Document:

Incentive Stock Option Plan

 Exhibit 10.1 
 CAROLINA BANK HOLDINGS, INC. 
 2007 INCENTIVE STOCK OPTION PLAN 
 Carolina Bank Holdings, Inc., a North Carolina corporation (hereinafter referred to as the “Corporation”), does herein set forth the terms of
the Carolina Bank Holdings, Inc. 2007 Incentive Stock Option Plan (hereinafter referred to as this “Plan”) which was adopted by the Corporation’s Board of Directors (hereinafter referred to as the “Board”) subject to
approval by the Corporation’s shareholders as provided in Paragraph 21 hereof. 
 1. Purpose of the Plan. The purpose
of this Plan is to provide for the grant of Incentive Stock Options (hereinafter referred to as “Option” or “Options”) qualifying for the tax treatment afforded by Section 422 of the Internal Revenue Code of 1986, as
amended, to eligible officers and employees of the Corporation (hereinafter referred to as “Eligible Employees”) who wish to invest in the Corporation’s common stock (hereinafter referred to as “Common Stock”). The
Corporation believes that participation in the ownership of the Corporation by Eligible Employees will be to the mutual benefit of the Corporation and Eligible Employees. The existence of this Plan will make it possible for the Corporation to
attract capable individuals to employment in key employee positions. 
 2. Administration of the Plan. 
 (a) This Plan shall be administered by a committee of the Board (hereinafter referred to as the “Committee”). The Committee shall consist of at
least three (3) members of the Board all of whom must satisfy Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The members of the Committee shall be appointed by the Board and shall
serve at the pleasure of the Board, which may remove members from, add members to, or fill vacancies in the Committee. 
 (b) The Committee
shall decide to whom Options shall be granted under this Plan, the number of shares as to which Options shall be granted, the Option Price (as hereinafter defined) for such shares and such additional terms and conditions for such Options as the
Committee deems appropriate. 
 (c) A majority of the Committee shall constitute a quorum and the acts of a majority of the members present
at any meeting at which a quorum is present, or acts approved unanimously in writing by the Committee, shall be considered as valid actions by the Committee. 
 (d) The Board may designate any officers or employees of the Corporation to assist in the administration of this Plan. The Board may authorize such individuals to execute documents on its behalf and may delegate to
them such other ministerial and limited discretionary duties as the Board may deem fit. 
 3. Shares of Common Stock Subject to the
Plan. The number of shares of Common Stock that shall be available initially for Options under this Plan is Thirty Thousand 

 
Three Hundred Fifty (30,350) shares, subject to adjustment as provided in Paragraph 14 hereof. Shares subject to Options, which expire or terminate
prior to the issuance of the shares of Common Stock shall again be available for future grants of Options under this Plan. 
 4.
Eligibility. Options under this Plan may be granted to any Eligible Employee as determined by the Committee. An individual may hold more than one Option under this or other plans adopted by the Corporation. 
 5. Vesting of Options. Options granted under this Plan shall be fully vested upon the date of grant. 
 6. Option Price. 
 (a) The
price per share of each Option granted under this Plan (hereinafter called the “Option Price”) shall be determined by the Committee as of the effective date of grant of such Option, but in no event shall the Option Price be less than 100%
of the fair market value of Common Stock on the date of grant. If an Optionee (as hereinafter defined) at the time that an Option is granted owns stock possessing more than ten (10%) percent of the total combined voting power of all classes of
stock of the Corporation, then the Option Price per share of each Option granted under this Plan shall be no less than 110% of the fair market value of Common Stock on the date of grant and such Option shall not be exercisable more than
five (5) years from the date of grant. An Option shall be considered as granted on the date that the Committee acts to grant such Option or such later date as the Committee shall specify in an Option Agreement (as hereinafter defined).

 (b) The fair market value of a share of Common Stock shall be determined as follows: (i) if on the date as of which such
determination is being made, Common Stock being valued is admitted to trading on a securities exchange or exchanges for which actual sale prices are regularly reported, or actual sale prices are otherwise regularly published, the fair market value
of a share of Common Stock shall be deemed to be equal to the closing sale price as reported on the date as of which such determination is made; provided, however, that, if a closing sale price is not reported for such date, then the
fair market value shall be equal to the closing sale price on the most recent trading days for which a closing sale price is available, or (ii) if on the date as of which such determination is made, no such closing sale prices are reported, but
quotations for Common Stock are regularly listed on the National Association of Securities Dealers Automated Quotation System (“NASDAQ”) or another comparable system, the fair market value of a share of Common Stock shall be deemed to be
equal to the arithmetic mean of the bid and asked prices for such Common Stock quoted on such system as reported for the date as of which such determination is made, but if bid and asked prices are not available for such date, then the fair market
value shall be equal to the arithmetic mean of the bid and asked prices on the most recent trading day for which such prices are available, or (iii) if no such quotations are available, the fair market value of a share of Common Stock shall be
deemed to be the average of the bid and asked prices furnished by a professional securities dealer making a market in such shares, as selected by the Committee, for the most recent trading date practicable In the event that none of the foregoing
methods can be applied to establish the fair market value of the 

