Document:

Form of RONA Award Letter

 Exhibit 10.7 
 

 
  

	TO:	[Name] 

 August
    , 2006 
 FY07 RETURN ON NET ASSETS (RONA) AWARD 
 UNDER PERFORMANCE BONUS PLAN 
 Dear
            : 
 On August 16, 2006, the Human Resources and Compensation Committee of
the Board of Directors (the “Committee”) authorized a RONA award (“Award”) for fiscal year 2007 (“FY07”) to you under the Corporation’s Performance Bonus Plan, which was approved by the shareholders of the
Corporation on October 26, 2005, so that payments made hereunder will be qualified as “performance-based compensation” for purposes of Section 162(m) of the Internal Revenue Code of 1986 and Section 1.162-27 of the Treasury
Regulations promulgated thereunder. Your Award is in the amount of              RONA Shares. The Award is subject to the following terms and conditions: 
  

	 	1.	The payout value of each RONA Share (“RONA %”) is determined as follows: 

  

	 	a)	Earnings / Average Assets = Return on Assets (ROA) 

  

	 	b)	If ROA is <35%: ROA x 0.1786 = RONA% 

 —or— if ROA is >35%: 6.25% + ((ROA-35%) x 0.08928) = RONA% 
 where: 
  

	 	Earnings	= the Corporation’s Segment Operating Income for FY07; 

 Average Assets = the average of the Corporation’s RONA Assets at the beginning of FY07 and at the end of each of the fiscal quarters of FY07; and 
 RONA Assets = inventory + accounts receivable + prepaid expenses + property, plant and equipment (net) + goodwill + intangibles – trade accounts payable. 
  

	 	2.	The formula for calculating your “Payout” under the Award is as follows: 

  

	 	a)	RONA% x (# of RONA Shares) = Total Bonus % 

  

	 	b)	Total Bonus % x Base Pay for fiscal year 2007 = Payout 

 3. The Payout earned under the Award will be paid after the end of FY07. Your Payout will be reduced on a pro rata basis to reflect the actual amount of time you serve in an eligible position during FY07. 

 4. If you retire (at or after age 60, or earlier with the consent of the Committee), die or become
disabled during FY07, you will be entitled to receive a pro rata share of the Payout ultimately earned during FY07 based upon the number of full months worked during FY07. Termination of employment for any other reason during FY07 will result in
forfeiture of your Award. 
 5. You will receive the Payout in either cash or a credit to your Executive Deferral Plan account (based on your
election made in accordance with rules established by the Corporation) following certification of the calculation of the RONA% and Payout by the Committee at the end of FY07. The Committee retains the ability to reduce the Payout at its sole
discretion. The amount of the Payout is also subject to the payout limitations set forth in Section 5(c) of the Bonus Plan. 
 6. The
Award is subject to all terms, conditions and provisions of the Bonus Plan to the extent not specifically addressed herein. In the event of any conflict between the terms of the Bonus Plan and the Award, the Bonus Plan shall prevail. 
 Please acknowledge receipt of this Award and indicate your agreement with the terms hereof by signing and returning a copy to me as soon as possible. 
 

 
 Thomas A. Piraino, Jr. 
 Vice President, General Counsel 
 And Secretary 
 Receipt Acknowledged and Agreed: 
  

							
	  
	 		 	Date:	 	  

