Document:

Exhibit

EMPLOYMENT AGREEMENT

This Employment Agreement (this "Agreement") is made and entered into effective as of January 12, 2017, by and between Sanjay Baskaran (the "Executive") and Blucora, Inc. (the "Company").
RECITALS
WHEREAS, the Company desires to employ the Executive as the President of the Company’s subsidiary, TaxAct, Inc., effective January 30, 2017 (the "Effective Date") and the Executive desires to serve in such capacity; 
NOW THEREFORE, in consideration of the foregoing, the mutual covenants contained herein, the employment of the Executive by the Company, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
		
	1.
	Certain Definitions

(a)    “Additional Employee Agreement” means the Supplementary Terms of Employment attached hereto as Exhibit A.
(b)    "Base Salary" has the meaning set forth in Section 5(a).
(c)    "Board" means the Board of Directors of the Company.
(d)    "Cause" means, as determined by the Board in its reasonable discretion:  (i) the Executive's conviction of, or plea of guilty or nolo contendere to, a misdemeanor involving dishonesty, wrongful taking of property, immoral conduct, bribery or extortion or any felony; (ii) willful material misconduct by the Executive in connection with the business of the Company; (iii) the Executive's continued and willful failure to perform substantially his responsibilities to the Company under this Agreement, after written demand for substantial performance has been given by the Board that specifically identifies how the Executive has not substantially performed his responsibilities; (iv) the Executive’s improper disclosure of confidential information or other material breach of this Agreement, including the Additional Employee Agreement; (v) the Executive's material fraud or dishonesty against the Company; (vi) the Executive's willful and material breach of the Company's written code of conduct and business ethics or other material written policy, procedure or guideline in effect from time to time (provided that the Executive was given access to a copy of such policy, procedure or guideline prior to the alleged breach) relating to personal conduct; or (vii) the Executive's willful attempt to obstruct or willful failure to cooperate with any investigation authorized by the Board or any governmental or self-regulatory entity.  Any determination of Cause by the Company shall be made by a resolution approved by a majority of the members of the Board, provided that, with respect to Section 1(d)(iii), the Board must give the Executive notice and 60 days to cure the substantial nonperformance.
(e)    "Change of Control" means the occurrence of any of the following:
(i)    any "person" (as defined in Sections 13(d) and 14(d) of the Exchange Act), excluding for this purpose, (A) the Company or any subsidiary of the Company or (B) any employee benefit plan of the Company or any subsidiary of the Company, or any person or entity organized, appointed or established by the Company for or pursuant to the terms of any such plan that acquires beneficial ownership of voting securities of the Company, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing more than 50% of the combined voting power of the Company’s then outstanding securities;
(ii)    consummation of a reorganization, merger or consolidation of the Company, in each case, unless, following such transaction, all or substantially all the individuals and entities who were the beneficial owners of outstanding voting securities of the Company immediately prior to such transaction beneficially own, directly or indirectly, more than 50% of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the company resulting from such transaction (including, without limitation, a company that, as a result of such transaction, owns the Company or all or substantially all the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to such transaction of the outstanding voting securities of the Company; 
(iii)    any sale or disposition by the Company, in one transaction or a series of related transactions, of all or substantially all the Company's assets;
(iv)    a "Board Change" which, for purposes of this Agreement, shall have occurred if a majority of the seats on the Board are occupied by individuals who were neither (A) nominated by a majority of the Incumbent Directors nor (B) appointed by directors so nominated ("Incumbent Director" means a member of the Board who has been either (1) nominated by a majority of the directors of the Company then in office or (2) appointed by directors so nominated, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Board); or
(v)    an approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.
(f)    "Code" means the Internal Revenue Code of 1986, as amended.
(g)    "Compensation Committee" means the Compensation Committee of the Board.
(h)    "Constructive Termination" means the occurrence, on a date that is prior to the two-month period prior to the consummation of a Change of Control or after the 12-month period following the consummation of a Change of Control, of any of the following without the Executive's express prior written consent:  (i) a material reduction of or to the Executive's duties, authority or responsibilities (a change in reporting relationship alone does not constitute such a material reduction); (ii) a material reduction by the Company of the Executive's Base Salary, unless similarly situated executives also experience a reduction; or (iii) a requirement that the Executive relocate his primary work location more than 25 miles from Irving, Texas or from any work location to which the Company transfers the Executive during the course of his employment and to which such transfer the Executive has consented.  Notwithstanding the foregoing, a Constructive Termination shall not exist unless (x) the Executive delivers written notice to the Company (the "Constructive Termination Notice") of the existence of the condition which the Executive believes constitutes a Constructive Termination within 30 days of the initial existence of such condition (which Constructive Termination Notice specifically identifies such condition), (y) the Company fails to remedy such condition within 30 days after the date on which it receives such notice (the "Constructive Termination Cure Period"), and (z) the Executive actually terminates employment within 30 days after the expiration of the Constructive Termination Cure Period.
(i)    "Disability" means the Executive's inability to perform his employment duties to the Company hereunder, with or without reasonable accommodation, for 180 days (in the aggregate) in any one-year period as determined by an independent physician selected by the Company.
(j)    "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(k)    "Good Reason" means the occurrence of any of the following without the Executive's express prior written consent:  (i) a material reduction of or to the Executive's duties, authority, responsibilities or reporting relationship; (ii) a material reduction of the Executive's Base Salary; (iii) a material reduction of the Executive's Target Bonus; (iv) a material reduction in the kind or level of employee benefits to which the Executive is entitled that occurs within 12 months following a Change of Control, unless similarly situated employees also experience a reduction; (v) a requirement that the Executive relocate his primary work location more than 25 miles from Irving, Texas or from any work location to which the Company transfers the Executive during the course of his employment and to which such transfer the Executive has consented; (vi) in connection with a Change of Control, the failure of the Company to assign this Agreement to a successor to the Company or the failure of a successor to the Company to explicitly assume and agree to be bound by this Agreement in a writing delivered to the Executive; or (vii) a material breach of this Agreement by the Company.  
Notwithstanding the foregoing, termination of employment by the Executive will not be for Good Reason unless (x) the Executive delivers written notice to the Company (the "Good Reason Notice") of the existence of the condition which the Executive believes constitutes Good Reason within 30 days of the initial existence of such condition (which Good Reason Notice specifically identifies such condition), (y) the Company fails to remedy such condition within 30 days after the date on which it receives such notice (the "Good Reason Cure Period"), and (z) the Executive actually terminates employment within 30 days after the expiration of the Good Reason Cure Period.
(l)    "Release" means a full release of claims against the Company substantially in the form attached hereto as Exhibit B; provided, however, that notwithstanding the foregoing, such Release is not intended to and will not waive the Executive's rights:  (i) to indemnification pursuant to any applicable provision of the Company's Bylaws or Certificate of Incorporation, as amended, pursuant to any written indemnification agreement between the Executive and the Company, or pursuant to applicable law; (ii) to vested benefits or payments specifically to be provided to the Executive under this Agreement or any Company employee benefit plans or policies; or (iii) respecting any claims the Executive may have solely by virtue of the Executive's status as a stockholder of the Company.  The Release also shall not include claims that an employee cannot lawfully release through execution of a general release of claims.
(m)    "Section 409A" means Section 409A of the Code and the Treasury Regulations and official guidance issued in respect of Section 409A of the Code.
(n)    "Target Bonus" has the meaning set forth in Section 5(b).
		
	2.
	Duties and Scope of Employment

The Company shall employ the Executive in the position of President of TaxAct, Inc.  The Executive shall report directly to the Company's Chief Executive Officer.  The Executive will render such business and professional services in the performance of the Executive's duties, consistent with the Executive's position(s) within the Company, as shall be reasonably assigned to the Executive at any time and from time to time by the Chief Executive Officer.  Upon termination of the Executive's employment for any reason, unless otherwise requested by the Chief Executive Officer, the Executive will be deemed to have resigned from all positions held at the Company and its affiliates voluntarily, without any further action by the Executive, as of the end of the Executive's employment, and the Executive, at the Chief Executive Officer’s request, will execute any documents necessary to reflect his resignation.
		
	3.
	Obligations

While employed hereunder, the Executive will perform his duties ethically, faithfully and to the best of the Executive's ability and in accordance with law and Company policy.  The Executive agrees not to actively engage in any other employment, occupation or consulting activity for any direct or indirect remuneration without the express prior written approval of the Company's Chief Executive Officer; provided, however, that notwithstanding anything to the contrary in the Additional Employee Agreement, the Executive may engage in charitable activities so long as such activities do not materially interfere with the Executive's responsibilities to the Company. 
		
	4.
	Agreement Term

Unless earlier terminated as provided herein, the term of this Agreement (the "Agreement Term") shall be for a period of three years commencing on the Effective Date, and may be extended thereafter upon the written mutual agreement of the Executive and the Company.
		
