Document:

Exhibit 10.6

 

Exhibit 10.6

EMPLOYMENT AGREEMENT

     THIS AGREEMENT is entered into and effective as of February 1,1999, by and between PIEDMONT
BANK, a North Carolina banking corporation (hereinafter referred to as the “Bank”) and EDWIN E.
LAWS of Statesville, North Carolina (hereinafter referred to as the “Officer”).

     For and in consideration of their mutual promises, covenants and conditions hereinafter set
forth, and other good and valuable consideration, the receipt and sufficiency of which hereby is
acknowledged, the parties agree as follows:

     1. Employment. The Bank agrees to employ the Officer and the Officer agrees to accept
employment upon the terms and conditions stated herein as the Chief Financial Officer and Treasurer
of the Bank. The Officer shall render such administrative and management services to the Bank as
are customarily performed by persons situated in a similar executive capacity. The Officer shall
promote the business of the Bank, including being active in at least one civic organization in
Iredell County, and perform such other duties as shall, from time to time, be reasonably assigned
by the Board of Directors of the Bank (the “Directors”). Upon the request of the Directors, the
Officer shall disclose all business activities or commercial pursuits in which Officer is engaged,
other than Bank duties.

     2. Compensation. The Bank shall pay the Officer during the term of this Agreement, as
compensation for all services rendered by him to the Bank, a base salary at the rate of $51,750 per
annum, payable in cash not less frequently than monthly. Participation in the Bank’s incentive
compensation, deferred compensation, discretionary bonus, profit-sharing, retirement and other
employee benefit plans and participation in any fringe benefits shall not reduce the salary payable
to the Officer under this Paragraph. In the event of a Change in Control (as defined in Paragraph
10), the Officer’s rate of salary shall be increased not less than five percent annually during the
term of this Agreement. Any payments made under this Agreement shall be subject to such
deductions as are required by law or regulation or as may be agreed to by the Bank and the Officer.

     3. Discretionary Bonuses. During the term of this Agreement, the Officer shall be
entitled, in an equitable manner with all other key management personnel of the Bank, to such
discretionary bonuses as may be authorized, declared and paid by the Directors to the Bank’s key
management employees. No other compensation provided for in this Agreement shall be deemed a
substitute for the Officer’s right to such discretionary bonuses when and as declared by the
Directors.

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     4. Participation in Retirement and Employee Benefit Plans; Fringe Benefits.

     (a) The Bank shall provide family medical coverage for the Officer and the Officer shall also
be entitled to participate in any plan relating to deferred compensation, stock options, stock
purchases, pension, thrift, profit sharing, group life insurance, disability coverage, education,
or other retirement or employee benefits that the Bank has adopted, or may, from time to time
adopt, for the benefit of its executive employees or for employees generally, subject to the
eligibility rules of such plans.

     (b) The Bank shall pay the expenses of the Officer for membership and dues in one country club
and in one civic club in Statesville.

     (c) The Officer shall also be entitled to participate in any other fringe benefits which are
now or may be or become applicable to the Bank’s executive employees, including the payment of
reasonable expenses for continuing education to maintain professional designations, and any other
benefits which are commensurate with the duties and responsibilities to be performed by the Officer
under this Agreement. Additionally, the Officer shall be entitled to such vacation and sick leave
as shall be established under uniform employee policies promulgated by the Directors. The Bank
shall reimburse the Officer for all out-of-pocket reasonable and necessary business expenses which
the Officer may incur in connection with his services on behalf of the Bank.

     5. Term. The initial term of employment under this Agreement shall be for the period
commencing upon the effective date of this Agreement and ending one calendar years from the
effective date of this Agreement. On each anniversary of the effective date of this Agreement, the
term of this Agreement shall automatically be extended for an additional one year period beyond the
then effective expiration date unless written notice from the Bank or the Officer is received 90
days prior to an anniversary date advising the other that this Agreement shall not be further
extended; provided that the Directors shall review the Officer’s performance annually and make a
specific determination pursuant to such review to renew this Agreement prior to the 90 days’
notice.

     6. Loyalty; Noncompetition. (a) The Officer shall devote his full efforts and
entire business time to the performance of his duties and responsibilities under this Agreement.

     (b) During the term of this Agreement, or any renewals thereof, and for a period of [two]
years after termination, the Officer agrees he will not, within Iredell County, North Carolina, or
within 15 miles of any Bank office opened during the term of this Agreement, directly or
indirectly, own, manage, operate, join, control or participate in the management, operation or
control of, or be employed by or connected in any manner with any business which competes with the
Bank or any of its subsidiaries without the prior written consent of the Bank; provided, however,
that the provisions of this Paragraph shall not apply in the event the Officer’s employment is
unilaterally terminated by the Bank for Cause, (as such term is defined in Paragraph 8(c) hereof)
or in the event the Officer terminates his employment with the Bank after the occurrence of a
“Termination Event” (as such term is defined in Paragraph 10(b) hereof) following a “Change of
Control” (as such term is defined in Paragraph 10(d) hereof). Notwithstanding the foregoing, the
Officer shall be free, without such consent, to purchase or hold

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as an investment or otherwise, up to five percent of the outstanding stock or other security of
any corporation which has its securities publicly traded on any recognized securities exchange or
in any over-the counter market.

     (c) The Officer agrees he will hold in confidence all knowledge or information of a
confidential nature with respect to the business of the Bank or any subsidiary received by him
during the term of this Agreement and will not disclose or make use of such information without the
prior written consent of the Bank. The Officer agrees that he will be liable to the Bank for any
damages caused by unauthorized disclosure of such information. Upon termination of his
employment, the Officer agrees to return all records or copies thereof of the Bank or any
subsidiary in his possession or under his control which relate to the activities of the Bank or any
subsidiary.

     (d) The Officer acknowledges that it would not be possible to ascertain the amount of monetary
damages in the event of a breach by the Officer under the provisions of this Paragraph 6. The
Officer agrees that, in the event of a breach of this Paragraph 6, injunctive relief enforcing the
terms of this Paragraph 6 is an appropriate remedy. If the scope of any restriction contained in
this Paragraph 6 is determined to be too broad by any court of competent jurisdiction, then such
restriction shall be enforced to the maximum extent permitted by law and the Officer consents that
the scope of this restriction may be modified judicially.

     7. Standards. The Officer shall perform his duties and responsibilities under this
Agreement in accordance with such reasonable standards expected of employees with comparable
positions in comparable organizations and as may be established from time to time by the Directors.
The Bank will provide the Officer with the working facilities and staff customary for similar
executives and necessary for him to perform his duties.

     8. Termination and Termination Pay. (a) The Officer’s employment under this Agreement
shall be terminated upon the death of the Officer during the term of this Agreement, in which
event, the Officer’s estate shall be entitled to receive the compensation due the Officer through
the last day of the calendar month in which his death shall have occurred and for a period of one
month thereafter.

     (b) The Officer’s employment under this Agreement may be terminated at any time by the
Officer upon 60 days’ written notice to the Directors. Upon such termination, the Officer shall be
entitled to receive compensation through the effective date of such termination.