	[Name]Employment Agreement btw the Bank & Robert E. Marziano

 EXHIBIT 10.01 
 STATE OF NORTH CAROLINA 
 COUNTY OF DAVIE 
 EMPLOYMENT AGREEMENT 
 THIS EMPLOYMENT AGREEMENT (the “Agreement”) is entered into
as of 12th day of July, 2004 (the “Effective Date”), by and between BANK OF THE CAROLINAS (the “Bank”) and ROBERT E. MARZIANO (“Employee”). 
 WITNESSETH: 
 WHEREAS, Employee currently is employed by the Bank as Chief
Executive Officer; and 
 WHEREAS, the Bank desires to continue to employ Employee as its Chief Executive Officer, and Employee
desires to accept such continued employment; and 
 WHEREAS, the Bank and Employee desire to set forth the terms and conditions of
Employee’s continued employment with the Bank in a written agreement and, for that purpose, the Bank and Employee have agreed to enter into this Agreement. 
 NOW, THEREFORE, in consideration of the premises and mutual promises, covenants, and conditions hereinafter set forth, and for other good and valuable considerations, the receipt and sufficiency of which hereby
are acknowledged, the Bank and Employee hereby agree as follows: 
 1. Employment. The Bank agrees to continue to employ
Employee, and Employee accepts continued employment with the Bank, upon the terms and conditions stated herein. As an employee of the Bank, Employee will continue to (a) serve as Chief Executive Officer of the Bank and/or in such other
or additional executive position or positions as shall be specified from time to time by the Bank’s Board of Directors, (b) promote the Bank and its business and engage in business development activities on the Bank’s behalf,
and (c) have such functional managerial duties and responsibilities as shall be assigned to him by the Bank from time to time. 
 2. Term. Unless sooner terminated as provided in this Agreement, and subject to the right of either Employee or the Bank to terminate Employee’s employment at any time as provided herein, the term of
Employee’s employment with the Bank under this Agreement (the “Term of Employment”) shall begin on May 31, 2004 and be for a continually renewing period of three (3) years, with the effect that on May 31, 2005, and on
May 31 of each year thereafter to and including May 31 , 2014, and without any further action by the Bank or Employee, the Term of Employment automatically shall be extended by one additional year such that the then current unexpired Term
of Employment under this Agreement will be extended to again be three (3) years. Upon the extension that occurs on May 31, 2014, the Term of Employment shall become a fixed three (3) years, shall not be further extended, and shall
expire at the close of the Bank’s business on May 31, 2017. If, following the date of expiration, Employee remains employed by the Bank, such employment shall be on an “at will” basis. 
 3. Cash Compensation. For all services rendered by Employee to the Bank under this Agreement, during the Term of Employment the Bank
shall pay Employee a base salary at an annual rate of TWO HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS ($250,000.00) (“Base Salary”). 

 As an executive officer of the Bank, Employee shall be eligible to participate in the Bank’s
Management Incentive Program for any bonus opportunities. Employee’s Base Salary may be increased from time to time during the Term of Employment at the discretion of the Bank’s Board of Directors. Base Salary paid under this Agreement
shall be payable not less frequently than monthly in accordance with the Bank’s payroll policies and procedures. 
 4.
Employee Benefit Plans; Fringe Benefits; Income Taxes. 
 (a) Benefit Plans. During the Term of
Employment, Employee shall be eligible to participate in any and all employee benefit programs maintained by or for the Bank that are generally available to and which cover all the Bank’s officers at Employee’s job level or classification,
subject to the rules applicable to such plans or programs prevailing from time to time. Except as otherwise specifically provided herein, Employee’s participation in such plans and programs shall be subject to and in accordance with the terms
and conditions (including eligibility requirements) of such plans and programs, resolutions of the Bank’s Board of Directors establishing such programs and plans, and the Bank’s normal practices and established policies regarding such
plans and programs. 
 Employee acknowledges that the terms and provisions of the Bank’s employee benefit plans and programs from time
to time may be determined only by reading the actual plan documents under which the Bank or the plan administrator, as applicable, may make certain administrative determinations with discretion, and that the Bank reserves the right to modify or
terminate each plan or program and any benefits provided thereunder. 
 (b) Annual Vacation Leave. During the
Term of Employment, all matters pertaining to the entitlement to, and the accrual and scheduling of, vacation leave shall be determined under the Bank’s standard leave policies and procedures in effect from time to time; provided, however, that
the minimum amount of annual vacation leave to which Employee shall be entitled shall be three weeks or, if longer, the number of weeks provided for in those policies and procedures for persons in Employee’s position or job classification.

