Document:

Carolina Trust Bank 8-K12G3

 

Exhibit 10.12

 

CAROLINA TRUST BANK 

2005 INCENTIVE STOCK OPTION PLAN

 

Carolina Trust Bank, a
North Carolina corporation (the “Corporation”), does herein set forth the terms of the its 2005 Incentive Stock Option
Plan (the “Plan”) which was adopted by the Corporation’s Board of Directors (the “Board”) subject
to approval by the Corporation’s shareholders, as provided in Paragraph 21 hereof, and by the appropriate regulatory authorities,
as provided by law.

 

1.           Purpose of the
Plan. The purpose of this Plan is to provide for the grant of Incentive Stock Options (an “Option” or “Options”)
qualifying for the tax treatment afforded by Section 422 of the Internal Revenue Code of 1986, as amended, to eligible officers
and employees of the Corporation (“Eligible Employees”) who wish to invest in the Corporation’s common stock,
par value $5.00 per share (the “Common Stock”). The Corporation believes that participation in the ownership of the
Corporation by Eligible Employees will be to the mutual benefit of the Corporation and Eligible Employees. The existence of this
Plan will make it possible for the Corporation and any of its subsidiaries to attract capable individuals to employment in key
employee positions.

 

2.           Administration
of the Plan.   (a)       This Plan shall be administered by the Personnel Committee of the Board (the “Committee”).
The Committee shall consist of at least three (3) members of the Board, all of whom shall qualify as disinterested persons as provided
in Section 16(b), and the rules and regulations promulgated thereunder, of the Securities Exchange Act of 1934, as amended. The
members of the Committee shall be appointed by the Board and shall serve at the pleasure of the Board, which may remove members
from, add members to, or fill vacancies in the Committee.

 

(b)             The Committee shall decide
to whom Options shall be granted under this Plan, the number of shares as to which Options shall be granted, the Option Price (as
hereinafter defined) for such shares and such additional terms and conditions for such Options as the Committee deems appropriate.
The Committee shall interpret the Plan and prescribe, amend and rescind any rules and regulations regarding the Plan. All interpretations
and constructions of the Plan by the Committee shall be final and conclusive.

 

(c)             A majority of the Committee
shall constitute a quorum and the acts of a majority of the members present at any meeting at which a quorum is present, or acts
approved unanimously in writing by the Committee, shall be considered as valid actions by the Committee.

 

(d)             The Board and the Committee
may designate any officers or employees of the Corporation to assist in the administration of this Plan. The Board and the Committee
may authorize such individuals to execute documents on its behalf and may delegate to them such other ministerial and limited discretionary
duties as the Board may deem fit.

 

3.           Shares of Common
Stock Subject to the Plan. The number of shares of Common Stock that shall be available initially for Options under this
Plan is Fifty four thousand three hundred and eighty seven (54,387), subject to adjustment as provided in Paragraph 14 hereof.
Common Stock subject to Options which expire or terminate prior to exercise of the Options shall lapse and such shares shall again
be available for future grants of Options under this Plan.

 

4.
         Eligibility. Options under this Plan
may be granted to any Eligible Employee as determined by the Committee. An individual may hold more than one Option under
this or other plans adopted by the Corporation.

 

5.           Grant of Options.
  (a)       The Committee may authorize the grant of Options to certain current officers and employees of the Corporation. Such Options
shall be granted based upon the past service and the continued participation of those individuals in the management of the Corporation.

 

     

     

    

 

(b)             Upon the forfeiture of
an Option for whatever reason prior to the expiration of the Option Period (as defined in Paragraph 9 hereof) the shares of Common
Stock covered by a forfeited Option shall be available for the granting of additional Options to Eligible Employees during the
remaining term of this Plan upon such terms and conditions as may be determined by the Committee. The number of additional Options
to be granted to specific Eligible Employees during the term of this Plan shall be determined by the Committee as provided in Subparagraph
2(b) hereof.

 

6.           Option Price.
  (a)             The price per share of each Option granted under
this Plan (the “Option Price”) shall be determined by the Committee as of the effective date of grant of such Option.
In no event shall the Option Price be less than 100% of the fair market value of the Common Stock on the date of grant. If an
Optionee (as hereinafter defined) at the time that an Option is granted owns stock possessing more than ten (10%) of the total
combined voting power of all classes of stock of the Corporation, then the Option Price per share of each Option granted under
this Plan shall be no less than 110% of the fair market value of the Common Stock on the date of grant and such Option shall not
be exercisable more than five (5) years from the date of grant. An Option shall be considered as granted on the date that the
Committee acts to grant such Option or such later date as the Committee shall specify in an Option Agreement (as hereafter defined).