     (c) The Directors may terminate the Officer’s employment at any time, but any termination by
the Directors, other than termination for Cause, shall not prejudice the Officer’s right to
compensation or other benefits under this Agreement. The Bank shall provide written notice
specifying the grounds for termination for Cause. The Officer shall have no right to receive
compensation or other benefits for any period after termination for Cause. Termination for Cause
shall include termination because of the Officer’s personal dishonesty or moral turpitude,
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

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of this Agreement. Notwithstanding such termination, the obligations under Paragraph 6(c)
shall survive any termination of employment.

     (d) Subject to the Bank’s obligations and the Officer’s rights under (i) Title I of the
Americans with Disabilities Act, §504 of the Rehabilitation Act, and the Family and Medical Leave
Act, and to (ii) the vacation leave, disability leave, sick leave and any other leave policies of
the Bank, the Officer’s employment under this Agreement automatically shall be terminated in the
event the Officer becomes disabled during the term of this Agreement and it is determined by the
Bank that the Officer is unable to perform the essential functions of his job under this Agreement
for sixty (60) business days or more during any 12-month period. Upon any such termination, the
Officer shall be entitled to receive any compensation the Officer shall have earned prior to the
date of termination but which remains unpaid, and shall be entitled to any payments provided under
any disability income plan of the Bank which is applicable to the Officer.

     In the event of any disagreement between the Officer and the Bank as to whether the Officer
is physically or mentally incapacitated such as will result in the termination of the Officer’s
employment pursuant to this Paragraph 8(d), the question of such incapacity shall be submitted to
an impartial physician licensed to practice medicine in North Carolina for determination and who
will be selected by mutual agreement of the Officer and the Bank, or failing such agreement, by
two (2) physicians (one (1) of whom shall be selected by the Bank and the other by the Officer),
and such determination of the question of such incapacity by such physician or physicians shall be
final and binding on the Officer and the Bank. The Bank shall pay the reasonable fees and expenses
of such physician or physicians in making any determination required under this Paragraph 8(d).

     9. Additional
Regulatory Requirements. Notwithstanding anything contained in this
Agreement to the contrary, it is understood and agreed that the Bank (or any of 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 governmental agency having jurisdiction over the Bank
(hereinafter referred to as “Regulatory Authority”) to be insolvent, in default or operating in an
unsafe or unsound manner; or,

     (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, including, without
limitation, the Federal Deposit Insurance Act 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.

     10. Change in Control. (a) In the event of a termination of the Officer’s employment
in connection with, or within twenty-four (24) months after, a “Change in Control” (as defined in
Subparagraph (d) below) of the Bank other than for Cause (as defined in Paragraph 8), the Officer
shall be entitled to receive liquidated damages as set forth in Subparagraph (c) below. Said sum
shall be payable as provided in Subparagraph (e) below.

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     (b) In addition to any rights the Officer might have to terminate this Agreement contained in
Paragraph 8, the Officer shall have the right to terminate this Agreement upon the occurrence of
any of the following events (the “Termination Events”) within twenty-four months following a Change
in Control of the Bank:

     (i) Officer is assigned any duties and/or responsibilities that are inconsistent with
or constitute a demotion or reduction in 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, regardless of Officer’s resulting position; or

     (ii) Officer’s annual base salary rate is reduced below the annual 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; or

     (iii) Officer’s life insurance, medical or hospitalization insurance, disability
insurance, stock options plans, stock purchase plans, deferred compensation plans,
management retention plans, retirement plans or similar plans or benefits being provided by
the Bank to the Officer 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) Officer is transferred to a location which is an unreasonable distance from his
current principal work location without the Officer’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.

     (c) In the event that the Officer terminates this Agreement pursuant to this Paragraph 10, the
Bank will be obligated to pay or cause to be paid to Officer liquidated damages in an amount equal
to 2.99 times the Officer’s “base amount” as defined in Section 280G(b)(3) of the Internal Revenue
Code of 1986, as amended (the “Code”).

     (d) For the purposes of this Agreement, the term Change in Control shall mean any of the
following events:

     (i) After the effective date of this Agreement, any “person” (as such term is defined
in Section 7(j)(8)(A) of the Change in Bank Control Act of 1978), directly or indirectly,
acquires beneficial ownership of voting stock, or acquires beneficial ownership of voting
stock, or acquires irrevocable proxies or any combination of voting stock and irrevocable
proxies, representing twenty-five percent (25 %) or more of any class of voting securities
of the Bank, or acquires control of, in any manner, the election of a majority of the
directors of the Bank; or

     (ii) The Bank consolidates or merges with or into another corporation, association or
entity, or is otherwise reorganized, where the Bank is not the surviving corporation in
such transaction; or

     (iii) All or substantially all of the assets of the Bank are sold or otherwise
transferred to or are acquired by any other corporation, association or other person,
entity or group.

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Notwithstanding the other provisions of this Paragraph 10, a transaction or event shall not
be considered a Change in Control if, prior to the consummation or occurrence of such transaction
or event, Officer and Bank agree in writing that the same shall not be treated as a Change in
Control for purposes of this Agreement.

     (e) Such amounts payable pursuant to this Paragraph 10 shall be paid, at the option of the
Officer, either in one lump sum or in equal monthly payments following termination of this
Agreement.

     (f) Following a Termination Event which gives rise to Officer’s rights hereunder, the Officer
shall have twelve (12) months from the date of occurrence of the Termination Event to terminate
this Agreement pursuant to this Paragraph 10. Any such termination shall be deemed to have occurred
only upon delivery to the Bank (or to any successor corporation) of written notice of termination
which describes the Change in Control and the Termination Event. If Officer does not so terminate
this Agreement within such twelve-month period, he 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.

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

     (h) In the event any dispute shall arise between the Officer and the Bank as to the terms or
interpretation of this Agreement, including this Paragraph 10, whether instituted by formal legal
proceedings or otherwise, including any action taken by the Officer to enforce the terms of this
Paragraph 10 or in defending against any action taken by the Bank, the Bank shall reimburse the
Officer for all costs and expenses, proceedings or actions, in the event the Officer prevails in
any such action.

     11. 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, purchase or otherwise, all or substantially all of the assets
of the Bank.

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

     12. Modification; Wavier; Amendments. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to in writing, signed
by the Officer and on behalf of the Bank by such officer as may be specifically designated by the
Directors. No waiver by either party hereto, at any tune, of any breach by the

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other
party hereto 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. No amendment or addition to this
Agreement shall be binding unless in writing and signed by both parties, except as herein
otherwise provided.

     13. Applicable Law. 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.

     14. Severability. The provisions of this Agreement shall be deemed severable and the
invalidity or unenforceability of any provision shall not affect the validity or enforceability of
the other provisions hereof.

     15. Entire Agreement. This Agreement constitutes the entire agreement of the parties
pertaining to the employment of the Officer and supersedes all prior and contemporaneous
agreements, representations, and understandings of the parties. Officer agrees that no promises,
representations, or inducements have been made which caused Officer to sign this Agreement other
than those which are expressly set forth above.