  

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Common Stock, the Board shall adopt a reasonable valuation method, which valuation method shall be documented in writing and shall take into consideration
all available information material to the valuation of the Common Stock, and shall apply such valuation method in a reasonable manner to fix the fair market value of the Common Stock for the purposes of this Plan. 
 7. Payment of Option Price. Payment for shares subject to an Option may be made in cash or in issued and outstanding shares of Common
Stock. 
 8. Terms and Conditions of Grant of Options. Each Option granted pursuant to this Plan shall be evidenced by a
written Incentive Stock Option Agreement (hereinafter referred to as “Option Agreement”) with each Eligible Employee (hereinafter referred to as “Optionee”) to whom an Option is granted; such agreement shall be substantially in
the form attached hereto as “Exhibit A,” unless the Committee shall adopt a different form and, in each case, may contain such other, different, or additional terms and conditions as the Committee may determine. 
 9. Option Period. Each Option Agreement shall set forth a period during which such Option may be exercised (hereinafter referred to as
the “Option Period”); provided, however, that the Option Period shall not exceed ten (10) years after the date of grant of such Option as specified in an Option Agreement. 
 10. Limitation on Grant of Incentive Stock Options. Notwithstanding any other provision of this Plan, no person shall be granted an Option
under this Plan which would cause such person’s “annual vesting amount” to exceed $100,000.00. With respect to any calendar year, a person’s “annual vesting amount” is the aggregate fair market value of stock subject to
incentive stock options with respect to which such options are first exercisable during such calendar year. For purposes of the foregoing, the aggregate fair market value of stock with respect to which incentive stock options are first exercisable
during any calendar year shall be determined by taking into account all such options granted to such person under all incentive stock option plans of the Corporation or of any of its parent or subsidiary corporations. 
 11. Exercise of Incentive Stock Options. An Option shall be exercised by written notice to the Committee signed by an Optionee or by
such other person as may be entitled to exercise such Option. The aggregate Option Price for the shares being purchased must be paid in cash or in issued and outstanding shares of Common Stock. The written notice shall state the number of shares
with respect to which an Option is being exercised and shall either be accompanied by the payment of the aggregate Option Price for such shares or shall fix a date (not more than ten (10) business days from the date of such notice) by which the
payment of the aggregate Option Price will be made. An Optionee shall not exercise an Option to purchase less than one hundred (100) shares, unless the Committee otherwise approves or unless the partial exercise is for the remaining shares
available under such Option. A certificate or certificates for the shares of Common Stock purchased by the exercise of an Option shall be issued in the regular course of business subsequent to the exercise of such Option and the payment therefor.
During the Option Period, no person entitled to exercise any Option granted under this Plan shall have 

  

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any of the rights or privileges of a shareholder with respect to any shares of Common Stock issuable upon exercise of such Option, until certificates
representing such shares shall have been issued and delivered and the individual’s name entered as a shareholder of record on the books of the Corporation for such shares. 
 12. Effect of Termination of Employment, Retirement, Disability or Death. 
 (a) In the event of the termination of employment of an Optionee by reason of being discharged for cause, any Option or Options granted to the Optionee
under this Plan, to the extent not previously exercised or expired, shall immediately terminate. The phrase “discharged for cause” shall include termination at the sole discretion of the Board because of such Optionee’s personal
dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any law, rule or regulation (other than traffic violations or similar offenses), a
final cease and desist order, or material breach of any provision of any employment agreement that such Optionee may have with the Corporation. 
 (b) In the event of the termination of employment of an Optionee either by reason of (i) being discharged for any reason other than cause or (ii) voluntary separation on the part of such Optionee for a reason other than retirement
or disability, such Optionee shall have the right to exercise any Option or Options granted to the Optionee under this Plan, to the extent that they have vested and have not previously been exercised by the Optionee or expired, for a period of three
(3) months after the date of such termination, but in no event may any Option be exercised later than the end of the Option Period provided in such Option Agreement in accordance with Paragraph 9 hereof. 
 (c) In the event of the termination of employment of an Optionee as a result of such Optionee’s retirement, such Optionee shall have the right to
exercise any Option or Options held by the Optionee under this Plan, to the extent that they have not previously been exercised by the Optionee or expired, for a period of three (3) months after the date of retirement, but in no event may any
Option be exercised later than the end of the Option Period provided in such Option Agreement in accordance with Paragraph 9 hereof. Notwithstanding any other provision contained herein, or in any Option Agreement, upon retirement, any Option
then held by an Optionee shall be exercisable immediately in full. For purposes of this Plan, the term “retirement” shall mean (i) termination of an Optionee’s employment under conditions which would constitute retirement under
any tax qualified retirement plan maintained by the Corporation or any of its subsidiaries or (ii) attaining age 65. 
 (d) In the event
of the termination of employment of an Optionee by reason of such Optionee’s disability, such Optionee shall have the right to exercise any Option or Options held by the Optionee, to the extent that they previously have not been exercised by
the Optionee or expired, notwithstanding any limitations placed on the exercise of such Options by this Plan or an Option Agreement, including vesting requirements, immediately in full and at any time within twelve (12) months after the last
date on which such Optionee provided services as 