 

(b)            The fair market value
of a share of Common Stock shall be determined as follows:

 

(i)             If on the date as of
which such determination is being made, the Common Stock is admitted to trading on a securities exchange or exchanges for which
actual sale prices are regularly reported, or actual sale prices are otherwise regularly published, the fair market value of a
share of Common Stock shall be deemed to be equal to the mean of the closing sale price as reported on each of the five (5) trading
days immediately preceding the date as of which such determination is made; provided, however, that, if a closing
sale price is not reported for each of the five (5) trading days immediately preceding the date as of which such determination
is made, then the fair market value shall be equal to the mean of the closing sale prices on those trading days for which such
price is available.

 

(ii)             If on the date as of
which such determination is made, no such closing sale prices are reported, but quotations for the Common Stock are regularly listed
on the National Association of Securities Dealers Nasdaq system or another comparable system (“System”), the fair market
value of a share of Common Stock shall be deemed to be equal to the average of the closing prices for such Common Stock quoted
on such system on each of the five (5) trading days preceding the date as of which such determination is made. If a closing price
is not available for each of the five (5) trading days, then the fair market value shall be equal to the average of the closing
prices on those trading days during the five-day period for which such prices are available.

 

(iii)           If no such quotations
are available, the fair market value of a share of Common Stock shall be deemed to be the average of the closing bid and asked
prices furnished by a professional securities dealer making a market in the Common Stock, as selected by the Committee, for the
trading date first preceding the date as of which such determination is made.

 

If the Common Stock has
not been listed on any market or System or if the Committee determines that the price as determined above does not represent the
fair market value of a share of Common Stock, the Committee may then consider such other factors as it deems appropriate and then
fix the fair market value for the purposes of this Plan.

 

7.          
Payment of Option Price. Payment for shares subject to an Option must be made in cash.

 

8.          
Terms and Conditions of Grant of Options. Each Option granted pursuant to this Plan shall be evidenced by a written
Incentive Stock Option Agreement (the “Option Agreement”) with each

 

    	2 

     

    

 

Eligible Employee (the “Optionee”) to whom an Option is granted. The
Option Agreement shall be in such form as the Committee shall adopt and may contain such terms and conditions as the Committee
may determine.

 

9.           Option Period.
Each Option Agreement shall set forth a period during which such Option may be exercised (the “Option Period”); provided,
however, that the Option Period shall not exceed ten (10) years after the date of grant of such Option as specified in the
Option Agreement.

 

10.         Limitations on
Grant of Incentive Stock Options.   (a)       Notwithstanding any other provision of this Plan, no person shall be granted an Option
under this Plan which would cause such person’s “annual vesting amount” to exceed $100,000. With respect to any
calendar year, a person’s “annual vesting amount” is the aggregate fair market value of stock subject to incentive
stock options which are first exercisable during such calendar year. The aggregate fair market value of stock with respect to which
incentive stock options are first exercisable during any calendar year shall be determined by taking into account all incentive
stock options granted to such person under all incentive stock options plans of the Corporation or of any of its parent or subsidiary
corporations.

 

(b)             Notwithstanding any other
provision of this Plan, no person shall be granted an Option or Options under this Plan which would result in the total number
of shares granted to such Optionee to exceed 40% of the shares allocated to this Plan, or, if greater, the maximum permitted by
the Commissioner of Banks of North Carolina (hereinafter the “Commissioner of Banks”).

 

11.         Exercise of Incentive
Stock Options.   (a)       An Option shall be exercised by written notice to the
Committee signed by an Optionee or by such other person as may be entitled to exercise such Option. The written notice shall state
the number of shares with respect to which an Option is being exercised and shall either be accompanied by the payment of the
aggregate Option Price for such shares or shall fix a date (not more than ten (10) business days from the date of such notice)
by which the payment of the aggregate Option Price will be made. An Optionee shall not exercise an Option to purchase less than
100 shares, unless the Committee otherwise approves, or unless the partial exercise is for the remaining share available under
such Option.

 

(b)             A certificate or certificates
for the shares of Common Stock purchased by the exercise of an Option shall be issued in the regular course of business subsequent
to the exercise of such Option and the payment therefore. During the Option Period, no person entitled to exercise any Option granted
under this Plan shall have any of the rights or privileges of a shareholder with respect to any shares of Common Stock issuable
upon exercise of such Option, until certificates representing such shares shall have been issued and delivered and the individual’s
name entered as a shareholder of record on the books of the Corporation for such shares.

 

12.         Effect
of Termination of Employment, Retirement, Disability or Death.

 

(a)             In the event of the termination
of employment of an Optionee either by reason of (i) being Discharged for Cause or (ii) voluntary separation on the part of such
Optionee for a reason other than retirement or disability, any Option or Options granted to the Optionee under this Plan, to the
extent not previously exercised or surrendered by the Optionee or expired, shall immediately terminate. “Discharged for Cause”
shall include termination at the sole discretion of the Board because of such Optionee’s personal dishonesty, incompetence,
willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation
of any law, rule or regulation (other than traffic violations or similar offenses), a final cease and desist order, or material
breach of any provision of any employment agreement that such Optionee may have with the Corporation.