 (c) Income Taxes. All cash or other compensation payable or provided to Employee under this Agreement shall be
subject to customary withholding of taxes and such other deductions or withholdings as are required by law or customary for the Bank’s employees. Employee shall be solely responsible for any income taxes owed on account of his receipt from the
Bank of any employee or fringe benefits under this Agreement and, to the extent that the Bank reasonably believes itself obligated to do so, the Bank may withhold any such taxes from cash compensation payable to Employee. 
 5. Standards of Performance and Conduct. During the Term of Employment, Employee faithfully and diligently shall discharge his
obligations under this Agreement, and he shall perform the duties associated with his positions with the Bank in a manner which is reasonably competent and satisfactory to the Bank, and Employee shall comply with and use his best efforts to
implement the Bank’s policies and procedures currently in effect or as are established from time to time by the Bank. 
 In the
execution of his employment duties under this Agreement, Employee shall, at all times and in all material respects, comply with any code of conduct or ethics policies applicable to Employee and/or the Bank’s employees in general, as in effect
as of the Effective Date or as may be adopted, amended or supplemented from time to time subsequent thereto (the “Code of Conduct”), and with all federal and state statutes, and all rules, regulations, administrative orders, statements of
policy, and other pronouncements or standards promulgated thereunder, which are applicable to the Bank and its employees, business, and operations. 
  

 2 

 6. Termination and Termination Pay. 
 (a) By Employee. The Term of Employment and Employee’s employment under this Agreement may be terminated at any time by Employee
upon 90 days’ written notice to the Bank. Upon such termination, Employee shall be entitled to receive compensation earned under this Agreement through the effective date of such termination and, thereafter, the Bank shall have no further
obligations hereunder. 
 (b) Death or Retirement . The Term of Employment and Employee’s employment under this
Agreement automatically shall be terminated upon his death during the Term of Employment or upon the effective date of Employee’s “Retirement.” Upon any such termination, Employee (or, in the case of Employee’s death, his estate)
shall be entitled to receive any compensation Employee shall have earned prior to the date of termination but which remains unpaid. “Retirement” shall mean any termination of Employee’s employment with the Bank which is treated as a
retirement (whether early, normal or delayed retirement) under the terms of any qualified retirement benefit plan generally applicable to the Bank’s salaried employees and in which Employee is a participant, or any other termination of
employment that Employee and the Bank mutually agree in writing to treat as a Retirement. 
 (c) By the Bank. The Bank
may terminate the Term of Employment and Employee’s employment under this Agreement at any time for “Cause” (as defined below) or without Cause. Upon any such termination by the Bank under this Paragraph 6(c) without
Cause, the Bank shall be obligated to pay Base Salary to Employee at his then current Base Salary rate for the then current unexpired Term of Employment hereunder (which payments shall be made on the same schedule as Employee’s Base
Salary was paid by the Bank during the Term of Employment), and, if Employee chooses to exercise his rights to purchase continued health insurance coverage under the Bank’s health insurance plan pursuant to the Consolidated Omnibus Budget
Reconciliation Act (“COBRA”), the Bank shall reimburse Employee for the cost of such continued insurance coverage for the maximum period during which such coverage is available to Employee under COBRA, but not longer than the unexpired
Term of Employment hereunder, and shall have no further obligations hereunder. The term “ without cause” shall be deemed to include termination of this Agreement by Employee, upon ninety (90) days’ written notice to
the Bank, because the Bank, without his consent, reduces Employee’s Base Salary, removes him from an executive officer position, requires him to transfer his office more than 50 miles from his current principal work location, or materially
breaches any term of this Agreement; provided, however, that the Bank shall have thirty (30) days in which to correct or cure any such material breach, in which case the Bank shall not be obligated to make the payments provided pursuant
to this Paragraph 6(c). Upon any such termination with Cause, Employee shall have no further rights, and the Bank shall have no further obligations, under this Agreement. 
 For purposes of this Paragraph 6(c), the Bank shall have “Cause” to terminate Employee’s employment if: 
 (i) (A) Employee has breached in any material respect any of the terms or conditions of this Agreement or of the Code of Conduct, or has
failed in any material respect to perform or discharge his duties or responsibilities of employment in the manner provided herein (provided however, that such a breach or failure, other than a breach of the Bank’s Code of Conduct, shall not
give the Bank “Cause” to terminate Employee’s employment if such breach or failure is corrected or cured by Employee to the Bank’s reasonable satisfaction (which shall not be unreasonably withheld by the Bank) within 30 days
following written notice thereof to Employee), or (B) Employee is engaging or has engaged in willful misconduct or conduct which is detrimental in any material respect to the business or business prospects of the Bank or which has had or
likely will have an adverse effect on the Bank’s business or reputation; 
 (ii) The material violation by Employee of any
applicable federal or state law, or any applicable rule, regulation, order, or statement of policy promulgated by any governmental agency or authority having jurisdiction over the Bank, including but not limited to the North Carolina Commissioner of
Banks, the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other regulator (a “Regulatory Authority”), that results from Employee’s negligence, willful misconduct, or intentional disregard of such law, rule,
regulation, order, or policy statement and results in any substantial damage, monetary or otherwise, to the Bank or to the Bank’s reputation; 
  