	5.
	Compensation and Benefits

(a)    Base Salary.  The Company agrees to pay the Executive a base salary (the "Base Salary") at an annual rate of not less than $350,000, payable in accordance with the regular payroll practices of the Company, but not less frequently than monthly.  The Executive's Base Salary shall be subject to annual review by the Board (or a committee thereof).  In addition, on the first payroll cycle following the Effective Date, the Company will pay Executive and one-time signing bonus of $210,000 (less applicable withholdings) (“Signing Bonus”).
(b)    Relocation Expenses.  The Company will reimburse Executive for (i) reasonable and documented relocation expenses and (ii) all pre-approved temporary business-related housing and travel expenses incurred by Executive prior to Executive’s move to Irving, Texas, which move shall occur no later than April 30, 2017 (collectively, “Relocation Expenses”).  The Company’s payment/reimbursement obligation with respect to Relocation Expenses shall be limited to Executive’s actual expenses and shall not exceed $150,000 in the aggregate.  In addition, the following specific limitations shall also apply:  
(i)    Relocation Expenses incurred in connection with the sale/rental of Executive’s existing home and purchase of a new home shall not exceed $70,000 (inclusive of tax gross-up); 
(ii)    Repayment to Executive’s immediately prior employer of moving and temporary lodging expenses incurred by Executive in connection with his employment at such employer shall not exceed $60,000 (inclusive of tax gross-up); and
(iii)    Relocation Expenses related to the packing and delivery of Executive’s personal possessions to the Dallas, Texas area shall not exceed $30,000.
If, on or before the two-year anniversary of the Effective Date, Executive resigns his position with the Company for any reason, or if Executive is terminated by the Company for Cause, Executive shall be obligated to pay to the Company an amount equal to the sum of the Signing Bonus plus the Relocation Expenses. 
(c)    Annual Bonus.  Beginning in 2017, the Executive shall be eligible to participate in the Company's bonus and other incentive compensation plans and programs for the Company's senior executives at a level commensurate with his position.  The Executive shall have the opportunity to earn an annual target bonus (the "Target Bonus") measured against criteria to be determined by the Board (or a committee thereof) of at least 60% of Base Salary, which amount will be prorated to the Effective Date for 2017. 
(d)    Equity Awards.  Beginning in 2018, the Executive will be eligible participate in all Company long-term equity incentive programs extended to senior executives of the Company generally at levels commensurate with the Executive’s position, which participation and levels shall be determined by the Board (or a committee thereof) in its sole discretion.
(e)    Benefits.  The Executive and his eligible dependents shall be eligible to participate in the employee benefit plans that are available or that become available to other employees of the Company, with the adoption or maintenance of such plans to be in the discretion of the Company, subject in each case to the generally applicable terms and conditions of the plan or program in question and to the determination of any committee administering such plan or program.  Such benefits shall include participation in the group medical, life, disability, and retirement plans that are made generally available to employees of the Company, and any supplemental plans available to senior executives of the Company from time to time.  The Company reserves the right to change or terminate its employee benefit plans and programs at any time.
(f)    Expenses.  The Company shall reimburse the Executive for reasonable business expenses incurred by the Executive in the furtherance of or in connection with the performance of the Executive's duties hereunder, in accordance with the Company's expense reimbursement policy as in effect from time to time.
(g)    Initial Equity Awards.  As a material inducement to Executive’s willingness to accept employment with the Company, on or shortly following the Effective Date, the Executive shall be granted restricted stock units with a value of $750,000 on the grant date, and a nonqualified stock option with a value of $750,000 on the grant date.  The number of restricted stock units granted to the Executive shall be determined by dividing $750,000 by the closing price of the Company's common stock on the grant date.   The number of shares of the Company's common stock subject to the option shall be based on the Company’s option valuation methodology.  These equity awards will be granted under the Company’s 2015 Incentive Plan, as amended (the “2015 Plan”) and will vest in accordance with, and have such other terms and conditions as are specified in, the Restricted Stock Unit Notice and Letter Agreement and the Nonqualified Stock Option Letter Agreement approved by the Compensation Committee with respect to such awards (the "Restricted Stock Unit Agreement" and the “NSO Agreement”) and shall otherwise be subject to the terms and conditions of the 2015 Plan and the Restricted Stock Unit Agreement and the NSO Agreement; provided, however, that notwithstanding the foregoing, in the event of a conflict between the terms and conditions of the Restricted Stock Unit Agreement or the NSO Agreement and this Agreement, the terms and conditions of this Agreement shall prevail.
		
	6.
	Termination of Employment

(a)    General Provisions.  This Agreement and the Executive's employment with the Company may be terminated by either the Executive or the Company at will at any time with or without Cause; provided, however, that the parties’ rights and obligations upon such termination during the Agreement Term shall be as set forth in applicable provisions of this Agreement; and provided, further, that Section 6(d) provides for payments in the event of certain terminations of employment after the expiration of the Agreement Term.  
(b)    Any Termination by Company or Executive.  In the event of any termination of the Executive's employment with the Company, whether by the Company or by the Executive, (i) the Company shall pay the Executive any unpaid Base Salary due for periods prior to the date of termination of employment ("Termination Date"); (ii) the Company shall pay the Executive any unpaid bonus compensation pursuant to Section 5(b), to the extent earned through the Termination Date; (iii) ; and (iii) following submission of proper expense reports by the Executive, the Company shall reimburse the Executive for all expenses reasonably and necessarily incurred by the Executive in connection with the business of the Company through the Termination Date (collectively, the "Accrued Obligations").  The Accrued Obligations shall be paid promptly upon termination and within the period of time mandated by applicable law (but, in any event, within 30 days after the Termination Date).  The Accrued Obligations paid or provided pursuant to this Section 6(b) shall be in addition to the payments and benefits, if any, to be provided to the Executive upon her termination of employment pursuant to Section 6(c), 6(d), 6(e), or 6(f).  Except as expressly stated above or as required by law or this Agreement, the Executive shall receive no further compensation in any form other than as set forth in this Section 6(b). 
(c)    Termination by Company Without Cause or Constructive Termination.  If, other than in connection with a Change of Control as described in Section 6(d), the Executive's employment with the Company is terminated by the Company without Cause or the Executive terminates employment with the Company under circumstances constituting a Constructive Termination, then subject to Section 6(g), the Executive shall receive the following payments and benefits:
(i)    a severance payment in an amount equal to one times the Executive's Base Salary in effect as of the Termination Date (or if the Executive terminates employment under circumstances constituting a Constructive Termination due to a material reduction of the Executive's Base Salary, in effect immediately prior to such reduction) (less applicable withholding taxes), which amount shall be payable in a single lump sum on the first payroll date that is at least 60 days following the Termination Date (but, in any event, by no later than March 15 of the calendar year immediately following the calendar year that includes the Termination Date), in accordance with Section 13(b)(ii); and
(ii)    a lump-sum payment in an amount equal to (A) the monthly COBRA premium in effect under the Company's group health plan as of the Termination Date for the coverage in effect under such plan for the Executive (and the Executive's spouse and dependent children) on such date multiplied by (B) 12 (less applicable withholding taxes), which amount shall be payable in a single lump sum on the first payroll date that is at least 60 days following the Termination Date (but, in any event, by no later than March 15 of the calendar year immediately following the calendar year that includes the Termination Date), in accordance with Section 13(b)(ii); provided, however, that notwithstanding the foregoing or any other provision in this Agreement to the contrary, the Company (or its successor) may unilaterally amend this Section 6(c)(ii) or eliminate the benefit provided hereunder to the extent it deems necessary to avoid the imposition of excise taxes, penalties or similar charges on the Company or any of its subsidiaries, affiliates or successors, including, without limitation, under Section 4980D of the Code.
Notwithstanding any provision to the contrary in any Company equity compensation plan or any outstanding equity award agreement, if, during the Agreement Term, the Executive terminates employment with the Company under circumstances described in this Section 6(c), there shall be no acceleration of vesting or exercisability of any outstanding equity awards or extension of any option post-termination exercise period.
For the avoidance of doubt, under no circumstances will the Executive be entitled to payments and benefits under both this Section 6(c) and Section 6(d).
(d)    Termination of Employment in Connection With a Change of Control.  If the Company terminates the Executive's employment without Cause or the Executive terminates employment with the Company for Good Reason (1) on the day of or during the 12-month period immediately following the consummation of a Change of Control or (2) during the 2-month period prior to the consummation of a Change of Control but at the request of any third party participating in or causing the Change of Control or otherwise in connection with the Change of Control, then subject to Section 6(g) and with respect to clause (2), subject to the consummation of such Change of Control, the Executive shall receive the following payments and benefits:
(i)    a severance payment in an amount equal to one times the Executive's Base Salary in effect as of the Termination Date and his then current Target Bonus amount (or if the Executive terminates employment for Good Reason due to a material reduction of the Executive's Base Salary or Target Bonus, in effect immediately prior to such reduction) (in each case less applicable withholding taxes), which amount shall be payable in a single lump sum on the first payroll date that is at least 60 days following the Termination Date (but, in any event, by no later than March 15 of the calendar year immediately following the calendar year that includes the Termination Date), in accordance with Section 13(b)(ii); 
(ii)    a lump-sum payment in an amount equal to (A) the monthly COBRA premium in effect under the Company's group health plan as of the Termination Date for the coverage in effect under such plan for the Executive (and the Executive's spouse and dependent children) on such date multiplied by (B) 12 (less applicable withholding taxes), which amount shall be payable in a single lump sum on the first payroll date that is at least 60 days following the Termination Date (but, in any event, by no later than March 15 of the calendar year immediately following the calendar year that includes the Termination Date), in accordance with Section 13(b)(ii); provided, however, that notwithstanding the foregoing or any other provision in this Agreement to the contrary, the Company (or its successor) may unilaterally amend this Section 6(d)(ii) or eliminate the benefit provided hereunder to the extent it deems necessary to avoid the imposition of excise taxes, penalties or similar charges on the Company or any of its subsidiaries, affiliates or successors, including, without limitation, under Section 4980D of the Code; and
(iii)    notwithstanding any provision to the contrary in any applicable equity compensation plan or any outstanding equity award agreement, the treatment of the Executive’s outstanding equity awards shall be governed solely by the following provisions:  (A) all of the Executive's then-outstanding time-vesting equity awards shall fully vest and all restrictions thereon shall lapse, and (B) to the extent vested (including as a result of the acceleration provided under this Section 6(d)(iii)), all of the Executive's outstanding stock options shall remain exercisable until the first to occur of 12 months following the Termination Date and each such stock option's original expiration date.
If a Change of Control is consummated prior to the expiration of the Agreement Term, this Section 6(d) shall apply to a termination of the Executive's employment by the Company without Cause or by the Executive for Good Reason during the 12-month period immediately following the consummation of the Change of Control even if such 12-month period extends past the expiration of the Agreement Term.  Moreover, notwithstanding the expiration of the Agreement Term, if a Change of Control is consummated within two months after the expiration of the Agreement Term, then this Section 6(d) shall apply to a termination of the Executive's employment by the Company without Cause or by the Executive for Good Reason (i) on the day of or during the 12-month period immediately following the consummation of the Change of Control or (ii) during the 2-month period prior to the consummation of the Change of Control but at the request of any third party participating in or causing the Change of Control or otherwise in connection with the Change of Control.
For the avoidance of doubt, the payments and benefits described under this Section 6(d) and the Accrued Obligations shall be the only payments and benefits to which the Executive is entitled in the event that the Executive's employment terminates under this Section 6(d).
(e)    Death.  In the event of the Executive's death while employed hereunder, and subject to Section 6(g), the Executive's beneficiary (or such other person(s) specified by will or the laws of descent and distribution) shall be entitled to receive a lump-sum payment in an amount equal to three months' Base Salary in effect as of the Termination Date (less applicable withholding taxes), which amount shall be payable in a single lump sum on the first payroll date that is at least 60 days following the Termination Date (but, in any event, by no later than March 15 of the calendar year immediately following the calendar year that includes the Termination Date), in accordance with Section 13(b)(ii).
(f)    Disability.  In the event of the Executive's termination of employment with the Company due to Disability, and subject to Section 6(g), the Executive shall be entitled to receive a lump-sum payment in an amount equal to six months' Base Salary in effect as of the Termination Date (less applicable withholding taxes), which amount shall be payable in a single lump sum on the first payroll date that is at least 60 days following the Termination Date (but, in any event, by no later than March 15 of the calendar year immediately following the calendar year that includes the Termination Date), in accordance with Section 13(b)(ii).
(g)    Release and Other Conditions.  The payments and benefits described in Sections 6(c) through 6(f) are expressly conditioned on (i) the Executive (or, in the case of the Executive's death, the Executive's representative) signing and delivering (and not revoking thereafter) a Release to the Company (which, in the case of the Executive's death, also releases any claims by the Executive's estate or survivors), which Release is executed, delivered and effective no later than 60 days following the Termination Date and (ii) the Executive continuing to satisfy any obligations to the Company under this Agreement, the Release and the Additional Employee Agreement that are incorporated herein by reference, and any other agreement(s) between the Executive and the Company.  In the event the Release described in Section 6(g)(i) is not executed, delivered and effective by the 60th day after the Termination Date, none of such payments or benefits shall be provided to the Executive.
		