 

    	3 

     

    

 

(b)            In the event of the termination
of employment of an Optionee as a result of such Optionee’s retirement, such Optionee shall have the right to exercise any
Option or Options granted to the Optionee under this Plan, to the extent that they have not previously been exercised or surrendered
by the Optionee or expired, for a period of three (3) months after the date of retirement, but in no event may any Option be exercised
later than the end of the Option Period provided in such Option Agreement in accordance with Paragraph 9 hereof. Notwithstanding
any other provision contained herein, or in any Option Agreement, upon retirement, any Option then held by an Optionee shall be
exercisable immediately in full. For purposes of this Plan, the term “retirement” shall mean (i) termination of an
Optionee’s employment under conditions which would constitute retirement under any tax qualified retirement plan maintained
by the Corporation or (ii) attaining age 65.

 

(c)             In the event of the termination
of employment of an Optionee by reason of such Optionee’s disability, such Optionee shall have the right to exercise any
Options held by the Optionee, to the extent that they previously have not been exercised or surrendered by the Optionee or expired,
notwithstanding any limitations placed on the exercise of such Options by this Plan or an Option Agreement, immediately in full
and at any time within twelve (12) months after the last date on which such Optionee provides services as an officer or an employee
of the Corporation before being disabled, but in no event may any Option be exercised later than the end of the Option Period provided
in the Option Agreement in accordance with Paragraph 9 hereof. For purposes of this Plan, the term “disability” shall
be defined in the same manner as such term is defined in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended.

 

(d)            In the event that an
Optionee should die while employed by the Corporation, or within three (3) months after retirement, any Option or Options granted
to the Optionee under this Plan and not previously exercised or surrendered by the Optionee or expired shall vest and shall be
exercisable, according to their respective terms, by the personal representative of such Optionee or by any person or persons who
acquired such Options by bequest or inheritance from such Optionee, notwithstanding any limitations placed on the exercise of such
Options by this Plan or any Option Agreement, immediately in full and at any time within twelve (12) months after the date of death
of such Optionee, but in no event may any Option be exercised later than the end of the Option Period provided in such Option Agreement
in accordance with Paragraph 9 hereof. Any references herein to an Optionee shall be deemed to include any person entitled to exercise
an Option under the terms of this Plan after the death of such Optionee.

 

13.         Effect
of Plan on Employment Status. The fact that the Committee has granted an Option to an Optionee under this Plan shall not
confer on such Optionee any right to employment with the Corporation, or to a position as an officer or an employee of the Corporation,
nor shall it limit the right of the Corporation to remove such Optionee from any position held by the Optionee or to terminate
the Optionee’s employment at any time.

 

14.          Adjustment
Upon Changes in Capitalization; Dissolution or Liquidation.

 

(a)             In the event of a change
in the number of shares of the Common Stock outstanding by reason of a stock dividend, stock split, recapitalization, reorganization,
merger, exchange of shares, or other similar capital adjustment, prior to the termination of an Optionee’s rights under this
Plan, equitable proportionate adjustments shall be made by the Committee in (i) the number and kind of shares which remain available
under this Plan and (ii) the number, kind, and the Option Price of shares subject to unexercised Options under this Plan. The adjustments
to be made shall be determined by the Committee and shall be consistent with such change or changes in the Corporation’s
total number of outstanding shares; provided, however, that no adjustment shall change the aggregate Option Price
for the exercise of Options granted under this Plan.

 

    	4 

     

    

 

(b)             The grant of Options
under this Plan shall not affect in any way the right or power of the Corporation or its shareholders to make or authorize any
adjustment, recapitalization, reorganization, or other change in the Corporation’s capital structure or its business, or
any merger of the Corporation, or to issue bonds, debentures, preferred or other preference stock ahead of or affecting the Common
Stock or the rights thereof, or the dissolution or liquidation of the Corporation, or any sale or transfer of all or any part of
the Corporation’s assets or business.

 

