Document:

Employment Agreement

 Exhibit 10.1 
 THE MILLS CORPORATION 
 EMPLOYMENT AGREEMENT 
 This EMPLOYMENT AGREEMENT (“Agreement”) is executed this 16th day of March 2006 (the “Effective Date”), by and between THE MILLS
CORPORATION, a Delaware corporation (the “Company”), and JAMES A. NAPOLI (“Executive”). 
 Recitals

 R-1 The Company is engaged directly and indirectly in the business of developing, constructing, leasing, financing and
managing super regional value-oriented retail and entertainment-based shopping centers, malls, strip centers and other commercial properties. 
 R-2 Executive currently is employed by the Company in the capacity of President, Operating Division and has considerable experience and an intimate knowledge of the business and affairs of the Company, its policies, methods,
personnel and operations and the Company wishes to continue to employ Executive, and Executive wishes to accept continued employment with the Company, on the terms and conditions set forth herein. 
 Agreement 
 NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and Executive, intending to be legally and equitably bound, hereby agree as follows: 
 1. Employment; Employment Period. 
 1.1 Employment. The Company hereby employs Executive, and Executive hereby accepts employment with the Company, all upon the terms and conditions set forth in this Agreement. 
 1.2 Employment Period. The term of Executive’s employment under this Agreement shall be the period commencing on the Effective Date and
ending on December 31, 2007 (the “Employment Period”); provided that, commencing on January 1, 2008, and on each January 1 thereafter, the Employment Period shall automatically be extended for one (1) year unless either
party has given written notice of non-renewal to the other party at least ninety (90) days prior to the then scheduled expiration of the Employment Period, and each such extension shall, ipso facto, become part of (and incorporated into)
the Employment Period for all purposes of this Agreement; and provided, further, that Executive’s employment hereunder may be terminated prior to the end of the Employment Period as provided in Section 6 hereof. Notwithstanding anything in
this Agreement to the contrary, upon a Change in Control (as defined in Section 7.1) of the Company, the term of Executive’s employment under this Agreement shall be the longer of the period commencing on the effective date of such Change
in Control and ending on the second anniversary of the effective date of the Change in Control and the term that would otherwise apply pursuant to this Section 1.2, subject in any case to earlier termination of Executive’s employment
pursuant to Section 6 hereof. 
 2. Duties. During the Employment Period, Executive shall be employed by the Company as an
executive. In such capacity, Executive shall perform such duties and responsibilities, and shall have such title or titles, as are reasonably assigned to Executive by the Company in its sole discretion during the Employment Period. 

 3. Performance of Duties/Standard of Care. During the Employment Period, Executive shall
act at all times in the best interests of the Company and diligently discharge his duties and responsibilities to the Company under this Agreement. Without limiting the generality of the foregoing, Executive shall at all times abide strictly by the
policies of the Company including, without limitation, The Mills Corporation Code of Business Conduct and Ethics as it may be amended from time to time in the Company’s sole discretion (the “Code of Conduct”). Such duties shall be
rendered at the principal office of the Company and Executive shall travel to other places as the interests, needs, business or opportunity of the Company shall require, subject to any rights Executive may have under Section 6.7(b)(i) hereof.
During the Employment Period, Executive agrees to devote his full business time, attention and energies to the business of the Company and its subsidiaries and not to engage in any other business activity, whether or not such business activity is
pursued for gain, profit or other economic or financial advantage, except that Executive may serve in charitable or philanthropic capacities or positions and serve as a director of other companies which do not directly or indirectly compete with the
Company with the prior consent of the Chief Executive Officer or President of the Company, in each case so long as such activities comply with the Code of Conduct, are not injurious to the Company and do not interfere with the performance of
Executive’s duties hereunder. In connection with the performance of his duties hereunder, Executive shall at all times seek to exercise the highest degree of loyalty to the Company and shall comply with the highest standards of conduct in the
performance of his duties. Subject to compliance with the Code of Conduct and the provisions of this Agreement, this Section 3 shall not be construed to prevent or prohibit Executive from managing his personal assets or investments as long as
such activities do not interfere with the performance of Executive’s duties hereunder. 
 4. Compensation and Expenses.

 4.1 Base Salary. 
 (a) The Company shall pay to Executive, during the Employment Period, an annual base salary (the “Base Salary”) in accordance with the Company’s normal payroll practice applicable to executives of the Company in the same or
similar positions to that of Executive. The Base Salary shall be at the rate of $456,023 from April 1, 2005 to March 31, 2006. The Base Salary shall be reviewed effective as of April 1, 2006 and at least annually thereafter for such
adjustments as may be determined by the Executive Compensation Committee of the Board of Directors (the “Executive Compensation Committee”) to be appropriate; provided, however, that the Base Salary in effect from April 1, 2005
through the end of the Employment Period shall not be decreased below $456,023 except, prior to a Change in Control, as part of a salary reduction program approved by the Board of Directors that is generally applicable to executives of the Company
in the same or similar positions to that of Executive. 
 (b) For purposes of this Agreement, if Executive is a member of the Company’s
Operating Committee he shall be deemed to be in the same or similar position to that of all other members of the Company’s Operating Committee except the Company’s President. 
  

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 4.2 Annual Bonus Program. 
 (a) During each calendar year of the Employment Period, Executive will be eligible to participate in the Company’s annual short-term performance
incentive plan applicable to executives in the same or similar positions to that of Executive, as such plan may exist from time to time (the “PIP”). The amount of Executive’s target annual bonus under the PIP for each calendar year
during the Employment Period (each a “Target Annual Bonus”) shall be determined by the Executive Compensation Committee in its discretion. The amount of the actual annual bonus, if any, awarded to Executive under the PIP with respect to
any calendar year during the Employment Period (each an “Annual Bonus Award”) shall be determined in accordance with the terms of the PIP as administered by the Executive Compensation Committee. All decisions regarding the criteria to be
used to determine awards under the PIP (which may consist of both corporate and individual performance factors and metrics), the amount, if any, to be awarded to Executive under the PIP with respect to any calendar year during the Employment Period
and interpretations of the terms of the PIP shall be made solely and exclusively by the Executive Compensation Committee in its discretion. The Company reserves the right to change, alter, or terminate the PIP at any time in its sole discretion;
provided, that no such change, alteration or termination shall adversely affect Executive’s rights under this Agreement, or with respect to any Annual Bonus Award made prior to the date of such change, alteration or termination, without
Executive’s prior written consent. 
 (b) Each Annual Bonus Award shall be paid to Executive in cash when the Company customarily pays
annual bonus awards to other executives in the same or similar positions to that of Executive under the PIP; provided that payment shall in all events be made not later than the end of the calendar year immediately following the annual bonus
performance period to which the bonus relates. 
 4.3 Long Term Incentive Plan. Executive will be eligible to participate in the
Company’s long term incentive plan applicable to executives in the same or similar positions to that of Executive, as such plan may exist from time to time (the “LTIP”). Executive’s target LTIP award for any LTIP performance
period during the Employment Period (each a “Target LTIP Award”) shall be determined by the Executive Compensation Committee in its discretion. The amount of the actual LTIP award, if any, made to Executive with respect to any LTIP
performance period during the Employment Period (each an “LTIP Award”) shall be determined in accordance with the terms of the LTIP as administered by the Executive Compensation Committee. All decisions regarding the criteria to be used to
determine LTIP Awards (which may consist of both corporate and individual performance factors and metrics), the actual amount of the LTIP Award, if any, with respect to any LTIP performance period during the Employment Period, the form of payment of
such awards (which may be in cash, shares of Company Stock or a combination thereof, or any other medium chosen by the Executive Compensation Committee), and interpretations of the terms of the LTIP shall be made solely and exclusively by the
Executive Compensation Committee in its discretion. The Company reserves the right to change, alter or terminate the LTIP at any time in its sole discretion; provided, that no such change, alteration or termination shall adversely affect
Executive’s rights under this Agreement or under any LTIP Award made prior to the date of such change, alteration or termination. Payment shall be made as soon as practicable after completion of each performance period, provided that it shall
in all events be made not later than the end of the calendar year immediately following the completion of any performance period. 
  

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 4.4 Expense Reimbursement Policy. During the Employment Period, the Company shall reimburse
Executive for all ordinary and reasonable business expenses paid by Executive in connection with the performance of his duties under this Agreement in accordance with and subject to the Company’s expense reimbursement policies then in effect
for executives in the same or similar positions to that of Executive. 
 5. Personnel Policies and Benefits. 
 5.1 Benefits Generally. During the Employment Period, Executive shall be entitled to participate in all benefit programs, policies or plans adopted
by the Company and applicable to executives in the same or similar positions to that of Executive on the same basis as such other executives, as such programs, policies or plans may be interpreted, adopted, revised or terminated from time to time by
the Company in its sole discretion. All matters of eligibility for coverage or benefits under any such benefit programs, policies or plans shall be determined in accordance with the provisions of the applicable program, policy or plan. The Company
reserves the right to change, alter, interpret or terminate any such programs, policies or plans at any time in its sole discretion. 
 5.2 Personnel Policies. Except as otherwise provided herein, Executive’s employment shall be subject to the personnel policies that apply generally to the Company’s executives in the same or similar positions to that of
Executive, as the same may be interpreted, adopted, revised or terminated from time to time during the Employment Period by the Company in its sole discretion. 
 6. Termination. 
 6.1 Payment of Accrued But Unpaid Amounts Upon Termination.
Notwithstanding any provision in this Agreement to the contrary, in the event of termination of Executive’s employment for any reason during the Employment Period, Executive or his beneficiaries or estate (as provided in Section 10.2)
shall be entitled to receive, in addition to any other payments or benefits required to be made or provided under the remaining provisions of this Article 6, within fourteen (14) days after the Effective Date of Termination (as defined below):

 (a) any accrued but unpaid Base Salary for services rendered by Executive to the Company prior to the Effective Date of Termination;

 (b) any earned but unpaid Annual Bonus Awards for calendar years that have ended prior to the Effective Date of Termination; 

(c) reimbursement of any accrued but unpaid expenses required to be reimbursed under this Agreement that were incurred by Executive prior to the
Effective Date of Termination; 
 (d) payment for any accrued but unpaid vacation time to the extent consistent with Company policy in
effect as of the Effective Date of Termination; and 
 (e) any earned but unpaid LTIP Awards. 
 Except as specifically provided in this Agreement and under the terms of any incentive compensation and benefit plans in effect and applicable to Executive on the
Effective Date of Termination, Executive shall have no right to receive any other compensation, or to participate in 
  

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 any other plan, arrangement or benefit of the Company after such termination and all other obligations of the Company and
rights of Executive under this Agreement shall terminate effective as of the Effective Date of Termination. 
 6.2 Termination Due to
Death. Executive’s employment with the Company shall automatically terminate upon Executive’s death. From and after the date of death, the Company shall have no further obligation to pay any Base Salary to Executive. In the event of
such termination: 
 (a) the entitlement of any beneficiary of Executive to benefits under any benefit program, policy or plan described in
Section 5.1 hereof shall be determined in accordance with the provisions of such program, policy or plan; 
 (b) vesting and all other
rights with respect to stock options and any other equity-based compensation awards not covered by Section 6.1 above (other than LTIP Awards) will be treated in accordance with the equity incentive plan under which the relevant grant was made
and any applicable grant documents; provided, however, that Executive shall be considered for such purpose to have been employed at the end of the calendar year in which the termination occurred; and 
 (c) any LTIP Awards that are not covered by Section 6.1 above will be treated in accordance with the LTIP as then in effect. 
 6.3 Termination by the Company Due to Disability. 
 (a) If Executive becomes “Disabled” (as defined below) during the Employment Period, the Company shall have the right to terminate Executive’s employment by giving written notice of such termination to
Executive, which notice shall specify the Effective Date of Termination and which Effective Date of Termination shall be no less than thirty (30) calendar days after the date of such notice. From and after the Effective Date of Termination, the
Company shall have no further obligation to pay any Base Salary to Executive. In the event of such termination: 
 (i) the entitlement of
Executive to benefits under any benefit program, policy or plan described in Section 5.1 hereof shall be determined in accordance with the provisions of such program, policy or plan; 
 (ii) vesting and all other rights with respect to stock options and any other equity-based compensation awards not covered by Section 6.1 above
(other than LTIP Awards) will be treated in accordance with the equity incentive plan under which the relevant grant was made and any applicable grant documents; provided, however that Executive shall be considered for such purpose to have been
employed at the end of the calendar year in which the termination occurred; and 
 (iii) any LTIP Awards that are not covered by
Section 6.1 above will be treated in accordance with the LTIP as then in effect. 
 (b) The term “Disabled” or
“Disability” shall mean that (i) Executive has been unable, notwithstanding such reasonable accommodations as may be required by applicable law, to engage in the essential functions of his position with the Company due to a
disability, as determined by the Company upon receipt of and in reliance on independent 
  

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 competent medical advice, for more than one hundred eighty (180) total calendar days during any period of twelve
(12) consecutive months, or (ii) the Company has reasonably determined, upon receipt of and in reliance on independent competent medical advice, that Executive is unlikely to be able, notwithstanding such reasonable accommodations as may
be required by applicable law, to engage in the essential functions of his position with the Company due to a disability for more than one hundred eighty (180) total calendar days during any period of twelve (12) consecutive months. With
respect to Executive, the foregoing definition of Disability shall supersede the definition of Disability set forth in, and shall be used for purposes of, the Company’s 2004 Stock Incentive Plan, as it has been or may be amended from time to
time (the “2004 Plan”), the Operating Guidelines for the Administration of Executive Long-Term Incentive Awards (“LTIP Guidelines”) and the Operating Guidelines for the Administration of Annual Incentive Awards (“PIP
Guidelines”) and any awards or grants under the 2004 Plan, the LTIP Guidelines and the PIP Guidelines. 
 6.4 Voluntary Termination
by Executive. Executive may terminate his employment at any time during the Employment Period without Good Reason (as defined in Section 6.7) by giving the Company written notice of Executive’s intent to terminate not less than ninety
(90) calendar days before the effective date of such termination; provided, however, that the required notice period shall be reduced to forty-five (45) days in the event Executive’s voluntary termination is not for the purpose of
taking alternative employment. Such written notice of termination shall state the Effective Date of Termination, which shall not be earlier than the last day of the applicable notice period set forth in the preceding sentence nor later than ninety
(90) days after the date of such notice. From and after the Effective Date of Termination, the Company shall have no further obligation to pay any Base Salary to Executive. In the event of such termination: 
 (a) the entitlement of Executive to benefits under any benefit program, policy or plan described in Section 5.1 shall be determined in accordance
with the provisions of such program, policy or plan; 
 (b) all unvested equity or equity-based compensation awards shall be forfeited by
Executive; and 
 (c) any LTIP Awards that are not covered by Section 6.1 or Section 6.4(b) above will be treated in accordance
with the LTIP as then in effect. 
 6.5 Termination by the Company without Cause. 
 (a) The Company may terminate Executive’s employment at any time during the Employment Period for reasons other than death, Disability or Cause by
giving written notice to Executive, which notice shall specify the Effective Date of Termination and which Effective Date of Termination shall be no less than thirty (30) calendar days after the date of such notice. From and after the Effective
Date of Termination, the Company shall have no further obligation to pay any Base Salary to Executive. In the event of such termination, except as provided in Section 6.8 with respect to termination within twenty-four (24) months after a
Change in Control, Executive shall be entitled to the payments and benefits described in Section 6.5(b), contingent upon executing and returning to the Company (and not revoking) a release of claims in substantially the form attached hereto as
Exhibit A within the time permitted by the Company (which permitted time period shall not be less than twenty-one (21) days). 
  

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 (b) Within the later of (x) fifteen (15) days following the Effective Date of Termination and
(y) eight (8) days after Executive provides an executed release of claims which he is obligated to deliver as described above, and as long as such release of claims is not revoked by Executive during the seven (7) day period following
its execution by Executive), the Company shall pay to Executive a lump sum cash payment equal to (i) two (2) times the sum of (A) Executive’s Base Salary in effect as of the Effective Date of Termination and
(B) Executive’s Target Annual Bonus for the year in which the termination occurs and (ii) a pro rata cash payment equal to Executive’s Target Annual Bonus for the year of termination based on service from commencement of the
applicable bonus year through the Effective Date of Termination. In addition, vesting and all other rights with respect to stock options and other equity-based compensation awards not covered under Section 6.1 above (other than LTIP Awards)
will be treated in accordance with the equity incentive plan under which the relevant grant was made and any applicable grant documents; provided, however, that Executive shall be considered for such purpose to have been employed at the end of the
calendar year in which the termination occurred. Any LTIP Awards not covered by Section 6.1 above will be treated in accordance with the LTIP as then in effect. The entitlement of Executive to benefits under any benefit program, policy or plan
described in Section 5.1 hereof shall be determined in accordance with the provisions of such program, policy or plan; provided, however, that, subject to the last sentence of this Section 6.5, the Company shall provide, at its expense,
continued participation in any medical insurance and dental insurance plans in which Executive or his dependents participated as of the Effective Date of Termination for twenty-four (24) months following the Effective Date of Termination at the
same coverage level as in effect as of the Effective Date of Termination, but subject to such modifications as shall be established for executives of the Company in the same or similar positions to that of Executive. As a condition to receiving such
continued coverage, Executive may be required to elect continuation coverage under “COBRA” under the terms of the applicable plans, in which case the Company shall reimburse Executive for the cost of such continued coverage at the same
coverage level as in effect as of the Effective Date of Termination subject to such modifications as shall be established for executives of the Company in the same or similar positions to that of Executive. 
 6.6 Termination by the Company for Cause. 
 (a) The Company may terminate Executive’s employment at any time during the Employment Period for “Cause,” which termination shall be effective immediately upon written notice to Executive. 
 (b) For purposes of this Agreement and notwithstanding any other provision of this Agreement, “Cause” shall mean any of the following:
(i) Executive commits an act of fraud or embezzlement with respect to the Company or any of its affiliates; (ii) Executive is convicted of, or enters a plea of guilty or nolo contendere to, any felony; (iii) Executive
commits any act of dishonesty, breach of fiduciary duty or misconduct (whether in connection with Executive’s responsibilities as an employee of the Company or otherwise) that, in the Company’s reasonable judgment, either
(A) materially impairs the Company’s business, goodwill or reputation or (B) materially compromises Executive’s ability to perform Executive’s job duties or represent the Company with the public; (iv) Executive fails to
substantially perform the responsibilities of his position (other than any such failure resulting from a material breach of this Agreement by the Company or the Disability of Executive) which failure continues for more than thirty (30) days
after written notice by the Company; (v) such carelessness, lack of judgment, ineffectiveness or inefficiency in performance by Executive of his duties that Executive is determined by the Executive Compensation Committee to be unfit to continue
in service; 
  

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 provided that Executive shall be given notice and an opportunity to cure unless the Executive Compensation Committee
determines, in its sole discretion, not to provide Executive with notice and an opportunity to cure given the severity or frequency of the carelessness, lack of judgment, ineffectiveness or inefficiency; or (vi) Executive materially violates
any provision of this Agreement. With respect to Executive, the foregoing definition of Cause shall supersede the definition of Cause set forth in, and shall be used for purposes of, the 2004 Plan, the LTIP Guidelines and the PIP Guidelines and any
awards or grants under the 2004 Plan, the LTIP Guidelines and the PIP Guidelines. 
 (c) The Company agrees that, if the executed version of
any employment agreement between the Company and any member of the Operating Committee other than Mr. Mark D. Ettenger or Mr. Laurence C. Siegel, in the event Mr. Siegel becomes a member of the Operating Committee (each an
“Other EVP”), or any ancillary agreement or side letter agreement or any amendment to any of the foregoing that is entered into by the Company and any Other EVP during the term of this Agreement (any such document, the “Other EVP
Agreement”), contains a definition of “Cause” that, in substance, is more favorable to the Other EVP than the definition of “Cause” set forth herein and such more favorable definition was not included in the Other EVP
Agreement as a result of circumstances that are unique to the Other EVP’s employment with the Company, the Company will promptly prepare and execute an amendment to this Agreement to incorporate such more favorable terms herein, which amendment
shall become effective when countersigned by Executive; provided that to the extent an Other EVP Agreement contains a definition of “Cause” that, in substance, is more favorable to the Other EVP than the definition of “Cause” set
forth herein, to receive the benefit of such more favorable definition, Executive must also agree to all other provisions contained in the Other EVP Agreement that are, in substance, less favorable to Executive than those contained in the
Company’s Form of Executive Employment Agreement For Operating Committee Members then in effect. 
 (d) From and after the Effective
Date of Termination pursuant to this Section 6.6, the Company shall have no further obligation to pay any Base Salary to Executive. In the event of such termination: 
 (i) the entitlement of Executive to benefits under any benefit program, policy or plan described in Section 5.1 shall be determined in accordance with the provisions of such program, policy or plan; 