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first
hereinabove written.

	 	 	 	 	 	 	 
	 

	 	 	 	PIEDMONT BANK	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ J. T. Alexander, Jr.
 

J. T. Alexander, Jr.
	 	 
	 

	 	 	 	Chairman of the Board	 	 
	 
	 	 	 	 	 	 
	Attest:
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Patricia
H. Wooten, Assistant Corporate Secretary 
 

Mary Dawne Clark, Corporate Secretary

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	OFFICER	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	/s/ Edwin E. Laws
 

Edwin E. Laws
	 	 

7Exhibit 10.8

 

SALARY CONTINUATION AGREEMENT

          THIS SALARY CONTINUATION AGREEMENT (this “Agreement”) is entered into as of this first
day of October 1, 2006, by and between GATEWAY BANK & TRUST CO., a North Carolina banking
corporation (hereinafter referred to as the “Bank” or “Employer”) and D. BEN BERRY, an individual
resident of Virginia (hereinafter referred to as the “Executive”).

          WHEREAS, the Executive has contributed substantially to the success of the Employer and
the Employer desires that the Executive continue in its employ;

          WHEREAS, to encourage the Executive to remain an employee of the Employer, the Employer is
willing to provide salary continuation benefits to the Executive, payable out of the Employer’s
general assets; and

          WHEREAS, the parties hereto intend that this Agreement shall be considered an unfunded
arrangement maintained primarily to provide supplemental retirement benefits for the Executive, and
shall be considered a plan described in Section 301(a)(3) of the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”).

          NOW THEREFORE, in consideration of the foregoing premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows.

ARTICLE 1

DEFINITIONS

          Whenever used in this Agreement, the following terms have the meanings specified —

          1.1 “Accrual Balance” means the liability that should be accrued by the Employer under
accounting principles generally accepted in the United States (“GAAP”) for the Employer’s
obligation to the Executive under this Agreement, by applying Accounting Principles Board Opinion
No. 12, as amended by Statement of Financial Accounting Standards No. 106, and the calculation
method and discount rate specified hereinafter. The Accrual Balance shall be determined by the
liability accrued by the bank as of the Effective Date. The projected Accrual Balance is detailed
on Schedule A including annual accruals. The Accrual Balance shall be calculated assuming a level
principal amount and interest as the discount rate is accrued each period. The principal accrual
is determined such that when it is credited with interest each month, the Accrual Balance at Normal
Retirement Age equals the present value of the normal retirement benefits described in Section
2.1.1(a) and (b). At the end of each Plan Year, the Accrual Balance shall be adjusted to reflect
the Employer’s obligation under Sections 2.1.1(a) in terms of the Executive’s actual base salary
for that Plan Year. The discount rate means the rate used by the Plan Administrator for
determining the Accrual Balance. The rate is based on the yield on a 20-year corporate bond rated
Aa by Moody’s, rounded to the nearest 1/4%, or as otherwise determined by the governing Regulatory
body. The initial discount rate is 5.75%. In its sole discretion, the Plan Administrator may
adjust the discount rate to maintain the rate within reasonable standards according to GAAP and
consistent with the Interagency Advisory on Accounting for Deferred Compensation Agreements which
states that the “cost of those benefits shall be accrued over that period of the employee’s service
in a systematic and rational manner.”

 

 

          1.2 “Beneficiary” means each designated person, or the estate of the deceased Executive,
entitled to benefits, if any, upon the death of the Executive, determined according to Article 4.

          1.3 “Beneficiary Designation Form” means the form established from time to time by the Plan
Administrator that the Executive completes, signs, and returns to the Plan Administrator to
designate one or more Beneficiaries.

          1.4 “Change in Control” For the purposes of this Agreement, the term Change in Control shall
mean a change in control as defined in Section 409A of the Code, including any of the following
events:

     (i) Any person or group acquires beneficial ownership of representing more than fifty
percent (50%) of the fair market value or voting power of the Bank’s securities; or

     (ii) During any period of twelve consecutive months, any person or persons acting in
concert acquires beneficial ownership of representing thirty-five percent (35%) or more of any
class of voting securities of the Bank, or a majority of the Bank’s board of directors is
replaced by individuals who have not been appointed, or whose election has not been endorsed in
advance, by a majority the Bank’s board of directors;

     (iii) During any period of twelve consecutive months, any person or persons acting in
concert acquire more than forty percent (40%) of the assets of the Bank.

Notwithstanding the other provisions of this Section 1.4, a transaction or event shall not be
considered a Change in Control if, prior to the consummation or occurrence of such transaction or
event, Executive and Bank agree in writing that the same shall not be treated as a Change in
Control for purposes of this Agreement.

          1.4A “Code”means the Internal Revenue Code of 1986, as amended.

          1.5 “Disability” means the Executive suffers a sickness, accident or injury that is determined
by the carrier of any individual or group disability insurance policy covering the Executive to be
a disability rendering the Executive totally and permanently disabled, as certified by a physician
chosen by the Employer and reasonably acceptable to the Executive, or as later defined by the
Internal Revenue Service in IRS Notice 2005 — 1.

          1.6 “Early Retirement Date” means the date of the Executive’s Termination of Employment with
the Employer for reasons other than death, Disability, Termination for Cause, termination under
Article 5 of this Agreement, or within twenty-four (24) months after a Change in Control, provided,
however, that an Early Retirement Date may only occur following the later of the date the Executive
attains age sixty-two (62) or the date the Executive has been continuously employed by the Employer
for ten (10) years.

          1.7 “Effective Date” means October 1, 2006.

          1.8 “Final Average Salary” means the Executive’s average annual base salary for the three year
period ending at Executive’s Normal Retirement Date.

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          1.9 “Good Reason” shall mean any of the following events:

     (i) Executive is assigned any duties and/or responsibilities that, in Executive’s
reasonable determination, are inconsistent with or constitute a demotion or reduction in the
Executive’s position, duties, responsibilities or status as such existed at the time of the
Change in Control or with his reporting responsibilities or titles with the Bank in effect at
such time, regardless of Executive’s resulting position; or

     (ii) Executive’s annual base salary rate is reduced below the annual 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; or

     (iii) Executive’s life insurance, medical or hospitalization insurance, disability
insurance, stock options plans, stock purchase plans, deferred compensation plans, management
retention plans, retirement plans or similar plans or benefits being provided by the Bank to
the Executive 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) Executive is transferred to a location which is more than 15 miles from his current
principal work location without the Executive’s express written consent.

          1.10 “Normal Retirement Age” means age sixty-five (65).

          1.11 “Normal Retirement Date” means the date of the Executive’s Termination of Employment on
or after the Executive reaches Normal Retirement Age, other than a Termination of Employment due to
the Executive’s death or due to a Termination for Cause.

          1.12 “Person” means an individual, corporation, partnership, trust, association, joint
venture, pool, syndicate, sole proprietorship, unincorporated organization or other entity.

          1.13 “Plan Administrator” means the plan administrator described in Article 8.