(c)             Upon the effective date
of the dissolution or liquidation of the Corporation, or of a reorganization or merger of the Corporation with one or more other
corporations in which the Corporation is not the surviving corporation, or the transfer of all or substantially all of the assets
or shares of the Corporation to another person or entity, or a tender offer approved by the Board (any such transaction being hereinafter
referred to as an “Acceleration Event”), this Plan and any Options granted hereunder shall terminate unless provision
is made in writing in connection with such Acceleration Event for the continuance of this Plan and for the assumption of Options
granted hereunder, or the substitution for such Options of new options for the shares of the successor corporation, or a parent
or a subsidiary thereof, with such appropriate adjustments, as may be determined or approved by the Committee or the successor
to the Corporation, to the number, kind and Option Price of shares subject to such substituted options in which event this Plan
and Options granted hereunder, or the new options substituted therefore, shall continue in the manner and under the terms so provided,
but any vesting periods or other restrictions on exercise that would otherwise apply shall no longer be applicable. Upon the occurrence
of any Acceleration Event in which provision is not made for the continuance of this Plan and for the assumption of Options granted
hereunder, or the substitution for such Options of new options for the shares of a successor corporation or a parent or a subsidiary
thereof, each Optionee to whom an Option has been granted under this Plan (or such person’s personal representative, the
executor or administrator of such person’s estate, or any person who acquired the right to exercise such Option from such
person by bequest of inheritance) shall be entitled, prior the effective date of any Acceleration Event, (i) to exercise, in whole
or in part, the Optionee’s rights under any Option granted to the Optionee without any regard to any restrictions on exercise
that would otherwise apply, or (ii) to surrender any such Option to the Corporation in exchange for receipt of cash equivalent
to the amount by which the fair market value of the shares of Common Stock such person would have received had such person exercised
the Option in full immediately prior to consummation of such Acceleration Event exceeds the applicable aggregate Option Price.
To the extent that a person, pursuant to this Subparagraph 14(c), has a right to exercise or surrender any Option on account of
a Acceleration Event which such person otherwise would not have had at that time, such right shall be contingent upon the consummation
of the Acceleration Event.

 

15.         Non-Transferability.
Any Option granted under this Plan shall not be assignable or transferable except, in the case of the death of an Optionee, by
will or by the laws of descent and distribution. In the event of the death of an Optionee, the personal representative, the executor
or the administrator of such Optionee’s estate, or the person or persons who acquired by bequest or inheritance the rights
to exercise such Option, may exercise or surrender any Option or portion thereof to the extent not previously exercised or surrendered
by an Optionee or expired, in accordance with the terms of the Option Agreement, prior to the expiration of the exercise period
as specified in Subparagraph 12(d) hereof.

 

16.         Tax Withholding.
The employer of a person granted an Option under this Plan shall have the right to deduct or otherwise effect a withholding or
payment of any amount required by federal or state laws to be withheld or paid with respect to the grant, exercise or surrender
for cash of any Option or the sale of stock acquired upon the exercise of an Option in order for the employer to obtain a tax

 

    	5 

     

    

 

deduction
otherwise available as a consequence of such grant, exercise, surrender for cash, or sale, as the case may be.

 

17.         Listing and Registration
of Option Shares. Any Option granted under the Plan shall be subject to the requirement that if at any time the Committee
shall determine, in its sole discretion, that the listing, registration, or qualification of the shares of Common Stock covered
thereby upon any securities exchange or under any state or federal law or the consent or approval of any governmental regulatory
body is necessary or desirable as a condition of, or in connection with, the granting of such Option or the issuance or purchase
of shares thereunder, such Option may not be exercised in whole or in part unless and until such listing, registration, or qualification
consent, or approval shall have been effected or obtained free of any conditions not acceptable to the Committee.

 

18.         Exculpation and
Indemnification. In connection with this Plan, no member of the Committee shall be personally liable for any act or omission
to act in such person’s capacity as a member of the Committee, nor for any mistake in judgment made in good faith, unless
arising out of, or resulting from, such person’s own bad faith, gross negligence, willful misconduct, or criminal acts. To
the extent permitted by applicable law and regulation, the Corporation shall indemnify and hold harmless the members of the Committee,
and each other officer of employee of the Corporation to whom any duty or power relating to the administration or interpretation
of this Plan may be assigned or delegated, from and against any and all liabilities (including any amount paid in settlement of
a claim with approval of the Board) and any costs or expense (including reasonable counsel fees) incurred by such person arising
out of, or as a result of, such person’s duties, responsibilities, and obligations under this Plan, other than such liabilities,
costs, and expenses as may arise out of, or result from, the bad faith, gross negligence, willful misconduct, or criminal acts
of such persons.

 

19.         Amendment and
Modification of the Plan. The Board may at any time and from time to time amend or modify this Plan in any respect; provided,
however, that no amendment or modification shall be made that increases the total number of shares covered by this Plan
or effects any change in the categories of persons who may receive Options under this Plan or materially increases the benefits
accruing to Optionees under this Plan unless such change is approved by the holders of two thirds of the shares of Common Stock.
Any amendment or modification of this Plan shall not materially reduce the benefits under any Option theretofore granted to an
Optionee under this Plan without the consent of such Optionee or the permitted transferee thereof.

 

20.         Termination and
Expiration of the Plan. This Plan may be abandoned, suspended, or terminated at any time by the Board; provided,
however, that abandonment, suspension, or termination of this Plan shall not affect any Options then outstanding under this
Plan. No Option shall be granted pursuant to this Plan after ten (10) years from the effective date of this Plan as provided in
Paragraph 21 hereof.