(ii) any unvested equity or equity-based compensation awards shall be forfeited by Executive; and 
 (iii) any LTIP Awards that are not covered by Section 6.1 or Section 6.6(d)(ii) above will be treated in accordance with the LTIP as then in
effect. 
 6.7 Termination by Executive for Good Reason.  
 (a) Executive may terminate his employment hereunder at any time during the Employment Period for “Good Reason” (as hereinafter defined) by
providing the Company with written notice of termination within ninety (90) days after Executive knows, or should have known, that an event constituting “Good Reason” has occurred. Such notice of termination shall state the Effective
Date of Termination, which effective date shall not be less than thirty (30) days, nor more than ninety (90) days, after the date of such notice, except in the 
  

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 case of any event described in subparagraph 6.7(b)(ii) below, in which case such termination shall be effective
immediately upon delivery of such notice. If Executive terminates his employment under this Section 6.7 for Good Reason (a “Termination for Good Reason”), and a Change in Control has not occurred within the twenty-four (24) month
period preceding the Effective Date of Termination, Executive shall receive the same payments and benefits Executive would be entitled to receive under Section 6.5 following a termination of employment by the Company without Cause, subject to
providing a release of claims as described therein. If Executive terminates his employment under this Section 6.7 for Good Reason and a Change in Control has occurred within the twenty-four (24) month period preceding the Effective Date of
Termination, Executive shall receive the payments and benefits described in Section 6.8. 
 (b) “Good Reason” shall mean the
occurrence of any one or more of the following events without the express written consent of Executive; provided, however, that any of the events described in subparagraph 6.7(b)(ii) below shall only constitute Good Reason if the Company shall have
failed to correct or remedy such event within thirty (30) days following receipt of written notice from Executive describing in reasonable detail such event and demanding correction or remedy; and provided further that any of the events
described in subparagraphs (b)(vii) and (b)(viii) below shall only be treated as a Good Reason event if such event occurs within twenty-four (24) months following a Change in Control: 
 (i) the relocation of Executive’s principal office to a location that is more than fifty (50) miles from the Company’s
current or future Washington, D.C. area headquarters; 
 (ii) a failure by the Company to pay or provide for any earned Base
Salary, earned Annual Bonus, earned LTIP Award or any other material earned compensation or benefits required to be paid or provided for under this Agreement, in each case when due; 
 (iii) a reduction by the Company in Executive’s Base Salary except as part of a salary reduction program approved by the Board of
Directors that is generally applicable to executives of the Company in the same or similar positions to that of Executive; 
 (iv) except as part of a benefit reduction program approved by the Board of Directors that is generally applicable to executives of the Company in the same or similar positions to that of Executive, a material reduction in the terms of
Executive’s eligibility for benefits under any of the Company’s incentive compensation plans or health or welfare benefit plans from the terms that were in effect on the Effective Date or a material modification to, or termination of, any
such plans as such plans were in effect on the Effective Date (the “Existing Plans”) without replacement of such modified or terminated plans with one or more plans offering to Executive eligibility for benefits at least as favorable to
Executive as those offered by the Existing Plans; 
 (v) a diminution in Executive’s responsibilities that results in
Executive no longer being the senior ranking officer responsible for the Company’s in-line leasing activities; 
  

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 (vi) the failure of the Company to obtain a satisfactory agreement from any successor to
the Company to assume and perform the obligations of the Company hereunder, as contemplated by Section 10.1; 
 (vii)
the assignment to Executive of duties materially inconsistent with Executive’s authorities, duties, responsibilities and status (including offices, titles and reporting requirements) as an officer of the Company (or its successor), or a
material reduction or alteration in the nature or status of Executive’s authority, duties or responsibilities from those in effect immediately prior to the effective date of the Change in Control; or 
 (viii) a reduction by the Company (or its successor) in Executive’s Base Salary from the Base Salary that was in effect with respect
to Executive immediately prior to the effective date of the Change in Control or a material reduction in the terms of Executive’s eligibility for benefits under any of the Company’s incentive compensation plans or health or welfare benefit
plans from the terms that were in effect immediately prior to the effective date of the Change in Control or a material modification to, or termination of, any such plans as such plans were in effect immediately prior to the effective date of the
Change in Control (the “Pre-Change in Control Existing Plans”) without replacement of such modified or terminated plans with one or more plans offering to Executive eligibility for benefits at least as favorable to Executive as those
offered by the Pre-Change in Control Existing Plans. 
 Executive shall also be entitled to voluntarily terminate his employment with the
Company for any reason by giving not less than five (5) days’ advance written notice to the Company of his intention to terminate his employment within the thirty (30)-day period commencing on the first anniversary of the effective date of
the Change in Control of the Company and any such termination shall be considered a termination for Good Reason after a Change in Control for purposes of this Agreement. The continued employment of Executive after an event constituting Good Reason
shall not constitute consent to, or a waiver of rights with respect to, any circumstance constituting Good Reason, until the passage of ninety (90) days after Executive knew or should have known that an event constituting Good Reason has
occurred without delivery by Executive of a written notice of termination for Good Reason, as provided above. With respect to Executive, the foregoing definition of Good Reason shall supersede the definition of Good Reason set forth in, and shall be
used for purposes of, the 2004 Plan, the LTIP Guidelines and the PIP Guidelines and any awards or grants under the 2004 Plan, the LTIP Guidelines and the PIP Guidelines. 
 6.8 Termination after a Change in Control. 
 (a) If during the Employment Period, (i) the
Company terminates Executive’s employment for reasons other than death, Disability or Cause or (ii) Executive timely terminates his employment for Good Reason, and either (i) or (ii) occurs within twenty-four (24) months
after a Change in Control, then, from and after the Effective Date of Termination, the Company shall have no further obligation to pay any Base Salary to Executive and, in lieu of any severance amounts payable under Section 6.5 or 6.7,
whichever would otherwise apply, Executive shall be entitled to the payments and benefits described in paragraph (b) or (c) below, whichever is applicable, contingent upon executing and returning to the Company (and not revoking) a release
of claims in substantially the form attached hereto as Exhibit A within the time permitted by the Company (which permitted time period shall not be less than twenty-one (21) days). 
  

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 (b) In the event that Executive’s employment is terminated by the Company or Executive as provided
in Section 6.8(a) above within twenty-four (24) months after a Change in Control that is not a Simon Change in Control (as defined below), then within the later of (x) fifteen (15) days following the Effective Date of Termination
and (y) eight (8) days after Executive provides an executed release of claims as described in Section 6.8(a) above, as long as such release of claims is not revoked by Executive during the seven (7) day period following its
execution by Executive), the Company shall pay to Executive a lump sum cash payment equal to (i) two (2) times the sum of (A) Executive’s Base Salary in effect as of the Effective Date of Termination and (B) Executive’s
Target Annual Bonus for the year in which the termination occurs and (ii) a pro rata cash payment equal to Executive’s Target Annual Bonus for the year of termination based on service from the commencement of the applicable bonus year
through the Effective Date of Termination. In addition, vesting and all other rights with respect to stock options and other equity-based compensation awards not covered by Section 6.1 above (other than LTIP Awards) will be treated in
accordance with the equity incentive plan under which the relevant grant was made and any applicable grant agreements; provided, however, that Executive shall be considered for such purpose to have been employed at the end of the calendar year in
which the termination occurred. Any LTIP Awards not covered by Section 6.1 hereof will be treated in accordance with the LTIP as then in effect; provided that if the Company terminates Executive’s employment for reasons other than death,
Disability or Cause or Executive timely terminates his employment for Good Reason, and such termination occurs during the Employment Period and within twenty-four (24) months after a Change in Control, notwithstanding Section VI.D. of
the LTIP Guidelines currently in effect (or any comparable provisions in any subsequently adopted LTIP Guidelines), Executive will be entitled to the payment of the full amount (without pro ration) of any unvested LTIP Awards that have been made to
Executive for any Performance Period that has commenced, payable in cash and/or equity, as previously determined by the Executive Compensation Committee with respect to the applicable Performance Period, calculated in accordance with the LTIP
Guidelines; provided that for purposes of calculating the LTIP Award for any Performance Period that has commenced (1) for any completed calendar year in which actual performance by the Company and/or Executive against corporate Performance
Targets (as defined in the LTIP Guidelines) or individual performance goals, as applicable, has been measured, and such measurement has been ratified by the Company’s Executive Compensation Committee prior to the effective date of the Change in
Control, such measurement shall be used and (2) for any calendar year in which actual performance by the Company and/or Executive against corporate Performance Targets or individual performance goals has not yet been so measured or ratified by
the Executive Compensation Committee, such corporate Performance Targets and individual performance goals shall be either (x) deemed 100% satisfied or (y) measured against actual performance by the Company and/or the Employee against
corporate Performance Targets or individual performance goals, as applicable, whichever is greater, which LTIP Awards shall be payable in accordance with the terms of the original grant agreement, if any, and otherwise in accordance with the LTIP
Guidelines in effect for such Performance Period. The entitlement of Executive to benefits under any benefit program, policy or plan described in Section 5.1 shall be determined in accordance with the provisions of such program, policy or plan;
provided, however, that, subject to the last sentence of Section 6.5, the Company shall provide, at its expense, continued participation in any medical insurance and dental insurance plans in which Executive or his dependents participated as of
the Effective Date of Termination for twenty-four (24) months following the Effective Date of Termination, as described in Section 6.5. 
  

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 (c) In the event that Executive’s employment is terminated by the Company or Executive as provided
in Section 6.8(a) above within twenty-four (24) months after a Simon Change in Control, then within the later of (x) fifteen (15) days following the Effective Date of Termination and (y) eight (8) days after Executive
provides an executed release of claims as described in Section 6.8(a) above, as long as such release of claims is not revoked by Executive during the seven (7) day period following its execution by Executive), the Company shall pay to
Executive a lump sum cash payment equal to (i) three (3) times the sum of (A) Executive’s Base Salary in effect as of the Effective Date of Termination and (B) Executive’s Target Annual Bonus for the year in which the
termination occurs and (ii) a pro rata cash payment equal to Executive’s Target Annual Bonus for the year of termination based on service from the commencement of the applicable bonus year through the Effective Date of Termination. In
addition, vesting and all other rights with respect to stock options and other equity-based compensation awards not covered by Section 6.1 above (other than LTIP Awards) will be treated in accordance with the equity incentive plan under which
the relevant grant was made and any applicable grant agreements; provided, however, that Executive shall be considered for such purpose to have been employed at the end of the calendar year in which the termination occurred. Any LTIP Awards not
covered by Section 6.1 hereof will be treated in accordance with the LTIP as then in effect; provided that if the Company terminates Executive’s employment for reasons other than death, Disability or Cause or Executive timely terminates
his employment for Good Reason or Executive exercises the right to terminate his employment as provided in Section 6.8(d) in a timely manner, and such termination occurs during the Employment Period and within twenty-four
(24) months after a Simon Change in Control, notwithstanding Section VI.D. of the LTIP Guidelines currently in effect (or any comparable provisions in any subsequently adopted LTIP Guidelines), Executive will be entitled the payment of the full
amount (without pro ration) of any unvested LTIP Awards that have been made to Executive for any Performance Period that has commenced, payable in cash and/or equity, as previously determined by the Executive Compensation Committee with respect to
the applicable Performance Period, calculated in accordance with the LTIP Guidelines; provided that for purposes of calculating the LTIP Award for any Performance Period that has commenced (1) for any completed calendar year in which actual
performance by the Company and/or Executive against corporate Performance Targets (as defined in the LTIP Guidelines) or individual performance goals, as applicable, has been measured, and such measurement has been ratified by the Company’s
Executive Compensation Committee prior to the effective date of the Change in Control, such measurement shall be used and (2) for any calendar year in which actual performance by the Company and/or Executive against corporate Performance
Targets or individual performance goals has not yet been so measured and ratified by the Executive Compensation Committee prior to the effective date of the Change in Control, such corporate Performance Targets and individual performance goals shall
be either (x) deemed 100% satisfied or (y) measured against actual performance by the Company and/or the Employee against corporate Performance Targets or individual performance goals, as applicable, whichever is greater, which LTIP Awards
shall be payable in accordance with the terms of the original grant agreement, if any, and otherwise in accordance with the LTIP Guidelines in effect for such Performance Period. The entitlement of Executive to benefits under any benefit program,
policy or plan described in Section 5.1 shall be determined in accordance with the provisions of such program, policy or plan; provided, however, that, subject to the last sentence of Section 6.5, the Company shall provide, at its expense,
continued participation in any medical insurance and dental insurance plans in which Executive or his dependents participated as of the Effective Date of Termination for twenty-four (24) months following the Effective Date of Termination, as
described in Section 6.5. 
  

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 (d) Notwithstanding anything in this Agreement to the contrary, if (i) a Change in Control occurs
and, immediately following and as a result of such Change in Control, Simon Property Group or an affiliate thereof (which for purposes of this Section 6.8(d) shall mean any entity in which Simon Property Group owns or controls more than fifty
percent (50%) of the voting interests) (a “Simon Affiliate”) or any “group” (within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934) that includes Simon Property Group or a Simon Affiliate has the
right to elect at least a majority of the members of the Board of Directors of the Company, whether through the ownership of voting securities or by contract or otherwise or (ii) any of Melvin Simon, Herbert Simon, David Simon, Deborah Simon or
Steve Simon or an officer or director of Simon Property Group or of a Simon Affiliate (other than an independent director of any such entity, as defined in Rule 303A.02 of the New York Stock Exchange Listed Company Manual) has authority to establish
and direct the policies or strategic direction of the Company’s in-line leasing activities other than in connection with general responsibilities as a member of the Company’s Board of Directors (either (i) or (ii) being
hereinafter referred to as a “Simon Change in Control”), Executive shall have the right to terminate his employment hereunder by delivering written notice to the Company within ninety (90) days after the effective date of such Simon
Change in Control (which notice shall state the Effective Date of Termination and which Effective Date of Termination shall not be more than ninety (90) days after the date of such notice) and, in the event Executive exercises such right in a
timely manner, then within the later of (x) fifteen (15) days following the Effective Date of Termination and (y) eight (8) days after Executive provides an executed release of claims as described in Section 6.8(a) above, as
long as such release of claims is not revoked by Executive during the seven (7) day period following its execution by Executive), the Company shall pay to Executive the payments and benefits set forth in Section 6.8(c) in lieu of the
payments and benefits set forth in Section 6.4 hereof. 
 6.9 Effective Date of Termination. For purposes of this Agreement, the
Effective Date of Termination shall mean: in the event of (a) Executive’s death, his date of death; (b) Executive’s Disability, the date specified in the written notice of termination provided for in Section 6.3(a);
(c) termination of Executive’s employment without Cause, the date specified in the Company’s notice of termination provided for in Section 6.5; (d) termination of Executive’s employment for Cause, the date on which
written notice of termination is delivered to Executive as provided in Section 6.6(a); (e) termination of Executive’s employment for Good Reason, the date specified by Executive in his written notice of termination as provided for in
Section 6.7(a); (f) voluntary termination by Executive pursuant to Section 6.4, the date specified by Executive in his written notice of termination provided for in Section 6.4; (g) voluntary termination by Executive
pursuant to Section 6.8(d), the date specified by Executive in his written notice of termination provided for in Section 6.8(d) and (h) either party giving written notice of non-renewal in accordance with Section 1.2, the date of
expiration of the Employment Period. 
 6.10 Termination by Mutual Consent; Expiration of Term. If at any time during the Employment
Period, the parties by mutual consent decide to terminate Executive’s employment or this Agreement on a basis other than that set forth in this Agreement, they shall do so only by separate written agreement setting forth the terms and
conditions of such termination. 
 6.11 Cooperation with the Company after Termination of Employment. Following termination of
Executive’s employment for any reason, Executive shall reasonably cooperate with the Company in all matters relating to any litigation in which the Company is or 
  

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 becomes involved or any investigation of the Company or its affairs by a governmental agency or a Committee of the
Company’s Board of Directors, and in the winding up of his pending work on behalf of the Company, including, but not limited to, the orderly transfer of any such pending work to other employees of the Company as may be designated by the
Company. The Company agrees to reimburse Executive for any time and reasonable out-of-pocket expenses he incurs in performing any work on behalf of the Company following the termination of his employment. 
 6.12 Company Right to Recover Severance Payments. Executive hereby agrees that, if it is ever determined by the Board of Directors, as recommended
by the Audit Committee of the Company, that actions by the Executive have constituted wrongdoing that contributed to any material misstatement or omission from any report or statement filed by the Company with the U.S. Securities and Exchange
Commission, gross misconduct, breach of fiduciary duty to the Company, or fraud, then the Company, or its successor, as appropriate, may recover all of any award or payment made to Executive, less the amount of any net tax owed by the Executive with
respect to such award or payment over the tax benefit to the Executive from the repayment or return of the award or payment, pursuant to Section 6.5 (“Termination by the Company without Cause”), 6.7 (“Termination by Executive for
Good Reason”) or 6.8 (“Termination After a Change in Control”), and Executive agrees to repay and return such awards and amounts to the Company within 30 calendar days of receiving notice from the Company that the Board of Directors
has made the determination referenced above and accordingly the Company is demanding repayment pursuant to this Section 6.12. The Company or its successor may, in its sole discretion, affect any such recovery by (i) obtaining repayment
directly from Executive; (ii) setting off the amount owed to it against any amount or award that would otherwise be payable by the Company to Executive; or (iii) any combination of (i) and (ii) above. 
 6.13 Compliance with Code Section 409A. The Company and Executive agree to execute any reasonable amendments to this Agreement as may be
necessary to ensure compliance with Section 409A of the Code. 
 7. Change in Control. 
 7.1 Definition of “Change in Control.” A “Change in Control” of the Company shall be deemed to have occurred as of the first
day on which any one or more of the following conditions shall have been satisfied: 
 (a) The acquisition of beneficial ownership, as such
term is defined in the Securities Exchange Act of 1934, as amended (the “Exchange Act”), in a single transaction or series of related transactions (by tender offer or otherwise), of more than fifty percent (50%) of the voting
securities of the Company by a single person or entity (other than the Company) or “group” within the meaning of Section 13(d)(3) of the Exchange Act, whether through the acquisition of previously issued and outstanding voting
securities, or of voting securities that have not been previously issued, or any combination thereof; or 
 (b) There shall be consummated
any consolidation, merger, business combination or reorganization involving the Company or the securities of the Company in which holders of voting securities of the Company immediately prior to such consummation own, as a group, immediately after
such consummation, voting securities of the Company (or, if the Company does not survive such transaction, voting securities of the corporation surviving such transaction) having less than fifty percent (50%) of the total voting power in an
election of directors of the Company (or such other surviving corporation); or 
  