	7.
	Section 280G

(a)    Amount of Payments and Benefits.  Notwithstanding anything to the contrary herein, in the event that the Executive becomes entitled to receive or receives any payments, options, awards or benefits (including, without limitation, the monetary value of any noncash benefits and the accelerated vesting of equity-based awards) under this Agreement or under any other plan, agreement or arrangement with the Company or any person affiliated with the Company (collectively, the "Payments"), that may separately or in the aggregate constitute "parachute payments" within the meaning of Section 280G of the Code and the Treasury Regulations promulgated thereunder (or any similar or successor provision) (collectively, "Section 280G") and it is determined that, but for this Section 7(a), any of the Payments will be subject to any excise tax pursuant to Section 4999 of the Code or any similar or successor provision (the "Excise Tax"), the Company shall pay to the Executive either (i) the full amount of the Payments or (ii) an amount equal to the Payments, reduced by the minimum amount necessary to prevent any portion of the Payments from being an "excess parachute payment" (within the meaning of Section 280G) (the "Capped Payments"), whichever of the foregoing amounts results in the receipt by the Executive, on an after-tax basis, of the greatest amount of Payments notwithstanding that all or some portion of the Payments may be subject to the Excise Tax.  For purposes of determining whether the Executive would receive a greater after-tax benefit from the Capped Payments than from receipt of the full amount of the Payments, (i) there shall be taken into account any Excise Tax and all applicable federal, state and local taxes required to be paid by the Executive in respect of the receipt of such payments and (ii) such payments shall be deemed to be subject to federal income taxes at the highest rate of federal income taxation applicable to individuals that is in effect for the calendar year in which the payments and benefits are to be paid, and state and local income taxes at the highest rate of taxation applicable to individuals in the state and locality of the Executive's residence on the effective date of the relevant transaction described under Section 280G(b)(2)(A)(i) of the Code, net of the maximum reduction in federal income taxes that could be obtained from deduction of such state and local taxes (as determined by assuming that such deduction is subject to the maximum limitation applicable to itemized deductions under Section 68 of the Code and any other limitations applicable to the deduction of state and local income taxes under the Code).
(b)    Computations and Determinations.  All computations and determinations called for by this Section 7 shall be made by an independent accounting firm or independent tax counsel appointed by the Company (the "Tax Counsel"), and all such computations and determinations shall be conclusive and binding on the Company and the Executive.  For purposes of such calculations and determinations, the Tax Counsel may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code.  The Tax Counsel shall submit its determination and detailed supporting calculations to both the Executive and the Company within 15 days after receipt of a notice from either the Company or the Executive that the Executive may receive payments which may be considered "parachute payments."  The Company and the Executive shall furnish to the Tax Counsel such information and documents as the Tax Counsel may reasonably request in order to make the computations and determinations called for by this Section 7.  The Company shall bear all costs that the Tax Counsel may reasonably incur in connection with the computations and determinations called for by this Section 7.
(c)    Reduction Methodology.  In the event that Section 7(a) applies and a reduction is required to be applied to the Payments thereunder, the Payments shall be reduced by the Company in its reasonable discretion in the following order:  (i) reduction of any Payments that are subject to Section 409A on a pro-rata basis or such other manner that complies with Section 409A, as determined by the Company, and (ii) reduction of any Payments that are exempt from Section 409A.
		
	8.
	No Impediment to Agreement

The Executive hereby represents to the Company that the Executive is not, as of the date hereof, and will not be, during the Executive's employment with the Company, employed under contract, oral or written, by any other person, firm or entity, and is not and will not be bound by the provisions of any restrictive covenant or confidentiality agreement that would constitute an impediment to, or restriction upon, the Executive's ability to enter this Agreement and to perform the duties of the Executive's employment.
		
	9.
	Additional Employee Agreement

The Additional Employee Agreement is incorporated herein by reference.  The Additional Employee Agreement shall survive the termination of this Agreement and/or the Executive’s employment with the Company.
		
	10.
	Arbitration

(a)    Executive agrees that any dispute and/or claim between the Company (including without limitation its officers, directors, employees agents or shareholders and its subsidiaries) and Executive that underlies, relates to and/or results from Executive’s employment relationship with the Company or the termination of that relationship or any of the terms of this Agreement, including the Additional Employee Agreement, that cannot be resolved by mutual agreement of the Company and Executive will be submitted to final, binding arbitration to the maximum extent permitted by law in accordance with the National Rules for the Resolution of Employment Disputes of the American Arbitration Association that are then in effect.  This arbitration provision includes, but is not limited to, claims of wrongful discharge, infliction of emotional distress, breach of contract (including breach of this Agreement), breach of any covenant of good faith and fair dealing, and claims of retaliation and/or discrimination in violation of any local, state or federal law.  Examples of such laws include Title VII of the Civil Rights Act of 1964; the Age Discrimination in Employment Act of 1967; the Americans with Disabilities Act of 1990; and the Family and Medical Leave Act of 1993, and all amendments to each such law as well as the regulations issued thereunder.  This arbitration provision does not affect the Executive’s right to pursue worker’s compensation or unemployment compensation benefits for which he may be eligible in accordance with state law, nor does it affect the Executive’s right to file and/or to cooperate in the investigation of an administrative charge of discrimination.
(b)    Notwithstanding this arbitration provision, either the Executive or the Company may apply to any court of competent jurisdiction for a temporary restraining order, preliminary injunction, or other interim or conservatory relief, as necessary, without breach of this Agreement and without abridgement of the powers of the arbitrator.  
(c)    The Company, as further consideration for Executive’s agreement to arbitrate covered disputes, agrees to pay for the arbitrator’s fees and other costs directly associated with the arbitration that would not otherwise be charged if the parties pursued civil litigation in court.
		
	11.
	Successors; Personal Services

The services and duties to be performed by the Executive hereunder are personal and may not be assigned or delegated.  This Agreement shall be binding upon and inure to the benefit of the Company and its successors and assigns, and the Executive and the Executive's heirs and representatives.
		
	12.
	Notices

Notices and all other communications contemplated by this Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by U.S. registered or certified mail, return receipt requested and postage prepaid.  In the case of the Executive, mailed notices shall be addressed to the Executive at the home address the Executive most recently communicated to the Company in writing.  In the case of the Company, mailed notices shall be addressed to its corporate headquarters, and all notices shall be directed to the attention of its General Counsel.
		
	13.
	Section 409A

(a)    The parties intend that this Agreement and the payments and benefits provided hereunder be exempt from the requirements of Section 409A, to the maximum extent possible, whether pursuant to the short-term deferral exception described in Treasury Regulation Section 1.409A-1(b)(4), the involuntary separation pay plan exception described in Treasury Regulation Section 1.409A-1(b)(9)(iii), or otherwise.  To the extent Section 409A is applicable to this Agreement, the parties intend that this Agreement and any payments and benefits thereunder comply with the deferral, payout and other limitations and restrictions imposed under Section 409A.  Notwithstanding anything herein to the contrary, this Agreement shall be interpreted, operated and administered in a manner consistent with such intentions.
(b)    Without limiting the generality of the foregoing, and notwithstanding any other provision of this Agreement to the contrary:
(i)    if the Executive is deemed on the date of termination to be a "specified employee" within the meaning of that term under Section 409A, then with regard to any payment that is considered a "deferral of compensation" under Section 409A payable on account of a "separation from service," such payment shall be made on the date which is the earlier of (A) the date that is six months and one day after the date of such "separation from service" of the Executive and (B) the date of the Executive's death (the "Delay Period"), to the extent required under Section 409A.  Within ten business days following the expiration of the Delay Period, all payments delayed pursuant to this Section 13(b)(i) (whether they would have otherwise been payable in a single sum or in installments in the absence of such delay) shall be paid to the Executive in a lump sum, and all remaining payments due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for those payments in this Agreement; 
(ii)    to the extent that any payments or benefits under this Agreement are conditioned on a Release, if the Release is executed and delivered by the Executive to the Company and becomes irrevocable and effective within the specified 60-day post-termination period, then, subject to Section 13(b)(i) and to the extent not exempt under Section 409A, such payments or benefits shall be made or commence on the first payroll date after the date that is 60 days after the Termination Date (but, in any event, by no later than March 15 of the calendar year immediately following the calendar year that includes the Termination Date).  If a payment or benefit under this Agreement is conditioned on a Release and such Release is not executed, delivered and effective by the 60th day after the Termination Date, such payment or benefit shall not be paid or provided to the Executive; 
(iii)    all expenses or other reimbursements under this Agreement shall be made on or prior to the last day of the taxable year following the taxable year in which such expenses were incurred by the Executive.  No such reimbursement or expenses eligible for reimbursement in any taxable year shall in any way affect the expenses eligible for reimbursement in any other taxable year, and the Executive's right to reimbursement shall not be subject to liquidation or exchange for any other benefit; 
(iv)    for purposes of Section 409A, the Executive's right to receive a series of installment payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payments.  Whenever a payment under this Agreement specifies a payment period with reference to a number of days (e.g., "payment shall be made within 30 days"), the actual date of payment within the specified period shall be within the sole discretion of the Company; 
(v)    in no event shall any payment under this Agreement that constitutes a "deferral of compensation" for purposes of Section 409A be offset by any other payment pursuant to this Agreement or otherwise; and
(vi)    to the extent required for purposes of compliance with Section 409A, termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits upon or following a termination of employment unless such termination is also a "separation from service" within the meaning of Section 409A, and for purposes of any such provision of this Agreement, references to a "termination," "termination of employment" or like terms shall mean "separation from service."
(c)    The Company and the Executive agree to work together in good faith to consider amendments to this Agreement and to take such reasonable actions that may be necessary, appropriate, or desirable to avoid imposition of additional tax or income recognition on the Executive under Section 409A, in each case to the maximum extent permitted by applicable law.  Notwithstanding any provision of this Agreement to the contrary, (i) in no event will the Company be liable for any additional tax, interest or penalty that may be imposed on the Executive by Section 409A or damages for failing to comply with Section 409A and (ii) the Executive acknowledges and agrees that the Executive will not have any claim or right of action against the Company or any of its employees, officers, directors or agents in the event it is determined that any payment or benefit provided hereunder does not comply with Section 409A.
		