  

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an officer or an employee of the Corporation before being disabled, but in no event may any Option be exercised later than the end of the Option Period
provided in such Option Agreement in accordance with Paragraph 9 hereof. For purposes of this Plan, the term “disability” shall be defined in the same manner as such term is defined in Section 22(e)(3) of the Internal Revenue Code of
1986, as amended. 
 (e) In the event that an Optionee should die while employed by the Corporation or any of its subsidiaries, or within
three (3) months after retirement, any Option or Options granted to the Optionee under this Plan and not previously exercised by the Optionee or expired shall vest and shall be exercisable, according to their respective terms, by the personal
representative of such Optionee or by any person or persons who acquired such Options by bequest or inheritance from such Optionee, notwithstanding any limitations placed on the exercise of such Options by this Plan or an Option Agreement,
immediately in full and at any time within twelve (12) months after the date of death of such Optionee, but in no event may any Option be exercised later than the end of the Option Period provided in such Option Agreement in accordance with
Paragraph 9 hereof. Any references herein to an Optionee shall be deemed to include any person entitled to exercise an Option under the terms of this Plan after the death of such Optionee under the terms of this Plan. 
 13. Effect of Plan on Employment Status. The fact that the Committee has granted an Option to an Optionee under this Plan shall not
confer on such Optionee any right to employment with the Corporation or to a position as an officer or an employee of the Corporation, nor shall it limit the right of the Corporation to remove such Optionee from any position held by the Optionee or
to terminate the Optionee’s employment at any time. 
 14. Adjustment Upon Changes in Capitalization; Dissolution or
Liquidation. 
 (a) In the event of a change in the number of shares of Common Stock outstanding by reason of a stock dividend, stock
split, recapitalization, reorganization, merger, exchange of shares, or other similar capital adjustment, prior to the termination of an Optionee’s rights under this Plan, equitable proportionate adjustments shall be made by the Committee in
(i) the number and kind of shares which remain available under this Plan and (ii) the number, kind, and the Option Price of shares subject to unexercised Options under this Plan. The adjustments to be made shall be determined by the
Committee and shall be consistent with such change or changes in the Corporation’s total number of outstanding shares; provided, however, that no adjustment shall change the aggregate Option Price for the exercise of Options
granted under this Plan. 
 (b) The grant of Options under this Plan shall not affect in any way the right or power of the Corporation or its
shareholders to make or authorize any adjustment, recapitalization, reorganization, or other change in the Corporation’s capital structure or its business, or any merger or consolidation of the Corporation, or to issue bonds, debentures,
preferred or other preference stock ahead of or affecting Common Stock or the rights thereof, or the dissolution or liquidation of the Corporation, or any sale or transfer of all or any part of the Corporation’s assets or business. 

 

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 (c) Upon the effective date of the dissolution or liquidation of the Corporation, or of a reorganization,
merger, or consolidation of the Corporation with one or more other corporations in which the Corporation is not the surviving corporation, or the transfer of all or substantially all of the assets or shares of the Corporation to another person or
entity (any such transaction being hereinafter referred to as a “Terminating Event”), this Plan and any Options granted hereunder shall terminate unless provision is made in writing in connection with such Terminating Event for the
continuance of this Plan and for the assumption of Options granted hereunder, or the substitution for such Options of new options for the shares of the successor corporation, or a parent or a subsidiary thereof, with such appropriate adjustments, as
may be determined or approved by the Committee or the successor to the Corporation, to the number and kind of shares subject to such substituted options in which event this Plan and Options granted hereunder, or the new options substituted therefor,
shall continue in the manner and under the terms so provided. Upon the occurrence of any Terminating Event, all Options granted to an Optionee hereunder shall immediately vest in full. Further, upon the occurrence of any Terminating Event in which
provision is not made for the continuance of this Plan and for the assumption of Options granted hereunder, or the substitution for such Options of new options for the shares of a successor corporation or a parent or a subsidiary thereof, each
Optionee to whom an Option has been granted under this Plan (or such personal representative, the executor or administrator of such person’s estate, or any person who acquired the right to exercise such Option from such person by bequest or
inheritance) shall be entitled, prior to the effective date of any such Terminating Event, to exercise, in whole or in part, the Optionee’s rights under any Option granted to the Optionee without any regard to any restrictions on exercise that
would otherwise apply. To the extent that a person, pursuant to this Subparagraph 14 (c), has a right to exercise any Option on account of a Terminating Event which such person otherwise would not have had at that time, such right shall be
contingent upon the consummating of such Terminating Event. 
 15. Non-Transferability. Any Option granted under this Plan
shall not be assignable or transferable except, in the case of the death of an Optionee, by will or by the laws of descent and distribution. In the event of the death of an Optionee, the personal representative, the executor or the administrator of
such Optionee’s estate, or the person or persons who acquired by bequest or inheritance the rights to exercise such Option, may exercise any Option or portion thereof to the extent not previously exercised by an Optionee or expired, in
accordance with its terms, prior to the expiration of the exercise period as specified in Subparagraph 12 (e) hereof. 
 16. Tax
Withholding. The employer of a person granted an Option under this Plan shall have the right to deduct or otherwise effect a withholding of any amount required by federal or state laws to be withheld with respect to the grant, exercise
or the sale of stock acquired upon the exercise of an Option in order for the employer to obtain a tax deduction otherwise available as a consequence of such grant, exercise or sale, as the case may be. 
  