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 (c) The individuals who constituted the Company’s Board of Directors as of the Effective Date (the
“Incumbent Board”) cease for any reason to constitute at least a majority of the directors of the Company; provided, however, that individuals whose election, or whose nomination for election by the Company’s shareholders, was
approved by a vote of at least two-thirds (2/3) of the persons then comprising the Incumbent Board shall be considered, for purposes of this Agreement, members of the Incumbent Board; and provided, further, that no individual shall be
considered a member of the Incumbent Board if such individual initially assumed office as a result of either an actual or threatened “election contest” (as described in Rule 14a-11 promulgated under the Exchange Act) (an “Election
Contest”) or other actual or threatened solicitation of proxies or consents by or on behalf of a person or entity other than the Company’s Board of Directors (a “Proxy Contest”), including by reason of any agreement intended to
avoid or settle any Election Contest or Proxy Contest; or 
 (d) There shall be consummated any sale, lease, exchange or other transfer (in
one transaction or a series of related transactions) of all or substantially all of the assets of the Company (on a consolidated basis) to a party which is not a direct or indirect wholly-owned subsidiary of the Company, including, without
limitation, any sale, lease, exchange or other transfer of all or substantially all of the assets of the Company (on a consolidated basis) that includes the assets of The Mills Limited Partnership, a Delaware limited partnership (the “Operating
Partnership”); or 
 (e) The Company (or its successor) no longer serves as the sole general partner of the Operating Partnership other
than as a result of (i) the merger of the Operating Partnership with the Company or a subsidiary of the Company, (ii) the redemption of all limited partnership interests in the Operating Partnership by the Operating Partnership or the
purchase of all such limited partnership interests by the Company, or (iii) the liquidation, dissolution or winding up of the Operating Partnership. 
 Notwithstanding anything in this Agreement to the contrary, a Change in Control shall be deemed not to have occurred with respect to Executive (a) if Executive is involved as an officer, director, employee, agent, finder, consultant,
partner, investor, creditor or principal, or in any other individual or representative capacity whatsoever, with an entity that acquires an interest in the Company in a transaction that otherwise would constitute a Change in Control and, pursuant to
a written or unwritten agreement or understanding with such entity entered into prior to or in connection with such transaction (a “Change in Control Agreement”), Executive receives or has the right to receive a material economic benefit
as a result of or in connection with such transaction (other than compensation granted or awarded to Executive by the Company in the ordinary course of business consistent with past practice pursuant to this Agreement or solely as a result of his
then-current ownership interest in the Company), or (b) if any of the foregoing transactions occurs with any employee benefit plan of the Company or with any trustee or fiduciary or committee of any employee benefit plan of the Company, any
affiliate of the Company, any direct or indirect wholly-owned subsidiary of the Company or any entity owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of stock of the Company
prior to the event that would otherwise constitute a Change in Control. For purposes of this Section 7.1, a “material economic benefit” shall mean any compensation, payment, beneficial ownership interest in the Company or another
entity that is party to any of the foregoing transactions, or other economic benefit (other than compensation granted or awarded to Executive by the Company in the ordinary course of business consistent with past practice pursuant to this Agreement
or solely as a result of his then-current ownership interest in the Company) that has a value equal to or greater than forty percent (40%) of 
  

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 Executive’s Base Salary in effect as of the effective date of the Change in Control; provided, however, that if this
Agreement is terminated as a result of or in connection with such transaction, the amount of compensation paid or payable pursuant to this Agreement shall be deducted from any compensation paid or payable pursuant to a Change in Control Agreement in
calculating whether Executive receives or has the right to receive a material economic benefit as a result of or in connection with such transaction. With respect to Executive, the foregoing definition of Change in Control shall supersede the
definition of Change in Control set forth in, and shall be used for purposes of, the 2004 Plan, the LTIP Guidelines and the PIP Guidelines and any awards or grants under the 2004 Plan, the LTIP Guidelines and the PIP Guidelines. 
 8. Confidentiality and Non-competition. 
 8.1 Post-Employment Obligations. 
 (a) Unless Executive obtains the prior written approval of the
Company, Executive shall not, at any time during the Employment Period or at any time during an applicable Non-Compete Period (as defined below), directly or indirectly, engage either individually or as an officer, director, employee, agent,
consultant, partner, investor (excluding passive investments in voting securities of a publicly traded entity aggregating less than five percent (5%) of any such entity’s total outstanding voting securities), creditor, principal or
otherwise, (i) in the predevelopment, development, redevelopment, operation, management or leasing of any type of retail or entertainment-based shopping centers, malls, strip centers or other similar commercial properties, (ii) in the
provision of related services or (iii) in any other businesses then carried on by the Company in which Executive was involved during the Employment Period, in each such instance noted above, in any way that would compete with the business
activities then carried on by the Company; provided, however, that retail or entertainment-based shopping centers, malls, strip centers or other commercial properties with an aggregate square footage of less than 250,000 square feet shall be deemed
not to compete with the business activities of the Company for purposes of this Section 8.1(a); and provided further, that nothing in this Section 8.1 shall prohibit Executive from being an officer, director, employee of, an agent or
consultant for or a partner or investor in a retail operating business. For purposes of this Section 8.1(a), the term “Non-Compete Period” shall mean (Y) in the event that Executive’s employment with the Company is
terminated by the Company without Cause or by Executive with Good Reason and a Change in Control has not occurred within the twenty-four (24) month period preceding the Effective Date of Termination, the period beginning on the Effective Date
of Termination and ending on the first anniversary of the Effective Date of Termination, and (Z) in the event that Executive’s employment with the Company is terminated by the Executive voluntarily pursuant to Section 6.4 hereof, the
period beginning on the Effective Date of Termination and ending on the date that is one hundred twenty (120) days after the Effective Date of Termination; provided that there shall be no Non-Compete Period in the event that, either
(1) within the twenty-four (24) month period following a Change in Control, Executive’s employment with the Company is terminated by the Company without Cause or by Executive for Good Reason or the Executive voluntarily terminates his
employment with the Company or (2) Executive timely terminates his employment with the Company pursuant to Section 6.8(d) after a Simon Change in Control. Any Non-Compete Period in effect upon the occurrence of a Change in Control or a
Simon Change in Control shall end as of the effective date of such Change in Control or Simon Change in Control. 
 (b) Unless Executive
obtains the prior written approval of the Company, Executive shall not, at any time during the Employment Period and for a period of 
  

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 twenty-four (24) months following the termination of Executive’s employment with the Company for any reason,
whether voluntary or involuntary, or whether due to the expiration, non-renewal or termination of this Agreement, directly or indirectly, cause, solicit, entice or induce any employee of the Company or any employee of any affiliate of the Company to
leave the employ of the Company or such affiliate, to interfere in any manner with the business of the Company or any such affiliate or to accept employment with, or compensation from, Executive or any other person, entity or business. 

8.2 Confidentiality Covenants. 
 (a) Executive acknowledges that, in the course of his employment with the Company, the Company has provided and will provide Executive with, and Executive has had and will have access to, material, non-public information and other materials
and information that constitute trade secrets or other intellectual property or proprietary material of the Company and its affiliates (“Proprietary Property”). Such Proprietary Property includes, but is not limited to, information
(regardless of the form or medium in which such information is stored or contained) regarding the operations, markets, structure, project development or redevelopment activities or plans, business opportunities, acquisition activities or plans,
processes, techniques, technologies, promotional or marketing plans, strategies, forecasts, new products or services, systems, financial information, budgets, projections, licenses, prices, costs, or employees of the Company or any affiliate of the
Company and/or their clients, tenants, prospective clients or prospective tenants or the identity of, or the Company’s or any affiliate of the Company’s relationship with, its clients, tenants, prospective clients, prospective tenants,
subcontractors or vendors, including but not limited to technical data, drawings, specifications, trade secrets, databases, proprietary software, works of authorship, designs, research and development, ideas, concepts, improvements, inventions,
theories, formulas, plans, policies, procedures and other innovations and all other information and materials developed, conceived, made or reduced to practice by Executive or other employees of the Company or its affiliates in connection with their
activities for or on behalf of the Company or its affiliates and/or developed through the use of the Company’s or any affiliate of the Company’s resources, including trademarks, copyrights and other intellectual property, whether or not
any of the foregoing is patentable or copyrightable, and any other information learned by Executive in the course of Executive’s employment with the Company. Such Proprietary Property shall be the sole and exclusive property of the Company and
its affiliates. Executive shall have no right, title or interest in and to the Proprietary Property and hereby assigns to the Company any rights Executive may have or acquire in the Proprietary Property. 
 (b) Executive covenants and agrees to hold the Proprietary Property in the strictest confidence and not to during the Employment Period or at any time
thereafter directly or indirectly, (i) communicate, disclose or divulge to any other person or entity any Proprietary Property or any information in any way relating to the Proprietary Property other than in connection with the performance of
Executive’s duties for the Company under this Agreement or (ii) use for the benefit of Executive or any other person or entity (other than the Company and its affiliates), or to the disadvantage of the Company and its affiliates, the
Proprietary Property or any information in any way relating to the Proprietary Property. 
 (c) Notwithstanding anything herein to the
contrary, (i) any disclosure of Proprietary Property made by Executive pursuant to valid legal process (including, but not limited to, a subpoena or court order) shall not be considered a violation of this Section 8.2 so long as Executive
has promptly notified the Company of his receipt of such process and 
  

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 provided the Company with an opportunity to contest the validity of the process; and (ii) the term “Proprietary
Property” shall not include any information that becomes public by any means other than a breach by Executive of this Agreement or is rightfully disclosed to Executive by a third party without restriction and not in violation of any duty of
confidentiality owed to the Company. 
 (d) Executive agrees that Executive will not, during Executive’s employment with the Company,
improperly use or disclose any proprietary or confidential information or trade secrets of any former or concurrent employer or other person or entity and that Executive will not bring onto the premises of the Company any unpublished document or
proprietary or confidential information belonging to any such employer, person or entity unless consented to in writing by such employer, person or entity. 
 (e) Executive recognizes that the Company has received and in the future will receive from third parties their confidential or proprietary information subject to a duty on the Company’s part to maintain the
confidentiality of such confidential or proprietary information in the strictest confidence and not to disclose it to any person or entity or use it except as necessary in carrying out Executive’s work for the Company consistent with the
Company’s agreement with such third party. 
 (f) Executive will obtain the written approval of the Senior Vice President, Marketing of
the Company before publishing or submitting for publication any material (written, verbal, or otherwise) that relates to Executive’s work at the Company and/or incorporates any Proprietary Property. 
 8.3 Covenants Concerning Return of Company Property. Upon demand by the Company and/or upon termination of Executive’s employment with the
Company for any reason, whether voluntary or involuntary or whether due to the expiration, non-renewal or termination of this Agreement, Executive shall promptly deliver to the Company (and not keep in Executive’s possession, recreate or
deliver to anyone else) all Proprietary Property (in any format whatsoever) and all other property and materials belonging to the Company, including, without limitation, all lists of and information pertaining to the Company’s clients, tenants,
prospective clients, prospective tenants, subcontractors and vendors and any work product developed by Executive pursuant to or in connection with Executive’s employment with the Company or otherwise belonging to the Company, but excluding
materials distributed to employees of the Company generally and relating to Executive’s rights and obligations as an employee of the Company. Upon termination of Executive’s employment by the Company or Executive or in the event the
Company or Executive delivers a notice of non-renewal in accordance with Section 1.2 hereof, on the Effective Date of Termination Executive shall deliver to the Company a Termination Certification substantially in the form of Exhibit C attached
hereto duly executed by Executive and dated as of the Effective Date of Termination. 
  

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 8.4 Certain Acknowledgments. Executive acknowledges and agrees that: 
 (a) As a key management person, Executive is involved, on a high level, in the development, implementation and management of the Company’s
development strategies and plans. By virtue of Executive’s unique and sensitive position and special background, employment of Executive by a competitor of the Company at any time while the covenants set forth in Section 8.1 are in effect
represents a serious competitive danger to the Company, and the use of Executive’s talent and knowledge and information about the Company’s business strategies can and would constitute a valuable competitive advantage over the Company;

 (b) Enforcement of the covenants set forth in this Section 8 hereof will not prevent Executive from earning a living in the real
estate industry; 
 (c) The Company has made or will make a substantial investment in Executive and the Company’s business; 

(d) The restrictions provided in this Section 8 are reasonable, proper and necessary for the Company’s protection; and 
 (e) This Agreement is not intended to restrict Executive from performing work in a role that does not compete with the then-current business of the
Company. 
 8.5 Enforcement and Remedies. 
 (a) If a court of competent jurisdiction finds Section 8, or any of its restrictions, to be ambiguous, unenforceable and/or invalid, Executive and the Company agree that such court shall (i) in the case of
ambiguity, read Section 8 as a whole and interpret the restriction(s) at issue to be enforceable and valid to the maximum extent allowed by law for the protection of the Company’s business interests; and (ii) in the case of
unenforceability or invalidity, eliminate such enforceable or invalid provisions from this Agreement to the extent necessary to permit the remaining provisions to be enforced to the maximum extent permitted for the protection of the Company’s
business interests. 
 (b) Executive acknowledges that it may be impossible to assess the monetary damages incurred by his violation of this
Section 8, or any of its terms, and that any threatened or actual violation or breach of this Section 8, or any of its terms, will constitute immediate and irreparable injury to the Company. Executive expressly agrees that, in addition to
any and all other damages and remedies available to the Company as a result of Executive’s breach of Section 8, the Company shall be entitled to an injunction restraining Executive from violating or breaching Section 8 or any of its
terms. 
 (c) If the Company is successful in whole or part in any legal or equitable action against Executive under this Section 8,
the Company shall be entitled to reimbursement from Executive of all costs, including reasonable attorney’s fees, incurred by the Company in connection with such legal or equitable action. 
 8.6 Mutual Non-Disparagement. Executive shall not, at any time during or after the Employment Period, make or publish any derogatory, unfavorable,
negative, disparaging, false, damaging or deleterious written or oral statements or remarks (including without limitation, the repetition or distribution of derogatory rumors, allegations, or negative or unfavorable reports or comments) regarding
the Company or any of its affiliates or any members 
  

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 of their respective managements or the business affairs or performance of the Company or any of its affiliates or any of
the respective managements. The Company shall not at any time during or after the Employment Period make or publish any derogatory, unfavorable, negative, disparaging, false, damaging or deleterious written or oral statements or remarks regarding
Executive or his performance to anyone who is not an officer, director or employee of the Company or any of its affiliates. For purposes of this Section 8.6, a statement or remark shall be deemed to have been made by the Company only if it is
made or authorized by a member of the Board of Directors or executive management of the Company. Nothing in this Section 8.6 shall be construed to limit any person’s ability to give truthful testimony pursuant to valid legal process,
including but not limited to, a subpoena or court order. 
 8.7 Publication of this Agreement to Subsequent Employers or Business
Associates. Executive agrees that, if Executive is offered employment or the opportunity to enter into any business venture as an owner, partner, consultant or in any other capacity in the businesses or industries covered by Section 8 of
this Agreement while the restrictions described in Section 8 of this Agreement are in effect, Executive will inform the offeror of the existence of Section 8 of this Agreement and provide the offeror with a copy thereof. Executive
authorizes the Company to provide a copy of relevant provisions of this Agreement to any of the persons or entities described herein and to make such persons aware of Executive’s obligations under this Section 8. 
 8.8 Employee Inventions Agreement. As a condition to effectiveness of the Company’s obligations under this Agreement, Executive shall have
duly executed and delivered to the Company, on or prior to the Effective Date, an Employee Inventions Agreement substantially in the form of Exhibit B attached hereto, the terms of which are hereby incorporated by reference into, and shall be deemed
a part of, this Section 8. 
 9. Director’s and Officer’s Liability Insurance. The Company shall, at its sole cost and
expense, provide Executive with director’s and officer’s liability insurance coverage with respect to services rendered during the Employment Period in an amount not less than $10,000,000. 
 10. Assignment. 
 10.1
Assignment by the Company. This Agreement may, and shall be, assigned or transferred to, and shall be binding upon and shall inure to the benefit of, any successor of the Company, and any such successor shall be deemed substituted for all
purposes for the “Company” under the terms of this Agreement (other than for the purpose of determining whether a Change in Control has occurred under Section 7.1). Notwithstanding such assignment, the Company (if it survives) shall
remain, with such successor, jointly and severally liable for all its obligations hereunder. Except as herein provided, this Agreement may not otherwise be assigned by the Company. 
 10.2 Assignment by Executive. The services to be provided by Executive to the Company pursuant to this Agreement are personal to Executive, and
Executive’s duties may not be assigned by Executive; provided, however, that this Agreement shall inure to the benefit of and shall be enforceable by Executive’s personal or legal representatives, executors and administrators, heirs,
distributees, devisees and legatees. Unless otherwise required by law, if Executive dies while any amounts payable to Executive hereunder remain outstanding, all such amounts shall be paid in accordance with the terms of this Agreement to the
beneficiary designated in writing to the Company prior to his death or if Executive has not designated a beneficiary or the designated beneficiary does not survive Executive, to Executive’s estate. 
  

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 11. Arbitration. 
 11.1 Exclusive Remedy. The parties recognize that litigation in federal or state courts or before federal or state administrative agencies of
disputes arising out of Executive’s employment with the Company or out of this Agreement, with the exception of Section 8, may not be in the best interests of either Executive or the Company, and may result in unnecessary costs, delays,
complexities and uncertainty. The parties agree that any dispute between the parties arising out of or relating to Executive’s employment, or to the negotiation, execution, interpretation, performance or termination of this Agreement, whether
that dispute arises during or after employment and whether the dispute derives in contract, tort, statute or otherwise, with the exception of any dispute arising out of or related to Section 8, shall be resolved by arbitration in the
Washington, D.C. metropolitan area before one neutral arbitrator, which arbitration shall be conducted in accordance with the National Employment Arbitration Rules of the American Arbitration Association (“AAA”), as modified by the
provisions of this Section 11. The parties each further agree that the arbitration provisions of this Agreement shall provide each party with its exclusive remedy, and each party expressly waives any right it might have to seek redress in any
other forum, except as otherwise expressly provided in this Agreement. By election of arbitration as the means for final settlement of all claims, the parties hereby waive their respective rights to, and agree not to, sue each other in any action in
a Federal, State or local court with respect to such claims, but may seek to enforce in court an arbitration award rendered pursuant to this Agreement. 
 11.2 Arbitrator’s Authority. Except as provided in Section 12.4 hereof, in reaching his or her decision, the arbitrator shall have no authority to add to, detract from or otherwise modify any
provision of this Agreement. Judgment upon the award rendered by the arbitrator may be entered in any court having competent jurisdiction. 
 11.3 Effect of Arbitrator’s Decision: Arbitrator’s Fees. The decision of the arbitrator shall be final and binding on the parties as to all claims which were or could have been raised in connection with the dispute, to the
full extent permitted by law. If the Company initiates the arbitration, then it shall pay AAA’s administrative fees. If Executive initiates the arbitration, then Executive shall pay up to the first $150.00 of AAA’s administrative fees
(representing the current federal court filing fee) and the Company shall pay the remainder. Each side shall pay its own legal fees and expenses, although the arbitrator shall have the discretion to award reasonable legal fees and expenses to a
prevailing party or as provided by any applicable substantive law. The fees and expenses of the arbitrator shall be paid completely by the Company to AAA, which shall disburse the fees to the arbitrator without identifying which party paid the fees.

 11.4 Indemnification. If either party breaches this arbitration agreement and attempts to resolve in court claims covered by this
provision, the litigating party agrees to indemnify the other party for all its reasonable legal costs and attorney’s fees incurred to defend such action in court and to enforce the provisions of the arbitration clause. 
 11.5 Continuing Nature of Agreement to Arbitrate. The parties acknowledge and agree that their obligations under this arbitration agreement
survive the termination of this Agreement and continue after the termination of the employment relationship between Executive and the Company. 
  

 - 21 - 

 12. General Provisions. 
 12.1 Notice. Any notice required or permitted hereunder shall be made in writing (a) by actual delivery of the notice into the hands of the
party thereunder entitled, (b) by the mailing of the notice by first class mail, certified or registered mail, return receipt requested, all postage prepaid or (c) by nationally recognized overnight delivery service and addressed to the
party to whom the notice is to be given at the party’s respective address set forth below, or such other address as the parties may from time to time designate by written notice as herein provided. 
  

					
	To the Company:	  	The Mills Corporation
		  	1300 Wilson Boulevard, Suite 400
		  	Arlington, Virginia 22209
		  	Attn: Chief Executive Officer
		
	with copies to:	  	The Mills Corporation
		  	1300 Wilson Boulevard, Suite 400
		  	Arlington, Virginia 22209
		  	Attn: General Counsel
		
		  	and
		
		  	Karen A. Dewis, Esquire
		  	McDermott, Will & Emery
		  	600 13th Street, NW
		  	Washington, DC 20005
		
	To Executive:	  	James A. Napoli
		  	7317 Brookstone Ct.
		  	Potomac, MD 20854

 The notice shall be deemed to be received in case (a) on the date of its actual receipt by the party entitled
thereto, in case (b) on the third business day following the date of its mailing and in case (c) on the next business day following the date of its delivery to such nationally recognized overnight delivery service. 
 12.2 Amendment and Waiver. No amendment or modification of this Agreement shall be valid or binding upon (a) the Company unless made in
writing and signed by a duly authorized officer of the Company or (b) Executive unless made in writing and signed by him. 
 12.3
Non-Waiver of Breach. No failure by either party to declare a default due to any breach of any obligation under this Agreement by the other, nor failure by either party to act quickly with regard thereto, shall be considered to be a waiver of
any such obligation, or of any future breach. 
 12.4 Severability. If any provision or portion of this Agreement, with the exception
of Sections 1, 2 and 4, shall be determined to be invalid or unenforceable for any reason, the remaining provisions of this Agreement shall be unaffected thereby and shall remain in full force and effect. 
  