	14.
	Miscellaneous Provisions

(a)    Waiver.  No provision of this Agreement shall be modified, waived or discharged unless the modification, waiver or discharge is agreed to in writing and signed by the Executive and by an authorized officer of the Company (other than the Executive).  No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time.
(b)    Entire Agreement.  This Agreement (including exhibits) shall supersede and replace all prior agreements or understandings relating to the subject matter hereof, and no agreements, representations or understandings (whether oral or written or whether express or implied) that are not expressly set forth in this Agreement have been made or entered into by either party with respect to the relevant matters hereof.  This Agreement may not be modified except expressly in a writing signed by both parties.
(c)    Choice of Law.  The validity, interpretation, construction and performance of this Agreement shall be governed by the internal substantive laws of the State of Texas without reference to any choice of law rules.
(d)    Severability.  The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect.
(e)    No Assignment of Benefits.  The rights of any person to payments or benefits under this Agreement shall not be made subject to option or assignment, either by voluntary or involuntary assignment or by operation of law, in respect of bankruptcy, garnishment, attachment or other creditor's process, and any action in violation of this Section 14(e) shall be void.
(f)    No Duty to Mitigate.  The Executive shall not be required to mitigate the amount of any payment contemplated by this Agreement, nor shall any such payment be reduced by any earnings that the Executive may receive from any other source.
(g)    Employment Taxes.  All payments made pursuant to this Agreement will be subject to withholding of all applicable income, employment and other taxes.
(h)    Assignment by Company.  The Company may assign its rights under this Agreement to an affiliate (as defined under the Exchange Act), and an affiliate may assign its rights under this Agreement to another affiliate of the Company or to the Company.  In the case of any such assignment, the term "Company" when used in a section of this Agreement shall mean the corporation that actually employs the Executive.
(i)    Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together will constitute one and the same instrument.

IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by its duly authorized officer, as of the day and year first above written.
	
			
	 
	 
	BLUCORA, INC.

By:/s/ John S. Clendening
Name:   John S. Clendening
Title:   President & CEO

	

	 
	 

	 
	 
	 

	

	 
	 

	 
	 
	EXECUTIVE:

/s/ Sanjay Baskaran   
 Sanjay Baskaran

	 
	 
	 

EXHIBIT A
Supplementary Terms of Employment —President, TaxAct, Inc.
In consideration of my employment by Blucora, Inc., a Delaware corporation, and itssubsidiaries, affiliates, successors or assigns (collectively herein the “Company”), and in consideration of the compensation now and hereafter paid to me, I agree to the following terms and conditions of my employment relationship with the Company (the “Agreement”) which supplement the terms of my employment agreement with the Company, dated as of January 30, 2017 (the “Employment Agreement”):
Section I — General Terms
1. At-Will Employment: I acknowledge that my employment will be of indefinite duration and that either the Company or I will be free to terminate this employment relationship at will at any time with or without cause. I also acknowledge that any representations to the contrary are unauthorized and void, unless contained in a separate written employment contract approved by the Board of Directors of the Company or a Committee thereof. I further acknowledge that the terms and conditions of this Agreement shall survive termination of my employment.
2. Outside Activities and Investments: I will devote my best efforts to furthering the best interests of the Company. During my employment, I will not engage in any activity or investment (other than an investment of less than one percent (1%) of the shares of a company traded on a registered stock exchange), that (a) conflicts with the Company’s business interest, including without limitation, any business activity contemplated by this Agreement, (b) occupies my attention so as to interfere with the proper and efficient performance of my duties at the Company, or (c) interferes with the independent exercise of my judgment in the Company’s best interests.
Also, during my employment by the Company, I will not actively engage in any other employment, occupation or consulting activity for any direct or indirect remuneration without the prior approval of the Company’s Board of Directors or a duly authorized Committee thereof. I have listed on the Company’s Outside Activity Disclosure form, attached hereto as Exhibit A, any business activities or ventures with which I am currently involved.
3. Return of Company Property: At the time I leave the employ of the Company or at the Company’s request, I will return to the Company all papers, drawings, notes, memoranda, manuals, specifications, designs, devices, documents, diskettes and tapes, and any other material on any media containing or disclosing any confidential or proprietary technical or business information of the Company or any third party to whom the Company owes a duty of confidentiality. I will also return any keys, pass cards, identification cards or any other property belonging to the Company. Anything to the contrary notwithstanding, I shall be entitled to retain (i) papers and other materials of a personal nature, including, but not limited to, photographs, correspondence, personal diaries, calendars and rolodexes, personal files and phone books, (ii) information showing my compensation or relating to reimbursement of expenses, and (iii) copies of compensatory plans, programs and agreements with the Company.
4. Obligation to Disclose This Agreement: For a period of one (1) year after termination of my employment for any reason (the “Post-Employment Year”), I agree to inform any new employer, prior to accepting any such new employment, of the existence and terms of this Agreement and to provide such new employer with a copy of this Agreement.
Section II — Non-Disclosure
5. Non-Disclosure of the Company Information: During my employment with the Company and at any time thereafter, I will not disclose to anyone outside the Company nor use for any purpose other than my work for the Company any confidential or proprietary technical, financial, marketing, distribution or business information or trade secrets of the Company, including without limitation, concepts, techniques, processes, methods, systems, designs, cost data, computer programs, formulas, development or experimental work, work in progress, or information or details regarding the Company’s relationships with customers, vendors, partners and suppliers (collectively “The Company Confidential Information”). I will also not disclose any The Company Confidential Information inside the Company except on a “need to know” basis. If I have any questions as to what comprises such The Company Confidential Information, or to whom, if anyone, inside the Company, it may be disclosed, I will consult the Company’s Chief Legal & Administrative Officer. Anything herein to the contrary notwithstanding, The Company Confidential Information does not include information which (i) is disclosed as required by law, provided that I give the Company prompt written notice of such requirement prior to such disclosure and assistance in obtaining an order protecting the information from public disclosure and (ii) as to information that becomes generally known to the public other than due to my violation of any legal contractual or fiduciary confidentiality obligation.
6. Non-Disclosure of Third-Party Information Obtained through the Company: The Company has received and will receive confidential and proprietary information from third parties subject to a duty on the Company’s part to maintain the confidentiality of such information and to use it only for certain limited purposes. During my employment with the Company and thereafter, I will not disclose such confidential or proprietary information to anyone except as necessary in carrying out my work for the Company and consistent with the Company’s agreement with such third party. I will not use such information for the benefit of anyone other than the Company or such third party, or in any manner inconsistent with any agreement between the Company and such third party of which I am made aware.
7. Non-Disclosure of Third-Party Information Obtained Elsewhere: During my employment at the Company I will not improperly use or disclose any confidential or proprietary information or trade secrets of my former or current employers, principals, partners, co-ventures, clients, customers, or suppliers, or the vendors or customers of such persons or entities, unless such persons or entities have given consent to my use or disclosure. I will not violate any non-disclosure or proprietary rights agreement I might have signed in connection with any such person or entity.
Section III — Invention Assignment, Release and Cooperation
8. Invention Assignment and Release: I will make prompt and full disclosure to the Company, will hold in trust for the sole benefit of the Company, and will assign and hereby do assign exclusively to the Company all my right, title and interest in and to any and all inventions, discoveries, designs, developments, improvements, copyrightable material, and trade secrets (collectively herein “Inventions”) that I, solely or jointly, may conceive, develop, or reduce to practice during the period of time I am in the employ of the Company. I hereby waive and quitclaim to the Company any and all claims of any nature whatsoever that I now or hereafter may have for infringement of any patent resulting from any patent applications for any Inventions so assigned to the Company. I will assign to the Company or its designee all right, title and interest in and to any and all Inventions full title to which may be required to be in the United States by any contract between the Company and the United States or any of its agencies.
My obligation to assign shall not apply to any Invention about which I can prove that it was developed entirely on my own time; and
		
	a)
	No equipment, supplies, facility, or trade secret information of the Company was used in its development; and

		
	b)
	It does not relate (1) directly to the business of the Company or (2) to the actual or demonstrably anticipated research or development of the Company; and

		
	c)
	It does not result from any work performed by me for the Company.

9. Prior Inventions: I have listed and described on Exhibit B, attached hereto, all Inventions belonging to me and made by me prior to my employment at the Company that I wish to have excluded from this Agreement. If Exhibit B is left blank, I represent that there are no such Inventions. If, in the course of my employment at the Company, I use in or incorporate into an the Company product, process, or machine an Invention owned by me or in which I have an interest that is not on Exhibit B and is related (1) directly to the business of the Company or (2) to the actual or demonstrably anticipated research or development of the Company, the Company is hereby granted and shall have a non-exclusive, fully-paid up, royalty-free, irrevocable, worldwide license to make, have made, use and sell that Invention without restriction as to the extent of my ownership or interest.
10. Cooperation: I will execute any proper oath or verify any proper document in connection with carrying out the terms of this Agreement. If, because of my mental or physical incapacity or for any other reason whatsoever, the Company is unable to secure my signature to apply for or to pursue any application for any United States or foreign patent or copyright covering Inventions assigned to the Company as stated above, I hereby irrevocably designate and appoint the Company and its duly authorized officers and agents as my agent and attorney in fact, to act for me and in my behalf and stead to execute and file any such applications and to all other lawfully permitted acts to further the prosecution and issuance of U.S. and foreign patents and copyrights thereon with the same legal force and effect as if executed by me. I will testify at the Company’s request and expense in any interference, litigation, or other legal proceeding that may arise during or after my employment. Notwithstanding anything to the contrary contained herein, (i) in requesting your cooperation under this Section 10 following the termination of your employment, the Company shall take into account your personal and business commitments and (iii) in any event, in complying with your obligations under this Section 10, you shall not be required to act against your own legal interests.
Section IV — Non-Competition and Non-Solicitation
11. Non-Competition: During the Post-Employment Year, I will not, within the United States, Canada, and any other region where the Company engages in the Company’s business (as defined below) during my employment with the Company, accept employment with any entity whose business is, or engage in any activities that are, competitive with the Company’s business. For purposes of this paragraph 11, “the Company’s business” shall mean (a) tax preparation and tax preparation-related products and services provided to consumers and small businesses, and to or through tax professionals; (b) investment and insurance products or services, and related advice and brokerage services, provided to or through tax professionals or in conjunction with tax preparation services and (c) any other business the Company engages in or develops during Executive’s employment with the Company.
12. Non-Solicitation: While employed at the Company and during the Post-Employment Year, on my own behalf or on behalf of any other person or entity, I will not solicit, induce or attempt to influence directly or indirectly any employee of the Company to work for me or any other person or entity for whom I work or intend to work, nor will I solicit, induce or attempt to influence directly or indirectly any customer, business partner, supplier or vendor of the Company to terminate his/her/its business relationship with the Company.
Section V — Arbitration
13. Mutual Agreement to Arbitrate: I understand that the Company is committed to resolving any employment related disputes and claims efficiently and effectively, while preserving due process safeguards, through the use of binding arbitration. I agree that any dispute and/or claim between the Company (including without limitation its officers, directors, employees agents or shareholders) and me that underlies, relates to and/or results from my employment relationship with the Company or any of the terms of this Agreement, including the confidentiality, non-compete and non-solicitation requirements, that cannot be resolved by mutual agreement of the Company and me will be submitted to final, binding arbitration to the maximum extent permitted by law in accordance with the National Rules for the Resolution of Employment Disputes of the American Arbitration Association that are then in effect.
I understand that this Agreement governs any claim I have that underlies, relates to and/or results from my employment relationship with the Company or the termination of that relationship, including, but not limited to, claims of wrongful discharge, infliction of emotional distress, breach of contract (including breach of this Agreement), breach of any covenant of good faith and fair dealing, and claims of retaliation and/or discrimination in violation of any local, state or federal law. Examples of such laws include Title VII of the Civil Rights Act of 1964; the Age Discrimination in Employment Act of 1967; the Americans with Disabilities Act of 1990; the Family and Medical Leave Act of 1993; RCW Chapter 49.60, and all amendments to each such Act as well as the regulations issued thereunder.
14. Excluded from Arbitration: This Agreement does not affect my right to pursue worker’s compensation or unemployment compensation benefits for which I may be eligible in accordance with state law, nor does it affect my right to file and/or to cooperate in the investigation of an administrative charge of discrimination.
15. Arbitration Remedies and Awards: I understand that I may seek in arbitration any remedy or award that would be available to me through civil litigation and the arbitrator has authority to grant any such remedy or award. I agree that such remedies include monetary damages but do not include reinstatement unless authorized by statute.
16. Arbitration Fees: I understand that the Company, as further consideration for my agreement to arbitrate covered disputes, agrees to pay for the arbitrator’s fees and other costs directly associated with the arbitration that would not otherwise be charged if the parties pursued civil litigation in court.
17. Injunctive or Other Relief: I understand that, pursuant to this Agreement, I and the Company forego and waive the right to take any covered dispute or claim to civil litigation in court. However, I understand that either I or the Company may apply to any court of competent jurisdiction for a temporary restraining order, preliminary injunction, or other interim or conservatory relief, as necessary, without breach of this Agreement and without abridgement of the powers of the arbitrator.
Section VI — Miscellaneous Terms
18. Choice of Law and Venue: I agree that this Agreement shall be governed for all purposes by the laws of the state of Texas, and that venue for any action arising out of this Agreement shall be exclusively laid in the Federal District Court of Texas. In any matter that is presented to an arbitrator under this Agreement, I agree that the location of the arbitration hearing(s) will be in Dallas County, Texas, unless another location is mutually agreed upon.
19. Conflicting Provisions: If any provision of this Agreement shall be declared excessively broad, it shall be construed or modified so as to afford the Company the maximum protection permissible by law. If any provision of this Agreement is void or so declared, such provision shall be severed from this Agreement, which shall otherwise remain in full force and effect.
20. Entire Agreement: This Agreement sets forth the entire Agreement of the parties as to the subject matter hereof and any representations, promises, or conditions in connection therewith not in writing and signed by both parties shall not be binding upon either party.
21. Acknowledgment: I acknowledge that I have had a full opportunity to read this Agreement before signing it. I confirm that I understand its terms and believe them to be reasonable, and I agree that the Company’s offer of employment is sufficient consideration for this Agreement.