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 17. Listing and Registration of Option Shares. Any Option granted under the Plan shall
be subject to the requirement that if at any time the Committee shall determine, in its discretion, that the listing, registration, or qualification of the shares covered thereby upon any securities exchange or under any state or federal law or the
consent or approval of any governmental regulatory body is necessary or desirable as a condition of, or in connection with, the granting of such Option or the issuance or purchase of shares thereunder, such Option may not be exercised in whole or in
part unless and until such listing, registration, qualification, consent, or approval shall have been effected or obtained free of any conditions not acceptable to the Committee. 
 18. Exculpation and Indemnification. In connection with this Plan, no member of the Committee shall be personally liable for any act
or omission to act in such person’s capacity as a member of the Committee, nor for any mistake in judgment made in good faith, unless arising out of, or resulting from, such person’s own bad faith, gross negligence, willful misconduct, or
criminal acts. To the extent permitted by applicable law and regulation, the Corporation shall indemnify and hold harmless the members of the Committee, and each other officer or employee of the Corporation or of any subsidiary thereof to whom any
duty or power relating to the administration or interpretation of this Plan may be assigned or delegated, from and against any and all liabilities (including any amount paid in settlement of a claim with the approval of the Board) and any costs or
expenses (including counsel fees) incurred by such persons arising out of, or as a result of, any act or omission to act in connection with the performance of such person’s duties, responsibilities, and obligations under this Plan, other than
such liabilities, costs, and expenses as may arise out of, or result from, the bad faith, gross negligence, willful misconduct, or criminal acts of such persons. 
 19. Amendment and Modification of the Plan. The Board may at any time and from time to time amend or modify this Plan (including the form of Option Agreement) in any respect; provided,
however, that no amendment or modification shall be made that increases the total number of shares covered by this Plan or effects any change in the categories of persons who may receive Options under this Plan or materially increases the
benefits accruing to Optionees under this Plan unless such change is approved by the holders of a majority of shares of Common Stock present or represented at a shareholders’ meeting at which a quorum is present. Any amendment or modification
of this Plan shall not materially reduce the benefits under any Option theretofore granted to an Optionee under this Plan without the consent of such Optionee or the transferee thereof in the event of the death of such Optionee. Notwithstanding the
above, no amendment may be effective, without the prior approval of the shareholders of the Corporation, if approval of such amendment is required in order that transactions in the Common Stock under the Plan be exempt from the operation of
Section 16 (b) of the Exchange Act. 
 20. Termination and Expiration of the Plan. This Plan may be abandoned,
suspended, or terminated at any time by the Board; provided, however, that abandonment, suspension, or termination of this Plan shall not affect any Options then outstanding under this Plan. No Option shall be granted pursuant to this
Plan after one (1) year from the effective date of this Plan as provided in Paragraph 21 hereof. 
  

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 21. Effective Date; Shareholder Approval. This Plan shall not be effective until
approved by the holders of a majority of the outstanding shares of Common Stock; which shareholder vote shall be taken at the next meeting of the shareholders of the Corporation to occur following Board approval of the Plan. 
 22. Captions and Headings; Gender and Number. Captions and paragraph headings used herein are for convenience only, do not modify or affect
the meaning of any provision herein, are not a part hereof, and shall not serve as a basis for interpretation or in construction of this Plan. As used herein, the masculine gender shall include the feminine and neuter, the singular number the
plural, and vice versa, whenever such meanings are appropriate. 
 23. Expenses of Administration of Plan. All costs and
expenses incurred in the operation and administration of this Plan shall be borne by the Corporation or one or more of its subsidiaries. 
 24. Governing Law. Without regard to the principles of conflicts of laws, the laws of the State of North Carolina shall govern and control the validity, interpretation, performance, and enforcement of this Plan. 
 25. Inspection of Plan. A copy of this Plan, and any amendments thereto or modification thereof, shall be maintained by the Secretary of
the Corporation and shall be shown to any proper person making inquiry about it. 
 26. Compliance with Section 16 of the
Securities Exchange Act of 1934. It is the intention of the Corporation that the Plan and Options hereunder satisfy and be interpreted in a manner, that, in the case of Optionees, satisfies the applicable requirements of Rule 16b-3
promulgated under Section 16(b) of the Exchange Act, so that such persons will be entitled to the benefits of Rule 16b-3 or other exemptive rules under Section 16 of the Exchange Act and will not be subject to avoidable liability
thereunder. If any provision of the Plan or of any Option Agreement would otherwise frustrate or conflict with the intent expressed in this Paragraph 26, that provision to the extent possible shall be interpreted and deemed amended so as to avoid
such conflict. To the extent of any remaining irreconcilable conflict with such intent, the provision shall be deemed void as applicable to any person who is subject to Section 16 of the Exchange Act. 
  