 - 22 - 

 12.5 Tax Withholding. The Company may withhold from any payments to Executive under this Agreement
all Federal, state, city, or other taxes as may be required pursuant to any law or governmental regulation or ruling. 
 12.6 Governing
Law. To the extent not preempted by Federal law, the validity and effect of this Agreement and the rights and obligations of the parties hereto shall be construed and determined in accordance with the internal substantive laws of the State of
Delaware, without regard to its conflict-of-laws or choice-of-law principles. 
 12.7 Effect on Prior Agreement. As of the Effective
Date, the letter dated June 3, 2002 from the Company to Executive containing certain terms of Executive’s employment with the Company (the “Offer Letter”) including, without limitation, Executive’s obligation to repay any
portion of the relocation bonus specified in Section 8 of the Offer Letter shall be deemed terminated and of no further force or effect without any consequence to Executive or the Company of any kind and the Offer Letter shall be deemed
superseded and replaced for all purposes by this Agreement. 
 12.8 Entire Agreement. This Agreement, including the Exhibits and
Schedules hereto, contains all of the terms agreed upon by the Company and Executive with respect to the subject matter hereof and, as of the Effective Date, supersedes all prior agreements, arrangements and communications between the parties
dealing with such subject matter, whether oral or written. To the extent this Agreement conflicts with any terms, conditions or agreements set forth in any Company plan, policy or manual, the terms of this Agreement shall govern. 
 12.9 Headings. Numbers and titles to paragraphs and sections hereof are for information purposes only and, where inconsistent with the text, are
to be disregarded. 
 12.10 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed
an original, but all of which, when taken together, shall be and constitute one and the same instrument. 
 12.11 Survival beyond
Termination. Notwithstanding anything in this Agreement to the contrary, the restrictions and obligations contained in Sections 6, 8, 11 and 12.5 shall survive termination of Executive’s employment, whether voluntary or involuntary and
whether due to the expiration, non-renewal or termination of this Agreement, and be binding regardless of the reason for termination of employment. Executive covenants that if Executive should ever seek to avoid his obligations under
Section 6.11, Section 8, Section 11 or Section 12.5 because Executive contends that such restrictions are unenforceable as written for any reason, Executive shall provide notice to the Company in accordance with the provisions of
Section 12.1 of this Agreement setting forth in detail the reasons that Executive believes such restrictions to be unenforceable. 
 12.12 Legal Fees. The Company shall pay for reasonable attorney’s fees and expenses incurred by Executive in connection with negotiation and documentation of this Agreement, up to an aggregate maximum of $20,000, provided that
any request for such payment is accompanied by detailed supporting documentation. 
  

 - 23 - 

 12.13 Knowing and Voluntary Execution. Each of the parties hereto has carefully read and
considered all of the terms of this Agreement, including Section 8 and the restrictions contained in it. Each of the parties has freely, willing and knowingly entered into this Agreement with the intent to be bound by it. 
 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed on the date and year first written above. 
  

					
	The Company:	 	THE MILLS CORPORATION
		 	    a Delaware corporation
			
		 	By:	 	 /s/ Laurence C. Siegel

		 		 	Laurence C. Siegel
		 		 	Chairman and Chief Executive Officer
			
	Executive:	 		 	
		
		 	 /s/ James A. Napoli

		 	James A. Napoli

  

 - 24 - 

 EXHIBIT A 
 FORM OF GENERAL RELEASE 
 1. Parties. This General Release (“General
Release”) is made by                              for himself and his family, heirs, executors,
administrators, personal and legal representatives and their respective successors and assigns (“Executive”), for the benefit of The Mills Corporation (the “Company”), and its subsidiaries and affiliated companies, and their
current or former directors, officers, employees, shareholders or agents (together with the Company, the “Released Parties”). 
 2. Separation Benefits. If Executive signs and does not revoke this General Release, he will receive the benefits specified in Section 6.5, 6.7, or 6.8, as applicable, in the Employment Agreement by and between the
Company and the Executive dated                      (the “Separation Benefits”). 
 3. General Release. In exchange for the benefits described in Paragraph 2 above, Executive does hereby release and forever discharge the
Released Parties from any and all actions, causes of action, suits, controversies, claims, liabilities and demands whatsoever, for or by reason of any matter, cause, or thing whatsoever, whether known or unknown, that Executive has or may have
against the Released Parties, arising under or in connection with Executive’s employment or termination thereof, as of the date he or she signs this General Release, including, but not limited to, any and all claims that the Released Parties:

 • violated Title VII of the Civil Rights Act of 1964, as amended, the Age Discrimination in Employment Act
(“ADEA”), the Civil Rights Act of 1991, the Americans with Disabilities Act, or the Family and Medical Leave Act, or discriminated against Executive on the basis of any other status protected by local, state, or federal common laws,
statutes, constitutions, regulations, ordinances, or executive orders; 
 • violated the Company’s personnel
policies, procedures, any covenant of good faith and fair dealing, or any express or implied contract of any kind; or 
 • violated public policy, statutory, or common law, including claims for: any tort, personal injury; invasion of privacy; wrongful discharge, intentional infliction of emotional distress, intentional interference with contract;
negligence; or detrimental reliance. 
 4. Exclusions From General Release. Excluded from the release above are any claims or
rights that cannot be waived by law, including Executive’s right to file a charge with an administrative agency or to participate in any agency investigation. Executive is, however, waiving his or her right to recover money in connection with a
charge filed by any other individual or by the Equal Employment Opportunity Commission or any other federal or state agency. Also excluded from the General Release are: (a) any indemnification protection afforded to Executive pursuant to the
Company’s Certificate of Incorporation or Bylaws; (b) any rights or claims that may arise as a result of events occurring after the date this General Release is executed; (c) any claims for benefits under any directors’ and
officers’ liability insurance policy maintained by the Company, in accordance with its terms; and (d) any claims by Executive solely in his capacity as a stockholder of the Company or a holder of units of the Mills Limited Partnership, a
Delaware limited partnership. 

 5. Covenant Not To Sue. A “covenant not to sue” is a legal term which means
Executive promises not to file a lawsuit in court, or otherwise sue the Released Parties in any forum. It is different from the General Release of claims contained in Paragraph 3 above. In addition to waiving and releasing the claims covered by
Paragraph 3, Executive further agrees that he or she will never individually or with any other person file, or commence the filing of, any lawsuits, complaints or proceedings of any kind with any state or federal court against the Released Parties
with respect to the matters covered by the General Release in Paragraph 3. Notwithstanding this Covenant Not to Sue, Executive may bring a claim against the Released Parties to enforce this General Release, or to challenge the validity of this
General Release under the ADEA. 
 Executive further represents that he has not assigned to any party any rights with respect to any actions,
causes of action, suits, controversies, claims, liabilities or demands released by Executive pursuant to Paragraph 3 above. 
 6.
Revocation Period. Executive will have seven days after he signs this General Release to revoke it if Executive so desires. Any revocation must be transmitted in writing to Michael Rodis, SVP Human Resources, The Mills Corporation, 1300
Wilson Boulevard, Suite 400, Arlington, VA 22209, in a manner to be received within the seven day revocation period. This General Release will not be effective or enforceable until the seven day revocation period has expired without Executive
revoking it. 
 7. Executive Acknowledgments. Executive hereby acknowledges that (a) Executive has read this General
Release, understands all of its terms, and executes it knowingly and voluntarily, with full knowledge of its significance and the consequences thereof; and (b) some or all of the Separation Benefits exceed the benefits that Executive would
otherwise be entitled to upon separation of employment. 
 8. Governing Law. Executive acknowledges that this General Release
will be governed by and construed and enforced in accordance with the laws of the State of Delaware, to the extent not preempted by Federal law, and without regard to the conflict or choice of law provisions thereof. 
  

	
	  

	Executive Name
	
	                    , 20    

  

 - 2 - 

 EXHIBIT B 
 EMPLOYEE INVENTIONS AGREEMENT 
 As a condition of my employment with The Mills Corporation,
its subsidiaries, affiliates, successors or assigns (collectively, the “Company”), and in consideration of my employment with the Company and my receipt of the compensation now and hereafter paid to me by the Company, I agree to the
following: 
 1. Inventions 
 (a) Without further consideration, I agree to promptly disclose to the Company (during the period of my employment with the Company and for one year thereafter) and to hold in trust for the sole benefit of the Company and do hereby assign
and agree to assign to the Company or its designee, my entire right, title and interest in and to all inventions, discoveries, formulae, processes, systems, methods of operation, improvements, developments, ideas, concepts, designs, work of
authorship, Internet domain names, tradenames, trademarks, programs, source codes and related documentation (whether or not patentable or copyrightable) (collectively the “Intellectual Property”), including, without limitation, all rights
to obtain, register, perfect and enforce such Intellectual Property, which I may solely or jointly conceive or develop or reduce to practice or cause to be conceived or developed or reduced practice during the period of my employment with the
Company. Without limiting the generality of the foregoing, such assignment shall include, without limitation, all Intellectual Property that: 
 (i) relates to any services performed by me for the Company, or if not actually performed, services requested by the Company to be so performed, during the period of my employment with the Company, whether alone or
with others, whether or not during normal working hours and regardless of whether my own equipment, supplies or facilities or the Company’s equipment, supplies or facilities were used to create the Intellectual Property; 
 (ii) pertains to any present or reasonably anticipated line of business activity of the Company; or 
 (iii) was or is aided by the use of time, equipment, supplies, facilities, information or proprietary rights of the Company. 

(b) I acknowledge and agree that any Intellectual Property that is a work of authorship belongs to the Company and is a “work made for hire”
within the definition of Section 101 of the United States Copyright Acts of 1976, Title 17, United States Code. To the extent that any such Intellectual Property does not qualify as a “work made for hire,” this Agreement will
constitute an irrevocable assignment by me to the Company of the ownership of, and all rights of copyright in, such Intellectual Property. The Company or any of its direct or indirect licensees shall not be obligated to designate me as author of any
design, software, firmware, related documentation or any other work of authorship when distributed publicly or otherwise, nor to make any distribution. 
 (c) I agree to keep and maintain adequate and current written records of all Intellectual Property made by me, whether alone or with others, in the form of notes, sketches, drawings and other notations as may be
specified by the Company, which records shall be available to and remain the sole property of the Company at all times. 
  

 - 3 - 

 (d) I agree to perform, during and after the period of my employment with the Company, all acts deemed
necessary or desirable by the Company or its designee to permit and assist the Company or its designee, at the Company’s or its designee’s expense, in obtaining and enforcing the full benefits, enjoyment, rights and title throughout the
world in any patents, copyrights, trademarks, trade secrets and other rights in the Intellectual Property assigned to the Company or its designee in this Section 1, including, without limitation, execution of documents and assistance or
cooperation in legal proceedings and disclosure to the Company of all pertinent information and data with respect to the Intellectual Property. If the Company is unable because of my mental or physical capacity or for any other reason to secure my
signature to apply for or to pursue any application for United States or foreign patents or copyright registrations covering any Intellectual Property assigned to the Company or its designee under this Section 1, then I hereby irrevocably
designate and appoint the Company and its duly authorized officers and agents as my agent and attorney in fact, to act for and in my behalf and stead to execute and file any such applications and to do all other lawfully permitted acts to further
the prosecution and issuance of letters patent or copyright registrations thereon with the same legal force and effect as if executed by me. 
 2. Notification to New Employer. In the event that I leave the employ of the Company, I hereby grant consent to notification by the Company to my new employer about my rights and obligations under this Agreement. 
 3. Representations. I agree to execute any proper oath or verify any proper document required to carry out the terms of this Agreement. I
represent that my performance of all the terms of this Agreement will not breach any agreement to keep in confidence proprietary information acquired by me in confidence or in trust prior to my employment by the Company. I have not entered into, and
I agree I will not enter into, any oral or written agreement in conflict herewith. 
 4. Legal and Equitable Relief. I agree that a
breach of the covenants in Section 1 may cause irreparable harm and result in significant commercial damages to the Company and such harm and damages may be difficult to ascertain. Accordingly, I agree that if I breach such Section or threaten
to do so, the Company will have available, in addition to any other right or remedy available, the right to obtain an injunction from a court of competent jurisdiction restraining such breach or threatened breach and to specific performance of this
Agreement and of any such provision of this Agreement. I further agree that no bond or other security shall be required in obtaining such equitable relief, and I hereby consent to the issuance of such injunction and to the ordering of specific
performance. Finally, I agree that, in the event I breach this Agreement and the Company prevails in any action brought against me pursuant to this Section 4, the Company will be entitled to recover from me, in addition to all other relief to
which it may be entitled, the costs of such action, including reasonable attorneys’ fees. 
 5. Notices. Any notices required or
permitted by this Agreement shall be given to the appropriate party at the address specified below or at such other address as the party shall specify in writing. Such notice shall be deemed given upon personal delivery to the appropriate address or
if sent by certified or registered mail, three days after the date of mailing. 
  

 - 4 - 

 If to The Mills Corporation: 
 The Mills Corporation 
 1300 Wilson Boulevard, Suite 400 
 Arlington, Virginia 22209 
 Attention: General Counsel 
 If to Employee, to my address set forth in the Company’s books and records. 
 6. General Provisions. 
 (a) Governing Law; Consent to Personal Jurisdiction. This Agreement is governed by the laws of the Commonwealth of Virginia without regard to the
choice or conflict of law provisions thereof. I hereby expressly consent to the personal jurisdiction of the state and federal courts located in Virginia for any lawsuit filed there against me by the Company arising from or relating to this
Agreement. 
 (b) Severability. If any one or more of the provisions contained in this Agreement shall for any reason be held to be
excessively broad as to activity or subject, the Company and I agree that a court of competent jurisdiction shall reform that provision to the extent necessary to cause it to be enforceable to the maximum extent permitted by law. The Company and I
agree that we desire the court to reform such provision, and therefore agree that the court will have jurisdiction to do so and that we will abide by what the court determines. If such an interpretation is not possible regarding one or more of the
provisions in this Agreement, then such provision shall be deemed severed and the remaining provisions will continue in full force and effect, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never
been contained herein. 
 (c) Successors and Assigns. This Agreement may not be assigned by me, but may be assigned by the Company to
any successor-in-interest thereof, including without limitation, by way of merger, reorganization or sale of all or substantially all of the assets of the Company. This Agreement will be binding upon my heirs, executors, administrators and other
legal representatives and is for the benefit of the Company, its successors, and its assigns. 
 (d) Waiver. No waiver by the Company
of any breach of this Agreement shall be a waiver of any preceding or succeeding breach. No waiver by the Company of any right under this Agreement shall be construed as a waiver of any other right. The Company shall not be required to give notice
to enforce strict adherence to all terms of this Agreement. No waiver of any rights under this Agreement will be effective unless in writing signed by both parties and in the case of the Company signed by the Chief Executive Officer, President or
Chief Operating Officer of the Company or his/her designee. 
 (e) Opportunity to Review. I acknowledge and agree that I have
carefully reviewed this Agreement, understand it, and have been given an opportunity to consult with counsel regarding this Agreement and my obligations hereunder. 
 (f) Survival. This Agreement shall survive the termination of my employment with the Company for any reason and the assignment of this Agreement by the Company to any successor-in-interest thereof. 

 

 - 5 - 

 (g) Entire Agreement; Amendments. This Agreement sets forth the entire agreement and understanding
between the Company and me and supersedes all prior agreements or understandings, oral or written, between us relating to the subject matter hereof. No modification of or amendment to this Agreement will be effective unless in writing signed by both
parties. Any subsequent change or changes in my duties, salary or compensation will not affect the validity or scope of this Agreement. 
  

					
	  
	 		 	  

	Date	 		 	Signature
			
	  
	 		 	  

	Witness	 		 	Name of Employee (typed or printed)
			
	  
	 		 	  

  

 - 6 - 

 EXHIBIT C 
 TERMINATION CERTIFICATION 
 This is to certify that I do not have in my possession, nor have I
failed to return, any Proprietary Property (as defined in the Employment Agreement between the Company (as defined below) and me) or other information or property belonging to The Mills Corporation, its subsidiaries, affiliates, successors or
assigns (together, the “Company”), including without limitation, any work product developed by me pursuant to or in connection with my employment with the Company or otherwise belonging to the Company. 
 I further certify that I have complied with all terms of the Employee Inventions Agreement between the Company and me, including the reporting of any
inventions conceived or made by me (solely or jointly with others) covered by that agreement. 
  

	
	Date:
                                       
 
	
	  

	(Employee’s Signature)
	
	  

	(Type/Write Employee’s Name)

  

 - 7 -Agreement Plan of Merger

 Exhibit 10.VIII 
 AGREEMENT AND PLAN OF MERGER 
 by and between 
 PROGRESSIVE STATE BANK 
 and

 NEW CENTURY BANK SOUTH 
 and 
 NEW CENTURY BANCORP, INC. 
 THIS AGREEMENT AND PLAN OF MERGER (this “Agreement”) is entered into as of the 2nd day of February, 2006 by and between PROGRESSIVE STATE BANK, a North Carolina banking corporation (“PSB”), NEW
CENTURY BANK SOUTH, a North Carolina banking corporation (the “Bank”) and NEW CENTURY BANCORP, INC., a North Carolina corporation and registered bank holding company (“Bancorp”); 
 W I T N E S S E T H: 
 WHEREAS,
the parties hereto have agreed that it is in their mutual best interests and in the best interests of their respective shareholders for PSB to be merged with and into the Bank pursuant to a plan of merger (the “Plan of Merger”) in the form
attached hereto as Schedule A, with the effect that each of the outstanding shares of PSB’s common stock will be converted into cash in the manner set forth herein, and the parties desire to provide for certain undertakings, conditions,
representations, warranties and covenants in connection with the Merger (as hereinafter defined) and transactions contemplated hereby. 
 NOW, THEREFORE, in consideration of the premises, the mutual benefits to be derived from this Agreement, and of the representations, warranties, conditions, covenants and promises herein contained, and subject to the terms and conditions
hereof, the parties hereto mutually agree as follows: 
 ARTICLE I. THE MERGER 
 1.1 Merger. Subject to the provisions of this Agreement and the Plan of Merger, as of the Effective Time (as defined in Section 1.9
hereof), PSB shall be merged with and into the Bank pursuant to Section 53-12 of the North Carolina General Statutes (the “Merger”), the separate corporate existence of PSB shall cease and the corporate existence of the Bank, as the
surviving corporation in the Merger, shall continue under the laws of the State of North Carolina. The Bank, as the surviving corporation in the Merger, is hereinafter sometimes referred to as the “Surviving Corporation.” 
 1.2 Effect of the Merger. At the Effective Time and by reason of the Merger, and in accordance with applicable law, all of the property,
assets and rights of every kind and character of PSB including, without limitation, all real, personal or mixed property, all debts due on whatever account, all other choses in action and every other interest of or belonging to or due to PSB,
whether tangible or intangible, shall vest in the Surviving Corporation, and the Surviving 

 Corporation shall succeed to all the rights, privileges, immunities, powers, purposes and franchises of a public or
private nature of PSB, all without any conveyance, assignment or further act or deed; and the Surviving Corporation shall become responsible for all of the liabilities, duties and obligations of every kind, nature and description of PSB as of the
Effective Time. 
 1.3 Articles of Incorporation, Bylaws and Management. The Articles of Incorporation and bylaws of the Bank
in effect at the Effective Time shall be the Articles of Incorporation and bylaws of the Surviving Corporation until thereafter amended in accordance with applicable laws. The officers and directors of the Bank at the Effective Time shall continue
to hold such offices and positions of the Surviving Corporation until removed as provided by law or until the election or appointment of their respective successors. 
 1.4 Conversion of Shares and Merger Consideration. 
 (a) Bancorp and Bank
Stock. Each share of common stock of Bancorp, par value $1.00 per share (“Bancorp Stock”), and of the Bank, par value $5.00 per share, issued and outstanding immediately prior to the Effective Time shall continue to be
issued and outstanding and shall not be affected by the Merger. 
 (b) PSB Stock. Except as otherwise provided herein, at the
Effective Time, all rights of PSB’s shareholders with respect to all then outstanding shares of the common stock of PSB, $1.00 par value per share (“PSB Stock”), shall cease to exist, and the holders of shares of PSB Stock shall cease
to be and shall have no further rights as shareholders of PSB. At the Effective Time, each such outstanding share of PSB Stock (except for shares held, other than in a fiduciary capacity or as a result of debts previously contracted, by PSB, the
Bank or Bancorp, which shall be canceled in the Merger, and for Dissenting Shares (as defined in Section 1.7)) shall be converted, without any action on the part of the holder of such shares, into the right to receive the Per Share Cash
Consideration (as defined in Section 1.4(d)) in accordance with this Article I. Following the Effective Time, certificates representing shares of PSB Stock outstanding at the Effective Time shall evidence only the right to receive the Per Share
Cash Consideration. No share of PSB Stock, other than Dissenting Shares (as defined in Section 1.7), shall be deemed to be outstanding or have any rights other than those set forth in this Section 1.4 after the Effective Time. 

