Document:

Exhibit 10(b)(i)

 Exhibit 10(b)(i) 
 December 23, 2008 
 Joseph F. Beaman,
Jr. 
 518 West C. Street 
 Newton, NC 28658 
 Dear Joe, 
 Peoples Bancorp of North Carolina, Inc. (the
“Company”) anticipates entering into a Securities Purchase Agreement (the “Participation Agreement”) with the United States Department of Treasury (the “Treasury”) that provides, among other things, for the purchase by
the Treasury of securities issued by the Company. This purchase is anticipated to occur as part of the Company’s participation in the Treasury’s Troubled Asset Relief Program - Capital Purchase Program (the “CPP”). 
 As a condition to the closing of the investment contemplated by the Participation Agreement, the Company is required to take certain actions with respect
to compensation arrangements of its senior executive officers. The Company has determined that you are or may be a senior executive officer for purposes of the CPP. To comply with the requirements of the CPP, and in consideration of the benefits
that you will receive as a result of the Company’s participation in the CPP and for other good and valuable consideration, the sufficiency of which you hereby acknowledge, you agree as follows: 
  

	 	(1)	No Golden Parachute Payments. You will not be entitled to receive from the Company any golden parachute payment (as defined below) during any period in which the Treasury holds an
equity or debt position acquired from the Company in the CPP (the “CPP Covered Period”) (or during the year following any acquisition of the Company, to the extent required by the CPP Limitations (as defined below)).

  

	 	(2)	Recovery of Bonus and Incentive Compensation. You will be required to and shall return to the Company any bonus or incentive compensation paid to you by the Company during the CPP
Covered Period if such bonus or incentive compensation is paid to you based on materially inaccurate financial statements or any other materially inaccurate performance metric criteria. 

  

	 	(3)	Compensation Program Amendments. Each of the Company’s compensation, bonus, incentive and other benefit plans, arrangements and agreements , including golden parachute,
severance and employment agreements (all such plans, arrangements and agreements, the “Benefit Plans”) are hereby amended to the extent necessary to give effect to provisions (1) and (2) of this letter. 

The Company is also required as a condition to participation in the CPP to review the Benefit Plans to ensure that the Benefit Plans do not encourage
its senior executive officers to take unnecessary and excessive risks that threaten the value of the Company. To the extent that the Company determines that the Benefit Plans must be revised as a result of such review, or determines that the Benefit
Plans must otherwise be revised to comply with Section 111(b) of the EESA (as defined below) as implemented by any guidance or regulation thereunder that has been issued and is in effect as of the closing date of the Company’s issuance of
preferred stock and warrants to acquire common stock to the Treasury pursuant to the CPP (the “CPP Limitations”), you and the Company agree to negotiate and effect such changes promptly and in good faith. 

	 	(4)	Definitions and Interpretation. This letter shall be interpreted as follows: 

  

	 	•	 	 “Senior executive officer” means the Company’s “senior executive officers” as defined in Q&A 2 of the Interim Final Rule issued by the
Treasury at 31 CFR Part 30, effective on October 20, 2008 (the “Interim Final Rule”). 

  

	 	•	 	 “Golden parachute payment” shall have the meaning set forth in Q&A 9 of the Interim Final Rule. 

  

	 	•	 	 The term “Company” includes any entities treated as a single employer with the Company under Q&A 1 and Q&A 11 of the Interim Final Rule.

  

	 	•	 	 This letter is intended to, and shall be interpreted, administered and construed to comply with Section 111 of the Emergency Economic Stabilization Act of 2008
(the “EESA”) and the regulations and guidance promulgated thereunder (and, to the maximum extent consistent with the preceding, to permit operation of the Benefit Plans in accordance with their terms before giving effect to this letter).

  

	 	(5)	Miscellaneous. To the extent not subject to federal law, this letter will be governed by and construed in accordance with the laws of the State of North Carolina. This letter may be
executed in two or more counterparts, each of which will be deemed to be an original. A signature transmitted by facsimile will be deemed an original signature. 

  

	 	(6)	If the Treasury does not purchase the securities contemplated by the Participation Agreement, then this letter shall be of no force or effect. In addition, upon such time as the
Treasury no longer holds securities or debt of the Company acquired under the CPP, this letter shall be of no further force or effect, except to the extent required by the CPP Limitations. If you cease to be a senior executive officer of the Company
for purposes of the CPP, you shall be released from the restrictions and obligations set forth in this letter to the extent permissible under the CPP. If it is determined that you are not a senior executive officer of the Company as of the date
hereof, this letter shall be of no force or effect. 

 The Company appreciates the concessions you are making and looks forward
to your continued leadership during these financially turbulent times. 
 [Signature page follows] 
  

 2 

			
	Sincerely,
	
	Peoples Bancorp of North Carolina, Inc.
		
	By:	 	  

	Name:	 	Robert Abernethy
	Title:	 	Chairman of the Board of Directors

  

			
	Intending to be legally bound, I agree with and accept the foregoing terms on the date set forth below.
		
