          (You may refer to the beneficiary designation information prior to
          completion of this form.)

     A.   Person(s) as a Primary Designation:
          (Please indicate the percentage for each beneficiary.)

     Name                               Relationship                  /        %
         ------------------------------             -----------------   -------

     Address:
             -------------------------------------------------------------------
                  (Street)                  (City)       (State)         (Zip)

     Name                               Relationship                  /        %
         ------------------------------             -----------------   -------

     Address:
             -------------------------------------------------------------------
                  (Street)                  (City)       (State)         (Zip)

     Name                               Relationship                  /        %
         ------------------------------             -----------------   -------

     Address:
             -------------------------------------------------------------------
                  (Street)                  (City)       (State)         (Zip)

     Name                               Relationship                  /        %
         ------------------------------             -----------------   -------

     Address:
             -------------------------------------------------------------------
                  (Street)                  (City)       (State)         (Zip)

B.   Estate as a Primary Designation:

     My Primary Beneficiary is The Estate of
                                             -----------------------------------
     as set forth in the last will and testament dated the       day of
                                                           -----
                ,       and any codicils thereto.
     -----------  -----

C.   Trust as a Primary Designation:

Name of the Trust:
                   -------------------------------------------------------------

Execution Date of the Trust:       /       /
                             -----   -----   ---------

Name of the Trustee:
                     -----------------------------------------------------------

Beneficiary(ies) of the Trust (please indicate the percentage for each
beneficiary):

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

Is this an Irrevocable Life Insurance Trust?           Yes           No
                                             ---------     ---------

(If yes and this designation is for a Split Dollar agreement, an Assignment of
Rights form should be completed.)

                                       12

<PAGE>

II.  SECONDARY (CONTINGENT) DESIGNATION

     A.   Person(s) as a Secondary (Contingent) Designation: (Please indicate
          the percentage for each beneficiary.)

     Name                               Relationship                  /        %
         ------------------------------             -----------------   -------

     Address:
             -------------------------------------------------------------------
                  (Street)                  (City)       (State)         (Zip)

     Name                               Relationship                  /        %
         ------------------------------             -----------------   -------

     Address:
             -------------------------------------------------------------------
                  (Street)                  (City)       (State)         (Zip)

     Name                               Relationship                  /        %
         ------------------------------             -----------------   -------

     Address:
             -------------------------------------------------------------------
                  (Street)                  (City)       (State)         (Zip)

     Name                               Relationship                  /        %
         ------------------------------             -----------------   -------

     Address:
             -------------------------------------------------------------------
                  (Street)                  (City)       (State)         (Zip)

     B.   Estate as a Secondary (Contingent) Designation:

     My Secondary Beneficiary is The Estate of
                                               ---------------------------------
     as set forth in my last will and testament dated the       day of
                                                          -----
                ,        and any codicils thereto.
     -----------  -----

     C. Trust as a Secondary (Contingent) Designation:

     Name of the Trust:
                        --------------------------------------------------------

     Execution Date of the Trust:       /       /
                                  -----   -----   ---------

     Name of the Trustee:
                          ------------------------------------------------------

     Beneficiary(ies) of the Trust (please indicate the percentage for each
     beneficiary):

     ---------------------------------------------------------------------------

     ---------------------------------------------------------------------------

     All sums payable under the Executive Supplemental Retirement Plan Agreement
     by reason of my death shall be paid to the Primary Beneficiary(ies), if he
     or she survives me, and if no Primary Beneficiary(ies) shall survive me,
     then to the Secondary (Contingent) Beneficiary(ies). This beneficiary
     designation is valid until the participant notifies the bank in writing.

     ----------------------------               ----------------------------
     Participant                                Date

                                       13

<PAGE>

                                  EXHIBIT "A-1"

                End of      Benefit
               Year Age:    Amount
               ---------   --------

Bob Braswell       65      $74,611
                   66      $76,128
                   67      $77,823
                   68      $78,912
                   69      $79,944
                   70      $80,872
                   71      $81,708
                   72      $82,598
                   73      $85,287
                   74      $86,594
                   75      $87,844

                                       14

<PAGE>

                                  EXHIBIT "A-2"

               Plan Years Subsequent
                to Early Retirement
                Date as Defined in
                Subparagraph I(K)of    Benefit
                   the Agreement        Amount
               ---------------------   -------

Bob Braswell             1             $74,611
                         2             $76,128
                         3             $77,823
                         4             $78,912
                         5             $79,944
                         6             $80,872
                         7             $81,708
                         8             $82,598
                         9             $85,287
                        10             $86,594*

*    This benefit amount shall remain constant for any remaining Plan Years that
     the Executive may be entitled to receive a fixed benefit amount pursuant to
     Subparagraph II (B) of the Agreement; the Executive's age: 76

                                       15

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