(c) Treatment of PSB Options. At the Effective Time, each unexpired and unexercised outstanding option, whether or not then vested or
exercisable in accordance with its terms, to purchase shares of PSB Stock (the “PSB Options”) previously granted by PSB pursuant to a written stock option agreement (each a “PSB Option Agreement”) shall be cancelled and
converted, without any action on the part of the holder of such PSB Option, into the right to receive via certified check from Bancorp within 10 days following the Effective Time the Per Share Cash Consideration (as defined in Section 1.4(d))
minus the exercise price per share for each PSB Option held as evidenced in the PSB Option Agreement governing such PSB Option. Following the Effective Time, PSB Option Agreements representing PSB Options shall evidence only the right to receive the
Per Share Cash Consideration minus the exercise price per share of the PSB Options. No PSB Option shall be deemed to be outstanding or have any rights other than those set forth in this Section 1.4 after the Effective Time. 
  

 2 

 (d) Per Share Cash Consideration. For purposes of this Agreement, the “Per Share Cash
Consideration” shall be $21.30, subject to appropriate adjustment in the event of a stock split, stock dividend, or other change in capitalization effecting PSB Stock. 
 1.5 Closing Payment. Prior to the Effective Time, Bancorp or the Bank shall deposit, or shall cause to be deposited, with Registrar and
Transfer Company, Cranford, New Jersey, transfer agent of Bancorp Stock (the “Exchange Agent”), for the benefit of each holder of PSB Stock for exchange in accordance with this Article I the aggregate amount of cash to be delivered to
holders of PSB Stock as cash consideration to be paid pursuant to this Article I for outstanding shares of PSB Stock (such cash referred to as the “Exchange Fund”). Immediately after the Effective Time, the Exchange Agent shall, pursuant
to irrevocable instructions in accordance with this Article I, deliver cash contemplated to be paid with respect to PSB Stock out of the Exchange Fund to each shareholder of PSB Stock who has surrendered in accordance with the provisions of
Section 1.6 below one or more certificates representing shares of PSB Stock. The Exchange Fund shall not be used for any other purpose. The Exchange Agent shall invest all cash included in the Exchange Fund, as directed by Bancorp, on a daily
basis. Any interest and other income resulting from such investments shall be paid to Bancorp. 
 1.6 Exchange of Shares.

 (a) Exchange Procedures. Prior to the Effective Time, Bancorp or the Bank shall cause the Exchange Agent to mail to the
shareholders of PSB of record as of the date of such mailing, transmittal materials and other appropriate written instructions (collectively, a “Transmittal Letter”) (which shall specify that delivery shall be effected, and risk of loss
and title to the certificate representing shares of PSB Stock prior to such Effective Time shall pass, only upon proper delivery of such certificates to the Exchange Agent and which shall be in such form and have such other provisions as Bancorp may
reasonably specify). At the Effective Time and upon the proper surrender of certificate(s) representing shares of PSB Stock to the Exchange Agent, together with a properly completed and duly executed Transmittal Letter, the holder of such
certificate(s) shall receive, in exchange therefor, the Per Share Cash Consideration subject to any required withholding of applicable taxes. Notwithstanding anything else herein contained, neither Bancorp, the Bank nor the Exchange Agent shall be
obligated to deliver any of such payments in cash unless and until such holder has surrendered the certificate(s) representing such holder’s PSB Stock. The certificate(s) so surrendered shall be duly endorsed as the Exchange Agent may require
and shall be held in escrow by the Exchange Agent pending the Effective Time. If there is a transfer of ownership of any shares of PSB Stock not registered in the transfer records of PSB, the appropriate cash consideration shall be paid to the
transferee thereof if the certificates representing such PSB Stock are presented to the Exchange Agent, accompanied by all documents required, in the reasonable judgment of Bancorp, the Bank and the Exchange Agent, to evidence and effect such
transfer and to evidence that any applicable stock transfer taxes have been paid. Any portion of the Exchange Fund which remains undistributed to the holders of certificates representing PSB Stock for six months after the Effective Time shall be
delivered to Bancorp, upon demand, and any shareholders of PSB who have not previously complied with the provisions of this Article I shall thereafter look only to Bancorp for payment of their claim for cash. Any portion of the Exchange Fund
remaining unclaimed by holders of PSB Stock five years after the Effective Time (or such earlier date immediately prior to such time as such portion would otherwise escheat to or become property of any government entity) 
  

 3 

 shall, to the extent permitted by applicable law, become the property of Bancorp free and clear of any claims or interest
of any person previously entitled therein. Any other provision of this Agreement notwithstanding, neither Bancorp, the Bank nor the Exchange Agent shall be liable to any holder of shares of PSB Stock for any amounts paid or properly delivered in
good faith to a public official pursuant to any applicable abandoned property law. 
 (b) Lost Certificates. Any shareholder of
PSB whose certificate representing shares of PSB Stock has been lost, destroyed, stolen or otherwise is missing shall be entitled to receive any cash to which he, she or it is entitled in accordance with and upon compliance with conditions
reasonably imposed by the Exchange Agent or Bancorp (including, without limitation, a requirement that the shareholder provide a lost instruments indemnity bond in form, substance and amount reasonably satisfactory to the Exchange Agent and
Bancorp). 
 (c) Rights of Former PSB Shareholders. At the Effective Time, the stock transfer books of PSB shall be closed as
to holders of PSB Stock immediately prior to the Effective Time and no transfer of PSB Stock by any such holder shall thereafter be made or recognized. Until surrendered for exchange in accordance with the provisions of Section 1.6(a) of this
Agreement, each certificate theretofore representing shares of PSB Stock (other than shares to be canceled pursuant to Section 1.4(b) of this Agreement and Dissenting Shares) shall from and after the Effective Time represent for all purposes
only the right to receive the appropriate cash consideration. If, after the Effective Time, certificates representing PSB Stock are presented to PSB, Bancorp, the Bank or the Exchange Agent for any reason, they shall be canceled and exchanged as
provided in this Article I. 
 1.7 Dissenting Shares. Notwithstanding any other provision of this Agreement to the contrary,
shares of PSB Stock that are outstanding immediately prior to the Effective Time and that are held by shareholders who shall have not voted in favor of the Merger or consented thereto in writing and who properly shall have demanded appraisal for
such shares in accordance with N.C. Gen. Stat. § 55-13-01 et seq. (collectively, the “Dissenting Shares”) shall not be converted into or represent the right to receive the appropriate cash consideration. Such shareholders
instead shall be entitled to receive payment of the appraised value of such shares held by them in accordance with the provisions of N.C. Gen. Stat. § 55-13-01 et seq. except that all Dissenting Shares held by shareholders who shall have
failed to perfect or who effectively shall have withdrawn or otherwise lost their rights to appraisal of such shares under N.C. Gen. Stat. § 55-13-01 et seq. shall thereupon be deemed to have been converted into and to have become
exchangeable, as of the Effective Time, for the right to receive, without any interest thereon, the appropriate cash consideration upon surrender in the manner provided in Section 1.6 of the certificate or certificates that, immediately prior
to the Effective Time, evidenced such shares. PSB shall give Bancorp (i) prompt notice of any written demand for appraisal of any shares of PSB Stock, attempted withdrawals of such demands for appraisal or any other instruments served pursuant
to N.C. Gen. Stat. § 55-13-01 et seq. and received by PSB relating to shareholders’ rights of appraisal, and (ii) the opportunity to participate in all negotiations and proceedings with respect to demands under N.C. Gen. Stat.
§ 55-13-01 et seq. consistent with the obligations of PSB thereunder. PSB shall not, except with the prior written consent of Bancorp, (x) make any payment with respect to such demand, (y) offer to settle or settle any demand
for appraisal, or (z) waive any failure to timely deliver a written demand for appraisal or timely take any other action to perfect appraisal rights in accordance with N.C. Gen. Stat. § 55-13-01 et seq. 
  

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 1.8 Closing. The closing of the transactions contemplated by this Agreement (the
“Closing”) shall take place at the offices of Bancorp in Dunn, North Carolina, or at such other place as Bancorp shall designate, on a date mutually agreeable to PSB and Bancorp (the “Closing Date”) after the expiration of any
and all required waiting periods following the effective date of all required approvals of the Merger by the Federal Deposit Insurance Corporation (“FDIC”), the North Carolina Commissioner of Banks (the “Commissioner”) and any
other governmental or regulatory authorities (as soon as practicable, but in no event to be more than 90 days following the expiration of all such required waiting periods). At the Closing, Bancorp and PSB shall take such actions (including, without
limitation, the delivery of certain closing documents and the execution of Articles of Merger under North Carolina law) as are required herein and as otherwise shall be required by law to consummate the Merger and cause it to become effective.

 1.9 Effective Time. Subject to satisfaction or waiver of all conditions precedent set forth in this Agreement, the Merger
shall become effective on the date and at the time (the “Effective Time”) on which Articles of Merger and the other provisions required by, and executed in accordance with applicable North Carolina shall have been accepted for filing by
the Secretary of State of the State of North Carolina (or such later time as may be specified in the Articles of Merger); provided, however, that unless otherwise mutually agreed upon by the parties hereto, the Effective Time shall in no event be
more than ten days following the Closing Date. 
 1.10 Further Assurances. If at any time after the Effective Time, Bancorp or
the Bank shall consider or be advised that any further deeds, assignments or assurances in law or any other actions are necessary, desirable or proper to vest, perfect or confirm of record or otherwise, in the Surviving Corporation, the title to any
property or rights of PSB acquired or to be acquired by reason of, or as a result of, the Merger, PSB, and its officers and directors shall execute and deliver all such proper deeds, assignments and assurances in law and do all things necessary,
desirable or proper to vest, perfect or confirm title to such property or rights in Bancorp or the Bank, as applicable and otherwise to carry out the purpose of this Agreement, and that the officers and directors of Bancorp or the Bank, as
applicable, are fully authorized and directed in the name of PSB or otherwise to take any and all such actions. 
 ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF PSB 
 Except as otherwise specifically provided herein or as “Previously Disclosed” to
Bancorp, PSB hereby makes the following representations and warranties to Bancorp. (“Previously Disclosed” shall mean, as to PSB, the disclosure of information in a letter delivered by PSB to Bancorp specifically referring to this
Agreement and arranged in sections corresponding to the sections, subsections and items of this Agreement applicable thereto, and which letter has been delivered prior to the execution of this Agreement. Information shall be deemed Previously
Disclosed for the purpose of a given section, subsection or item of this Agreement only to the extent that a specific reference thereto is made in connection with disclosure of such information at the time of such delivery.) 
  

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 2.1 Corporate Organization, Capacity and Authority. 
 (a) Organization. PSB is a banking corporation duly organized and incorporated and validly existing under the laws of the State of North
Carolina with its deposits insured up to applicable limits by the FDIC. Other than Progressive Financial Services, Ltd., PSB has no direct or indirect subsidiaries. 
 (b) Power and Authority. PSB has all requisite power and authority (corporate and other) to own, lease and operate its properties and to carry on its business as it is now being conducted, is duly
qualified to do business and is in good standing in each other jurisdiction in which the character of the properties owned, leased or operated by it therein or in which the transaction of its business makes such qualification necessary, except where
failure to so qualify would not have a Material Adverse Effect (as defined herein) on PSB, and, to the best knowledge and belief of the management of PSB, is not transacting business or operating any properties owned or leased by it in violation of
any provision of federal, state or local law or any rule or regulation promulgated thereunder, which violation would have a Material Adverse Effect on PSB. For purposes of this Article II, “Material Adverse Effect” shall mean any event or
change that (i) is material and adverse to the financial position, results of operations or business of PSB, or (ii) would materially impair the ability of PSB to perform its obligations under this Agreement or otherwise materially impede
the consummation of the Merger; provided, however, that “Material Adverse Effect” shall not be deemed to include the impact of (A) changes in banking and similar laws of general applicability or interpretations thereof by any
applicable governmental authority, (B) changes in generally accepted accounting principles (“GAAP”) or regulatory accounting requirements applicable to banks and their holding companies generally, (C) changes in general economic
conditions, including interest rates, affecting banks and their holding companies generally, (D) any modifications or changes to valuation policies and practices, or expenses incurred, in connection with the Merger or restructuring charges
taken in connection with the Merger, in each case in accordance with GAAP, and (E) the effects of any action or omission taken with the prior consent of Bancorp or as otherwise contemplated by the Agreement. 
 (c) Constituent Documents. PSB has previously delivered to Bancorp true, accurate and complete copies of the currently effective charter
and bylaws or equivalent organizational documents of PSB and Progressive Financial Services, Ltd., including all amendments and proposed amendments thereto. 
 2.2 Capital Stock. The authorized capital stock of PSB consists of 1,600,000 shares of common stock, $1.00 par value per share, of which 767,317 shares are issued and outstanding as of the date hereof.
Other than the PSB Stock, PSB has no outstanding class of capital stock. Each outstanding share of PSB Stock has been duly authorized and validly issued, is fully paid and nonassessable except to the extent set forth in N.C. Gen. Stat. § 53-42,
has been issued in compliance with applicable federal and state securities laws and has not been issued in violation of the preemptive rights of any shareholder. 
 2.3 Principal Shareholders. Except as “Previously Disclosed,” there are no persons or entities known to PSB that own beneficially, directly or indirectly, more than 5% of the outstanding shares
of PSB Stock. 
  

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 2.4 Convertible Securities, Options, Etc. Except as Previously Disclosed, PSB does not have
any outstanding (i) securities or other obligations (including debentures or other debt instruments) which are convertible into shares of PSB Stock or any other securities of PSB, (ii) options, warrants, rights, calls or other commitments
of any nature which entitle any person to receive or acquire any shares of PSB Stock or any other securities of PSB, or (iii) plan, agreement or other arrangement pursuant to which shares of PSB Stock or any other securities of PSB or options,
warrants, rights, calls or other commitments of any nature pertaining thereto, have been or may be issued. 
 2.5 Authorization and
Validity of Agreement. This Agreement has been duly and validly approved by PSB’s board of directors. Subject only to approval of the Plan of Merger by the shareholders of PSB, (i) PSB has the corporate power and authority to
execute and deliver this Agreement and to perform its obligations and agreements and carry out the transactions described herein, (ii) all corporate proceedings and approvals required to be taken to authorize PSB to enter into this Agreement
and to perform its obligations and agreements and to carry out the transactions described herein have been duly and properly taken, and (iii) this Agreement constitutes the valid and binding agreement of PSB enforceable in accordance with its
terms (except to the extent enforceability may be limited by (A) applicable bankruptcy, insolvency, reorganization, moratorium or similar laws from time to time in effect which affect creditors’ rights generally, (B) legal and
equitable limitations on the availability of injunctive relief, specific performance and other equitable remedies, and (C) general principles of equity and applicable laws or court decisions limiting the enforceability of indemnification
provisions). 
 2.6 Validity of Transactions; Absence of Required Consents or Waivers. Provided the required approvals of
PSB’s shareholders and of governmental or regulatory authorities are obtained, neither the execution and delivery of this Agreement, nor the consummation of the transactions described herein, nor compliance by PSB with any of its obligations or
agreements contained herein, will: (i) conflict with or result in a breach of the terms and conditions of, or constitute a default or violation under any provision of, the Articles of Incorporation or bylaws or the equivalent organizational
documents of PSB, or any material contract, agreement, lease, mortgage, note, bond, indenture, license, or obligation or understanding (oral or written) to which PSB is bound or by which it or its business, capital stock or any of its properties or
assets may be affected; (ii) result in the creation or imposition of any lien, claim, interest, charge, restriction or encumbrance upon any of the properties or assets of PSB; (iii) to the best knowledge of management of PSB, violate any
applicable federal or state statute, law, rule or regulation, or any judgment, order, writ, injunction or decree of any court, administrative or regulatory agency or governmental body; (iv) result in the acceleration of any obligation or
indebtedness of PSB; or (v) interfere with or otherwise adversely affect the ability of PSB to carry on its business as presently conducted, or interfere with or otherwise adversely affect the ability of Bancorp and the Bank to carry on such
business after the Effective Time. No consents, approvals or waivers are required to be obtained from any person or entity in connection with PSB’s execution and delivery of this Agreement, or the performance of its obligations or agreements or
the consummation of the transactions described herein, except for required approvals of PSB’s shareholders as described in Section 7.1(a) below and of governmental or regulatory authorities as described in Section 7.1(b) below and
approvals previously obtained. 
  

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 2.7 Books and Records. The books of account of PSB have been maintained in material
compliance with all applicable legal and accounting requirements and in accordance with good business practices, and such books of account are complete and reflect accurately in all material respects PSB’s items of income and expense and all of
its assets, liabilities and shareholders’ equity. The minute books of PSB accurately reflect in all material respects the corporate actions which its shareholders and board of directors, and all committees thereof, have taken during the time
periods covered by such minute books. All such minute books have been or will be made available to Bancorp and its representatives. 
 2.8
Regulatory Reports. Since its date of incorporation, PSB has filed all reports, registrations and statements, together with any amendments required to be made with respect thereto, that were required to be filed with (i) the FDIC,
(ii) the Commissioner, and (iii) any other governmental or regulatory authorities having jurisdiction over PSB except to the extent that failure to file such reports, registrations and statements would not have a Material Adverse Effect on
PSB. All such reports, registrations and statements filed by PSB with the FDIC, the Commissioner or other such regulatory authority are collectively referred to herein as the “PSB Reports.” As of their respective dates and to the best
knowledge of management of PSB, the PSB Reports complied in all material respects with all the statutes, rules and regulations enforced or promulgated by the regulatory authority with which they were filed and did not contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; and PSB has not been notified that any such PSB
Reports were deficient as to form or content. Following the date of this Agreement, PSB shall deliver to Bancorp, simultaneous with the filing thereof, a copy of each report, registration, statement or other regulatory filing made thereafter by PSB,
with the FDIC, the Commissioner or any other such regulatory authority. 
 2.9 Shareholder Communications and FDIC Filings; Financial
Statements. 
 (a) Shareholder Communications and FDIC Filings. PSB has made available to Bancorp true, accurate and
complete copies of all communications by PSB to its shareholders generally since December 31, 2002 (collectively, the “PSB Shareholder Reports”). The PSB Shareholder Reports did not as of their respective dates contain any untrue
statement of a material fact or omit to state a material fact required to be stated in such PSB Shareholder Reports or necessary in order to make the statements in such PSB Shareholder Reports, in light of the circumstances under which they were
made, not misleading. 
 (b) Financial Statements. PSB has made available to Bancorp the following financial statements
(collectively, the “PSB Financial Statements”): (i) its balance sheets as of September 30, 2005 and 2004 and December 31, 2004 and 2003 and its statements of operations for the three and nine month periods ended
September 30, 2005 and for the years ended December 31, 2004, 2003 and 2002, together with notes thereto. Following the date of this Agreement, PSB promptly will deliver to Bancorp all other annual or interim financial statements prepared
by or for PSB. The PSB Financial Statements (including any related notes and schedules thereto) are in accordance with PSB’s books and records and present fairly PSB’s financial condition, assets and liabilities and results of operations
as of the dates indicated and for the periods specified therein subject, in the case of unaudited interim financial statements, to normal year-end adjustments and any other adjustments described therein, which adjustments will not be material in
amount or effect. 
  