 

21.         Effective Date;
Shareholder Approval. This Plan has been adopted by the Board. This Plan shall not be effective until approved by the
Commissioner of Banks and by the holders of two thirds of the shares of Common Stock.

 

22.         Captions and
Headings; Gender and Number. Captions and paragraph headings used herein are for convenience only, do not modify or affect
the meaning of any provision herein, are not a part hereof, and shall not serve as a basis for interpretation or in construction
of this Plan. As used herein,

 

    	6 

     

    

 

the masculine gender shall include the feminine and neuter, the singular number the plural, and
vice versa, whenever such meanings are appropriate.

 

23.         Expenses of Administration
of Plan. All costs and expenses incurred in the operation and administration of this Plan shall be borne by the Corporation.

 

24.         Governing Law.
Without regard to the principles of conflicts of laws, the laws of the State of North Carolina shall govern and control the validity,
interpretation, performance, and enforcement of this Plan.

 

25.         Inspection of
Plan. A copy of this Plan, and any amendments thereto or modification thereof, shall be maintained by the Secretary of
the Corporation and shall be shown to any proper person making inquiry about it.

 

7Carolina Trust Bank 8-K12G3

 

Exhibit 10.13 

 

 

CAROLINA
TRUST BANK

2005 NONSTATUTORY STOCK OPTION PLAN

 

Carolina
Trust Bank, a North Carolina corporation (the “Corporation”), does herein set forth the terms of its 2005 Nonstatutory
Stock Option Plan (the “Plan”), which was adopted by the Board of Directors (the “Board”) of the Corporation
subject to approval by the Corporation’s shareholders as provided in Paragraph 19 hereof, and by the appropriate regulatory
authorities as provided by law.

 

1.           Purpose
of this Plan. The purpose of this Plan is to provide for the grant of Nonstatutory Stock Options (the “Options”
or singularly, “Option”) to directors of the Corporation who wish to invest in the Corporation’s common stock,
par value $5.00 per share (the “Common Stock”). The Board believes the existence of this Plan will make it possible
for the Corporation to attract capable individuals to serve with the Corporation or any of its subsidiaries and on the Board.

 

2.           Administration
of this Plan. (a)
This Plan shall be administered by the Executive Committee of the Board (the “Committee”). The Committee shall have
full power and authority to construe, interpret and administer this Plan. All actions, decisions, determinations, or interpretations
of the Committee shall be final, conclusive, and binding upon all parties.

 

(b)             The
Committee may designate any officers or employees of the Corporation to assist in the administration of this Plan. The Committee
may authorize such individuals to execute documents on its behalf and may delegate to them such other ministerial and limited
discretionary duties as the Committee may see fit.

 

3.           Shares
of Common Stock Subject to this Plan. The number of shares of Common Stock that shall be available initially
for Options under this Plan is Fifty five thousand two hundred and forty two (55,242), subject to adjustment as provided in
Paragraph 12. Common Stock subject to Options which expire or terminate prior to exercise of the Options shall lapse and such
shares shall again be available for future grants of Options under this Plan.

 

4.           Eligibility.
(a) Options under this Plan may be granted to any director as determined by the Committee.
An individual may hold more than one Option under this or other plans adopted by the Corporation.

 

(b)             Upon
the forfeiture of an Option for whatever reason prior to the expiration of the Option Period (as defined in Paragraph 8 hereof)
the shares of Common Stock covered by a forfeited Option shall be available for the granting of additional Options during the
remaining term of this Plan upon such terms and conditions and to such Optionees (as defined below) as may be determined by the
Committee.

 

5.           Option
Price. (a)
The price per share of each Option granted under this Plan (the “Option Price”) shall be determined by the Committee
as of the effective date of grant of such Option. In no event shall such Option Price be less than 100% of the fair market value
of the Common Stock on the date of the grant. An Option shall be considered as granted on the later of (i) the date the Committee
acts to grant such Option, or (ii) such later date as the Committee shall specify in an Option Agreement (as hereinafter defined).

 

    	 

    	 

    

 

(b)             The
fair market value of a share of Common Stock shall be determined as follows:

 

(i)             If
on the date as of which such determination is being made, the Common Stock is admitted to trading on a securities exchange or
exchanges for which actual sale prices are regularly reported, or actual sale prices are otherwise regularly published, the fair
market value of a share of the Common Stock shall be deemed to be equal to the mean of the closing sale price as reported for
each of the five (5) trading days immediately preceding the date as of which such determination is made; provided,
however, that, if a closing sale price is not reported
for each of the five (5) trading days immediately preceding the date as of which such determination is made, then the fair market
value shall be equal to the mean of the closing sale prices on those trading days for which such price is available.