HAVING READ AND FULLY UNDERSTOOD THIS AGREEMENT, I have signed my name this date.
Signature of Employee: ________________________

Name of Employee:      Sanjay Baskaran

Date: _________________, 2017

EXHIBIT B
GENERAL RELEASE OF ALL CLAIMS
This General Release and Waiver of Claims (this “Release”) is executed by Sanjay Baskaran (“Executive”) as of the date set forth below, and will become effective as of the “Effective Date” as defined below.  This Release is in consideration of severance benefits to be paid to Executive by Blucora, Inc., a Delaware corporation (the “Company”), pursuant to the Employment Agreement between Executive and the Company dated January 12, 2017(the “Employment Agreement”).  Execution of this Release without revocation by Executive will satisfy the requirement, set forth in Section 6(g) of the Employment Agreement, that Executive execute a general release and waiver of claims in order to receive severance benefits pursuant to the Employment Agreement.
		
	1.
	Termination of Employment

Executive acknowledges that his employment with the Company and any of its subsidiaries (collectively, the “Company Group”) and any and all appointments he held with any member of the Company Group, whether as officer, director, employee, consultant, agent or otherwise, terminated as of ___________ (the “Termination Date”).  Effective as of the Termination Date, Executive has not had or exercised or purported to have or exercise any authority to act on behalf of the Company or any other member of the Company Group, nor will Executive have or exercise or purport to have or exercise such authority in the future. 
		
	2.
	Waiver and Release

		
	(a)
	Executive, for and on behalf of himself and his heirs and assigns, hereby waives and releases any common law, statutory or other complaints, claims, charges or causes of action arising out of or relating to Executive’s employment or termination of employment with, or Executive’s serving in any capacity in respect of any member of the Company Group (collectively, “Claims”).  The Claims waived and released by this Release include any and all Claims, whether known or unknown, whether in law or in equity, which Executive may now have or ever had against any member of the Company Group or any shareholder, employee, officer, director, agent, attorney, representative, trustee, administrator or fiduciary of any member of the Company Group (collectively, the “Company Releasees”) up to and including the date of Executive’s execution of this Agreement.  The Claims waived and released by this Release include, without limitation, any and all Claims arising out of Executive’s employment with the Company Group under, by way of example and not limitation, the Age Discrimination in Employment Act of 1967 (“ADEA”, a law which prohibits discrimination on the basis of age against persons age 40 and older), the National Labor Relations Act, the Civil Rights Act of 1991, the Americans With Disabilities Act of 1990, Title VII of the Civil Rights Act of 1964, the Employee Retirement Income Security Act of 1974, the Family Medical Leave Act, the Securities Act of 1933, the Securities Exchange Act of 1934, and the Texas Labor Code Chapter 21, all as amended, and all other federal, state and local statutes, ordinances, regulations and the common law, and any and all Claims arising out of any express or implied contract, except as described in Paragraphs 2(b) and 2(c) below.

		
	(b) 
	The waiver and release set forth in this Section 2 is intended to be construed as broadly and comprehensively as applicable law permits.  The waiver and release shall not be construed as waiving or releasing any claim or right that as a matter of law cannot be waived or released, including Executive’s right to file a charge with the Equal Employment Opportunity Commission or other government agency; however, Executive waives any right to recover monetary remedies and agrees that he will not accept any monetary remedy as a result of any such charge or as a result of any legal action taken against the Company by any such agency.

		
	(c)
	Notwithstanding anything else in this Release, Executive does not waive or release claims with respect to: 

		
	(i) 
	Executive’s entitlement, if any, to severance benefits pursuant to the Employment Agreement; 

		
	(ii) 
	vested benefits or payments specifically to be provided to the Executive pursuant to the Employment Agreement or any Company employee benefit plans or policies; 

		
	(iii) 
	indemnification pursuant to any applicable provision of the Company's Bylaws or Certificate of Incorporation, as amended, pursuant to any written indemnification agreement between the Executive and the Company, or pursuant to applicable law;

		
	(iv)
	any claims which the Executive may have solely by virtue of the Executive's status as a shareholder of the Company; or

		
	(v)
	unemployment compensation to which Executive may be entitled under applicable law.

		
	(d)
	Executive represents and warrants that he is the sole owner of the actual or alleged Claims that are released hereby, that the same have not been assigned, transferred, or disposed of in fact, by operation of law, or in any manner, and that he has the full right and power to grant, execute and deliver the releases, undertakings, and agreements contained herein.  

		
	(e)
	Executive represents that he has not filed any complaints, charges or lawsuits against the Company with any governmental agency or any court based on Claims that are released and waived by this Release.

		
	3.
	No Admission of Wrongdoing

This Release shall not be construed as an admission by either party of any wrongful or unlawful act or breach of contract.
		
	4.
	Binding Agreement; Successors and Assigns

This Release binds Executive’s heirs, administrators, representatives, executors, successors, and assigns, and will inure to the benefit of the respective heirs, administrators, representatives, executors, successors, and assigns of any person or entity as to whom the waiver and release set forth in Section 2 applies.
		
	5.
	Other Agreements

This Release does not supersede or modify in any way Executive’s continuing obligations pursuant to the Employment Agreement (including Exhibit A thereto) or the dispute resolution provisions of the Employment Agreement (including Exhibit A thereto).
		
	6.
	Knowing and Voluntary Agreement; Consideration and Revocation Periods

		
	(a)
	Executive acknowledges that he has been given twenty-one (21) calendar days from the date of receipt of this Release to consider all of the provisions of this Release and that if he signs this Release before the 21-day period has ended he knowingly and voluntarily waives some or all of such 21-day period.  

		
	(b)
	Executive represents that (i) he has read this Release carefully, (ii) she has hereby been advised by the Company to consult an attorney of his choice and has either done so or voluntarily chosen not to do so, (iii) she fully understands that by signing below she is giving up certain rights which she might otherwise have to sue or assert a claim against any of the Company Releasees, and (iv) she has not been forced or pressured in any manner whatsoever to sign this Release, and agrees to all of its terms voluntarily.

		
	(c) 
	Executive shall have seven (7) calendar days from the date of his execution of this Release (the “Revocation Period”) in which she may revoke this Release.  Such revocation must be in writing and delivered, prior to the expiration of the Revocation Period, to the attention of the Company’s Chief Legal and Administrative Officer at the Company’s then-current headquarters address.  If Executive revokes this Release during the Revocation Period, then the Release shall be null and void and without effect.  

		
	7.
	Effective Date

The Effective Date of this Release will be day after the Revocation Period expires without revocation by Executive.
IN WITNESS WHEREOF, Executive has executed this Release as of the date indicated below. 

_________________________________        Dated:  _______________________Exhibit 10.1

 

STATE OF NORTH CAROLINA

COUNTY OF HARNETT

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT
AGREEMENT (the “Agreement”) is entered into by and among SELECT BANK & TRUST COMPANY, a North Carolina
banking corporation (the “Bank”), SELECT BANCORP, INC., a North Carolina business corporation (the “Company”)
and W. KEITH BETTS (the “Employee”) effective as of January 11, 2017 (the “Effective Date”).

 

W I T N E S S E T H:

 

WHEREAS, the
expertise and experience of Employee in the financial services industry are extremely valuable to the Company and the Bank; and

 

WHEREAS, it
is in the best interests of the Bank, the Company and the Company’s shareholders to maintain an experienced and sound executive
management team to manage the Bank and to further the Company’s overall strategies to protect and enhance the value of the
shareholders’ investments; and

 

WHEREAS, the
Bank, the Company and Employee desire to enter into this Agreement to establish the scope, terms and conditions of Employee’s
employment by the Bank; and

 

WHEREAS, the
Bank, the Company and Employee desire to enter into this Agreement to also provide Employee with security in the event of a change
in control of the Bank and to ensure the continued loyalty of Employee during any such change in control in order to maximize shareholder
value as well as the continued safe and sound operation of the Bank.