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 2.10 Tax Returns and Other Tax Matters. To the best knowledge of management of PSB,
(i) PSB has timely filed or caused to be filed, or obtained proper extensions of time for filing, all federal, state and local income tax returns and reports which are required by law to have been filed, and all such returns and reports were
true, correct and complete in all material respects and contained all material information required to be contained therein; (ii) all federal, state and local income, profits, franchise, sales, use, occupation, property, excise, withholding,
employment and other taxes (including interest and penalties), charges and assessments which have become due from or been assessed or levied against PSB, or its respective properties have been fully paid or, if not yet due, a reserve or accrual
which is reasonably believed by the management of PSB to be adequate in all material respects for the payment of all such taxes to be paid and the obligation for such unpaid taxes is reflected on the PSB Financial Statements; (iii) tax returns
and reports of PSB have not been subject to audit by the Internal Revenue Service (the “IRS”) or the North Carolina Department of Revenue since December 31, 2000 and PSB has not received any indication of the pendency of any audit or
examination in connection with any such tax return or report or has any knowledge that any such return or report is subject to adjustment; and (iv) PSB has not executed any waiver or extended the statute of limitations (or been asked to execute
a waiver or extend a statute of limitations) with respect to any tax. 
 2.11 Absence of Material Adverse Effects or Certain Other
Events. 
 (a) To the best knowledge of management of PSB, since December 31, 2004, PSB has conducted business only in the
ordinary course, and there has been no Material Adverse Effect, and there has occurred no event or development and there currently exists no condition or circumstance which, with the lapse of time or otherwise, may or could cause, create or result
in a Material Adverse Effect, on PSB. 
 (b) To the best knowledge of management of PSB, since December 31, 2004, and other than
in the ordinary course of its business, PSB has not incurred any material liability or engaged in any material transaction or entered into any material agreement, suffered any loss, destruction or damage to any of its respective properties or
assets, or made a material acquisition or disposition of any assets or entered into any material contract or lease. 
 (c) PSB has
Previously Disclosed to Bancorp any and all “Raises” approved or actually effected since December 31, 2004. For purposes of this Section 2.11(c), “Raises” shall be defined to include (i) any bonus; and
(ii) any increase in the salaries, compensation or general benefits payable to employees of PSB. 
 2.12 Absence of Undisclosed
Liabilities. To the best knowledge of management of PSB, PSB has no liabilities or obligations, whether known or unknown, matured or unmatured, accrued, absolute, contingent or otherwise, whether due or to become due (including, without
limitation, tax liabilities or unfunded liabilities under employee benefit plans or arrangements), other than (i) those reflected in the PSB Financial Statements, or (ii) obligations or liabilities incurred in the ordinary course of its
business since December 31, 2004 and which are not, individually or in the aggregate, material to PSB. No facts or circumstances exist that could reasonably be expected to serve as the basis for any other liabilities of PSB. 
  

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 2.13 Litigation and Compliance with Law. 
 (a) There are no actions, suits, arbitrations, controversies or other proceedings or investigations (or, to the best knowledge and belief of
management of PSB, any facts or circumstances which reasonably could result in such), including, without limitation, any such action by any governmental or regulatory authority, which currently exist or are ongoing, pending or, to the best knowledge
and belief of management of PSB, threatened, contemplated or probable of assertion, against, relating to or otherwise affecting PSB, or any of their respective properties, assets or employees which, if determined adversely, could result in liability
on the part of PSB for, or subject PSB to, material monetary damages, fines or penalties or an injunction, or which could have a Material Adverse Effect on PSB or on PSB’s ability to consummate the Merger. 
 (b) Except for such licenses, permits, orders, authorizations or approvals (“Permits”) the absence of which would not have a Material
Adverse Effect on PSB, PSB has all Permits of any federal, state, local or foreign governmental or regulatory body that are material to or necessary for the conduct of its respective business or to own, lease and operate its respective properties.
Except as would not have a Material Adverse Effect on PSB, all such Permits are in full force and effect and no violations are or have been recorded in respect of any such Permits. No proceeding is pending or, to the best knowledge and belief of
management of PSB, threatened or probable of assertion to suspend, cancel, revoke or limit any Permit. 
 (c) PSB is not subject to
any supervisory agreement, enforcement order, writ, injunction, capital directive, supervisory directive, memorandum of understanding or other similar agreement, order, directive, memorandum or consent of, with or issued by any regulatory or other
governmental authority (including, without limitation, the Commissioner or the FDIC) relating to its financial condition, directors or officers, employees, operations, capital, regulatory compliance or otherwise; there are no judgments, orders,
stipulations, injunctions, decrees or awards against PSB that in any manner limit, restrict, regulate, enjoin or prohibit any present or past business or practice of PSB; and PSB has not been advised and has no reason to believe that any regulatory
or other governmental authority or any court is contemplating, threatening or requesting the issuance of any such agreement, order, injunction, directive, memorandum, judgment, stipulation, decree or award. 
 (d) PSB is not in violation or default under, and has complied with, all laws, statutes, ordinances, rules, regulations, orders, writs,
injunctions or decrees of any court or federal, state, municipal or other governmental or regulatory authority having jurisdiction or authority over it or its business operations, properties or assets (including, without limitation, all provisions
of North Carolina law relating to usury, consumer protection and all other laws and regulations applicable to extensions of credit) except for any such violation, default or noncompliance as does not or would not have a Material Adverse Effect on
PSB, and, to the best knowledge and belief of management of PSB, there is no basis for any claim by any person or authority for compensation, reimbursement or damages or otherwise for any violation of any of the foregoing. 
  

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 2.14 Real Properties. PSB has Previously Disclosed to Bancorp a listing of all real
property owned or leased by PSB (the “Real Property”) and all leases pertaining to any such Real Property to which PSB is a party (the “Real Property Leases” and each a “Real Property Lease”). With respect to all Real
Property, PSB has good and marketable fee simple title to, or a valid and subsisting leasehold interest in, such Real Property and owns the same free and clear of all mortgages, liens, leases, encumbrances, title defects and exceptions to title
other than (i) the lien of current taxes not yet due and payable, and (ii) such imperfections of title and restrictions, covenants and easements (including utility easements) which do not materially affect the value of the Real Property
and which do not and will not materially detract from, interfere with or restrict the present or future use of the properties subject thereto or affected thereby. With respect to each Real Property Lease (x) such lease is valid and enforceable
in accordance with its terms, (y) there currently exists no circumstance or condition which constitutes an event of default by PSB (as lessor or lessee) or its respective lessor or lessee or which, with the passage of time or the giving of
required notices will or could constitute such an event of default, and (z) subject to any required consent of PSB’s lessor, each such Real Property Lease may be assigned to the Bank or Bancorp and the execution and delivery of this
Agreement does not constitute an event of default thereunder. To the best knowledge and belief of management of PSB, the Real Property complies with all applicable federal, state and local laws, regulations, ordinances or orders of any governmental
authority, including those relating to zoning, building and use permits, except for such noncompliance as does not or would not have a Material Adverse Effect on PSB, and the Real Property may be used under applicable zoning ordinances for
commercial banking facilities as a matter of right rather than as a conditional or nonconforming use. All improvements and fixtures included in or on the Real Property are in good condition and repair, ordinary wear and tear excepted, and there does
not exist any condition which materially adversely affects the economic value thereof or materially adversely interferes (or will interfere after the Merger) with the contemplated use thereof. 
 2.15 Loans, Accounts, Notes and Other Receivables. 
 (a) All loans, accounts, notes and other receivables reflected as assets on the books and records of PSB (i) have resulted from bona fide business transactions in the ordinary course of operations of PSB,
(ii) were made in accordance with the standard loan policies and procedures of PSB, and (iii) are owned by PSB free and clear in all material respects of any liens, encumbrances, assignments, participation or repurchase agreements or other
exceptions to title or to the ownership or collection rights of any other person or entity. 
 (b) All of the records of PSB regarding
all outstanding loans, accounts, notes and other receivables, and all other real estate owned, are accurate in all material respects, and, with respect to such loans the loan documentation of which indicate are secured by any real or personal
property or property rights (“Loan Collateral”), such loans are in all material respects secured by valid, perfected and enforceable liens on all such Loan Collateral having the priority described in the records of such loan. PSB has not
engaged in any form of indirect lending and no such indirect loans are outstanding. 
 (c) To the best knowledge and belief of
management of PSB, each loan reflected as an asset on the books of PSB and each guaranty therefor, is the legal, valid and binding obligation of the obligor or guarantor thereon, and no defense, offset or counterclaim has been asserted with respect
to any such loan or guaranty. 
  

 11 

 (d) PSB has previously delivered to Bancorp (i) a written listing of each loan, extension of
credit or other asset of PSB which, as of December 31, 2005, is classified by the FDIC or the Commissioner as “Loss,” “Doubtful,” “Substandard” or “Special Mention” (or otherwise by words of similar
import), or which it has designated as a special asset or for special handling or placed on any “watch list” because of concerns regarding the ultimate collectibility or deteriorating condition of such asset or any obligor or Loan
Collateral therefor, and (ii) a written listing of each loan or extension of credit that, as of December 31, 2005, was past due as to the payment of principal or interest or both, or as to which any obligor thereon (including the borrower
or any guarantor) otherwise was in default, is the subject of a proceeding in bankruptcy or otherwise has indicated any inability or intention not to repay such loan or extension of credit. Each such listing is accurate and complete in all material
respects as of the date indicated. 
 (e) As of December 31, 2004 and 2005, PSB’s, reserve for possible loan losses (the
“Loan Loss Reserve”) has been established in conformity with GAAP, sound banking practices and all applicable requirements, rules and policies of the FDIC and the Commissioner and, in the best judgment of management of PSB, is reasonable
in view of the size and character of its loan portfolio, current economic conditions and other relevant factors, and is adequate to provide for losses relating to or the risk of loss inherent in its loan portfolio. 
 (f) To the best knowledge and belief of management of PSB, each of the loans carried on PSB’s books and records (with the exception of those
loans Previously Disclosed to Bancorp pursuant to subparagraph (d) of this Section 2.15) is collectible in the ordinary course of PSB’s business in an amount which is not less than the amount at which it is carried on PSB’s books
and records. 
 2.16 Securities Portfolio and Investments. Except as Previously Disclosed, all securities owned by PSB (whether
owned of record or beneficially) are held free and clear of all mortgages, liens, pledges, encumbrances or any other restriction or rights of any other person or entity, whether contractual or statutory, which would materially impair the ability of
PSB to dispose freely of any such security or otherwise to realize the benefits of ownership thereof at any time. There are no voting trusts or other agreements or undertakings to which PSB is a party with respect to the voting of any such
securities. With respect to all “repurchase agreements” to which PSB has “purchased” securities under agreement to resell, PSB has a valid, perfected first lien or security interest in the government securities or other
collateral securing the repurchase agreement, and the value of the collateral securing each such repurchase agreement equals or exceeds the amount of the debt owed that is secured by such collateral. Except for fluctuations in the market values of
its investment securities, since December 31, 2004, there has been no significant deterioration or material adverse change in the quality, or any material decrease in the value, of PSB’s securities portfolio as a whole. 
 2.17 Personal Property and Other Assets. All tangible personal property of PSB material to the business operations of PSB (including,
without limitation, all banking equipment, data processing equipment, vehicles, and all other tangible personal property located in any office of or used by PSB in the operation of its business) is owned or leased by PSB free and 
  

 12 

 clear of all liens, encumbrances, leases, title defects or exceptions to title other than such as are not material in
character, amount or extent, and which do not materially detract from the value of, or interfere with the present or future use or ability to convey, the property subject thereto or affected thereby. All of PSB’s tangible personal property
material to its business is in good operating condition and repair, ordinary wear and tear excepted. 
 2.18 Patents and
Trademarks. PSB owns, possesses or has the right to use any and all patents, licenses, trademarks, trade names, copyrights, trade secrets and proprietary and other confidential information necessary to conduct its business as now conducted.
PSB has not violated, and currently is not in conflict with, any patent, license, trademark, trade name, copyright or proprietary right of any other person or entity. PSB owns, possesses or has the right to use any and all licenses necessary to
lawfully use any and all software, applications and code currently installed or otherwise in use on any computer hardware of PSB or otherwise used by PSB in the conduct of its business. 
 2.19 Environmental Matters. 
 (a) PSB has Previously Disclosed to Bancorp copies of all written reports, correspondence, notices or other materials, if any, in its possession pertaining to: (i) environmental surveys or assessments of the Real Property or any
of its Loan Collateral and any improvements thereon; or (ii) to any violation of “Environmental Laws” (as defined in Section 2.19(f) below) on, affecting or otherwise involving the Real Property or any Loan Collateral.

 (b) Except as Previously Disclosed, there has been no presence, use, production, generation, handling, transportation, treatment,
storage, disposal, distribution, labeling, reporting, testing, processing, emission, discharge, release, threatened release, control, removal, clean-up or remediation of any “Hazardous Substances” (as defined in Section 2.19(g) below)
by any person prior to the date hereof on, from or relating to the Real Property or, to the best knowledge and belief of management of PSB, the Loan Collateral, which constitutes a violation of any Environmental Laws. 
 (c) PSB has not violated any federal, state or local law, rule, regulation, order, permit or other requirement relating to health, safety or the
environment or imposing liability, responsibility or standards of conduct applicable to environmental conditions, and there has been no violation of any Environmental Laws (as defined below) (including, to the best knowledge and belief of management
of PSB, any violation with respect to or relating to any Loan Collateral) by any other person or entity for whose liability or obligation with respect to any particular matter or violation PSB is or may be responsible or liable, except to the extent
any violations of which, when taken as a whole, would not have a Material Adverse Effect on PSB. 
 (d) PSB is not subject to any
claims, demands, causes of action, suits, proceedings, losses, damages, penalties, liabilities, obligations, costs or expenses of any kind and nature which arise out of, under or in connection with, or which result from or are based upon the
presence, use, production, generation, handling, transportation, treatment, storage, disposal, distribution, labeling, reporting, testing, processing, emission, discharge, release, threatened release, control, removal, clean-up or remediation of any
Hazardous Substances on, from or relating to the Real Property or, to the best knowledge and belief of management of PSB, any Loan Collateral by any person or entity. 
  

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 (e) No facts, events or conditions relating to the Real Property or, to the best knowledge and
belief of management of PSB, any Loan Collateral, or the operations of PSB, will prevent, hinder or limit continued compliance with Environmental Laws, or give rise to any investigatory, emergency removal, remedial or corrective actions, obligations
or liabilities (whether accrued, absolute, contingent, unliquidated or otherwise) pursuant to Environmental Laws. 
 (f) For purposes
of this Agreement, “Environmental Laws” shall include: 
 (i) all federal, state and local statutes,
regulations, ordinances, orders, decrees, and similar provisions having the force or effect of law, 
 (ii) all
contractual agreements, and 
 (iii) all common law 
 concerning public health and safety, worker health and safety, and pollution or protection of the environment, including without limitation all standards of conduct and bases of obligations relating to the presence,
use, production, generation, handling, transportation, treatment, storage, disposal, distribution, labeling, reporting, testing, processing, discharge, release, threatened release, control, emergency removal, clean-up or remediation of any Hazardous
Substances (including without limitation the Comprehensive Environmental Response, Compensation and Liability Act, the Superfund Amendment and Reauthorization Act, the Federal Insecticide, Fungicide and Rodenticide Act, the Hazardous Materials
Transportation Act, the Resource Conservation and Recovery Act, the Clean Water Act, the Clean Air Act, the Toxic Substances Control Act, any “Superfund” or “Superlien” law, the Americans with Disabilities Act, and the
Occupational Safety and Health Act), as such may now, or at any time prior to the effective time, be defined or in effect. 
 (g) For
purposes of this Agreement, “Hazardous Substances” shall include hazardous, toxic or otherwise regulated materials, substances or wastes; chemical substances or mixtures; pesticides; pollutants; contaminants; toxic chemicals; oil or other
petroleum products, byproducts, additives, or constituents (including but not limited to crude oil, diesel oil, fuel oil, gasoline, lubrication oil, oil refuse, oil mixed with other waste, oil sludge, MTBE and all other liquid hydrocarbons
regardless of specific gravity); asbestos or asbestos containing material; flammable explosives; polychlorinated biphenyls (“PCBs”) or any material containing PCBs; radioactive materials; biological micro-organisms, viruses, fungi, spores;
environmental tobacco smoke; radon or radon gas; formaldehyde or any material containing formaldehyde; fumigants; any material or substance comprising or contributing to conditions known as “sick building syndrome,” “building-related
illness” or similar conditions or exposures; and/or any hazardous, toxic, regulated or dangerous waste, substance or material defined as such by the United States Environmental Protection Agency or any other federal, state or local governmental
agency or political subdivision thereof, or for the purpose of or by any Environmental Laws, as now or at any time prior to the Effective Time may be defined or in effect. 
  

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 2.20 Brokerage or Finders’ Commissions. All negotiations relative to this Agreement
and the transactions described herein have been carried on by PSB or its legal counsel directly with Bancorp or its representatives, and no person or firm has been retained by or has acted on behalf of, pursuant to any agreement, arrangement or
understanding with, or under the authority of, PSB or its board of directors, as a broker, finder or agent or has performed similar functions or otherwise is or may be entitled to receive or claim a brokerage fee or other commission in connection
with or as a result of the transactions described herein. 
 2.21 Material Contracts. 
 (a) Except as Previously Disclosed, PSB is not a party to or bound by any agreement, other than loans made in the ordinary course of business,
(i) involving money or other property in an amount or with a value in excess of $25,000, (ii) which calls for the provision of goods or services to PSB and cannot be terminated without material penalty upon written notice to the other
party thereto, (iii) which is material to PSB and was not entered into in the ordinary course of business, (iv) which involves hedging, options or any similar trading activity, or interest rate exchanges or swaps, (v) which commits
PSB to extend any loan or credit (with the exception of letters of credit, lines of credit and loan commitments extended in the ordinary course of business), (vi) which involves the purchase or sale of any assets of PSB, or the purchase, sale,
issuance, redemption or transfer of any capital stock or other securities of PSB, or (vii) with any director, officer or principal shareholder of PSB (including, without limitation, any consulting agreement, but not including any agreement
relating to loans or other banking services which were made in the ordinary course of its business and on substantially the same terms and conditions as were prevailing at that time for similar agreements with unrelated persons). 
 (b) PSB is not in default, and there has not occurred any event which with the lapse of time or giving of notice or both would constitute such a
default, under any contract, lease, insurance policy, commitment or arrangement to which it is a party or by which it or its property is or may be bound or affected or under which it or its property receives benefits. 
 2.22 Employment Matters; Employee Relations. 
 (a) PSB (i) has paid in full to or accrued on behalf of all its respective directors, officers and employees all wages, salaries, commissions, bonuses, fees and other direct compensation for all labor or
services rendered, including all wages, salaries, commissions, bonuses, fees and other direct compensation for all labor or services performed by them to the date of this Agreement and all vacation pay, sick pay, severance pay and other amounts
promised to the extent required by law or its existing policies or practices, and (ii) to the best knowledge of management of PSB, is in compliance in all material respects with all applicable federal, state and local laws, statutes, rules and
regulations with regard to employment and employment practices, terms and conditions, and wages and hours and other compensation matters; and no person has, to the best knowledge and belief of management of PSB, asserted that PSB is liable in any
amount for any arrearages in wages or employment taxes or for any penalties for failure to comply with any of the foregoing. 
  