 

(ii)             If
on the date as of which such determination is made, no such closing sale prices are reported, but quotations for the Common Stock
are regularly listed on the National Association of Securities Dealers Nasdaq system or another comparable system (“System”),
the fair market value of a share of Common Stock shall be deemed to be equal to the average of the closing prices for such Common
Stock quoted on such system on each of the five (5) trading days preceding the date as of which such determination is made. If
a closing price is not available for each of the five (5) trading days, then the fair market value shall be equal to the average
of the closing prices on those trading days during the five-day period for which such prices are available.

 

(iii)           If
no such quotations are available, the fair market value of a share of Common Stock shall be deemed to be the average of the closing
bid and asked prices furnished by a professional securities dealer making a market in such shares, as selected by the Committee,
for the trading date first preceding the date as of which such determination is made.

 

If
the Common Stock has not been listed on any market or System or if the Committee determines that the price as determined above
does not represent the fair market value of a share of Common Stock, the Committee may then consider such other factors as it
deems appropriate and then fix the fair market value for the purposes of this Plan.

 

6.           Payment
of Option Price. Payment for shares subject to an Option must be made in cash.

 

7.           Terms
and Conditions of Grant of Options.    (a) Each Option granted pursuant to this Plan shall be evidenced by a
written Nonstatutory Stock Option Agreement (the “Option Agreement”) with each employee or director to whom an
Option is granted (the “Optionee”). The Option Agreement shall be in the form the Committee shall adopt and may
contain such terms and conditions as the Committee may determine.

 

(b)             Notwithstanding
any other provision of this Plan, no person shall be granted an Option or Options under this Plan which would result in the total
number of shares granted to such Optionee to exceed 40% of the shares allocated to this Plan, or, if greater, the maximum permitted
by the Commissioner of Banks of North Carolina (the “Commissioner of Banks”).

 

8.           Option
Period. Each Option Agreement shall set forth a period during which such Option may be exercised (the “Option
Period”)’ provided, however,
that the Option Period shall not exceed ten (10) years after the date of grant of such Option as specified in an Option Agreement.

 

    	 

    	 

    

  

9.           Exercise
of Options.  (a) An Option shall be exercised by written notice to the Committee signed by an Optionee or by
such other person as may be entitled to exercise such Option or to surrender such Option. The written notice shall state the
number of shares with respect to which an Option is being exercised and shall either be accompanied by the payment of the
aggregate Option Price for such shares or shall fix a date (not more than ten (10) business days after the date of such
notice) by which the payment of the aggregate Option Price will be made. An Optionee shall not exercise an Option to purchase
less than 100 shares, unless the Committee otherwise approves or unless the partial exercise is for the remaining shares
available under such Option.

 

(b)             A
certificate or certificates for the shares of Common Stock purchased by the exercise of an Option shall be issued in the regular
course of business following the receipt of the notice of exercise of such Option and the payment therefor. During the Option
Period, no person entitled to exercise any Option granted under this Plan shall have any of the rights or privileges of a shareholder
with respect to any shares of the Common Stock issuable upon exercise of such Option, until certificates representing such shares
shall have been issued and delivered and the individual’s name entered as a shareholder of record on the books of the Corporation
for such shares.

 

10.        Effect
of Leaving the Corporation or Death. (a) In the event that an Optionee terminates the relationship with the Corporation
for any reason other than retirement, disability, death, or, in the event that the Optionee is a director as provided for in paragraph
(e) of this Section, the natural expiration of the director’s term on the board including but not limited to the director’s
decision not to pursue an additional term on the board or the director not being reelected to the board, any Option granted to
the Optionee under this Plan, to the extent not previously exercised or surrendered by the Optionee or expired, shall immediately
terminate.

 

(b)             In
the event of an Optionee’s retirement, such Optionee shall have the right to exercise an Option granted under this Plan,
to the extent that it has not previously been exercised or surrendered by the Optionee or expired, for such period of time as
may be determined by the Committee and specified in the Option Agreement, but in no event may any Option be exercised later than
the end of the Option Period provided in the Option Agreement in accordance with Paragraph 8 hereof. Notwithstanding any other
provision contained this Plan, or in any Option Agreement, upon retirement, any Option then held by an Optionee shall be exercisable
immediately in full. For purposes of this Plan, the term “retirement” for a Director shall mean termination of a Director’s
membership on the Board (i) at any time after attaining age 65 with the approval of the Committee; or (ii) at the election of
the Director, at any time after not less than five (5) years service as a member of the Board.

 

(c)             In
the event of an Optionee’s disability, such Optionee shall have the right to exercise an Option granted under this Plan,
to the extent that it has not previously been exercised or surrendered by the Optionee or expired, for such period of time as
may be determined by the Committee and specified in the Option Agreement, but in no event may any Option be exercised later than
the end of the Option Period provided in the Option Agreement in accordance with Paragraph 8 hereof. Notwithstanding any other
provision contained this Plan, or in any Option Agreement, upon an Optionee’s disability, any Option then held by the Optionee
shall be exercisable immediately in full. For purposes of this Plan, the term “disability” shall be defined as may
be determined by the Committee.