 3 

 (iii) The commission in the course of Employee’s employment with the Bank of an act of
fraud, embezzlement, theft, or proven personal dishonesty (whether or not such act or charge results in criminal indictment, charges, prosecution, or conviction); 
 (iv) The conviction of Employee of any felony or any criminal offense involving dishonesty or breach of trust, or the occurrence of any event described in Section 19 of the Federal Deposit Insurance Act or
any other event or circumstance which disqualifies Employee from serving as an employee or executive officer of, or a party affiliated with, the Bank; or, in the event Employee becomes unacceptable to, or is removed, suspended, or prohibited from
participating in the conduct of the Bank’s affairs (or if proceedings for that purpose are commenced), by any Regulatory Authority; or 
 (v) The exclusion of Employee by the carrier or underwriter from coverage under the Bank’s then current “blanket bond” or other fidelity bond or insurance policy covering its or their directors, officers, or employees,
or the occurrence of any event that the Bank believes, in good faith, will result in Employee being excluded from such coverage, or having coverage limited as to Employee as compared to other covered officers or employees, pursuant to the terms and
conditions of such “blanket bond” or other fidelity bond or insurance policy. 
 (d) Effect of
Termination. Except as otherwise provided below, upon the earlier of the expiration date of this Agreement or the effective date of any actual termination of Employee’s employment with the Bank under this Agreement for any
reason, the provisions of this Agreement, with the exception of Paragraph 7 below and the Bank’s obligations, if any, for continued payments of Base Salary under Paragraph 6(c) above, likewise shall terminate and be of no further
force or effect. Employee’s covenants contained in Paragraph 7 below, and the Bank’s obligations, if any, under Paragraph 6(c) above, shall survive and remain in effect in accordance with their terms following any actual termination
of Employee’s employment. 
 7. Noncompetition; Confidentiality. 
 (a) General. Employee hereby acknowledges and agrees that (i) the Bank will make a significant investment in the
development of its business in the geographic area identified below as the “Relevant Market” and, as a result, will have a valuable economic interest in its business in the “Relevant Market” which it is entitled to protect;
(ii) in the course of his service as an employee of the Bank, Employee will gain substantial knowledge of and familiarity with the Bank’s customers and its dealings with them, and other information concerning the Bank’s
businesses, all of which will constitute valuable assets and privileged information belonging to the Bank; and (iii) in order to protect the Bank’s interest in its business, it is reasonable and necessary to place certain
restrictions on Employee’s ability to compete against the Bank and on his disclosure of information about the Bank’s business and customers. For that purpose, and in consideration of the Bank’s agreements contained herein and for a
one-time payment of TWO THOUSAND FIVE HUNDRED AND NO/100 DOLLARS ($2,500.00), Employee covenants and agrees as provided below. 
 (b) Covenant Not to Compete. During the “Restriction Period” (as defined below), Employee shall not “Compete” (as defined below), directly or indirectly, with the Bank. 
 For purposes of this Paragraph 7, the following terms shall have the meanings set forth below: 
 Compete. The term “Compete” means: (i) soliciting any Person who was a Customer of the Bank on the date of
termination of Employee’s employment with the Bank to become a depositor in or a borrower from any other Financial Institution, to obtain any other service or product from any other Financial 
  