          1.14 “Plan Year” means a twelve-month period commencing on January 1, and ending on December
31 of each year. The initial Plan Year shall commence on the Effective Date of this Agreement and
end on December 31 of the year in which occurs the Effective Date.

          1.15 “Regulatory Body” refers to The Office of the Comptroller of the Currency (OCC), the
Board of Governors of the Federal Reserve System (FRB), the Federal Deposit Insurance Corporation
(FDIC), and the Office of Thrift Supervision (OTS), also known as “the agencies”.

          1.16 “Termination for Cause” and “Cause” shall have the same definition specified in any
effective severance or employment agreement existing on the date hereof or hereafter entered into
between the Executive and the Bank. If the Executive is not a party to a severance or employment
agreement containing a definition of termination for cause, Termination for Cause means the Bank
terminates the Executive’s employment because of:

          (a) the Executive’s gross negligence or gross neglect of duties or intentional and
material failure to perform stated duties after written notice thereof, or

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          (b) disloyalty or dishonesty by the Executive in the performance of his duties, or a
breach of the Executive’s fiduciary duties for personal profit, in any case whether in his
capacity as a director or officer, or

          (c) intentional wrongful damage by the Executive to the business or property of the
Bank or its affiliates, including without limitation the reputation of the Bank, which in
the judgment of the Bank causes material harm to the Bank or affiliates, or

          (d) a willful violation by the Executive of any applicable law or significant policy of
the Bank or an affiliate that, in the Bank’s judgment, results in an adverse effect on the
Bank or the affiliate, regardless of whether the violation leads to criminal prosecution or
conviction. For purposes of this Agreement, applicable laws include any statute, rule,
regulatory order, statement of policy, or final cease-and-desist order of any governmental
agency or body having regulatory authority over the Bank, or

          (e) the occurrence of any event that results in the Executive being excluded from
coverage, or having coverage limited for the Executive as compared to other executives of
the Bank, under the Bank’s blanket bond or other fidelity or insurance policy covering its
directors, officers, or employees, or

          (f) the Executive is removed from office or permanently prohibited from participating
in the Bank’s affairs by an order issued under section 8(e) (4) or section 8(g) (1) of the
Federal Deposit Insurance Act, 12 U.S.C. 1818(e) (4) or (g)(1), or

          (g) conviction of the Executive for or plea of nolo contendere to a felony or
conviction of or plea of nolo contendere to a misdemeanor involving moral turpitude, or the
actual incarceration of the Executive for 45 consecutive days or more.

          1.17 “Termination of Employment” with the Employer means that the Executive shall have ceased
to be employed by the Employer for any reason whatsoever, excepting a leave of absence approved by
the Employer. For purposes of this Agreement, if there is a dispute over the employment status of
the Executive or the date of termination of the Executive’s employment, the Employer shall have the
sole and absolute right to decide the dispute.

ARTICLE 2

RETIREMENT BENEFITS

          2.1 Normal Retirement Benefit. Upon the Executive’s Termination of Employment on or after
Normal Retirement Age for reason other than death, the Executive shall be eligible to receive the
benefit described in this Section 2.1 in lieu of any other benefit under Article 2 of this
Agreement provided no Change in Control benefit or Termination benefit has been paid as specified
in Section 2.6.

	 	2.1.1.	 	Amount of Benefit. The amount of the annual benefit shall be equal to the following:

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	 	(a)	 	Fixed Benefit. The annual benefit under this Section 2.1(a) is
an amount equal to the benefit detailed on Schedule A payable annually for
fifteen (15) years commencing upon the first month after attaining age 65.
	 
	 	(b)	 	Variable Benefit. Variable Benefit. The variable benefit under
this Section 2.1 (b) is an amount equal to seventy percent (70%) of the
Executive’s Final Average Salary, less the Fixed Benefit detailed on Schedule
A, payable annually for fifteen (15) years commencing upon the first month
after attaining age 65. If the benefit due under this Section 2.1 (b) is less
than zero (0), then no benefit is payable under this Section 2.1 (b).

	 	2.1.2.	 	Payment of Benefit. The Employer shall pay the aggregate annual benefit described in
Section 2.1.1 to the Executive over the remaining term in twelve (12) equal monthly
installments payable on the first day of each month, beginning with the month after the
Executive’s Normal Retirement Date.

          2.2 Early Retirement Benefit. Upon the Executive’s Early Retirement Date, the Executive shall
be eligible to receive the benefit described in this Section 2.2 in lieu of any other benefit under
Article 2 of this Agreement.

	 	2.2.1.	 	Amount of Benefit. The annual benefit under this Section 2.2 is an amount equal to
the Accrual Balance earned as of the last day of the Plan Year immediately preceding
the Executive’s Early Retirement Date.
	 
	 	2.2.2.	 	Payment of Benefit. The Employer shall pay the early retirement benefit to the
Executive over fifteen (15) years in twelve (12) equal monthly installments payable
annually on the first day of each month, beginning with the month after the Executive
reaches his Normal Retirement Age.

          2.3 Disability Benefit. Upon the Executive’s Termination of Employment due to a Disability
before reaching Normal Retirement Age, the Executive shall be eligible to receive the benefit
described in this Section 2.3 in lieu of any other benefit under this Agreement.

	 	2.3.1.	 	Amount of Benefit. The annual benefit under this Section 2.3 is an amount equal to
the Accrual Balance earned as of the last day of the Plan Year immediately preceding
the effective date of the Executive’s Termination of Employment.
	 
	 	2.3.2.	 	Payment of Benefit. The Employer shall pay the Disability benefit to the Executive
over fifteen (15) years in twelve (12) equal monthly installments payable on the first
day of each month, beginning with the month after the Executive’s Normal Retirement
Age.

          2.4 Change in Control Benefit. If, within twenty-four (24) months after a Change in Control,
the Employer terminates the Executive’s employment other than for Cause or as described in Section
5.2 hereof or if the Executive terminates employment for Good Reason, the Executive shall be
eligible to receive the benefit described in this Section 2.4 instead of any other benefit under
Article 2 of this Agreement.

5

 

	 	2.41	 	Amount of Benefit. The annual benefit under this Section 2.4 is an amount
equal to seventy percent (70%) of the Executive’s final annual salary at the
Executive’s Termination of Employment, or the benefit detailed on Schedule A, whichever
is greater, payable annually for fifteen (15) years commencing as of the last day of
the Plan Month preceding the effective date of the Executive’s Termination of
Employment.

	 	2.41.1	 	Payment of Benefit. The Employer shall pay the Change in Control benefit
under Section 2.4 of this Agreement to the Executive over fifteen (15) years in
twelve (12) equal monthly installments payable on the first day of each month,
beginning with the month after the Executive’s Termination of Employment.
	 
	 	2.41.2	 	Change in Control Payout of Normal Retirement Benefit, Early Retirement
Benefit, or Disability Benefit Being Paid to the Executive at the Time of a
Change in Control. If a Change in Control occurs at any time during the period
in which the Executive is receiving payment of the benefit under Section 2.1,
2.2, or 2.3, the Employer shall pay the remaining benefits due to the Executive
under the applicable section to the Executive in a single lump sum payment
within thirty (30) days after the Change in Control.