 

NOW, THEREFORE,
for and in consideration of the premises and mutual promises, covenants and conditions hereinafter set forth, and other good and
valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the Bank, the Company and Employee hereby
agree as follows:

 

     

     

    

  

1.       Employment.
The Bank hereby agrees to employ Employee, and Employee hereby agrees to serve as an officer of both the Bank and the Company,
all upon the terms and conditions stated herein. As an officer of the Bank and the Company, Employee will (i) serve as Executive
Vice President and Chief Banking Officer, and (ii) have such other duties and responsibilities, and render to the Bank and the
Company such other management services, as are customary for persons in Employee’s position or as shall otherwise be reasonably
assigned to him from time to time by the Bank and/or the Company. Employee shall faithfully and diligently discharge his duties
and responsibilities under this Agreement and shall use his best efforts to implement the policies established by the Bank and
the Company. Employee agrees to devote such number of hours of his working time and endeavors to the employment granted hereunder
as the parties hereto shall deem to be necessary to discharge his duties hereunder, and, for so long as employment hereunder shall
exist, Employee shall not engage in any other occupation which requires a significant amount of Employee’s personal attention
during the Bank’s regular business hours or which otherwise interferes with Employee’s attention to or performance
of his duties and responsibilities as an officer of the Bank and the Company except with the prior written consent of the Bank
or the Company. However, nothing herein contained shall restrict or prevent Employee from personally, and for Employee’s
own account, trading in stocks, bonds, securities, real estate or other forms of investment for Employee’s own benefit so
long as said activities do not interfere with Employee’s attention to or performance of his duties and responsibilities as
an officer of the Bank and the Company, and provided further, that such activities do not amount, in the Bank’s sole discretion,
to direct competition with the Bank.

  

2.       Compensation.
For all services rendered by Employee to the Bank and the Company under this Agreement, the Bank shall pay Employee a base salary
at a rate of Two Hundred Ten Thousand and 00/100 Dollars ($210,000.00) per annum. The rate of such salary shall be reviewed by
the Board of Directors of the Bank not less often than annually during the Term (as defined below) of this Agreement and may be
increased, but not decreased, during the Term hereof unless such decrease is part of a corporate plan for all similarly situated
employees. Salary paid under this Agreement shall be payable not less frequently than monthly on the Bank’s regularly scheduled
paydays in accordance with the Bank’s payroll practices and procedures. All compensation of Employee shall be subject to
customary withholding taxes and such other employment taxes or deductions as are required by law or properly requested by Employee.

 

3.       Participation
in Retirement and Employee Benefit Plans; Fringe Benefits. Subject to the terms and conditions of this Agreement, Employee
shall be entitled to participate in any and all employee benefit programs and compensation plans from time to time maintained by
the Bank and available to other similarly-situated employees of the Bank, all in accordance with the terms and conditions (including
eligibility requirements) of such programs and plans of the Bank, resolutions of the Bank’s Board of Directors establishing
such programs and plans, and the Bank’s normal practices and established policies regarding such programs and plans. Employee
acknowledges and agrees that the Bank has the unilateral right to amend, modify or terminate its employee benefit plans or policies
at any time during the Term, with or without prior notice, subject to applicable law.

 

    2 

     

    

  

In addition to the other
compensation and benefits described in this Agreement, and subject to this Paragraph 3, the Bank agrees as follows:

 

(i)       The
Bank shall permit Employee to take and accrue twenty-five (25) days of paid vacation leave per year (and not such other amount
of vacation leave as provided for by the Bank’s policy for all other employees) pursuant to the Bank’s vacation policies
and procedures as they may be instituted from time to time. Such vacation leave shall be in addition to federal banking holidays,
which shall be paid holidays, and ten days of annual sick-leave. Such vacation leave will accrue in accordance with the Bank’s
vacation policies and procedures, or monthly in the absence of any policies. Any payout of or roll over from one calendar year
to the next of accrued, unused vacation leave will be in accordance with the Bank’s then current vacation policies and procedures.
Allotted vacation leave and sick leave shall be pro-rated for the calendar year in which employment commences.

 

(ii)       The
Bank shall reimburse Employee for all reasonable expenses incurred by him in the performance of his duties under this Agreement
and documented to the reasonable satisfaction of the Bank pursuant to established policies and shall provide Employee with a monthly
allowance for travel-related expenses equal to One Thousand and 00/100 Dollars ($1,000.00) per month.

 

(iii)     The
Bank, subject to applicable eligibility requirements, shall provide Employee major medical insurance coverage under a policy at
least equivalent to the major medical insurance coverage, if any, generally provided to active full-time employees of the Bank
from time to time.

 

(iv)     The
Bank shall permit Employee to participate in incentive or bonus compensation plans existing on the date of this Agreement or adopted
by the Bank during the Term of this Agreement and available to similarly-situated employees of the Bank. The Bank’s incentive
or bonus compensation programs and plans may be amended or terminated at any time in the discretion of the Bank.

 

(v)      The
Bank shall permit Employee to participate (to the extent permissible under applicable laws and regulations) in all savings, pension
and retirement plans, policies and programs available to similarly-situated employees of the Bank. Without limiting the foregoing,
such plans shall include the Bank’s 401(k) Savings Plan.

 

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4.       Term.
Unless sooner terminated as provided in this Agreement and subject to the right of either Employee or the Bank to terminate Employee’s
employment at any time as provided herein, the initial term of this Agreement and Employee’s employment with the Bank hereunder
shall be for a period commencing on the Effective Date and continuing for a period of three (3) years. Upon the first anniversary
of the Effective Date, and upon each subsequent anniversary of the same, the term of this Agreement shall automatically be extended
for an additional one (1) year period under the terms and conditions set forth herein, unless written notice is provided by either
party to the other party no later than sixty (60) days prior to such anniversary and the expiration of the then current term (the
“Current Term”), notifying the other party that this Agreement shall not be further extended. The initial three (3)
year term of this Agreement and each additional one (1) year renewal year will be referred to herein collectively as the “Term.”

 

5.       Confidentiality;
Noncompetition. Employee hereby acknowledges and agrees that (i) in the course of his service as an officer of the Bank
and the Company, he will gain substantial knowledge of and familiarity with the Bank’s and the Company’s customers
and their dealings with such customers, and other information concerning the Bank’s and the Company’s business, all
of which constitutes valuable assets and privileged information that is particularly sensitive due to the fiduciary responsibilities
inherent in the banking business; and, (ii) in order to protect the Bank’s and the Company’s interest in and to assure
them the benefit of their business, it is reasonable and necessary to place certain restrictions on Employee’s ability to
compete against the Bank and the Company and on his disclosure of information about the Bank’s and the Company’s business
and customers. For that purpose, and in consideration of the Bank’s and the Company’s agreements contained herein,
Employee covenants and agrees as provided below.

 

(a)       Covenant
Not to Compete. Employee will not “Compete” (as defined below), directly or indirectly, with the Bank and the
Company within the “Relevant Market” (as defined below) as follows:

 

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(i)       if
this Agreement is terminated by the Bank without “Cause” (as defined in Paragraph 6(d) hereof), Employee shall not
“Compete” for the period of time Employee is receiving “Separation Benefits” pursuant to Paragraph 6(e)
of this Agreement; or

 

(ii)       if
this Agreement is terminated by Employee for any reason (including, but not limited to, resignation or retirement) or expires in
accordance with its terms pursuant to Paragraph 4, Employee shall not “Compete” for the twelve (12) month period immediately
following the date of termination of Employee’s employment with the Bank.

 

In addition to the foregoing
covenant, Employee expressly agrees not to “Compete” with the Bank and the Company during the Term of this Agreement
and, if the Term of this Agreement shall expire in accordance with its terms, during any period of employment with the Bank or
the Company thereafter that Employee shall remain employed by the Bank or the Company. If the Term of this Agreement shall expire
and Employee remains employed by the Bank thereafter, the non-compete period referenced in subparagraph 5(a)(ii) shall commence
upon the date of termination of Employee’s employment with the Bank.

 

For the purposes of this
Paragraph 5, the following terms shall have the meanings set forth below:

 

Compete. 
The term “Compete” means: (i) soliciting or securing deposits from any Person residing in the Relevant Market for any
Financial Institution; (ii) soliciting any Person residing in the Relevant Market to become a borrower from any Financial Institution
with which such Person has no prior relationship or assisting (other than through the performance of ministerial or clerical duties)
any Financial Institution with which such Person has no prior relationship in making loans to any such Person; (iii) inducing or
attempting to induce any Person who was a Customer of the Bank on the date of termination of Employee’s employment with the
Bank, to change such Customer’s depository, loan and/or other banking relationship from the Bank to another Financial Institution;
(iv) acting as a consultant, officer, director, independent contractor, or employee of any Financial Institution that has its main
or principal office in the Relevant Market, or, in acting in any such capacity with any other Financial Institution, to maintain
an office or be employed at or assigned to or to have any direct involvement in the management, business or operation of any office
of such Financial Institution located in the Relevant Market; (v) communicating to any Financial Institution the names or addresses
or any financial information concerning any Person who was a Customer of the Bank at the date of Employee’s termination of
employment with the Bank; (vi) inducing or attempting to induce any person who is an employee of the Bank or the Company on the
date of termination of Employee’s employment with the Bank to terminate such person’s employment with the Bank or the
Company; or (vii) holding a position based in or with responsibility for all or part of the Relevant Market, with any Financial
Institution, whether as employee, consultant, or otherwise, (A) in which Employee will have duties, or will perform or be expected
to perform services for such Financial Institution, that is or are the same as or substantially similar to the position held by
Employee or those duties or services actually performed by Employee for the Bank within the twelve (12) month period immediately
preceding the termination of Employee’s employment with the Bank, or (B) in which Employee will use or disclose or be reasonably
expected to use or disclose any Confidential Information of the Bank or the Company for the purpose of providing, or attempting
to provide, such Financial Institution with a competitive advantage in relation to the Bank or the Company.

 

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Customer.
The term “Customer” means (A) any Person with whom, as of the effective date of termination of this Agreement or during
Employee’s employment with the Bank, the Bank has or has had a depository, loan and/or other banking relationship, or (B)
any Person with whom, as of the effective date of termination of this Agreement or during the last twelve (12) months of Employee’s
employment with the Bank, the Bank has or has had a depository, loan and/or other banking relationship and with whom Employee had
dealings on behalf of the Bank in the course of his employment with the Bank.

 

Financial Institution.
The term “Financial Institution” means: (A) any federal or state chartered bank, savings bank, savings and loan association
or credit union, or any holding company for or corporation that owns or controls any such entity; (B) any subsidiary of any federal
or state chartered bank, savings bank, savings and loan association or credit union; and/or (C) any other Person engaged in the
business of making loans of any type or receiving deposits, other than the Bank.

 

Person.
The term “Person” means any natural person or any corporation, partnership, proprietorship, joint venture, limited
liability company, trust, estate, governmental agency or instrumentality, fiduciary, unincorporated association or other entity.

 

Relevant Market.
The term “Relevant Market” means: (A) New Hanover County, North Carolina; (B) Johnston County, North Carolina; (C)
Wake County, North Carolina; (D) Cumberland County, North Carolina; (E) Harnett County, North Carolina; and (F) within a fifteen
(15) mile radius of any full-service branch of the Bank in existence at the time Employee’s employment with the Bank
is terminated.