 4 

 Institution, or to change any depository, loan, and/or other banking relationship of the Customer from the Bank to
another Financial Institution; (ii) acting as a consultant, officer, director, advisory director, independent contractor, or employee of any Financial Institution that has its main or principal office in the Relevant Market (as defined
below), or, in acting in any such capacity with any other Financial Institution, to maintain an office or be employed at or assigned to or to have any direct involvement in the management, supervision, business, marketing activities, or solicitation
of business for or operation of any office of such Financial Institution located in the Relevant Market; (iii) communicating to any Financial Institution the names or addresses or any financial information concerning any Person who was a
Customer of the Bank on the date of termination of Employee’s employment with the Bank; or (iv) soliciting any person who was an employee of the Bank on the date of termination of Employee’s employment with the Bank to become
an employee of any other Financial Institution. 
 Customer. The term “Customer of the Bank” means any Person with
whom the Bank has a depository or loan relationship, and/or to whom the Bank provides any other service or product. 
 Financial
Institution. The term “Financial Institution” means (i) any federal or state chartered bank, savings bank, savings and loan association, or credit union (a “Depository Institution”), (ii) any
holding company for, or corporation that owns or controls, any Depository Institution (a “Holding Company”), (iii) any subsidiary or service corporation of any Depository Institution or Holding Company, or any entity controlled
in any way by any Depository Institution or Holding Company, or (iv) any other Person engaged in the business of making loans of any type, soliciting or taking deposits, or providing any other service or product that is provided by the
Bank or one of its affiliated corporations. 
 Person. The term “Person” means any natural person or any
corporation, partnership, proprietorship, joint venture, limited liability company, trust, estate, governmental agency or instrumentality, fiduciary, unincorporated association, or other entity. 
 Relevant Market. The term “Relevant Market” means any county in North Carolina in which the Bank maintains a business office on
the date of any termination of Employee’s employment with the Bank. 
 Restriction Period. The term “Restriction
Period” means the one (1) year period commencing on the effective date of any termination of Employee’s employment with the Bank, whether by Employee or by the Bank, for any reason; provided, however, that in the case of an
involuntary termination of Employee’s employment by the Bank without Cause as defined in Paragraph 6(a) or 6(c) above, the Restriction Period shall be the length of the then current unexpired Term of Employment during which
the Bank is obligated to continue to pay Base Salary to Employee, but, in such case, the Restriction Period shall immediately expire upon a default by the Bank in making the payments for which it is obligated. Notwithstanding anything contained
herein to the contrary, in the event any payment required under Paragraph 6(c) is not made by the Bank by the due date for that payment, the Bank shall not be considered to be in default with respect to that payment for purposes of this Paragraph
7(b) unless it shall fail to make that payment within ten days after its receipt of written notice from Employee that the payment has not been made. 
 (c) Confidentiality Covenant. Employee covenants and agrees that any and all data, figures, projections, estimates, lists, files, records, documents, manuals, or other such materials or
information (whether financial or otherwise, and including any files, data, or information maintained electronically, on microfiche , or otherwise) relating to the Bank and its lending and deposit operations and related business, regulatory
examinations, financing sources, financial results and condition, Customers (including lists of Customers and former customers and information regarding their accounts and business dealings with The Bank), prospective customers, contemplated
acquisitions (whether of business or assets), ideas, methods, marketing investigations, surveys, research, policies and procedures, computer systems and software, shareholders, employees, officers, and directors (herein referred to as
“Confidential Information”) are confidential and proprietary to the Bank and are valuable, special, and unique assets of the Bank’s business which are not directly reproducible from any other source and to which Employee has had
access as an officer and employee of the Bank and will have access during his continued employment with the Bank. 
  