          2.5 Termination Benefit. Upon the Executive’s Termination without Cause by the Employer, the
Executive shall be eligible to receive the benefit described in this Section 2.5 in lieu of any
other benefit under Article 2 of this Agreement.

	 	2.5.1	 	Amount of Benefit. The annual benefit under this Section 2.5
is an amount equal to the benefit detailed on Schedule A payable annually for
fifteen (15) years commencing upon the first month after attaining age 65.
	 
	 	2.5.2	 	Payment of Benefit. The Employer shall pay the benefit under
this Section 2.5 to the Executive over fifteen (15) years in twelve (12) equal
monthly installments payable annually on the first day of each month, beginning
with the month after the Executive reaches his Normal Retirement Age.

          2.6 Petition for Lump Sum Payment of Benefit. If the Executive is entitled to a benefit under
Section 2.1, Section 2.2, Section 2.3, Section 2.4 or Section 2.5, the Executive may petition the
Board of Directors of the Employer to have the Present Value of the Benefit, determined as of the
date the Executive becomes entitled to a benefit under Section 2.1, Section 2.2, Section 2.3,
Section 2.4 or Section 2.5, as applicable, paid to the Executive in a single lump sum. The Board
of Directors of the Employer may, in its sole and absolute discretion, pay the Present Value of the
Benefit to the Executive in a single lump sum. If the Present Value of the Benefit is paid to the
Executive in a single lump sum, the Employer shall have no further obligations under this
Agreement.

6

 

          2.7 Excess Parachute Payment. If the Executive receives the payment pursuant to Section 2.4
and acceleration of benefits under any other benefit, compensation, or incentive plan or
arrangement with the Bank or its parent corporation (collectively, the “Total Benefits”), and if
any part of the Total Benefits is subject to an excise tax under Section 280G and Section 4999 of
the Code (the “Excise Tax”), the Bank shall pay to the Executive the following additional amounts,
consisting of (x) a payment equal to the Excise Tax payable by the Executive under section 4999 on
the Total Benefits (the “Excise Tax Payment”) and (y) a payment equal to the amount necessary to
provide the Excise Tax Payment net of all income, payroll, and excise taxes. Together, the
additional amounts described in clauses (x) and (y) are referred to in this Agreement as the
“Gross-Up Payment Amount.” Payment of the Gross-Up Payment Amount shall be made in addition to the
amount set forth in Section 2.4 above.

          2.8 Total Benefits Subject to Excise Tax. For purposes of determining whether any of the
Total Benefits will be subject to the Excise Tax and for purposes of determining the amount of the
Excise Tax, any other payments or benefits received or to be received by the Executive in
connection with a Change in Control or the Executive’s termination of employment following a Change
in Control (whether under the terms of this Agreement or any other agreement or any other benefit
plan or arrangement with the Bank or its parent corporation) shall be treated as “parachute
payments” within the meaning of section 280G(b)(2) of the Code, and all “excess parachute payments”
within the meaning of section 280G(b)(1) shall be treated as subject to the Excise Tax, unless in
the opinion of the certified public accounting firm that is retained by the Bank as of the date
immediately before the Change in Control (the “Accounting Firm”), such other payments or benefits
do not constitute (in whole or in part) parachute payments, or such excess parachute payments
represent (in whole or in part) reasonable compensation for services actually rendered within the
meaning of section 280G(b)(4) of the Code in excess of the “base amount” (as defined in section
280G(b)(3) of the Code), or are otherwise not subject to the Excise Tax. The value of any noncash
benefits or any deferred payment or benefit shall be determined by the Accounting Firm in
accordance with the principles of sections 280G(d)(3) and (4) of the Code.

          2.9 Gross Up Payment Amount. For purposes of determining the Gross-Up Payment Amount, the
Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal
income taxation in the calendar years in which the Gross-Up Payment Amount is to be made and state
and local income taxes at the highest marginal rate of taxation in the state and locality of the
Executive’s residence on the date of termination of employment, net of the reduction in federal
income taxes that can be obtained from deduction of such state and local taxes (calculated by
assuming that any reduction under section 68 of the Code in the amount of itemized deductions
allowable to the Executive applies first to reduce the amount of such state and local income taxes
that would otherwise be deductible by the Executive, and applicable federal FICA and Medicare
withholding taxes).

          2.10 Determination by Accounting Firm. All determinations required to be made under Section
2.7, Section 2.8 and Section 2.9, including whether and when a Gross-Up Payment Amount is required,
the amount of the Gross-Up Payment Amount and the assumptions to be used to arrive at the
determination (collectively, the “Determination”), shall be made by the Accounting Firm, which
shall provide detailed supporting calculations both to the Bank and the Executive within 15
business days after receipt of notice from the Bank or the Executive that there has been a Gross-Up
Payment Amount, or such earlier time as is requested by the Bank.

7

 

All fees and expenses of the Accounting Firm shall be borne solely by the Bank. The Bank shall
enter into any reasonable agreement requested by the Accounting Firm in connection with the
performance of its services hereunder. If the Accounting Firm determines that no Excise Tax is
payable by the Executive, the Accounting Firm shall furnish the Executive with a written opinion to
that effect, and to the effect that failure to report an Excise Tax, if any, on the Executive’s
applicable federal income tax return will not result in the imposition of a negligence or similar
penalty. The Determination by the Accounting Firm shall be binding on the Bank and the Executive.
If, after a Determination by the Accounting Firm, the Executive is required to make a payment of
additional Excise Tax (“Underpayment”), the Accounting Firm shall determine the amount of the
Underpayment that has occurred. The Underpayment (together with interest at the rate provided in
section 1274(d)(2)(B) of the Code) shall be paid promptly by the Bank to or for the benefit of the
Executive. If the Gross-Up Payment Amount exceeds the amount necessary to reimburse the Executive
for his Excise Tax (“Overpayment”), the Accounting Firm shall determine the amount of the
Overpayment that has been made. The Overpayment (together with interest at the rate provided in
section 1274(d)(2)(B) of the Code) shall be paid promptly by the Executive to or for the benefit of
the Bank. Provided that his expenses are reimbursed by the Bank, the Executive shall cooperate with
any reasonable requests by the Bank in any contests or disputes with the Internal Revenue Service
relating to the Excise Tax. If the Accounting Firm is serving as accountant or auditor for the
individual, entity, or group effecting the Change in Control, the Executive, in his sole
discretion, may appoint another nationally recognized public accounting firm to make the
Determinations required hereunder (in which case the term “Accounting Firm” as used in this
Agreement shall be deemed to refer to the accounting firm appointed by the Executive under this
Section).

          2.11 Contradiction in Terms of Agreement and Schedule A. If there is a contradiction in the
terms of this Agreement and Schedule A attached hereto concerning the actual amount of a particular
benefit amount due the Executive under Sections 2.2, 2.3, 2.4 or 2.5 hereof, then the actual amount
of the benefit set forth in the Agreement shall control.