 

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(b)       Confidentiality
Covenant. Employee covenants and agrees that any and all data, figures, projections, estimates, lists, files, records,
documents, manuals or other such materials or information (financial or otherwise) relating to the Company or the Bank or their
banking business, regulatory examinations, financial results and condition, lending and deposit operations, customers (including
lists of the Bank’s customers and information regarding their accounts and business dealings with the Bank), policies and
procedures, computer systems and software, shareholders, directors and employees (herein referred to as “Confidential Information”)
are proprietary to the Company and the Bank and are valuable, special and unique assets of the Company’s and the Bank’s
business to which Employee will have access during his employment with the Bank. Employee agrees that (i) all such Confidential
Information shall be considered and kept as the confidential, private and privileged records and information of the Company and
the Bank, and (ii) at all times during the term of his employment with the Bank and following the termination of this Agreement
or his employment for any reason, and except as shall be required in the course of the performance by Employee of his duties on
behalf of the Bank and the Company or otherwise pursuant to the direct, written authorization of the Bank or the Company, as applicable,
Employee will not: divulge any such Confidential Information to any other Person or Financial Institution; remove any such Confidential
Information in written or other recorded form from the Bank’s premises; or make any use of any Confidential Information for
his own purposes or for the benefit of any Person or Financial Institution other than the Bank or the Company, as applicable. However,
the term Confidential Information does not include any information that: (i) at the time of disclosure is generally known to, or
readily ascertainable by, the public; (ii) becomes known to the public (provided that Employee was not responsible, directly or
indirectly, for permitting such Confidential Information to enter the public domain without the Bank’s or the Company’s
consent, as applicable); or (iii) is obtained by Employee from a third party which or who is not obligated under an agreement of
confidentiality with respect to such information. Any trade secrets of the Bank or the Company will be entitled to all of the protections
and benefits under the North Carolina Trade Secrets Protection Act and any other applicable law. If any information that the Bank
or the Company deems to be a trade secret is found by a court of competent jurisdiction not to be a trade secret, such information
will, nevertheless, be considered Confidential Information for purposes of this Agreement. Confidential Information encompasses
all formats in which information is preserved, whether electronic, print, or any other form, including all originals, copies, notes,
or other reproductions or replicas thereof. The restriction in this Paragraph 5(b) will not apply to any information that Employee
is required to disclose by law, provided that Employee (i) notifies the Bank and the Company, as applicable, of the existence and
terms of such obligation, (ii) gives the Bank and the Company, as applicable, a reasonable opportunity to seek a protective or
similar order to prevent or limit such disclosure, and (iii) only discloses that information actually required to be disclosed.
Provided, however, nothing in this Agreement prohibits Employee from reporting possible violations of federal law
or regulation to any governmental agency or entity, including but not limited to the Department of Justice, the Securities
and Exchange Commission, the Congress, and any agency Inspector General, or making other disclosures that are protected
under the whistleblower provisions of federal law or regulation. Employee does not need the prior authorization of the
Bank or the Company to make any such reports or disclosures and Employee is not required to notify the Bank or the
Company that Employee has made such reports or disclosures.

 

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(c)       Remedies
for Breach.  Employee understands and agrees that a breach or violation by him of the covenants contained in Paragraph
5(a) and 5(b) of this Agreement will be deemed a material breach of this Agreement and will cause irreparable injury to the Bank
and the Company, and that it would be difficult to ascertain the amount of monetary damages that would result from any such violation.
In the event of Employee’s actual or threatened breach or violation of the covenants contained in Paragraph 5(a) or 5(b),
the Bank and the Company, as applicable, shall be entitled to bring a civil action seeking an injunction restraining Employee from
violating or continuing to violate those covenants or from any threatened violation thereof, or for any other legal or equitable
relief relating to the breach or violation of such covenant. Employee agrees that, if the Bank or the Company institutes any action
or proceeding against Employee seeking to enforce any of such covenants or to recover other relief relating to an actual or threatened
breach or violation of any of such covenants, Employee shall be deemed to have waived the claim or defense that the Bank or the
Company, as applicable, has an adequate remedy at law and shall not urge in any such action or proceeding the claim or defense
that such a remedy at law exists. However, the exercise by the Bank or the Company of any such right, remedy, power or privilege
shall not preclude the Bank or the Company or their respective successors or assigns from pursuing any other remedy or exercising
any other right, power or privilege available to them for any such breach or violation, whether at law or in equity, including
the recovery of damages, all of which shall be cumulative and in addition to all other rights, remedies, powers or privileges of
the Bank and the Company.

 

Notwithstanding anything
contained herein to the contrary, Employee agrees that the provisions of Paragraph 5(a) and 5(b) above and the remedies provided
in this Paragraph 5(c) for a breach by Employee shall be in addition to and shall not be deemed to supersede or to otherwise restrict,
limit or impair the rights of the Bank or the Company under the Trade Secrets Protection Act contained in Article 24, Chapter 66
of the North Carolina General Statutes, or any other state or federal law or regulation dealing with or providing a remedy for
the wrongful disclosure, misuse or misappropriation of trade secrets or other proprietary or confidential information. Notwithstanding
the foregoing nondisclosure obligations, pursuant to 18 U.S.C. Section 1833(b), Employee shall not be held criminally or civilly
liable under any federal or state trade secret law for the disclosure of a trade secret that is made: (i) in confidence to a federal,
state, or local government official, either directly or indirectly, or to an attorney, and solely for the purpose of reporting
or investigating a suspected violation of law; or (ii) in a complaint or other document filed in a lawsuit or other proceeding,
if such filing is made under seal.

 

    8 

     

    

  

(d)       Survival
of Covenants. Employee’s covenants and agreements and the Bank’s and the Company’s rights and remedies
provided for in this Paragraph 5 shall survive any termination of this Agreement or Employee’s employment with the Bank for
any cause or reason.

 

(e)       Return
of Property. Upon the termination of Employee’s employment with the Bank, or at any time upon request of the Bank
or the Company, as applicable, the Employee will immediately return to the Bank and the Company, as applicable, all Confidential
Information in any form along with all personal property belonging to the Bank or the Company that is in Employee’s possession
or control, including, without limitation, all records, papers, files, drawings, notes, specifications, marketing materials, software,
reports, proposals, equipment, or any other device, material, document or possession, however obtained, including any and all copies
of the foregoing (all of which materials are referred to herein as “Bank Property”). Such Bank Property shall be returned
in the same condition as when provided to Employee, reasonable wear and tear excepted.

 

6.       Termination
and Termination Pay.

 

(a)       Employee’s
employment under this Agreement may be terminated at any time by Employee upon sixty (60) days prior written notice to the Bank.
Upon such termination, Employee shall be entitled to receive compensation through the effective date of such termination; provided,
however, that the Bank, in its sole discretion, may elect for Employee not to serve out part or all of said notice period.

 

(b)       Employee’s
employment under this Agreement shall be automatically terminated upon the death of Employee during the Term of this Agreement
on the date of his death. Upon any such termination, Employee’s estate shall be entitled to receive any compensation due
to Employee computed through the last day of the calendar month in which his death shall have occurred but which remains unpaid.

 

(c)       Employee’s
employment under this Agreement shall be automatically terminated in the event of the “Disability” of Employee. For
purposes of this Agreement, the term “Disability” shall mean the Employee is unable to perform the essential functions
of his job by reason of illness, physical or mental disability or other incapacity, with or without a reasonable accommodation
for more than ninety (90) days (which need not be consecutive) within any twelve (12) month period; provided, however, nothing
herein shall give the Bank the right to terminate Employee prior to discharging its obligations to Employee, if any, under the
Family and Medical Leave Act, the Americans with Disabilities Act, or any other applicable law. Upon any such termination, Employee
has no further rights to receive payments for compensation or benefits under this Agreement, with the exception of any vested benefits
of Employee under any employee benefits plan of the Bank or the Company and payment for any accrued, unpaid salary through the
date of termination.

 

(d)       The
Bank may terminate Employee’s employment at any time for “Cause” (as defined below). Any termination of Employee’s
employment which is for “Cause” shall mean that Employee has no further rights to receive payments for compensation
or benefits under this Agreement, with the exception of any vested benefits of Employee under any employee benefits plan of the
Bank or the Company and payment for any accrued, unpaid salary through the date of termination.

 

    9 

     

    

  

For purposes of this
Agreement, the Bank shall have “Cause” to terminate Employee’s employment upon:

 

(i)       A
determination by the Bank, in good faith, that Employee (A) has breached in any material respect any of the terms or conditions
of this Agreement or any other agreement between Employee and the Bank or the Company, or (B) is engaging or has engaged
in willful conduct which is materially detrimental to the business prospects of the Bank or which has had or likely will have a
material adverse effect on the Bank’s business or reputation. Prior to any termination by the Bank of Employee’s employment
for a breach, failure to perform or conduct described in this subparagraph (i), the Bank shall give Employee written notice which
describes such breach, failure to perform or conduct and if during a period of thirty (30) days following such notice Employee
cures or corrects the same to the reasonable satisfaction of the Bank, then this Agreement shall remain in full force and effect.
However, notwithstanding the above, if the Bank has given written notice to Employee on a previous occasion of the same or a substantially
similar breach, failure to perform or conduct, or of a breach, failure to perform or conduct which the Bank determines in good
faith to be of substantially similar import, or if the Bank determines in good faith that the then current breach, failure to perform
or conduct is not reasonably curable, then termination under this subparagraph (i) shall be effective immediately and Employee
shall have no right to cure such breach, failure to perform or conduct.

 

(ii)       The
violation by Employee of any applicable federal or state law, or any applicable rule, regulation, order or statement of policy
promulgated by any governmental agency or authority having jurisdiction over the Bank or any of its affiliates or subsidiaries
(a “Regulatory Authority,” including without limitation the Board of Governors of the Federal Reserve System, the Federal
Reserve Bank of Richmond, the Federal Deposit Insurance Corporation, the North Carolina Commissioner of Banks, or any other banking
regulator having legal jurisdiction over the Bank or the Company), which results from Employee’s gross negligence, willful
misconduct, or intentional disregard of such law, rule, regulation, order, or policy statement and results in any substantial damage,
monetary or otherwise, to the Bank or any of its affiliates or subsidiaries or to the Bank’s reputation;

 

(iii)       The
commission in the course of Employee’s employment with the Bank of an act of fraud, embezzlement, theft, or proven personal
dishonesty (whether or not resulting in criminal prosecution or conviction);

 

(iv)       The
conviction of Employee of any felony or any criminal offense involving dishonesty or breach of trust, or the occurrence of any
event described in Section 19 of the Federal Deposit Insurance Act or any other event or circumstance which disqualifies Employee
from serving as an employee or executive officer of, or a party affiliated with, the Bank or its bank holding company;

 

    10 

     

    

  

(v)      Employee
is or becomes unacceptable to, or is removed, suspended, or prohibited from participating in the conduct of the Bank’s affairs
(or if proceedings for that purpose are commenced) by, any Regulatory Authority; and

 

(vi)    The occurrence
of any event that results in Employee being excluded from coverage, or having coverage limited as to Employee as compared to other
covered officers or employees, under the Bank’s then current “blanket bond” or other fidelity bond or insurance
policy covering its directors, officers or employees.