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 STATE OF NORTH CAROLINA 
 EXHIBIT A 
 COUNTY OF GUILFORD 
 INCENTIVE STOCK OPTION AGREEMENT 
 THIS INCENTIVE STOCK OPTION AGREEMENT (hereinafter referred to as
this “Agreement”) is made and entered into as of this ___ day of ______, 20__, between CAROLINA BANK HOLDINGS, INC., a North Carolina corporation (hereinafter referred to as the “Corporation”), and
_________________________________, a resident of ______________ County, North Carolina (hereinafter referred to as the “Optionee”). 
 WHEREAS, the Board of Directors of the Corporation (hereinafter referred to as the “Board”) has adopted the Carolina Bank Holdings, Inc. 2007 Incentive Stock Option Plan (hereinafter referred to as the
“Plan”) which Plan was approved by the Corporation’s shareholders on April 17, 2007; and 
 WHEREAS, the Plan
provides that a committee (hereinafter referred to as the “Committee”) of the Board will make available to certain officers and employees of the Corporation and its subsidiaries (any one of which, as may be appropriate, is hereinafter
referred to as the “Employer”) the right to purchase shares of the Corporation’s common stock (hereinafter referred to as “Common Stock”); and 
 WHEREAS, the Committee has determined that the Optionee should be granted an option to purchase shares of Common Stock under the Plan; 
 NOW, THEREFORE, the Corporation and the Optionee agree as follows: 
 1. Date of Grant of Option. The date of grant of the option granted under this Agreement is the ___ day of ___________, 20__. 
 2. Grant of Option. Pursuant to the Plan, the Corporation grants to the Optionee the right (hereinafter referred to as the
“Option”) to purchase from the Corporation all or any part of an aggregate of ______________________________ (            ) shares of Common Stock (hereinafter referred to as the
“Option Shares”) which shall be authorized but unissued shares. 
 3. Option Price. The price to be paid for the
Option Shares shall be _______________________ Dollars ($______) per share (hereinafter referred to as the “Option Price”) which is the fair market value of the Option Shares as determined by the Committee as of the date of grant of this
Option. 
 4. When and Extent to which Option may be Exercised. At such time as the Option shall become exercisable in
accordance with this Agreement, the Optionee, in his discretion, may exercise all or any portion of the Option, subject to paragraph 5 hereof. The 

  

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Option shall terminate as provided in paragraph 6 hereof. Notwithstanding any other provision of this Agreement, the Option shall not become exercisable
for the first time during the course of any calendar year to purchase Option Shares having an aggregate fair market value on the date of grant of the Option in excess of One Hundred Thousand and No/100 Dollars ($100,000.00) (the “Value
Limitation”). The Value Limitation shall be reduced, dollar for dollar, by the value of any shares of Common Stock subject to “incentive stock options” obtained by the Optionee by means other than this Agreement which also are
exercisable for the first time in such calendar year. For purposes of this paragraph 4, the term “incentive stock options” means options qualifying for the tax treatment afforded by Section 422 of the Internal Revenue Code of 1986, as
amended (the “Code”). 
 Options granted hereunder shall be fully vested upon the date of grant. 
 5. Method of Exercise. The Option shall be exercised by written notice to the Committee signed by the Optionee or by such other person
as may be entitled to exercise. The aggregate Option Price for the shares being purchased must be paid in cash or in issued and outstanding shares of Common Stock. The written notice shall state the number of shares with respect to which the Option
is being exercised and shall either be accompanied by the payment of the aggregate Option Price for such shares or shall fix a date (not more than ten (10) business days from the date of such notice) by which the payment of the aggregate Option
Price will be made. The Optionee shall not exercise the Option to purchase less than one hundred (100) shares, unless the Committee otherwise approves or unless the partial exercise is for the remaining shares available under the Option. A
certificate or certificates for the shares of Common Stock purchased by the exercise of the Option shall be issued in the regular course of business subsequent to the exercise of the Option and the payment therefor. During the Option Period, no
person entitled to exercise the Option granted under this Agreement shall have any of the rights or privileges of a shareholder with respect to any shares of Common Stock issuable upon exercise of the Option, until certificates representing such
shares shall have been issued and delivered and the individual’s name entered as a shareholder of record on the books of the Corporation for such shares. 
 6. Termination of Option. The Option shall terminate as follows: 
 (a) Except as provided
in subparagraphs (b), (c), (d) and (e) below, the Option granted under this Agreement, to the extent that it has not been exercised or expired, shall terminate on (i) the date that the Optionee is discharged for cause, or
(ii) the date which is ten (10) years from the date of grant of the Option set forth in paragraph 1 hereof. The phrase “discharged for cause” shall include termination at the sole discretion of the Board of Directors of the
Employer of the Optionee because of the Optionee’s personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any law, rule or
regulation (other than traffic violations or similar offenses) or final cease and desist order, or material breach of any provision of any employment agreement that the Optionee may have with the Employer. 
  