          2.12 One Benefit Only. Despite any contrary provision of this Agreement, the Executive and
Beneficiary are entitled to one benefit only under Article 2 of this Agreement, which shall be
determined by the first event to occur that is dealt with by Article 2 of this Agreement.
Subsequent occurrence of events dealt with by this Article 2 shall not entitle the Executive or the
Executive’s Beneficiary to other or additional benefits under Article 2.

          2.13 Savings Clause Relating to Compliance with Code Section 409A. Despite any contrary
provision of this Agreement, if when the Executive’s employment terminates the Executive is a
specified employee, as defined in Code section 409A, and if any payments under Article 2 of this
Agreement will result in additional tax or interest to the Executive because of section 409A, the
Executive will not be entitled to the payments under Article 2 until the earliest of (a) the date
that is at least six months after termination of the Executive’s employment for reasons other than
the Executive’s death, (b) the date of the Executive’s death, or (c) any earlier date that does not
result in additional tax or interest to the Executive under section 409A. If any provision of this
Agreement would subject the Executive to additional tax or interest under section 409A, the Bank
shall reform the provision. However, the Bank shall maintain to the maximum extent practicable the
original intent of the applicable provision without subjecting the Executive to additional tax or
interest, and the Bank shall not be required to incur any additional compensation expense as a
result of the reformed provision. References in this Agreement to

8

 

Code section 409A include rules, regulations, and guidance of general application issued by
the Department of the Treasury under Code section 409A.

3

DEATH BENEFITS

          3.1 Death During Active Service. If the Executive dies while employed by the Employer,
instead of any benefits payable under Article 2 of this Agreement the Employer shall pay to the
Executive’s Beneficiary the present value of the amount necessary to provide the full benefit
described in section 2.1.1 and identified on Schedule A. The Employer shall pay the death benefit
under this Section 3.1 within thirty (30) days after the Executive’s death.

          3.2 Death During Benefit Period. If the Executive dies after benefit payments under Article 2
of this Agreement commences but before receiving all such payments, or if the Executive is entitled
to benefit payments under Article 2 but dies before payments commence, the remaining Accrual
Balance shall be payable to the Executive’s Beneficiary in accordance with the applicable payment
provisions of Article 2, until fully disbursed. Payments shall be made in the same amounts they
would have been made to the Executive had the Executive survived.

4

BENEFICIARIES

          4.1 Beneficiary Designations. The Executive shall have the right to designate at any time a
Beneficiary to receive any benefits payable under this Agreement upon the death of the Executive.
The Beneficiary designated under this Agreement may be the same as or different from the
beneficiary designation under any other benefit plan of the Employer in which the Executive
participates.

          4.2 Beneficiary Designation: Change. The Executive shall designate a Beneficiary by
completing and signing the Beneficiary Designation Form and delivering it to the Plan Administrator
or its designated agent. The Executive’s Beneficiary designation shall be deemed automatically
revoked if the Beneficiary predeceases the Executive or if the Executive names a spouse as
Beneficiary and the marriage is subsequently dissolved. The Executive shall have the right to
change a Beneficiary by completing, signing, and otherwise complying with the terms of the
Beneficiary Designation Form and the Plan Administrator’s rules and procedures, as in effect from
time to time. Upon the acceptance by the Plan Administrator of a new Beneficiary Designation Form,
all Beneficiary designations previously filed shall be cancelled. The Plan Administrator shall be
entitled to rely on the last Beneficiary Designation Form filed by the Executive and accepted by
the Plan Administrator before the Executive’s death.

          4.3 Acknowledgment. No designation or change in designation of a Beneficiary shall be
effective until received in writing by the Plan Administrator or its designated agent.

          4.4 No Beneficiary Designation. If the Executive dies without a valid beneficiary
designation, or if all designated Beneficiaries predecease the Executive, then the Executive’s
spouse shall be the designated Beneficiary. If the Executive has no surviving spouse, the benefits
shall be distributed to the personal representative of the Executive’s estate.

9

 

          4.5 Facility of Payment. If a benefit is payable to a minor, to a person declared
incapacitated, or to a person incapable of handling the disposition of his or her property, the
Employer may pay such benefit to the guardian, legal representative, or person having the care or
custody of the minor, incapacitated person, or incapable person. The Employer may require proof of
incapacity, minority, or guardianship as it may deem appropriate before distribution of the
benefit. Distribution shall completely discharge the Employer from all liability for the benefit.

5

GENERAL LIMITATIONS

          5.1 Termination for Cause. If the Executive experiences a Termination of Employment which is
a Termination for Cause, notwithstanding any provision of this Agreement to the contrary, this
Agreement and the Employer’s obligations under this Agreement shall terminate as of the effective
date of the Termination for Cause.

          5.2 Suicide or Misstatement No benefits shall be paid under this Agreement if the Executive
commits suicide within two years after the Effective Date of this Agreement or if the Executive
makes any material misstatement of fact on any application for life insurance purchased by the
Bank.

          5.3 Removal. Despite any contrary provision of this Agreement, if the Executive is removed
from office or permanently prohibited from participating in the Bank’s affairs by an order issued
under section 8(e) (4) or (g) (1) of the Federal Deposit Insurance Act, 12 U.S.C. 1818(e) (4) or
(g) (1), all obligations of the Bank under this Agreement shall terminate as of the effective date
of the order.

          5.4 Default Despite any contrary provision of this Agreement, if the Bank is in “default” or
“in danger of default”, as those terms are defined in of section 3(x) of the Federal Deposit
Insurance Act, 12 U.S.C. 1813(x), all obligations under this Agreement shall terminate.

          5.5 FDIC Open-Bank Assistance. All obligations under this Agreement shall be terminated,
except to the extent determined that continuation of the contract is necessary for the continued
operation of the Bank, at the time the Federal Deposit Insurance Corporation enters into an
agreement to provide assistance to or on behalf of the Bank under the authority contained in
section 13(c) of the Federal Deposit Insurance Act. 12 U.S.C. 1823(c).

6

CLAIMS AND REVIEW PROCEDURES

          6.1 Claims Procedure. A person or beneficiary (a “claimant”) who has not received benefits
under the Agreement that he or she believes should be paid shall make a claim for such benefits as
follows –

	 	6.1.1	 	Initiation — Written Claim. The claimant initiates a claim by submitting to
the Employer a written claim for the benefits. If the claim relates to the contents of
a notice received by the claimant, the claim must be made within 60 days after the
notice was received by the claimant. All other claims must be made within 180

10

 

	 	 	 	days after the date of the event that caused the claim to arise. The claim must
state with particularity the determination desired by the claimant.
	 
	 	6.1.2	 	Timing of Employer Response. The Employer shall respond to such claimant
within ninety (90) days after receiving the claim. If the Employer determines that
special circumstances require additional time for processing the claim, the Employer
can extend the response period by an additional ninety (90) days by notifying the
claimant in writing, prior to the end of the initial ninety (90)-day period, that an
additional period is required. The notice of extension must set forth the special
circumstances and the date by which the Employer expects to render its decision.
	 