 

(e)       The
Bank may terminate Employee’s employment at any time for any reason without Cause. Subject to the terms of this Paragraph
6(e), in the event Employee’s employment with the Bank is terminated by the Bank without Cause (and not due to expiration
of the Term pursuant to Paragraph 4, Employee’s death as provided for in Paragraph 6(b) or Employee’s Disability as
provided for in Paragraph 6(c)), and provided: (i) Employee has not breached this Agreement; (ii) Employee signs and does not revoke
within sixty (60) days after the termination date a general release of claims against the Bank, in form and substance satisfactory
to the Bank (the “Release”); (iii) Employee is not entitled to receive the payments or benefits specified in Paragraph
8 related to a Change in Control Termination; and (iv) Employee’s termination is a “separation from service”
within the meaning of Treasury Regulation § 1.409A-1(h), then the Bank will provide Employee with the following benefits,
referred to herein as the “Separation Benefits”: the continued payment of Employee’s then-current base salary,
less applicable federal, state and local payroll taxes and other withholdings required by law or authorized by Employee (the “Separation
Pay”), for the remainder of the Current Term. The first installment of the Separation Pay will be on the Bank’s first
regular payday occurring sixty (60) days after the termination date, and will include Separation Pay for the period from the termination
date through the payment date. The remaining installments will be paid over time in accordance with the Bank’s normal payroll
practices for its employees. The Separation Benefits under this Agreement shall be in lieu of and replace Employee’s right
to severance under any other Bank agreement, plan or program. Notwithstanding the foregoing, if Employee is entitled to receive
the Separation Benefits but violates any provisions of this Agreement or any other agreement entered into by Employee and the Bank
after termination of employment, the Bank will be entitled to immediately stop paying any further installments of the Separation
Benefits.

 

    11 

     

    

  

7.       Additional
Regulatory Requirements. Notwithstanding anything contained in this Agreement to the contrary, it is understood and agreed
that the Bank (or its successors in interest) shall not be required to make any payment or take any action under this Agreement
if (a) the Bank is declared by any Regulatory Authority to be insolvent, in default or operating in an unsafe or unsound
manner, or if (b) in the opinion of counsel to the Bank such payment or action (i) would be prohibited by or would
violate any provision of state or federal law applicable to the Bank or the Company, including without limitation the Federal Deposit
Insurance Act and Chapters 53 and 53C of the North Carolina General Statutes as now in effect or hereafter amended; (ii)
would be prohibited by or would violate any applicable rules, regulations, orders, or statements of policy, whether now existing
or hereafter promulgated, of any Regulatory Authority; or (iii) otherwise would be prohibited by any Regulatory Authority.

 

8.       Change
in Control Payments and Benefits.

 

(a)       In
the event that:

 

(i)       During
the Term of this Agreement, (x) the Bank terminates Employee’s employment without Cause (and not due to expiration
of the Term pursuant to Paragraph 4, Employee’s death as provided for in Paragraph 6(b) or Employee’s Disability as
provided for in Paragraph 6(c)); or (y) Employee terminates such employment following a Termination Event; and

 

(ii)       such
termination pursuant to clause (x) or (y) of Paragraph 8(a)(i) above occurs within twelve (12) months after a Change in Control
(any such termination meeting the explicit requirements of both Paragraphs 8(a)(i) and 8(a)(ii) referred to hereinafter as a “Change
in Control Termination”), then Employee shall be entitled to receive the payments and benefits specified in this Paragraph
8. The date on which the Employee or Bank receives notice in accordance with Paragraph 6 of the termination of Employee’s
employment or Paragraph 8(e) of a Change in Control Termination, respectively, shall be deemed the Change in Control Termination
Date.

 

    12 

     

    

  

(b)       For
the purposes of this Agreement, the term “Change in Control” shall mean a change in control event as defined in Treasury
Regulation § 1.409A-3(i)(5) promulgated under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”),
including a change in effective control of the Bank, a change in the ownership of the Bank, and a change in the ownership of a
substantial portion of the assets of the Bank, as such terms are defined in Treasury Regulation § 1.409A-3(i)(5).

 

(c)       For
purposes of this Agreement, the term “Termination Event” shall mean the occurrence of any of the following events:

 

(i)       Employee
is assigned any duties and/or responsibilities that are inconsistent with his position, duties, responsibilities, or status at
the time of the Change in Control or with his reporting responsibilities or titles with the Bank in effect at such time;

 

(ii)       Employee’s
annual base salary is reduced below the amount in effect as of the effective date of a Change in Control or as the same shall have
been increased from time to time following such effective date;

 

(iii)       Employee’s
life insurance, medical or hospitalization insurance, dental insurance, stock option plans, stock purchase plans, deferred compensation
plans, management retention plans, retirement plans, or similar plans or benefits being provided by the Bank to Employee as of
the effective date of the Change in Control are reduced in their level, scope, or coverage, or any such insurance, plans, or benefits
are eliminated, unless such reduction or elimination applies proportionately to all salaried employees of the Bank who participated
in such benefits prior to such Change in Control; or

 

(iv)       Employee
is transferred to a primary work location outside of New Hanover County, North Carolina without Employee’s express written
consent.

 

A Termination Event shall
be deemed to have occurred on the date such action or event is implemented or takes effect.

 

(d)       Upon
a Change in Control Termination, the Bank shall pay to Employee in a lump sum in cash on the earlier of (x) the first day
of the seventh month after the date of the Change in Control Termination Date or (y) the date of Employee’s death
an amount equal to two hundred percent (200%) of Employee’s base amount as defined in Section 280G(b)(3)(A) of the Code.

 

    13 

     

    

  

(e)       Following
a Termination Event which gives rise to Employee’s rights hereunder, Employee shall have sixty (60) days from the date of
occurrence of the Termination Event to terminate his employment pursuant to this Paragraph 8. Any such termination shall be deemed
to have occurred only (i) upon delivery to the Bank or any successor thereto, of written notice of termination which describes
the Change in Control and Termination Event and (ii) the expiration of a thirty (30) day period during which the Bank (or its successor)
shall have failed to cure such Termination Event. If Employee does not so terminate his employment within the sixty (60) day period,
Employee shall thereafter have no further rights hereunder with respect to that Termination Event, but shall retain rights, if
any, hereunder with respect to any other Termination Event as to which such period has not expired.

 

(f)       It
is the intent of the parties hereto that all payments made pursuant to this Agreement be deductible by the Bank (or Company, as
applicable) for federal income tax purposes and not result in the imposition of an excise tax on Employee. Notwithstanding anything
contained in this Agreement to the contrary, any payments to be made to or for the benefit of Employee which are deemed to be "parachute
payments" as that term is defined in Section 280G(b)(2) of the Code, shall be modified or reduced to the extent deemed to
be necessary by the Bank's Board of Directors to avoid the imposition of an excise tax on Employee under Section 4999 of the Code
or the disallowance of a deduction to the Bank under Section 280G(a) of the Code.

 

(g)       Employee’s
rights and benefits under this Paragraph 8 shall survive any termination of this Agreement or Employee’s employment.

 

9.       Successors
and Assigns.

 

(a)       This
Agreement shall inure to the benefit of and be binding upon any corporate or other successor of the Bank which shall acquire, directly
or indirectly, by conversion, merger, consolidation, purchase or otherwise, all or substantially all of the assets of the Bank.

 

(b)       The
Bank is contracting for the unique and personal skills of Employee. Therefore, Employee shall be precluded from assigning or delegating
his rights or duties hereunder without first obtaining the written consent of the Bank.

 

10.       Modification;
Waiver; Amendments. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification
or discharge is agreed to in writing and signed by the parties hereto. No waiver by any party, at any time, of any breach by another
party of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. This Agreement contains
the entire agreement and understanding by and between the parties with respect to the terms described herein, and any representations,
promises, agreements or understandings, written or oral, not herein contained shall be of no force or effect. No amendments or
additions to this Agreement shall be binding unless in writing and signed by the parties, except as herein otherwise provided.

 

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11.     Applicable
Law; Venue. This Agreement shall be governed in all respects, whether as to validity, construction, capacity, performance
or otherwise, by the laws of North Carolina, except to the extent that federal law shall be deemed to apply. The parties agree
that any litigation arising out of or related to this Agreement or Employee’s employment by the Bank will be brought exclusively
in any state or federal court in Harnett County, North Carolina. Each party (i) consents to the personal jurisdiction of said
courts, (ii) waives any venue or inconvenient forum defense to any proceeding maintained in such courts, and (iii) agrees not
to bring any proceeding arising out of or relating to this Agreement or Employee’s employment by the Bank in any other court.

 

12.     Severability.
Each provision of this Agreement is severable from every other provision of this Agreement. Any provision of this Agreement
that is determined by any court of competent jurisdiction to be invalid or unenforceable will not affect the validity or enforceability
of any other provision. Any provision of this Agreement held invalid or unenforceable only in part or degree will remain in full
force and effect to the extent not held invalid or unenforceable.

 

13.     Section
409A Compliance. Employee and the Bank intend that their exercise of authority or discretion under this Agreement shall
comply with Section 409A of the Code. In that regard, if any provision of this Agreement is ambiguous as to its satisfaction of
the requirements of Section 409A, such provision shall nevertheless be applied in a manner consistent with those requirements.
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 additional compensation expense as a result of the
reformed provision. If any payment, compensation or other benefit required by the Agreement is to be paid in a series of installment
payments, each individual payment in the series shall be considered a separate payment for purposes of Section 409A. References
in this Agreement to Section 409A of the Code include rules, regulations, and guidance of general application issued by the Department
of Treasury under Section 409A of the Code.

 

14.    Counterparts.
This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument. A facsimile or electronic transmission of a signed counterpart of this Agreement
will be sufficient to bind the party or parties whose signature(s) appear thereon.

 

    15 

     

    

 

IN WITNESS WHEREOF,
the parties have executed this Agreement under seal and in such form as to be binding as of the Effective Date.

 

	 	SELECT BANCORP, INC.
	 	 	 	 
	 	 	 	 
	 	By	/s/ William H. Hedgepeth, II	 (seal)
	 	Name:	William L. Hedgepeth, II	 
	 	Title:	President and Chief Executive Officer	 

 

	ATTEST:	 
	 	 
	 	 
	/s/ Brenda B. Bonner	 
	Brenda B. Bonner, Secretary	 

 

	 	SELECT BANK & TRUST COMPANY
	 	 	 	 
	 	 	 	 
	 	By	/s/ William L. Hedgepeth, II	 (seal)
	 	Name:	William L. Hedgepeth, II	 
	 	Title:	President and Chief Executive Officer	 

 

	ATTEST:	 
	 	 
	 	 
	/s/ Brenda B. Bonner	 
	Brenda B. Bonner, Secretary	 

 

	 	EMPLOYEE	 
	 	 	 
	 	 	 
	 	/s/ W. Keith Betts	(seal)
	 	W. Keith Betts	 

 

 

[Signature Page to Employment Agreement]

 

    16

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