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 (b) In the event the Optionee is involuntarily terminated for any reason other than cause or voluntarily
terminates employment for reasons other than retirement or disability, and such termination is prior to the date which is ten (10) years after the date of grant of the Option, the Optionee shall have the right to exercise the Option, to the
extent that it has vested and has not been exercised by the Optionee or expired, at any time within three (3) months after the date of such termination, but in no event may the Option be exercised later than ten (10) years after the date
of grant of the Options set forth in (b) of paragraph 1 hereof. 
 (c) In the event the Optionee retires prior to the date which is
ten (10) years after the date of grant of the Option, the Optionee shall have the right to exercise the Option, to the extent that it has not been exercised by the Optionee or expired, notwithstanding any limitation placed on the exercise of
the Option by the Plan or by this Agreement, immediately in full and at any time within three (3) months after the date of retirement, but in no event may the Option be exercised later than ten (10) years after the date of grant of the
Option set forth in paragraph 1 hereof. Notwithstanding any other provision contained herein or in the Plan, upon retirement, any Option then held by an Optionee shall be exercisable immediately in full. For purposes of this Agreement, the term
“retirement” shall mean (i) termination of the Optionee’s employment under conditions which would constitute retirement under any tax qualified retirement plan maintained by the Employer or (ii) attaining age 65. 

(d) In the event the Optionee becomes disabled prior to the date which is ten (10) years after the date of grant of the Option, the Optionee
shall have the right to exercise the Option, to the extent that it has not been exercised by the Optionee or expired, notwithstanding any limitation placed on the exercise of the Option by the Plan or by this Agreement, including vesting
requirements, immediately in full and at any time within twelve (12) months after the last date on which the Optionee provided services as an officer or an employee of the Employer before being disabled, but in no event may the Option be
exercised later than ten (10) years after the date of grant of the Option set forth in paragraph 1 hereof. For purposes of this Agreement, the term “disability” shall be defined in the same manner as such term is defined in
Section 22(e)(3) of the Internal Revenue Code of 1986, as amended. 
 (e) In the event the Optionee should die while employed by the
Employer or within three (3) months after retirement but prior to the date which is ten (10) years after the date of grant of the Option, the Option, to the extent it has not been exercised by the Optionee or expired, shall be exercisable,
according to its terms, by the personal representative, the executor or administrator of the Optionee’s estate, or any person or persons who acquired the Option by bequest or inheritance from the Optionee, notwithstanding any limitation placed
on the exercise of the Option by the Plan or by this Agreement, immediately in full and at any time within twelve (12) months after the date of death of the Optionee, but in no event may the Option be exercised later than ten (10) years
from the date of grant of the Option as set forth in paragraph 1 hereof. 
 7. Effect of Agreement on Employment Status of
Optionee. The fact that the Committee has granted the Option to the Optionee under this Agreement shall not confer on the Optionee any right to employment with the Employer or to a position as an officer or an employee of the Employer, nor
shall it limit the right of the Employer to remove the Optionee from any position held by the Optionee or to terminate his or her employment at any time. 
  

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 8. Listing and Registration of Option Shares. 
 (a) The Corporation’s obligation to issue shares of Common Stock upon exercise of the Option is expressly conditioned upon (i) the completion by
the Corporation of any registration or other qualification of such shares under any state or federal law or regulations or rulings of any government regulatory body or (ii) the making of such investment representations or other representations
and agreements by the Optionee or any person entitled to exercise the Option in order to comply with the requirements of any exemption from any such registration or other qualification of the Option Shares which the Committee shall, in its sole
discretion, deem necessary or advisable. Notwithstanding the foregoing, the Corporation shall be under no obligation to register or qualify the Option Shares under any state or federal law. The required representations and agreements referenced
above may include representations and agreements that the Optionee, or any other person entitled to exercise the Option, (i) is purchasing such shares on his or her own behalf as an investment and not with a present intention of distribution or
re-sale and (ii) agrees to have placed upon any certificates representing the Option Shares a legend setting forth any representations and agreements which have been given to the Committee or a reference thereto and stating that such shares may
not be transferred except in accordance with all applicable state and federal securities laws and regulations, and further representing that, prior to making any sale or other disposition of the Option Shares, the Optionee, or any other person
entitled to exercise the Option, will give the Corporation notice of the intention to sell or dispose of such shares not less than three (3) business days prior to such sale or disposition. 
 9. Adjustment Upon Change in Capitalization; Dissolution or Liquidation. 
 (a) In the event of a change in the number of shares of Common Stock outstanding by reason of a stock dividend, stock split, recapitalization,
reorganization, merger, exchange of shares, or other similar capital adjustment, prior to the termination of the Optionee’s rights under this Agreement, equitable proportionate adjustments shall be made by the Committee in the number, kind, and
the Option Price of shares subject to the unexercised portion of the Option granted under this Agreement. The adjustments to be made shall be determined by the Committee and shall be consistent with such change or changes in the Corporation’s
total number of outstanding shares; provided, however, that no adjustment shall change the aggregate Option Price for the exercise of the Option granted under this Agreement. 
 (b) The grant of the Option under this Agreement shall not affect in any way the right or power of the Corporation or its shareholders to make or
authorize any adjustment, recapitalization, reorganization, or other change in the Corporation’s capital structure or its business, or any merger or consolidation of the Corporation, or to issue bonds, debentures, preferred or other preference
stock ahead of or affecting Common Stock or the rights thereof, or the dissolution or liquidation of the Corporation, or any sale or transfer of all or any part of the Corporation’s assets or business. 
  