 5 

 Employee agrees that (i) all such Confidential Information shall be considered and kept as
the confidential, private, and privileged records and information of the Bank, and (ii) during the Term of Employment and at all times following the termination of this Agreement or his employment for any reason, and except as shall be
required in the course of the performance by Employee of his duties on behalf of the Bank or otherwise pursuant to the direct, written authorization of the Bank, Employee will not: divulge any such Confidential Information to any other Person;
remove any such Confidential Information in written or other recorded form from the Bank’s premises; or make any use of any Confidential Information for his own purposes or for the benefit of any Person other than the Bank. However, this
Paragraph 7(c) shall not apply to any Confidential Information which then is in the public domain (provided that Employee was not responsible, directly or indirectly, for permitting such Confidential Information to enter the public domain without
the Bank’s consent), or which is obtained by Employee from a third party which or who is not obligated under an agreement of confidentiality with respect to such information and who did not acquire such Confidential Information in a manner
which constituted a violation of the covenants contained in this Paragraph 7(c) or which otherwise breached any duty of confidentiality. Further, the above obligations of confidentiality shall not prohibit the disclosure of any such Confidential
Information by Employee to the extent such disclosure is required by subpoena or order of a court or regulatory authority of competent jurisdiction or to the extent that, in the reasonable opinion of legal counsel to Employee, disclosure otherwise
is required by law. 
 (d) Reasonableness of Restrictions. If any of the restrictions set forth in this
Paragraph 7 shall be declared invalid for any reason whatsoever by a court of competent jurisdiction, the validity and enforceability of the remainder of such restrictions shall not thereby be adversely affected. Employee acknowledges that the
Bank will have a substantial economic interest in its business in the Relevant Market which this Paragraph 7 specifically is intended to protect, and that the Relevant Market and Restriction Period are limited in scope to the geographic territory
and period of time reasonably necessary to protect the Bank’s economic interest and otherwise are reasonable and proper. In the event the Restriction Period or any other such time limitation is deemed to be unreasonable by a court of competent
jurisdiction, Employee hereby agrees to submit to such reduction of the Restriction Period as the court shall deem reasonable. In the event the Relevant Market is deemed by a court of competent jurisdiction to be unreasonable, Employee hereby agrees
that the Relevant Market shall be reduced by excluding any separately identifiable and geographically severable area necessary to make the remaining geographic restriction reasonable, but this Paragraph 7 shall be enforced as to all other areas
included in the Relevant Market which are not so excluded. 
 (e) Remedies for Breach. Employee understands and
acknowledges that a breach or violation by him of any of the covenants contained in Paragraphs 7(b) and 7(c) shall be deemed a material breach of this Agreement and will cause substantial, immediate, and irreparable injury to the Bank, and that the
Bank will have no adequate remedy at law for such breach or violation. In the event of Employee’s actual or threatened breach or violation of the covenants contained in either such Paragraph, the Bank shall be entitled to bring a civil action
seeking, and shall be entitled to, an injunction restraining Employee from violating or continuing to violate such covenant or from any threatened violation thereof, or for any other legal or equitable relief relating to the breach or violation of
such covenant. Employee agrees that, if the Bank institutes any action or proceeding against Employee seeking to enforce any of such covenants or to recover other relief relating to an actual or threatened breach or violation of any of such
covenants, Employee shall be deemed to have waived the claim or defense that the Bank has an adequate remedy at law and shall not urge in any such action or proceeding the claim or defense that such a remedy at law exists. However, the exercise by
the Bank of any such right, remedy, power, or privilege shall not preclude the Bank or its successors or assigns from pursuing any other remedy or exercising any other right, power, or privilege available to it for any such breach or violation,
whether at law or in equity, including the recovery of damages, all of which shall be cumulative and in addition to all other rights, remedies, powers, or privileges of the Bank. 
  

 6 

 Notwithstanding anything contained herein to the contrary, Employee agrees that the provisions of
Paragraphs 7(b) and 7(c) above and the remedies provided in this Paragraph 7(e) for a breach by Employee shall be in addition to, and shall not be deemed to supersede or to otherwise restrict, limit, or impair the rights of the Bank under any state
or federal law or regulation dealing with or providing a remedy for the wrongful disclosure, misuse, or misappropriation of trade secrets or other proprietary or confidential information. 
 (f) Survival of Covenants . Employee’s covenants and agreements and the Bank’s rights and remedies provided for in this
Paragraph 7 shall survive and remain fully in effect following the actual termination of Employee’s employment with the Bank during the Term of Employment. 
 8. Change in Control of the Bank. 
 (a) If at the effective time of, or any time
within 36 months following, a “Change in Control” (as defined below): 
 (i) the Bank terminates Employee’s employment
other than for “Cause” (as defined in Paragraph 6(c) above), or 
 (ii) a “Termination Event” (as defined below)
occurs and, thereafter, Employee voluntarily terminates his own employment with the Bank in the manner described below, then (subject to the limitations set forth herein) Employee shall be entitled to receive from the Bank, and the Bank shall be
obligated to pay or cause to be paid to Employee, an amount equal to 2.99 multiplied by Employee’s annual Base Salary in effect at the time the Change in Control became effective or in effect at the time the termination of Employee’s
employment becomes effective, whichever is greater. The payments provided for in this Paragraph 8 shall be in lieu of any other payments provided for in this Agreement, but, to the extent otherwise required by Paragraph 6(c), the Bank shall remain
obligated to reimburse Employee for the cost of health insurance coverage to the extent described in that Paragraph. 
 (b) For
purposes of this Agreement, a “Change in Control” shall be deemed to have occurred if: 
 (i) after the Effective Date, any
“Person” (as such term is defined in Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934, as amended), directly or indirectly, acquires beneficial ownership of voting stock, or acquires irrevocable proxies or any
combination of voting stock and irrevocable proxies, representing more than 50% of any class of voting securities of the Bank, or in any manner acquires control of the election of a majority of the directors of the Bank; or 
 (ii) the Bank consolidates or merges with or into another corporation, or otherwise is reorganized, where the Bank is not the resulting or
surviving corporation in such transaction; or 
 (iii) all or substantially all the Bank’s assets are sold or otherwise
transferred to or acquired by any other corporation, association or other person, entity, or group. 
 However, notwithstanding anything
contained herein to the contrary, for purposes of this Agreement the term “Change in Control” shall not include a transaction approved by the Bank’s Board of Directors that results in the Bank merging with, transferring its assets to,
or becoming the subsidiary of, a corporation or entity newly formed at the direction of the Bank’s Board of Directors for the purpose of such transaction (including a corporation or entity so formed for the purpose of serving as the Bank’s
parent bank holding company), and in connection with which transaction the Bank’s shareholders (other than those who exercise statutory rights of dissent and appraisal) become the holders of substantially all of the voting stock of such
corporation. Further, and notwithstanding the other provisions of this Paragraph 8, a transaction or event shall not be considered a Change in Control if, prior to the consummation or occurrence of such transaction or event, the Bank and Employee
agree in writing that the same shall not be treated as a Change in Control for purposes of this Agreement. 