 

(d)             In
the event that an Optionee should die while serving on the Board or as an employee during the Option Period, an Option granted
under this Plan, to the extent that it has not

 

    	 

    	 

    

  

previously been exercised or surrendered by the Optionee or expired, shall vest
and shall be exercisable, in accordance with the terms of the Option Agreement, by the personal representative of such Optionee,
the executor or administrator of such Optionee’s estate, or by any person or persons who acquired such Option by bequest
or inheritance from such optionee, notwithstanding any limitations placed on the exercise of such Option by this Plan or the Option
Agreement, at any time within twelve (12) months after the date of death of such Optionee. In no event may an Option be exercised
later than the end of the Option Period provided in the Option Agreement in accordance with Paragraph 8 hereof. Any references
herein to an Optionee shall be deemed to include any person entitled to exercise an Option after the death of such Optionee under
the terms of this Plan.

 

(e)             In
the event the Optionee is a Director and either: (i) his term expires and he chooses not to run for reelection; or, (ii) he is
not reelected to serve beyond his current term, the Optionee shall have the right to exercise the Option, to the extent it has
not been exercised or expired, notwithstanding ny other provision contained in this Plan, or in any Option Agreement, immediately
in full for the remainder of such ten (10) year period.

 

11.        Effect
of Plan on Status with Corporation. The fact that an Optionee has been granted an Option under this Plan shall
not confer on such Optionee any right to continued service on the Board, nor shall it limit the right of the Corporation to remove
such Optionee from service with the Corporation at any time.

 

12.       Adjustment
Upon Changes in Capitalization; Dissolution or
Liquidation.

 

(a)             In
the event of a change in the number of shares of Common Stock outstanding by reason of a stock dividend, stock split, recapitalization,
reorganization, merger, exchange of shares, or other similar capital adjustment prior to the termination of an Optionee’s
rights under this Plan, equitable proportionate adjustments shall be made by the Committee in (i) the number and kind of
shares which remain available under this Plan and (ii) the number, kind, and the Option Price of shares subject to the unexercised
portion of an Option under this Plan. The adjustments to be made shall be determined by the Committee and shall be consistent
with such change or changes in the Corporation’s total number of outstanding shares; provided,
however, that no adjustment shall change the aggregate
Option Price for the exercise of Options granted under this Plan.

 

(b)             The
grant of Options under this Plan shall not affect in any way the right or power of the Corporation or its shareholders to make
or authorize any adjustment, recapitalization, reorganization, or other change in the Corporation’s capital structure or
its business, or any merger or consolidation of the Corporation, or to issue bonds, debentures, preferred or other preference
stock ahead of or affecting the Common Stock or the rights thereof, or the dissolution or liquidation of the Corporation, or any
sale or transfer of all or any part of the Corporation’s assets or business.

 

(c)             Upon
the effective date of the dissolution or liquidation of the Corporation, or of a reorganization, merger, or consolidation of the
Corporation with one or more other corporations in which the Corporation is not the surviving corporation, or the transfer of
all or substantially all of the assets or shares of the Corporation to another person or entity, or a tender offer approved by
the Board (any such transaction being hereinafter referred to as an “Acceleration Event”), this Plan and any Options
granted hereunder shall terminate unless provision is made in writing in connection with such Acceleration Event for the continuance
of this Plan and for the assumption of Options granted hereunder, or the substitution for such Options of new options for the
shares of the successor corporation, or a parent or a subsidiary thereof, with such appropriate

 

    	 

    	 

    

  

adjustments as may be determined
or approved by the Board, or the successor to the Corporation, to the number, kind and Option Price of shares subject to such
substituted options. In such event, this Plan and Options granted hereunder, or the new options substituted therefore, shall continue
in the manner and under the terms so provided, but any vesting periods or other restrictions on exercise that would otherwise
apply shall no longer be applicable. Upon the occurrence of any Acceleration Event in which provision is not made for the continuance
of this Plan and for the assumption of Options granted hereunder, or the substitution for such Options of new options for the
shares of a successor corporation or a parent or a subsidiary thereof, each Optionee to whom an Option has been granted under
this Plan (or such person’s personal representative, the executor or administrator of such person’s estate, or any
person who acquired the right to exercise such Option from such person by bequest or inheritance) shall be entitled, prior to
the effective date of the Acceleration Event, (i) to exercise, in whole or in part, the Optionee’s rights under any Option
granted to the Optionee without any regard to any restrictions on exercise that would otherwise apply, or (ii) to surrender any
such Option to the Corporation in exchange for receipt of cash equivalent to the amount by which the fair market value of the
shares of Common Stock such person would have received had such person exercised the Option in full immediately prior to consummation
of the Acceleration Event exceeds the applicable aggregate Option Price. To the extent that a person, pursuant to this Subparagraph 12(c)
has a right to exercise or surrender any Option on account of an Acceleration Event which such person otherwise would not have
had at that time, such right shall be contingent upon the consummation of the Acceleration Event.