 - 12 - 

 (c) Upon the effective date of the dissolution or liquidation of the Corporation, or of a reorganization,
merger, or consolidation of the Corporation with one or more other corporations in which the Corporation is not the surviving corporation, or the transfer of all or substantially all of the assets or shares of the Corporation to another person or
entity, the Option granted under this Agreement shall terminate, except as may be provided in the Plan. 
 10.
Nontransferability. The Option granted under this Agreement shall not be assignable or transferable except, in the event of the death of the Optionee, by will or by the laws of descent and distribution. In the event of the death of
the Optionee, the personal representative, the executor or the administrator of the Optionee’s estate, or the person or persons who acquired by bequest or inheritance the right to exercise the Option may exercise the unexercised Option or a
portion thereof, in accordance with the terms hereof, prior to the date which is ten (10) years after the date of grant of Option as set forth in paragraph 1 hereof. 
 11. Notices. Any notice or other communications required or permitted to be given under this Agreement shall be in writing and shall
be deemed to have been sufficiently given when delivered personally or when deposited in the United States mail as Certified Mail, return receipt requested, properly addressed with postage prepaid, if to the Corporation at its principal office at
528 College Road, Greensboro, North Carolina 27410; and if to the Optionee to his or her last address appearing on the books of the Employer. The Employer and the Optionee may change their address or addresses by giving written notice of such
change as provided herein. Any notice or other communication hereunder shall be deemed to have been given on the date actually delivered or as of the third (3rd) business day following the date mailed, as the case may be. 
 12. Construction Controlled by Plan. This Agreement shall be construed so as to be consistent with the Plan; and the provisions of the
Plan shall be deemed to be controlling in the event that any provision hereof should appear to be inconsistent therewith. The Optionee hereby acknowledges receipt of a copy of the Plan from the Corporation. 
 13. Severability. Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be valid and
enforceable under applicable law, but if any provision of this Agreement is determined to be unenforceable, invalid or illegal, the validity of any other provisions or part thereof, shall not be affected thereby and this Agreement shall continue to
be binding on the parties hereto as if such unenforceable, invalid or illegal provision or part thereof had not been included herein. 
 14. Modification of Agreement; Waiver. This Agreement may be modified, amended, suspended, or terminated, and any terms, representations or conditions may be waived, but only by written instrument signed by each of the
parties hereto. No waiver hereunder shall constitute a waiver with respect to any subsequent occurrence or other transaction hereunder or of any other provision hereof. 
  

 - 13 - 

 15. Captions and Headings; Gender and Number. Captions and paragraph headings used
herein are for convenience only, do not modify or affect the meaning of any provision herein, are not a part hereof, and shall not serve as a basis for interpretation or in construction of this Agreement. As used herein, the masculine gender shall
include the feminine and neuter, the singular number the plural, and vice versa, whenever such meanings are appropriate. 
 16.
Governing Law; Venue and Jurisdiction. Without regard to the principles of conflicts of laws, the laws of the State of North Carolina shall govern and control the validity, interpretation, performance, and enforcement of this Agreement.
The parties hereto agree that any suit or action relating to this Agreement shall be instituted and prosecuted in the courts of the County of Guilford, State of North Carolina, and each party hereby does waive any right or defense relating to such
jurisdiction and venue. 
 17. Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of the
Corporation, its successors and assigns, and shall be binding upon and inure to the benefit of the Optionee, his or her heirs, legatees, personal representatives, executors, and administrators. 
 18. Entire Agreement. This Agreement constitutes and embodies the entire understanding and agreement of the parties hereto and, except
as otherwise provided hereunder, there are no other agreements or understandings, written or oral, in effect between the parties hereto relating to the matters addressed herein. 
 19. Counterparts. This Agreement may be executed in any number of counterparts, each of which when executed and delivered shall be
deemed an original, but all of which taken together shall constitute one and the same instrument. 
  