	 	6.1.3	 	Notice of Decision. If the Employer denies part or all of the claim, the
Employer shall notify the claimant in writing of such denial. The Employer shall write
the notification in a manner calculated to be understood by the claimant. The
notification shall set forth:

	 	6.1.3.1	 	The specific reasons for the denial,
	 
	 	6.1.3.2	 	A reference to the specific provisions of the Agreement on which the denial
is based,
	 
	 	6.1.3.3	 	A description of any additional information or material necessary for the
claimant to perfect the claim and an explanation of why it is needed,
	 
	 	6.1.3.4	 	An explanation of the Agreement’s review procedures and the time limits
applicable to such procedures, and
	 
	 	6.1.3.5	 	A statement of the claimant’s right to bring a civil action under ERISA
section 502(a) following an adverse benefit determination on review.

          6.2
Review Procedure. If the Employer denies part or all of the claim, the claimant shall
have the opportunity for a full and fair review by the Employer of the denial, as follows

	 	6.2.1	 	Initiation — Written Request. To initiate the review, the claimant, within 60
days after receiving the Employer’s notice of denial, must file with the Employer a
written request for review.
	 
	 	6.2.2	 	Additional Submissions — Information Access. The claimant shall then have the
opportunity to submit written comments, documents, records and other information
relating to the claim. The Employer shall also provide the claimant, upon request and
free of charge, reasonable access to, and copies of, all documents, records and other
information relevant (as defined in applicable ERISA regulations) to the claimant’s
claim for benefits.
	 
	 	6.2.3	 	Considerations on Review. In considering the review, the Employer shall take
into account all materials and information the claimant submits relating to the claim,

11

 

	 	 	 	without regard to whether such information was submitted or considered in the
initial benefit determination.
	 
	 	6.2.4	 	Timing of Employer Response. The Employer shall respond in writing to such
claimant within sixty (60) days after receiving the request for review. If the
Employer determines that special circumstances require additional time for processing
the claim, the Employer can extend the response period by an additional sixty (60) days
by notifying the claimant in writing, prior to the end of the initial sixty (60)-day
period, that an additional period is required. The notice of extension must set forth
the special circumstances and the date by which the Employer expects to render its
decision.
	 
	 	6.2.5	 	Notice of Decision. The Employer shall notify the claimant in writing of its
decision on review. The Employer shall write the notification in a manner calculated
to be understood by the claimant. The notification shall set forth –

	 	6.2.5.1	 	The specific reasons for the denial,
	 
	 	6.2.5.2	 	A reference to the specific provisions of the Agreement on which the denial
is based,
	 
	 	6.2.5.3	 	A statement that the claimant is entitled to receive, upon request and free
of charge, reasonable access to, and copies of, all documents, records and
other information relevant (as defined in applicable ERISA regulations) to the
claimant’s claim for benefits, and
	 
	 	6.2.5.4	 	A statement of the claimant’s right to bring a civil action under ERISA
Section 502(a).

7

MISCELLANEOUS

          7.1 Amendments and Termination. Subject to Section 7.13 of this Agreement, (a) this Agreement
may be amended solely by a written agreement signed by the Employer and by the Executive, and (b)
except for termination occurring under Article 5, this Agreement may be terminated solely by a
written agreement signed by the Employer and by the Executive.

          7.2 Binding Effect. This Agreement shall bind the Executive and the Employer and their
beneficiaries, survivors, executors, successors, administrators, and transferees.

          7.3 No Guarantee of Employment. This Agreement is not an employment policy or contract. It
does not give the Executive the right to remain an employee of the Employer, nor does it interfere
with the Employer’s right to discharge the Executive. It also does not require the Executive to
remain an employee nor interfere with the Executive’s right to terminate employment at any time.

          7.4 Non-Transferability. Benefits under this Agreement cannot be sold, transferred, assigned,
pledged, attached, or encumbered in any manner.

12

 

          7.5 Tax Withholding. The Employer shall withhold any taxes that are required to be withheld
from the benefits provided under this Agreement.

          7.6 Applicable Law. Except to the extent preempted by the laws of the United States of
America, the validity, interpretation, construction, and performance of this Agreement shall be
governed by and construed in accordance with the laws of the State of North Carolina, without
giving effect to the principles of conflict of laws of such state.

          7.7 Unfunded Arrangement. The Executive and the Executive’s Beneficiary are general unsecured
creditors of the Employer for the payment of benefits under this Agreement. The benefits represent
the mere promise by the Employer to pay such benefits. The rights to benefits are not subject in
any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
attachment, or garnishment by creditors. Any insurance on the Executive’s life is a general asset
of the Employer to which the Executive and Beneficiary have no preferred or secured claim.

          7.8 Severability. If any provision of this Agreement is held invalid, such invalidity shall
not affect any other provision of this Agreement, and each such other provision shall continue in
full force and effect to the full extent consistent with law. If any provision of this Agreement
is held invalid in part, such invalidity shall not affect the remainder of the provision, and the
remainder of such provision together with all other provisions of this Agreement shall continue in
full force and effect to the full extent consistent with law.

          7.9 Headings. The headings of sections herein are included solely for convenience of
reference and shall not affect the meaning or interpretation of any provision of this Agreement.

          7.10 Notices. All notices, requests, demands, and other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered by hand or mailed, certified or
registered mail, return receipt requested, with postage prepaid. Unless otherwise changed by
notice, notice shall be properly addressed to the Executive if addressed to the address of the
Executive on the books and records of the Employer at the time of the delivery of such notice, and
properly addressed to the Employer if addressed to the Board of Directors, at 1145 North Road
Street, Elizabeth City, North Carolina 27909.

          7.11 Entire Agreement. This Agreement constitutes the entire agreement between the Employer
and the Executive concerning the subject matter hereof. No rights are granted to the Executive
under this Agreement other than those specifically set forth herein.

          7.12 Payment of Legal Fees. In the event litigation ensues between the parties concerning the
enforcement of the obligations of the parties under this Agreement, the Employer shall pay all
costs and expenses in connection with such litigation until such time as a final determination
(excluding any appeals) is made with respect to the litigation. If the Employer prevails on the
substantive merits of the each material claim in dispute in such litigation, the Employer shall be
entitled to receive from the Executive all reasonable costs and expenses, including without
limitation attorneys’ fees, incurred by the Employer on behalf of the Executive in connection with
such litigation, and the Executive shall pay such costs and expenses to the Employer promptly upon
demand by the Employer.

13

 

          7.13 Termination or Modification of Agreement Because of Changes in Law, Rules or Regulations.
The Employer is entering into this Agreement on the assumption that certain existing tax laws,
rules, and regulations will continue in effect in their current form. If that assumption
materially changes and the change has a material detrimental effect on this Agreement, then the
Employer reserves the right to terminate or modify this Agreement accordingly, subject to the
written consent of the Executive, which shall not be unreasonably withheld. This Section 7.13
shall become null and void effective immediately if a Change in Control occurs.