 

13.        Non-Transferability.
An Option granted under this Plan shall not be assignable or transferable except, in the event of the death of an Optionee,
by will or by the laws of descent and distribution. In the event of the death of an Optionee, his personal representative, the
executor or the administrator of such Optionee’s estate, or the person or persons who acquired by bequest or inheritance
the rights to exercise or to surrender such Options, may exercise or surrender any Option or portion thereof to the extend not
previously exercisable or surrendered by an Optionee or expired, in accordance with the terms of the Option Agreement, prior to
the expiration of the exercise period as specified in Subparagraph 10(d) hereof.

 

14.       Tax
Withholding. The Corporation shall have the right to deduct or otherwise effect a withholding or payment of any
amount required by federal or state laws to be withheld or paid with respect to the grant, exercise or surrender for cash of any
Option or the sale of stock acquired upon the exercise of an Option in order for the Corporation or any of its subsidiaries to
obtain a tax deduction otherwise available as a consequence of such grant, exercise, surrender for cash, or sale, as the case
may be.

 

15.        Listing
and Registration of Option Shares. Any Option granted
under this Plan shall be subject to the requirement that if at any time the Committee shall determine, in its sole discretion,
that the listing, registration, or qualification of the shares covered thereby upon any securities exchange or under any state
or federal law or the consent or approval of any governmental regulatory body is necessary or desirable as a condition of, or
in connection with, the granting of such Option or the issuance or purchase of shares thereunder, such Option may not be exercised
in whole or in part unless and until such listing, registration, qualification, consent, or approval shall have been effected
or obtained free of any conditions not acceptable to the Committee.

 

    	 

    	 

    

  

16.       Exculpation
and Indemnification. In connection with this Plan, no member of the Committee shall be personally liable for any
act or omission to act in such person’s capacity as a member of the Committee, nor for any mistake in judgment made in good
faith, unless arising out of, or resulting from, such person’s own bad faith, gross negligence, willful misconduct, or criminal
acts. To the extent permitted by applicable law and regulation, the Corporation shall indemnify and hold harmless the members
of the Committee, and each other officer or employee of the Corporation to whom any duty or power relating to the administration
or interpretation of this Plan may be assigned or delegated, from and against any and all liabilities (including any amount paid
in settlement of a claim with the approval of the Committee) and any costs or expenses (including reasonable counsel fees) incurred
by such persons arising out of, or as a result of, any act or omission to act in connection with the performance of such person’s
duties, responsibilities, and obligations under this Plan, other than such liabilities, costs, and expenses as may arise out of,
or result from, the bad faith, gross negligence, willful misconduct, or criminal acts of such persons.

 

17.       Amendment
and Modification of this Plan. The Board may at any time, and from time to time, amend or modify this Plan in any
respect; provided, however,
that no amendment or modification shall be made that increases the total number of shares covered by this Plan or effects any
change in the category of persons who may receive Options under this Plan or materially increases the benefits accruing to Optionees
under this Plan unless such change is approved by the holders of two thirds of the outstanding shares of the Common Stock. Any
amendment or modification of this Plan shall not materially reduce the benefits under any Option therefore granted to an Optionee
under this Plan without the consent of such Optionee or any permitted transferee.

 

18.        Termination
and Expiration of this Plan. This Plan may be abandoned, suspended, or terminated at any time by the Board;
provided, however, that abandonment, suspension, or termination of this Plan shall not affect any Options
then outstanding under this Plan. No Option shall be granted pursuant to this Plan after ten (10) years from the effective date
of this Plan as provided in Paragraph 19 hereof.

 

19.       Effective
Date; Shareholder Approval. This Plan has been adopted by the Board. The Plan shall not be effective until approved
by the Commissioner of Banks and the holders of two thirds of the outstanding shares of Common Stock.

 

20.       Captions
and Headings; Gender and Number. Captions and paragraph headings used herein are for convenience only, do not modify
or affect the meaning of any provision herein, are not a part hereof, and shall not serve as a basis for interpretation or in
construction of this Plan. As used herein, the masculine gender shall include the feminine and neuter, the singular number, the
plural, and vice versa, whenever such meanings are appropriate.

 

21.       Expenses
of Administration of Plan. All costs and expenses incurred in the operation and administration of this Plan shall
be borne by the Corporation.

 

22.       Governing
Law. Without regard to the principles of conflicts of laws, the laws of the State of North Carolina shall govern
and control the validity, interpretation, performance, and enforcement of this Plan.

 

    	 

    	 

    

 

23.       Inspection
of Plan. A copy of this Plan, and any amendments thereto or modifications thereof, shall be maintained by the Secretary
of the Corporation and shall be shown to any proper person making inquiry about it.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00261-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00261-of-00352.parquet"}]]