 7 

 (c) For purposes of this Paragraph 8, all references to the Bank shall include any
“Successor” (as defined below) to the Bank which shall have assumed and become liable for the Bank’s obligations hereunder (whether such assumption is by agreement, operation of law, or otherwise). “Successor” refers to any
Person or entity (corporate or otherwise) into which the Bank (or any such Successor) shall be merged or consolidated or to which all or substantially all the Bank’s (or any such Successor’s) assets shall be transferred in any manner.

 (d) For purposes of this Paragraph 8, a “Termination Event” shall be deemed to have occurred if, at the effective time of
or within 36 months following a Change in Control, and without his express written consent: 
 (i) Employee’s annual Base
Salary rate is reduced below the annual rate in effect as of the effective date of the Change in Control or as the same shall have been increased from time to time following such effective date; or 
 (ii) Employee’s life insurance, medical or hospitalization insurance, disability insurance, or similar plans or benefits (including any
retirement plan) being provided by the Bank to Employee as of the effective date of the Change in Control are reduced in their level, scope, or coverage, or any such insurance, plans, or benefits are eliminated without being replaced with
substantially similar plans or benefits, unless such reduction or elimination applies proportionately to all salaried employees of the Bank who participated in such plans or benefits prior to such Change in Control; 
 (iii) Employee is transferred to a job location which is more than 50 miles (by most direct highway route) from his principal work location at
the effective date of the Change in Control; or 
 (iv) (A) if the Bank continues to exist as a separate entity following the
Change in Control, Employee’s position is changed such that he no longer serves in the same position with the Bank that he occupied immediately prior to the Change in Control, or (B) if as a result of the Change in Control the Bank
no longer exists as a separate entity, Employee is not designated as and does not serve as an executive officer of the Bank’s Successor or if he does not report directly to the Successor’s Chairman, President, or Chief Executive Officer.

 (e) If Employee’s employment is terminated by the Bank without Cause prior to the effective time of a Change in Control but
following the date on which the Bank’s Board of Directors takes action to approve an agreement (including any definitive agreement or an agreement in principle) relating to the Change in Control, then, for purposes of this Agreement, such
termination of employment shall be deemed to have occurred at the effective time of the Change in Control. 
 (f) Amounts payable
pursuant to this Paragraph 8 shall be paid not later than the 45th day following the Termination Date. For purposes of this Agreement, the “Termination Date” will be the effective date of the termination of Employee’s employment which
gives rise to the Bank’s payment obligation under this Paragraph 8. 
 (g) In order to become entitled to any payments under
Paragraph 8(a)(ii) above, Employee must effectively terminate his employment with the Bank within 90 days from the date of occurrence of the Termination Event which gives rises to his right to terminate. A Termination Event shall be deemed to have
occurred on the date such action or event is implemented or takes effect or, if later, on the date on which notice of the action or event is given to Employee. The Termination Date of Employee’s termination of employment following a Termination
Event shall be the date of delivery by Employee to the Bank (or to any Successor) of a written notice of termination which describes the Change in Control and Termination Event which have occurred. If Employee does not so terminate his employment
with the Bank 
  