8

ADMINISTRATION OF AGREEMENT

          8.1 Plan Administrator Duties. This Agreement shall be administered by a Plan Administrator
consisting of the Board of Directors of the Employer or such committee or person(s) as the Board of
Directors of the Employer shall appoint. In accordance with the rules applicable for companies
listed on the Nasdaq Stock Market and the Employer’s corporate governance procedures, the Executive
shall not serve as a member of the Plan Administrator. The Plan Administrator shall also have the
discretion and authority to (a) make, amend, interpret, and enforce all appropriate rules and
regulations for the administration of this Agreement and (b) decide or resolve any and all
questions, including interpretations of this Agreement, as may arise in connection with the
Agreement.

          8.2 Agents. In the administration of this Agreement, the Plan Administrator may employ agents
and delegate to them such administrative duties as it sees fit (including acting through a duly
appointed representative) and may from time to time consult with counsel, who may be counsel to the
Employer.

          8.3 Binding Effect of Decisions. The decision or action of the Plan Administrator with
respect to any question arising out of or in connection with the administration, interpretation,
and application of the Agreement and the rules and regulations promulgated hereunder shall be final
and conclusive and binding upon all persons having any interest in the Agreement. No Executive or
Beneficiary shall be deemed to have any right, vested or nonvested, regarding the continued use of
any previously adopted assumptions, including but not limited to the discount rate and calculation
method described in Section 1.1.

          8.4 Indemnity of Plan Administrator. The Plan Administrator shall not be liable to any person
for any action taken or omitted in connection with the interpretation and administration of this
Agreement, unless such action or omission is attributable to the willful misconduct of the Plan
Administrator or any of its members. The Employer shall indemnify and hold harmless the members of
the Plan Administrator against any and all claims, losses, damages, expenses, or liabilities
arising from any action or failure to act with respect to this Agreement, except in the case of
willful misconduct by the Plan Administrator or any of its members.

          8.5 Employer Information. To enable the Plan Administrator to perform its functions, the
Employer shall supply full and timely information to the Plan Administrator on all matters relating
to the date and circumstances of the retirement, Disability, death, or Termination of Employment of
the Executive and such other pertinent information as the Plan

14

 

Administrator may reasonably require.

      IN WITNESS WHEREOF, the Executive and a duly authorized Executive of the Company and the Bank
have signed this Agreement as of the date first written above.

	 	 	 	 	 	 	 	 	 
	THE EXECUTIVE:	 	 	 	THE BANK:

Gateway Bank & Trust Co.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	/s/ David Twiddy	 	 
	 

	 	 	 	 	 	 

	 	 
	/s/
D. Ben Berry 	 	 	 	 	 	 	 	 
	 

D. Ben Berry

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Its:	 	President & C.O.O.	 	 
	 

	 	 	 	 	 	 

	 	 

15

 

BENEFICIARY DESIGNATION

SALARY CONTINUATION AGREEMENT

I,
                                        ., designate the following as beneficiary of any death benefits
under this Salary Continuation Agreement –

	 	 	 	 	 
	 

	 	Primary:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	. 

	 
	 

	 	Contingent:	 	 
	 

	 	 	 	 
	 
	 	 	 	.
	 

	 	 	 	 
 

Note: To name a trust as beneficiary, please provide the name of the trustee(s) and the exact
name and date of the trust agreement.

I understand that I may change these beneficiary designations by filing a new written
designation with the Employer. I further understand that the designations will be automatically
revoked if the beneficiary predeceases me, or if I have named my spouse as beneficiary and our
marriage is subsequently dissolved.

	 	 	 	 	 	 	 
	 

	 	Signature:	 	 	 	 
	 

	 	 	 	 

Daniel Berry
	 	 
	 
	 	 	 	 	 	 
	 

	 	Date:
	 	 	, 2006	  
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	Accepted by the Employer this    
                
                      day of                                                             , 2006.
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Print Name:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 

	 	 

16

 

SCHEDULE A

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Termination	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	without	 	 	 	 	 	Change in	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Cause	 	Disability	 	Control	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	annual	 	annual	 	Annual	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	benefit	 	benefit	 	Benefit	 	 	 	 	 	 
	 	 	Plan Year	 	Annual	 	payable at	 	payable at	 	Payable at	 	 	 	 	 	 
	 	 	ending	 	Retirement	 	Normal	 	Normal	 	Normal	 	 	 	 	 	Premature
	Plan	 	December	 	Fixed	 	Retirement	 	Retirement	 	Retirement	 	Accrual	 	Death
	Year	 	31,	 	Benefit	 	Age	 	Age	 	Age	 	Balance	 	Benefit
	 
	  1
	 	 	2006	 	 	 	367,500	 	 	 	651,282	 	 	 	0	 	 	 	651,282	 	 	 	60,777	 	 	 	2,936,040	 
	  2
	 	 	2007	 	 	 	384,038	 	 	 	651,282	 	 	 	30,824	 	 	 	651,282	 	 	 	321,824	 	 	 	3,104,862	 
	  3
	 	 	2008	 	 	 	401,319	 	 	 	651,282	 	 	 	58,760	 	 	 	651,282	 	 	 	613,484	 	 	 	3,283,392	 
	  4
	 	 	2009	 	 	 	419,379	 	 	 	651,282	 	 	 	89,886	 	 	 	651,282	 	 	 	938,461	 	 	 	3,472,187	 
	  5
	 	 	2010	 	 	 	438,251	 	 	 	651,282	 	 	 	124,483	 	 	 	651,282	 	 	 	1,299,674	 	 	 	3,671,837	 
	  6
	 	 	2011	 	 	 	457,972	 	 	 	651,282	 	 	 	162,852	 	 	 	651,282	 	 	 	1,700,266	 	 	 	3,882,968	 
	  7
	 	 	2012	 	 	 	478,581	 	 	 	651,282	 	 	 	205,317	 	 	 	651,282	 	 	 	2,143,631	 	 	 	4,106,239	 
	  8
	 	 	2013	 	 	 	500,117	 	 	 	651,282	 	 	 	252,229	 	 	 	651,282	 	 	 	2,633,421	 	 	 	4,342,348	 
	  9
	 	 	2014	 	 	 	522,622	 	 	 	651,282	 	 	 	303,965	 	 	 	651,282	 	 	 	3,173,573	 	 	 	4,592,033	 
	10
	 	 	2015	 	 	 	546,140	 	 	 	651,282	 	 	 	360,931	 	 	 	651,282	 	 	 	3,768,327	 	 	 	4,856,074	 
	11
	 	 	2016	 	 	 	570,716	 	 	 	651,282	 	 	 	423,564	 	 	 	651,282	 	 	 	4,422,247	 	 	 	5,135,299	 
	12
	 	 	2017	 	 	 	596,398	 	 	 	651,282	 	 	 	492,334	 	 	 	651,282	 	 	 	5,140,247	 	 	 	5,430,578	 
	13
	 	 	2018	 	 	 	623,236	 	 	 	651,282	 	 	 	567,748	 	 	 	651,282	 	 	 	5,927,613	 	 	 	5,742,837	 
	 
	 	1-Dec	 	 	651,282	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	6,073,050	 

17

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