	By:	 	  

	Name:	 	Joseph F. Beaman, Jr.
	Title:	 	Executive Vice President and Secretary
	Date:	 	December 23, 2008

  

 3Exhibit 10(b)(ii)

 Exhibit 10(b)(ii) 
 AMENDMENT TO EMPLOYMENT AGREEMENT 
 This AMENDMENT TO EMPLOYMENT AGREEMENT (the
“Amendment”) is made on the      day of         , 2008, between PEOPLES BANK, Newton, North Carolina, a North Carolina banking institution (the
“Bank”), and JOSEPH F. BEAMAN, JR. (the “Employee”) and is joined in by PEOPLES BANCORP OF NORTH CAROLINA, INC., a North Carolina corporation (the “Holding Company”). 
 W I T N E S S E T H 
 WHEREAS,
the Bank and Employee, joined by the Holding Company, have previously entered into that certain Employment Agreement dated December 1, 1999 (as it may have heretofore been amended, the “Agreement”) to set forth the terms of
Employee’s employment with the Bank and to provide for certain benefits upon the termination of such employment; 
 WHEREAS,
Paragraph 13 of the Agreement provides, “No amendments or additions to this Agreement shall be binding unless in writing by both parties, except as herein otherwise provided”; and 
 WHEREAS, the Bank and Employee joined in by the Holding Company now desire to amend the Agreement through this Amendment in order to bring the
arrangement into compliance with Internal Revenue Code Section 409A, including regulations and guidance issued thereunder (“Section 409A”). 
 NOW THEREFORE, the Bank and Employee joined in by the Holding Company hereby agree to amend the Agreement as follows: 
  

	 	I.	Paragraph 3 of the Agreement is hereby deleted in its entirety and replaced by the following provisions: 

 3. Discretionary Bonuses. The Employee shall be entitled to participate with all other key
management personnel of the Bank in discretionary bonuses authorized and declared by the Directors of the Bank for all members of Bank management. No other compensation provided for in this Agreement shall be deemed a substitute for the
Employee’s right to participate in such discretionary bonuses when and as are declared by the Board of Directors, so long as such bonuses are provided for Bank management generally. Payment of the bonus shall be in a lump sum on or before
March 15 of the Employee’s first taxable year after the taxable year in which the bonus is declared by the Board. 
  

	 	II.	Paragraph 8.A(1) of the Agreement is amended by adding the following sentence as the last sentence of that paragraph: 

 Said compensation shall be paid according to the Bank’s customary schedule for paying such benefits to employees. 
  

	 	III.	Paragraph 8.A.(2) of the Agreement is amended by adding the following sentence as the last subparagraph of that paragraph: 

 Any payments of compensation and/or benefits required under this paragraph 8.A.(2) shall be paid according to the Bank’s customary schedule for
paying such benefits to employees. 
  

	 	IV.	A new Paragraph 8.C of the Agreement is added as follows: 

 C. For purposes of this Agreement and to the extent any payment is triggered by a termination of employment, the terms “terminate” and “termination” shall mean that the Employee has experienced a “separation from
service” within the meaning of Section 409A. 
  

	 	V.	Paragraph 13 of the Agreement is hereby deleted in its entirety and is replaced by the following provisions: 

 13. Amendments. 
 A. No
amendments or additions to this Agreement shall be binding unless in writing by both parties, except as herein otherwise provided. An amendment of this Agreement shall not be adopted if its adoption would be inconsistent with Internal Revenue Code
Section 409A, including regulations and guidance issued thereunder (“Section 409A”). If an amendment to this Agreement is required by any future guidance or regulation issues pursuant to Section 409A, the parties agree to adopt
an amendment to bring the Agreement into compliance with Section 409A. 
 B. The benefits provided under this Agreement shall not be
subject to change, renegotiation, acceleration or deferral beyond the payment time set forth herein (the “Changes”) except to the extent that the Changes comply with Section 409A at the time the parties agree to the Changes to the
extent Section 409A applies to such matters. 

	 	VI.	Paragraph 14 of the Agreement is hereby deleted in its entirety and is replaced by the following provisions: 

 14. Applicable Law. This Agreement shall be governed in all respects, whether as to validity, construction, capacity, performance or
otherwise, by the laws of the State of North Carolina, without reference to any choice- or conflict-of-laws provisions or principles, except to the extent that federal law shall be deemed to apply. 
  

	 	VII.	The following Paragraphs are hereby added to the Agreement: 

 18. Reimbursements. Any reimbursements provided under this Agreement in any year shall not affect any expenses eligible for reimbursement or in-kind benefits to be provided in any other year. The Employee’s right to
reimbursement as provided in this Agreement is not subject to liquidation or exchange for any other benefit. 
 19.
Interpretation. It is intended that this Agreement shall conform with Section 409A. Accordingly, in interpreting, construing or applying any provisions of the Agreement, the same shall be construed in such manner as shall meet and
comply with Section 409A, and in the event of any inconsistency with Section 409A, the same shall be reformed so as to meet the requirements of Section 409A. The Employee acknowledges that neither the Bank nor the Holding Company has
made any representation or warranty regarding the treatment of this Agreement or the benefits payable under this Agreement under federal, state or local income tax laws, including Section 409A. 
 20. Certain Payments Delayed for a Specified Employee. If the Employee is a “specified employee” as defined in Section 409A,
then any payment(s) under this Agreement on account of a “separation from service” as defined in Section 409A shall be made and/or shall begin on the first day of the seventh month following the date of the Employee’s separation
from service to the extent such payments are not exempt from Section 409A, and the six month delay in payment is required by Section 409A. 

 IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first above written.

  

			
	PEOPLES BANK,
	a North Carolina banking institution
		
	By:	 	
	  
	 	(SEAL)
	Tony W. Wolfe,
	President/Chief Executive Officer
	
	JOSEPH F. BEAMAN, JR.
		
	  
	 	(SEAL)

 The Foregoing Amendment is joined in and agreed to by Peoples Bancorp, Inc. 
  

			
	PEOPLES BANCORP, INC.,
	a North Carolina corporation
		
	By:	 	
		
	  
	 	(SEAL)
	Tony W. Wolfe
	President/Chief Executive Officer

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