 8 

 within such 90-day period following the occurrence of a Termination Event, then he thereafter shall have no rights
hereunder with respect to that Termination Event but shall retain rights, if any, hereunder with respect to any other Termination Event occurring within 36 months following the Change in Control and as to which such notice period has not
expired. 
 (h) 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 Employee. Notwithstanding anything contained in this Agreement to the contrary, any payments to be made to or for the benefit of Employee which are deemed to be
“parachute payments” as that term is defined in Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), shall be modified or reduced to the extent (but only to the extent) which, upon the advice of the
Bank’s independent certified public accountants, the Bank’s Board of Directors in good faith deems to be necessary to avoid the imposition of excise taxes on Employee under Section 4999 of the Code and the disallowance of a deduction
to the Bank under Section 280G(a) of the Code. 
 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, in the opinion of counsel to the Bank
such payment or action (a) 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,
(b) 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 (c) otherwise would be prohibited
by any Regulatory Authority. 
 10. Successors and Assigns. 
 (a) This Agreement shall inure to the benefit of and be binding upon any corporate or other successor of the Bank which shall acquire, directly or
indirectly, by conversion, merger, consolidation, purchase, or otherwise, all or substantially all of the assets of the Bank. 
 (b)
The Bank is contracting for the unique and personal skills of Employee. Therefore, Employee shall be precluded from assigning or delegating his rights or duties hereunder without first obtaining the written consent of the Bank. 
 11. Modification; Waiver; Amendments. No provision of this Agreement may be modified, waived, or discharged unless such waiver,
modification, or discharge is agreed to in writing and signed by the parties hereto. No waiver by either party hereto, at any time, of any breach by the 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 amendments or additions to this Agreement shall be binding unless in writing and signed by
both parties, except as herein otherwise provided. 
 12. Applicable Law. The parties hereto agree that without regard
to principles of conflicts of laws, the internal laws of the State of North Carolina shall govern and control the validity, interpretation, performance, and enforcement of this Agreement. 
 13. 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. 
 14. Headings. The section
and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. 
  

 9 

 15. Notices. Except as otherwise may be provided herein, all notices, claims,
certificates, requests, demands, and other communications hereunder shall be in writing and shall be deemed to have been duly given when hand delivered or sent by facsimile transmission by one party to the other, or when deposited by one party with
the United States Postal Service, postage prepaid, and addressed to the other party as follows: 
  

			
	If to the Bank:	  	If to Employee:
		
	Bank of the Carolinas	  	Robert E. Marziano
	135 Boxwood Drive	  	PO Box 785
	Mocksville, NC 27028	  	Mocksville, NC 27028
	Attention:                     	  	

 16. Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed an original instrument, but all such counterparts together shall constitute but one agreement. 
 17. Entire Agreement. This Agreement contains the entire understanding and agreement of the parties, and there are no agreements, promises, warranties, covenants, or undertakings other than those
expressly set forth or referred to herein. 
 IN WITNESS WHEREOF, the Bank has caused this Agreement to be executed under seal by its
duly authorized officer in pursuance of authority duly given by its Board of Directors, and Employee has set hereunto his hand and adopted as his seal the typewritten word “SEAL” appearing beside his name, all as of the day and year first
above written. 
  

							
		 		 	BANK OF THE CAROLINAS	 	
				
	[Corporate Seal]	 		 		 	
				
		 	By:	 	 /S/ John A. Drye
	 	
	Attested:	 	Its:	 	Chair of Corporate Governance Committee	 	
				
	 /S/ Joy L. Chaffin
	 		 		 	
	Asst. Secretary	 		 		 	
				
		 		 	 /S/ Robert E. Marziano
	 	(SEAL)
		 		 	Robert E. Marziano	 	

  

 10

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00109-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00109-of-00352.parquet"}]]