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 (b) There is no action, suit or proceeding by any person pending or, to the best knowledge and
belief of management of PSB, threatened against PSB (or its employees), involving employment discrimination, harassment, wrongful discharge or similar claims. PSB is not a party to or bound by any collective bargaining agreement with any of its
employees, any labor union or any other collective bargaining unit or organization. There is no pending or, to PSB’s best knowledge, threatened labor dispute, work stoppage or strike involving PSB, or any of its employees, or any pending or, to
PSB’s best knowledge, threatened proceeding in which it is asserted that PSB has committed an unfair labor practice; and, PSB is not aware of any activity involving it or any of its employees seeking to certify a collective bargaining unit or
engaging in any other labor organization activity. 
 2.23 Employment Agreements; Employee Benefit Plans. 
 (a) PSB has Previously Disclosed to Bancorp a true and complete list of all bonus, deferred compensation, pension, retirement, profit-sharing,
thrift, savings, employee stock ownership, stock bonus, stock purchase, restricted stock and stock option plans and agreements; all employment and severance contracts; all medical, dental, health, and life insurance plans; all vacation, sickness and
other leave plans, disability and death benefit plans; and all other employee benefit plans, contracts, or arrangements maintained or contributed to by PSB for the benefit of any employees, former employees, directors, former directors or any of
their beneficiaries (collectively, the “Plans”). True and complete copies of all Plans, including, but not limited to, any trust instruments or insurance contracts, if any, forming a part thereof, and all amendments thereto, previously
have been supplied to Bancorp. PSB does not maintain, sponsor, contribute to or otherwise participate in any “Employee Benefit Plan” within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”), any “Multiemployer Plan” within the meaning of Section 3(37) of ERISA, or any “Multiple Employer Welfare Arrangement” within the meaning of Section 3(40) of ERISA. Each Plan that is an
“employee pension benefit plan” within the meaning of Section 3(2) of ERISA and which is intended to be qualified under Section 401(a) of the Code, has received or applied for a favorable determination letter from the IRS and PSB
is not aware of any circumstances reasonably likely to result in the revocation or denial of any such favorable determination letter. To the best knowledge of management of PSB, all reports and returns with respect to the Plans (and any Plans
previously maintained by PSB) required to be filed with any governmental department, agency, service or other authority, including, without limitation, Internal Revenue Service Form 5500 (Annual Report), have been properly and timely filed.

 (b) All “Employee Benefit Plans” maintained by or otherwise covering employees or former employees of PSB currently are,
and at all times have been, in compliance with all provisions and requirements of ERISA except those the noncompliance of which, when taken as a whole, would not have a Material Adverse Effect on PSB. There is no pending or, to PSB’s best
knowledge, threatened litigation relating to any Plan or any such Plan previously maintained by PSB. PSB has not engaged in a transaction with respect to any Plan that has subjected it, or absent the exemption under which the transaction was
effected, would subject it to a tax or penalty imposed by either Section 4975 of the Code or Section 502(i) of ERISA. 
 (c)
PSB has Previously Disclosed to Bancorp a true, correct and complete copy (including copies of all amendments thereto) of each of its retirement plans that is intended to be 
  

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 qualified under Section 401(a) of the Code (collectively, the “Retirement Plans”), together with true,
correct and complete copies of the summary plan descriptions relating to the Retirement Plans, the most recent determination letters received from the IRS regarding the Retirement Plans, and the most recent Annual Reports (Form 5500 series) and
related schedules, if any, for the Retirement Plans. The Retirement Plans are qualified under the provisions of Section 401(a) of the Code, the trusts under the Retirement Plans are exempt trusts under Section 501(a) of the Code, and
determination letters have been issued or applied for with respect to the Retirement Plans to said effect, including determination letters covering the current terms and provisions of the Retirement Plans. There are no issues relating to said
qualification or exemption of the Retirement Plans currently pending before the IRS, the United States Department of Labor, the Pension Benefit Guaranty Corporation or any court. The Retirement Plans and the administration thereof meet (and have met
since the establishment of the Retirement Plans) the requirements of ERISA, the Code and all other laws, rules and regulations applicable to the Retirement Plans and do not violate (and since the establishment of the Retirement Plans have not
violated) any of the provisions of ERISA, the Code and such other laws, rules and regulations, except to the extent such violation, when taken as a whole, would not have a Material Adverse Effect on PSB. Without limiting the generality of the
foregoing, all reports and returns with respect to the Retirement Plans required to be filed with any governmental department, agency, service or other authority have been properly and timely filed. There are no disputes or unresolved disagreements
with respect to the Retirement Plans or the administration thereof currently existing between PSB, or any trustee or other fiduciary thereunder, and any governmental agency, any current or former employee of PSB, or beneficiary of any such employee
or any other person or entity. No “reportable event” within the meaning of Section 4043(b) of ERISA has occurred at any time with respect to the Retirement Plans, other than those that, when taken as a whole, would not have a Material
Adverse Effect on PSB. 
 (d) No material liability under subtitle C or D of Title IV of ERISA has been or is expected to be incurred
by PSB with respect to the Retirement Plans or with respect to any other ongoing, frozen or terminated defined benefit pension plan currently or formerly maintained by PSB. PSB presently does not contribute to a “Multiemployer Plan” or has
ever contributed to such a plan. All contributions required to be made pursuant to the terms of each of the Plans (including without limitation the Retirement Plans and any other “pension plan” (as defined in Section 3(2) of ERISA,
provided such plan is intended to qualify under the provisions of Section 401(a) of the Code) maintained by PSB have been timely made. Neither the Retirement Plans nor any other “pension plan” maintained by PSB have an
“accumulated funding deficiency” (whether or not waived) within the meaning of Section 412 of the Code or Section 302 of ERISA. PSB has not provided, and is not required to provide, security to any “pension plan” or to
any “Single Employer Plan” pursuant to Section 401(a)(29) of the Code. Under the Retirement Plans and any other “pension plan” maintained by PSB as of the last day of the most recent plan year ended prior to the date hereof,
the actuarially determined present value of all “benefit liabilities,” within the meaning of Section 4001(a)(16) of ERISA (as determined on the basis of the actuarial assumptions contained in the plan’s most recent actuarial
valuation) did not exceed the then current value of the assets of such plan, and there has been no material change in the financial condition of any such plan since the last day of the most recent plan year. 
 (e) There are no restrictions on the rights of PSB to amend or terminate any Plan. Except as Previously Disclosed, neither the execution and
delivery of this Agreement nor the 
  

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 consummation of the transactions contemplated hereby will (except as otherwise specifically provided for or contemplated
by the transactions described in this Agreement) (i) result in any payment to any person (including, without limitation, any severance compensation or payment, unemployment compensation, “golden parachute” or “change in
control” payment, or otherwise) becoming due under any plan or agreement to any director, officer, employee or consultant, (ii) increase any benefits otherwise payable under any plan or agreement, or (iii) result in any acceleration of the
time of payment or vesting of any such benefit. 
 2.24 Insurance. PSB has in effect a “financial institutions bond”
and such other policies of general liability, casualty, directors and officers liability, employee fidelity, errors and omissions and other property and liability insurance as have been Previously Disclosed to Bancorp (the “Policies”). The
Policies provide coverage in such amounts and against such liabilities, casualties, losses or risks as is required by applicable law or regulation; and, in the judgment of management of PSB, the insurance coverage provided under the Policies is
reasonable and adequate in all respects for PSB. Each of the Policies is in full force and effect and is valid and enforceable in accordance with its terms, and is underwritten by an insurer of recognized financial responsibility that is qualified
to transact business in North Carolina; and PSB has taken all requisite actions (including the giving of required notices) under each such Policy to preserve all rights thereunder with respect to all matters. PSB is not in default under the
provisions of, has received notice of cancellation or nonrenewal of, or any premium increase on, or has any knowledge of any failure to pay any premium on or any inaccuracy in any application for any Policy. There are no pending claims under any
Policy, and PSB has no knowledge of any facts or of the occurrence of any event that is reasonably likely to result in any such claim. 
 2.25 Insurance of Deposits. PSB is an “insured institution” as defined in the Federal Deposit Insurance Act and applicable regulations thereunder. The deposits of each depositor in PSB are insured by the FDIC to the
maximum amount provided by law, all deposit insurance premiums due from PSB to the FDIC have been paid in full in a timely fashion, and, to the best knowledge and belief of PSB, no proceedings have been commenced or are contemplated by the FDIC or
otherwise to terminate such insurance. 
 2.26 Compensation; Stock Ownership. PSB has Previously Disclosed (i) the name
and current salary or wage rate for each present employee of PSB, and (ii) the name of and number of shares of PSB Stock beneficially owned by each of the directors and officers of PSB and by any person or entity known to PSB to own
beneficially 5% or more of the issued and outstanding shares of PSB Stock. 
 2.27 Disclosure. To the best knowledge and belief
of management of PSB, no written statement, certificate, schedule, list or other written information furnished by or on behalf of PSB at any time to Bancorp in connection with this Agreement (including without limitation the statements contained
herein), when considered as a whole, contains or will contain any untrue statement of a material fact or omits or will omit to state a material fact necessary in order to make the statements herein or therein, in light of the circumstances under
which they were made, not misleading. Each document delivered or to be delivered by PSB to Bancorp is or will be a true and complete copy of such document, unmodified except by another document delivered by PSB. 
  

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 ARTICLE III. REPRESENTATIONS AND WARRANTIES OF BANCORP AND BANK 
 Except as otherwise specifically described herein or as “Previously Disclosed” to PSB, Bancorp hereby makes the following representations and
warranties to PSB. (“Previously Disclosed” shall mean, as to Bancorp, the disclosure of information in a letter delivered by Bancorp to PSB specifically referring to this Agreement and arranged in sections corresponding to the sections,
subsections and items of this Agreement applicable thereto, and which letter has been delivered prior to the execution of this Agreement. Information shall be deemed Previously Disclosed for the purpose of a given section, subsection or item of this
Agreement only to the extent a specific reference thereto is made in connection with disclosure of such information at the time of such delivery.) 
 3.1 Corporate Organization, Capacity and Authority. 
 (a) Organization. Bancorp is a corporation duly
organized and validly existing under the laws of the State of North Carolina and is registered with the Commissioner as a commercial bank holding company and with the Federal Reserve Board as a bank holding company under the Bank Holding Company Act
of 1956, as amended. 
 (b) Subsidiaries. Bancorp has two wholly owned bank subsidiaries, the Bank and New Century Bank.
Bancorp also owns 100% of the issued and outstanding common securities of New Century Statutory Trust I, a special purpose entity organized as a statutory trust under the laws of the State of Delaware and formed to allow Bancorp to issue trust
preferred securities. Other than the Bank, New Century Bank and New Century Statutory Trust I, Bancorp has no subsidiaries, direct or indirect, and does not own, directly or indirectly, any stock or other equity interest in any other corporation,
service corporation, joint venture, partnership or other entity, except for equity issues reflected in Bancorp’s investment portfolio and securities held in a fiduciary capacity. 
 (c) Organization of Subsidiary. The Bank is duly organized and validly existing under the laws of the State of North Carolina. All of the
outstanding capital stock of the Bank is owned of record and beneficially, free and clear of all security interests and claims, by Bancorp. All of the outstanding shares of capital stock of the Bank are duly authorized, validly issued, fully paid
and nonassessable, except to the extent set forth in N.C. Gen. Stat. § 53-42. 
 (d) Power and Authority. Each of Bancorp
and the Bank has all requisite power and authority (corporate and other) to own, lease and operate its properties and conduct its business as now being conducted, is duly qualified to do business and is in good standing in each other jurisdiction in
which the character of the properties owned or leased by it therein or in which the transaction of its business makes such qualification necessary, except where failure so to qualify would not have a Material Adverse Effect (as defined herein) on
Bancorp and the Bank, and is not transacting business, or operating any properties owned or leased by it, in violation of any provision of federal or state law or any rule or regulation promulgated thereunder, which violation would have a Material
Adverse Effect on Bancorp and the Bank. For purposes of this Article III, “Material Adverse Effect” shall mean: (a) with respect to references to Bancorp, any change in the business of Bancorp that is or could be materially adverse to
the financial condition, results of operations, prospects, business, assets, investments, 
  

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 properties or operations of Bancorp, or (b) with respect to references to the Bank, any change in the business of
the Bank that is or could be materially adverse to the financial condition, results of operations, prospects, business, assets, loan portfolio, investments, properties or operations of Bancorp and the Bank considered as one enterprise.
“Material Adverse Effect” shall not be deemed to include the impact of (A) changes in banking and similar laws of general applicability or interpretations thereof by any applicable governmental authority, (B) changes in generally
accepted accounting principles (“GAAP”) or regulatory accounting requirements applicable to banks and their holding companies generally, (C) changes in general economic conditions, including interest rates, affecting banks and their
holding companies generally, (D) any modifications or changes to valuation policies and practices, or expenses incurred, in connection with the Merger or restructuring charges taken in connection with the Merger, in each case in accordance with
GAAP, and (E) the effects of any action or omission taken with the prior consent of Bancorp or as otherwise contemplated by the Agreement. 
 (e) Constituent Documents. Bancorp has previously delivered to PSB true, accurate and complete copies of the currently effective charter and bylaws or equivalent organizational documents of each of Bancorp and the Bank,
including all amendments and proposed amendments thereto. 
 3.2 Authorization and Validity of Agreement. This Agreement has
been duly and validly approved by the respective boards of directors of Bancorp and the Bank. (i) Bancorp and the Bank have the corporate power and authority to execute and deliver this Agreement and to perform their obligations and agreements
and carry out the transactions described herein, (ii) all corporate proceedings and approvals required to be taken to authorize Bancorp and the Bank to enter into this Agreement and to perform its respective obligations and agreements and to
carry out the transactions described herein have been duly and properly taken, and (iii) this Agreement constitutes the valid and binding agreement of Bancorp and the Bank enforceable in accordance with its terms (except to the extent
enforceability may be limited by (A) applicable bankruptcy, insolvency, reorganization, moratorium or similar laws from time to time in effect which affect creditors’ rights generally, (B) legal and equitable limitations on the
availability of injunctive relief, specific performance and other equitable remedies, and (C) general principles of equity and applicable laws or court decisions limiting the enforceability of indemnification provisions). 
 3.3 Validity of Transactions; Absence of Required Consents or Waivers. Provided the required approvals of governmental or regulatory
authorities are obtained, neither the execution and delivery of this Agreement, nor the consummation of the transactions described herein, nor compliance by Bancorp or the Bank with any of its obligations or agreements contained herein, will:
(i) conflict with or result in a breach of the terms and conditions of, or constitute a default or violation under any provision of, the Articles of Incorporation or bylaws or the equivalent organizational documents of Bancorp or the Bank, or
any material contract, agreement, lease, mortgage, note, bond, indenture, license, or obligation or understanding (oral or written) to which Bancorp or the Bank, is bound or by which it, its business, capital stock or any of its properties or assets
may be affected; (ii) result in the creation or imposition of any lien, claim, interest, charge, restriction or encumbrance upon any of the properties or assets of Bancorp or the Bank; (iii) to the best knowledge of management of Bancorp
and the Bank, violate any applicable federal or state statute, law, rule or regulation, or any order, writ, injunction or decree of any court, administrative or regulatory agency or 
  

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 governmental body; (iv) result in the acceleration of any obligation or indebtedness of Bancorp or the Bank; or
(v) interfere with or otherwise adversely affect Bancorp’s or the Bank’s ability to carry on its business as presently conducted. No consents, approvals or waivers are required to be obtained from any governmental or regulatory
authority in connection with Bancorp’s or the Bank’s execution and delivery of this Agreement, or the performance of its obligations or agreements or the consummation of the transactions described herein, except for required approvals of
governmental or regulatory authorities described in Section 7.1 below and approvals previously obtained. 
 3.4 Books and
Records. The books of account of Bancorp and the Bank have been maintained in material compliance with all applicable legal and accounting requirements and in accordance with good business practices, and such books of account are complete
and reflect accurately in all material respects Bancorp’s and the Bank’s, respectively, items of income and expense and all of its assets, liabilities and shareholders’ equity. The minute books of each of Bancorp and the Bank
accurately reflect in all material respects the corporate actions which its respective shareholders and board of directors, and all committees thereof, have taken during the time periods covered by such minute books. All such minute books have been
or will be made available to PSB and its representatives. 
 3.5 Obstacles to Regulatory Approval. To the best of the knowledge
and belief of the management of Bancorp, no fact or condition relating to Bancorp or the Bank exists that may reasonably be expected to (i) prevent, impede or delay Bancorp, the Bank or PSB from obtaining the regulatory approvals required in
order to consummate transactions described herein; and, if any such fact or condition becomes known to the executive officers of Bancorp, Bancorp promptly (and in any event within three days after obtaining such knowledge) shall communicate such
fact or condition to the President of PSB. 
 3.6 Disclosure. To the best of the knowledge and belief of Bancorp, no written
statement, certificate, schedule, list or written information furnished by or on behalf of Bancorp at any time to PSB in connection with this Agreement (including, without limitation, the statements contained herein), when considered as a whole,
contains or will contain any untrue statement of a material fact or omits or will omit to state a material fact necessary in order to make the statements herein or therein, in light of the circumstances under which they were made, not misleading.
Each document delivered or to be delivered by Bancorp to PSB is or will be a true and complete copy of such document, unmodified except by another document delivered by Bancorp. 
 ARTICLE IV. COVENANTS OF PSB 
 4.1 Affirmative Covenants of PSB.
PSB hereby covenants and agrees as follows with Bancorp: 
 (a) Conduct of Business Prior to Effective Time. Between the date of
this Agreement and the Effective Time, except as otherwise agreed by Bancorp in writing, PSB will carry on its business in and only in the regular and usual course in substantially the same manner as such business heretofore was conducted, and will:

  

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 (i) make all reasonable efforts to preserve intact its present business
organization, keep available its present officers and employees, and preserve its relationships with customers, depositors, creditors, correspondents, suppliers, and others having business relationships with them; 
 (ii) maintain all of its properties and equipment used in its business in customary repair, order and condition, ordinary wear and
tear excepted; 
 (iii) maintain its books of account and records in the usual, regular and ordinary manner in
accordance with sound business practices applied on a consistent basis except to the extent otherwise reasonably required by applicable laws or regulations and on a monthly basis after the date hereof provide the Bank with copies of month-end
reconciliations for (a) correspondent bank accounts; and (b) all suspense or clearing accounts; 
 (iv)
comply in all material respects with all laws, rules and regulations applicable to it, its properties, assets or employees and to the conduct of its business; 
 (v) not change its existing loan underwriting guidelines, policies or procedures except as may be required by law or applicable
regulation; 
 (vi) continue to maintain in force insurance such as is described in Section 2.24 above; not modify
any bonds or policies of insurance in effect as of the date hereof unless the same, as modified, provides substantially equivalent coverage; and, not cancel, allow to be terminated or, to the extent available, fail to renew, any such bond or policy
of insurance unless the same is replaced with a bond or policy providing substantially equivalent coverage; and 
 (vii)
promptly provide to Bancorp such information about its financial condition, results of operations, prospects, businesses, assets, loan portfolio, investments, properties or operations as Bancorp reasonably shall request. 
 (b) Loans. PSB will provide Bancorp with two days’ prior notice of each new extension of credit (including the issuance of unfunded
commitments, but excluding such new extensions of credit as have been Previously Disclosed,) that it proposes to make within the following categories: (i) loan participations, (ii) loans for acquisition and development purposes, and
(iii) non-residential construction loans exceeding $500,000 in principal amount. PSB will not enter into any form of indirect lending. Additionally, PSB will make available and provide to Bancorp the following information with respect to its
loans and other extensions of credit (such assets herein referred to as “Loans”) as of December 31, 2005 and as of the end of each month thereafter until the Effective Time, such information for each month, or in the case of
(ii) below, quarterly, to be in form and substance as is usual and customary in the conduct of its business and to be furnished within 25 days of the end of each month ending after the date hereof, except as otherwise provided: 
 (i) a list of Loans past due for 30 days or more as to principal or interest; 
  