 - 14 - 

 IN WITNESS WHEREOF, the Corporation has caused this instrument to be executed in its corporate
name by its President or one of its Vice Presidents and attested by its Secretary or one of its Assistant Secretaries and its corporate seal to be hereto affixed, all by authority of its Board of Directors first duly given, and the Optionee has
hereunto set his or her hand and adopted as his or her seal the typewritten word “SEAL” appearing beside his or her name, all done this the day and year first above written. 
  

					
		 	CAROLINA BANK HOLDINGS, INC.
			
		 	By:	 	  

		 		 	                                      
  ,                      President
			
	ATTEST:	 		 	
	  
	 		 	
	                                      
  ,                     Secretary	 		 	
			
	[CORPORATE SEAL]	 		 	
		 		 	                                      
                               (SEAL)
		 		 	                                      
                  , Optionee

  

 - 15 - 

 EXHIBIT A 
 NOTICE OF EXERCISE OF 
 INCENTIVE STOCK OPTION 
 To: The Stock Option Committee of the Board of Directors of Carolina Bank Holdings, Inc. 
 The undersigned hereby elects to purchase
                     whole shares of Common Stock of Carolina Bank Holdings, Inc. (the “Corporation”) pursuant to the Incentive
Stock Option granted to the undersigned in that certain Incentive Stock Option Agreement between the Corporation and the undersigned dated the          day of
                    ,             . The aggregate purchase price for such
Shares is $            , which amount is (i) being tendered herewith, (ii) will be tendered on or before
                                        ,
20     (cross out provision which does not apply) in cash or in issued and outstanding shares of Common Stock. The effective date of this election shall be
                                        ,
20    , or the date of receipt of this Notice by the Corporation if later. 
 Executed this
                     day of
                                    ,
20    , at
                                    . 
  

			
	Signature:	 	  

		
	Name of Optionee:	 	  

		
	Social Security Number:	 	  

  

 - 16 -Second Amendment to Executive Employment Agreement (Stanford)

 EXHIBIT 10.1 
 SECOND AMENDMENT 
 TO

 EXECUTIVE EMPLOYMENT AGREEMENT (STANFORD) 
 Pursuant to Section 14 of the Executive Employment Agreement effective as of August 31, 2001 (the “Agreement”) entitled “Waiver;
Modification,” the parties to the Agreement hereby modify the Agreement in this Second Amendment (“Amendment”) as provided below. 
 Section 4 (c) shall be amended by adding a new subsection 4(c) (v) as follows: 
 (v) DEFERRED COMPENSATION: The
Company shall contribute a predetermined amount monthly , as determined by the Company’s Compensation Committee to the deferred compensation account of Officer, such account to be maintained under the Company’s deferred compensation plan
as in First State Bancorporation Deferred Compensation Plan (as in effect prior to 2005) (“Plan”). 
 Section 6(b)(iii)
shall be amended by deleting the provisions in their entirety and by replacing them with the following sentence:  
 Continued
participation in the Company’s fringe benefits set forth in Section 4(c); provided, however, that such continuation of benefits after termination shall not apply to those fringe benefits which require a minimum number of hours of
employment for participation, such as 401k, life insurance and other employee insurance. The Company shall purchase medical benefits and insurance equivalent to the Company’s medical insurance and benefits coverage on the date of termination
for the severance period; provided, however, if the Officer secures equivalent coverage for continued medical benefits and insurance for the severance period the cost of such coverage shall be reimbursed for the severance term. 
 The Officer, to the extent determined to be nondiscriminatory under the Company’s qualified employee benefit plans, shall become fully vested in his
benefits under such plans. Additionally, the Officer shall become fully vested with respect to any of the Company’s non-qualified benefit plans in which he is a participant. 
 Section 6(c) shall be amended by adding the following provision as Section 6 (c)(vi): 
 Continued participation in the Company’s fringe benefits set forth in Section 4(c); provided, however, that such continuation of benefits after
termination shall not apply to those fringe benefits which require a minimum number of hours of employment for 

  

 1 

 
participation, such as 401k, life insurance and other employee insurance. The Company shall purchase medical benefits and insurance equivalent to the
Company’s medical insurance and benefits coverage on the date of termination for the severance period; provided, however, if the Officer secures equivalent coverage for continued medical benefits and insurance for the severance period the cost
of such coverage shall be reimbursed for the severance term. 
 The Officer, to the extent determined to be nondiscriminatory under the
Company’s qualified employee benefit plans, shall become fully vested in his benefits under such plans. Additionally, the Officer shall become fully vested with respect to any of the Company’s non-qualified benefit plans in which he is a
participant. 
 All other provisions of the Agreement and the First Amendment to the Agreement shall remain in full force except as amended by this
Amendment. 
 Dated this 25th day of July 2007 
  

			
	 FIRST STATE BANCORPORATION

		
	 BY:
	 	 /S/ LEONARD J. DELAYO, JR.

	 TITLE:
	 	 CHAIRMAN OF THE BOARD

	
	 EXECUTIVE

	
	 /S/ MICHAEL R. STANFORD

  

 2

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