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 (ii) an analysis of the Loan Loss Reserve and management’s assessment of the
adequacy of the Loan Loss Reserve, which analysis and assessment shall include a list of all classified or “watch list” Loans, along with the outstanding balance and amount specifically allocated to the Loan Loss Reserve for each such
classified or “watch list” Loan; 
 (iii) a list of Loans in nonaccrual status; 
 (iv) a list of all Loans over $250,000 without principal reduction for a period of longer than one year; 
 (v) a list of all foreclosed real property or other real estate owned and all repossessed personal property; 
 (vi) a list of reworked or restructured Loans over $250,000 and still outstanding, including original terms, restructured terms and
status (provided however, that for purposes of this Section 4.1(b)(vi), the renewal of a loan under the same or substantially similar terms and conditions shall not constitute a “reworked or restructured” Loan); 
 (vii) a list of any actual or threatened litigation by or against PSB pertaining to any Loans or credits, together with the
pleadings and other filed documents related thereto; and 
 (viii) a list of new and renewed Loans made during the
previous month. 
 (c) Accruals for Loan Loss Reserve, Expenses and Other Accounting Matters. PSB will make such appropriate
accounting entries in its books and records and take such other actions as Bancorp, in consultation with PSB’s independent certified public accounting firm, deems to be required by GAAP, or which Bancorp otherwise reasonably deems to be
necessary, appropriate or desirable in anticipation of the Merger and which are not in violation of GAAP or applicable law, including without limitation additional provisions to PSB’s Loan Loss Reserve or accruals or the creation of reserves
for employee benefit and Merger-related expenses; provided, however, that notwithstanding any provision of this Agreement to the contrary, and except as otherwise agreed to by PSB and Bancorp, PSB shall not be required to make any such accounting
entries until immediately prior to the Closing and only following receipt of written confirmation from Bancorp that it is not aware of any fact or circumstance that would prevent completion of the Merger; and, provided further, however, that
no such entry made as a result of such a request by Bancorp shall, itself alone, constitute a breach by PSB of any representation, warranty or covenant made by PSB in this Agreement. 
 (d) Loan Charge-Offs. PSB will make such appropriate accounting entries in its books and records and take such other actions which are not
in violation of GAAP or 
  

 23 

 applicable law as Bancorp, in consultation with PSB’s independent certified public accounting firm, reasonably deems
to be necessary, appropriate or desirable to charge-off any Loans on PSB’s books, or any portions thereof, that Bancorp, in its sole discretion, considers to be losses or that Bancorp otherwise believes, in good faith, are required to be
charged off pursuant to applicable banking regulations, GAAP or otherwise, or that otherwise would be charged off by Bancorp after the Effective Time in accordance with its Loan administration and charge-off policies and procedures; provided,
however, that notwithstanding any provision of this Agreement to the contrary, and except as otherwise agreed to by PSB and Bancorp, PSB shall not be required to make any such accounting entries or take any such actions until immediately prior to
the Closing and only following receipt of written confirmation from Bancorp that it is not aware of any fact or circumstance that would prevent completion of the Merger; and, provided further, however, that no such entry made as a result of
such a request by Bancorp shall, itself alone, constitute a breach by PSB of any representation, warranty or covenant made by PSB in this Agreement. 
 (e) Notice of Certain Changes or Events. Following the execution of this Agreement and up to the Effective Time, PSB promptly will notify Bancorp in writing of and provide to it such information as it
shall request regarding (i) any material adverse change in its financial condition, results of operations, prospects, business, assets, loan portfolio, investments, properties or operations, or of the actual or prospective occurrence of any
condition or event which, with the lapse of time or otherwise, may or could cause, create or result in any such material adverse change, or of (ii) the actual or prospective existence or occurrence of any condition or event which, with the
lapse of time or otherwise, has caused or may or could cause any statement, representation or warranty of PSB herein to be or become inaccurate, misleading or incomplete, or which has resulted or may or could cause, create or result in the breach or
violation of any of PSB’s covenants or agreements contained herein or in the failure of any of the conditions described in Sections 7.1 or 7.3 below. 
 (f) Consents to Assignment of Contracts and Leases. PSB will use its best efforts to obtain all required consents to the assignment to Bancorp or the Bank of PSB’s rights and obligations under any
contracts or personal or real property leases, each of which consents shall be in such form as shall be specified by Bancorp. 
 (g)
Qualified Plans. PSB shall take all appropriate action as shall be necessary to maintain the Progressive State Bank 401(k) Plan (the “PSB 401(k) Plan”), as a qualified plan for purposes of ERISA. PSB acknowledges that Bancorp
intends (i) that the PSB 40l(k) Plan will be merged into the New Century Bancorp, Inc. 401(k) Plan (the “Bancorp 401(k) Plan”) as soon as practicable after the Effective Time. PSB shall take all such actions with respect to such plans
as shall be necessary to accomplish such intent and, until the Effective Time, will not take any other extraordinary actions with respect to such plans without the written consent of Bancorp. 
 (h) Further Action; Instruments of Transfer. PSB shall (i) use its best efforts in good faith to take or cause to be taken all action
required of it hereunder as promptly as practicable so as to permit the expeditious consummation of the transactions described herein, (ii) perform all acts and execute and deliver to Bancorp all documents or instruments required herein or as
otherwise shall be reasonably necessary or useful to or requested of PSB in consummating such transactions and (iii) cooperate with Bancorp fully in carrying out, and will pursue diligently the expeditious completion of, such transactions.

  

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 4.2 Negative Covenants of PSB. Between the date hereof and the Effective Time, PSB will not
do any of the following things or take any of the following actions without the prior written consent and authorization of the President of Bancorp: 
 (a) Amendments to Articles of Incorporation or Bylaws. Amend its Articles of Incorporation or bylaws. 
 (b)
Change in Capital Stock. Make any change in its authorized capital stock, or create any other or additional authorized capital stock or other securities, or issue, sell, purchase, redeem, retire, reclassify, combine or split any shares of
its capital stock or other securities (including securities convertible into capital stock), or enter into any agreement or understanding with respect to any such action. 
 (c) Options, Warrants and Rights. Grant or issue any options, warrants, calls, puts or other rights of any kind relating to the purchase, redemption or conversion of shares of its capital stock or any
other securities (including securities convertible into capital stock) or enter into any agreement or understanding with respect to any such action. 
 (d) Dividends. Declare or pay any dividends on any outstanding shares of its capital stock or make any other distributions on or in respect of any shares of its capital stock or otherwise to its
shareholders, provided however, that PSB shall be permitted to declare and pay a one time dividend on or after January 1, 2006 and before the Effective Time in an amount not to exceed $0.40 per share on the issued and outstanding shares of PSB
Stock as of the date hereof. 
 (e) Employment, Benefit or Retirement Agreements or Plans. Except as required by law,
contemplated by this Agreement or Previously Disclosed, (i) enter into, become bound by, renew or extend any oral or written contract, agreement or commitment for the employment or compensation of any director, officer, employee or consultant
which is not immediately terminable by PSB without cost or other liability on no more than 30 days’ notice; (ii) amend any existing, or adopt, enter into or become bound by any new or additional, profit-sharing, bonus, incentive, change in
control or “golden parachute,” stock option, stock purchase, pension, retirement, insurance (hospitalization, life or other), paid leave (sick leave, vacation leave or other) or similar contract, agreement, commitment, understanding, plan
or arrangement (whether formal or informal) with respect to or which provides for benefits for any of its current or former directors, officers, employees or consultants; (iii) make contributions to any 401(k) Plan other than basic and matching
contributions in accordance with the terms of such 401(k) Plan as Previously Disclosed; or (iv) enter into or become bound by any contract with or commitment to any labor or trade union or association or any collective bargaining group.

 (f) Increase in Compensation. With the exception of the anticipated increases in annual salary and annual officer and
employee bonuses Previously Disclosed to Bancorp and such other raises as are in the ordinary course of business and in accordance with historical practices, increase the compensation or benefits of, or pay any bonus or other special or additional
compensation to, any of its directors, officers, employees or consultants. 
  

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 (g) Accounting Practices. Make any changes in its accounting methods, practices or
procedures or in depreciation or amortization policies, schedules or rates heretofore applied (except as required by GAAP or governmental regulations). 
 (h) Acquisitions; Additional Branch Offices. Directly or indirectly (i) acquire or merge with, or acquire any branch or all or any significant part of the assets of, any other person or entity,
(ii) open any new branch office, or (iii) enter into or become bound by any contract, agreement, commitment or letter of intent relating to, or otherwise take or agree to take any action in furtherance of, any such transaction or the
opening of a new branch office. 
 (i) Changes in Business Practices. Except as may be required by the FDIC, the Commissioner
or any other governmental or other regulatory agency having jurisdiction over PSB or as shall be required by applicable law, regulation or this Agreement, (i) change in any material respect the nature of its business or the manner in which it
conducts its business, (ii) discontinue any material portion or line of its business or (iii) change in any material respect its lending, investment, asset-liability management or other material banking or business policies (except to the
extent required by Section 4.1 above and Section 6.8 below). 
 (j) Exclusive Merger Agreement. Directly or
indirectly, through any person (i) encourage, solicit or attempt to initiate or procure discussions, negotiations or offers with or from any person or entity (other than Bancorp) relating to a merger or other acquisition of PSB or the purchase
or acquisition of any PSB Stock or all or any significant part of PSB’s assets; or, except as required by law or by fiduciary obligations owed to the person assisted, provide assistance to any person in connection with any such offer;
(ii) except to the extent required by law, disclose to any person or entity any information not customarily disclosed to the public concerning PSB or its business, or afford to any other person or entity access to its properties, facilities,
books or records; (iii) sell or transfer all or any significant part of PSB’s assets to any other person or entity; or (iv) enter into or become bound by any contract, agreement, commitment or letter of intent relating to, or
otherwise take or agree to take any action in furtherance of, any such transaction. 
  

	 	(k)	Acquisition or Disposition of Assets. 

 (i) Except in the ordinary course of business consistent with its past practices, sell or lease (as lessor), or enter into or become bound by any contract, agreement, option or commitment relating to the sale,
lease (as lessor) or other disposition of any real estate; or sell or lease (as lessor), or enter into or become bound by any contract, agreement, option or commitment relating to the sale, lease (as lessor) or other disposition of any equipment or
any other fixed or capital asset (other than real estate) having a book value or a fair market value, whichever is greater, of more than $25,000 for any individual item or asset, or more than $50,000 in the aggregate for all such items or assets.

 (ii) Except in the ordinary course of business consistent with past practices, purchase or lease (as lessee), or
enter into or become bound by any contract, agreement, option or commitment relating to the purchase, lease (as lessee) or other acquisition of any real property; or purchase or lease (as lessee), or enter into or become bound by any contract,
agreement, option or commitment 
  

 26 

 relating to the purchase, lease (as lessee) or other acquisition of any equipment or any other fixed
assets (other than real estate) having a purchase price, or involving aggregate lease payments, in excess of $25,000 for any individual item or asset, or more than $50,000 in the aggregate for all such items or assets; 
 (iii) Enter into any purchase commitment for supplies or services which calls for prices of goods or fees for services materially
higher than current market prices or fees or which obligates PSB for a period longer than six months; 
 (iv) Except in
the ordinary course of its business consistent with its past practices, sell, purchase or repurchase, or enter into or become bound by any contract, agreement, option or commitment to sell, purchase or repurchase, any loan or other receivable or any
participation in any loan or other receivable; or 
 (v) Sell or dispose of, or enter into or become bound by any
contract, agreement, option or commitment relating to the sale or other disposition of, any other asset (whether tangible or intangible, and including without limitation any trade name, trademark, copyright, service mark or intellectual property
right or license) other than assets that are obsolete or no longer used in PSB’s business; or assign its right to or otherwise give any other person its permission or consent to use or do business under the corporate name of PSB or any name
similar thereto; or release, transfer or waive any license or right granted to it by any other person to use any trademark, trade name, copyright, service mark or intellectual property right. 
 (l) Debt; Liabilities. Except in the ordinary course of its business consistent with its past practices, (i) enter into or become
bound by any promissory note, loan agreement or other agreement or arrangement pertaining to its borrowing of money, (ii) assume, guarantee, endorse or otherwise become responsible or liable for any obligation of any other person or entity, or
(iii) incur any other liability or obligation (absolute or contingent). 
 (m) Liens; Encumbrances. Mortgage, pledge or subject
any of its assets to, or permit any of its assets to become or (with the exception of those liens and encumbrances Previously Disclosed to Bancorp with specificity) remain subject to, any lien or any other encumbrance (other than in the ordinary
course of business consistent with its past practices in connection with borrowings from the Federal Home Loan Bank of Atlanta, securing of public funds deposits, repurchase agreements or other similar operating matters). 
 (n) Waiver of Rights. Waive, release or compromise any material rights in its favor (except in the ordinary course of business) except in
good faith for fair value in money or money’s worth, nor waive, release or compromise any rights against or with respect to any of its officers, directors or shareholders or members of families of officers, directors or shareholders.

 (o) Other Contracts. Except as Previously Disclosed, enter into or become bound by any contracts, agreements, commitments or
understandings (other than those described elsewhere in this Section 4.2) (i) for or with respect to any charitable contribution in excess of $2,000; (ii) with any governmental or regulatory agency or authority; (iii) pursuant to
which PSB 
  

 27 

 would assume, guarantee, endorse or otherwise become liable for the debt, liability or obligation of any other person or
entity; (iv) which is entered into other than in the ordinary course of its business; or (v) which, in the case of any one contract, agreement, commitment or understanding and whether or not in the ordinary course of its business, would
obligate or commit PSB to make expenditures of more than $25,000 (other than contracts, agreements, commitments or understandings entered into in the ordinary course of PSB’s lending operations). 
 (p) Deposit Liabilities. Following the date of this Agreement and up to the Effective Time, PSB will make pricing decisions with respect to
its deposit accounts in a manner consistent with its past practices based on competition and prevailing market rates in its banking markets. 
 4.3 Shareholder Approval. 
 (a) Meeting of Shareholders. PSB shall cause a meeting of its shareholders
to be duly called and held as soon as practicable for the purpose of voting on the approval and adoption of the Plan of Merger. In connection with the call and conduct of and all other matters relating to its shareholders’ meeting or other
shareholder approval, PSB shall fully comply with all provisions of applicable federal and state law and regulations and with its Articles of Incorporation and bylaws. 
 (b) Recommendation of Board of Directors. Subject to its fiduciary obligations, the board of directors of PSB shall recommend to the shareholders of PSB that they vote their shares at the
shareholders’ meeting contemplated by Section 4.3(a) above to approve the Plan of Merger. 
 ARTICLE V. COVENANTS OF BANCORP AND
BANK 
 Bancorp hereby covenants and agrees as follows with PSB: 
 5.1 Employment. 
 (a)
Contracts. At the Effective Time, the Bank will enter into an Employment Agreement with Roland T. Orr substantially in the form attached hereto as Exhibit A. 
 (b) Other Employees. After the Effective Time, Bancorp will use its best efforts to retain other employees of PSB. Any such person so retained shall be employed on an “at-will” basis, and
nothing in this Agreement shall be deemed to constitute an employment agreement with any such person or to obligate Bancorp or any affiliate of Bancorp to employ any such person for any specific period of time or in any specific position or location
or to restrict Bancorp’s right to change the rate of compensation or terminate the employment of any such person at any time and for any reason. 
  

 28 

 5.2 Employee Benefits. 
 (a) Generally. Except as otherwise provided herein, or as Previously Disclosed to Bancorp, and to the extent permitted by contribution and
deduction limitations of ERISA and the Code with respect to Bancorp’s qualified plans, any employee of PSB who continues employment with Bancorp or the Bank at the Effective Time (a “New Employee”) shall become entitled to receive all
employee benefits and to participate in all benefit plans provided by Bancorp or the Bank, as applicable, on the same basis and subject to the same eligibility and vesting requirements, and to the same conditions, restrictions and limitations, as
generally are in effect and applicable to other newly hired employees of Bancorp or the Bank. However, each New Employee shall be given credit for his or her full years of service with PSB for purposes of (i) entitlement to vacation and sick
leave and for participation in all Bancorp welfare, insurance and other fringe benefit plans, and (ii) eligibility for participation and vesting in the Bancorp 401(k) Plan. Notwithstanding any provision herein to the contrary, neither the Bank
nor Bancorp will be required to take any action that could adversely affect the continuing qualification of the Bancorp 401(k) Plan. The Bank will grant to each New Employee a pro rata amount of sick leave and vacation leave, in accordance with the
Bank’s standard leave policies, for the period between the Effective Time and the end of the calendar year during which the Effective Time occurs. Each New Employee will be permitted to carry over accrued and unused sick leave and vacation
leave earned at PSB but shall thereafter be subject to the Bank’s leave policies. 
 (b) Health Insurance. Each New
Employee shall be entitled to participate in the Bank’s group health insurance plan at a cost equal to the cost, if any, for any Bank employee and such participation shall be without regard to pre-existing condition requirements under the
Bank’s group health insurance plan, to the extent any such condition at the Effective Time would have been covered under the health insurance plans of PSB. 
 (c) Retirement Benefits. Subject to the agreement of the Bank’s group health insurance plan carrier, each employee of PSB who has retired with ten (10) years of service after attaining age 55,
but before attaining age 65 or who has retired with at least ten (10) years of service at PSB after attaining age 65 and any employee of PSB after the Effective Time who retires after meeting the aforesaid age and service qualifications will be
permitted, at such employee’s own cost and expense, to elect to retain medical, dental care and life insurance as if they were active New Employees. After the Effective Time, Bancorp and the Bank shall, subject to approval of their group health
insurance plan carrier, seek to have the foregoing coverage applicable to all New Employees as well as all employees of Bancorp, the Bank and any of its direct or indirect subsidiaries. 
 5.3 PSB Directors. 
 (a)
Representation on Bank Board. The Bank shall appoint one person mutually agreeable to Bancorp and PSB to serve as a director of the Bank until the next annual meeting of its shareholder, Bancorp, at which directors of the Bank are elected
and shall take such actions as shall be required, if any, to increase the number of members of its board of directors as may be necessary to permit such nominee to serve as director. The Bank’s board shall nominate for election and Bancorp
shall elect such person at the annual meeting of the Bank’s shareholder such that the nominee of PSB will be able to serve as a director of the Bank for a term of no less than one year after the Effective Time. 
  

 29 

 (b) Advisory Board. Each member of the board of directors of PSB not also serving as an
officer, independent contractor or employee of PSB at the Effective Time shall be appointed to serve on an advisory board of the Bank for Lumberton, North Carolina. Such members shall be compensated $500 per month for a period of two (2) years
and shall attend such advisory board meetings as shall be called by the President of the Bank from time to time . 
 5.4
Indemnification of Directors and Officers. 
 (a) After the Effective Time, without releasing any insurance carrier and
after exhaustion of all applicable director and liability insurance coverage for PSB and its directors and officers, Bancorp shall indemnify, hold harmless and defend the directors and officers of PSB in office at the Effective Time, to the same
extent as it indemnifies its own directors and officers, from and against any and all claims, disputes, demands, causes of action, suits, proceedings, losses, damages, liabilities, obligations, costs and expenses of every kind and nature including,
without limitation, reasonable attorneys’ fees and legal costs and expenses therewith whether known or unknown and whether now existing or hereafter arising which may be threatened against, incurred, undertaken, received or paid by such persons
in connection with or which arise out of or result from or are based upon any action or failure to act by such person in the ordinary scope of his duties as a director or officer of PSB (including service as a fiduciary of any of the PSB Plans (as
defined in Section 2.23(a)) through the Effective Time; provided, however, that Bancorp shall not be obligated to indemnify such person for (i) any act not available for statutory or permissible indemnification under North Carolina law,
(ii) any penalty, decree, order, finding or other action imposed or taken by any banking regulatory authority, (iii) any violation or alleged violation of federal or state securities laws to the extent that indemnification is prohibited by
law, or (iv) any claim of sexual or other unlawful harassment, or any form of employment discrimination prohibited by federal or state law; further, provided, however, that (A) Bancorp or the Bank shall have the right to assume the defense
thereof and upon such assumption Bancorp or the Bank shall not be liable to any director or officer of PSB for any legal expenses of other counsel or any other expenses subsequently incurred by such director or officer in connection with the defense
thereof, except that if Bancorp or the Bank elects not to assume such defense for such director or officer or reasonably advises such director or officer that there are issues which raise conflicts of interest between Bancorp or the Bank and such
director or officer, such director or officer may retain counsel reasonably satisfactory to him, and Bancorp or the Bank shall pay the reasonable fees and expenses of such counsel, (B) neither Bancorp nor the Bank shall be liable for any
settlement effected without its prior written consent, and (C) neither Bancorp nor the Bank shall have any obligation hereunder to any director or officer of PSB when and if a court of competent jurisdiction shall determine that indemnification
of such director or officer in the manner contemplated hereby is prohibited by applicable law. The indemnification provided herein shall be in addition to any indemnification rights an indemnitee may have by law, pursuant to the charter or bylaws of
PSB or pursuant to any PSB Plan for which the indemnitee serves as a fiduciary. 
 (b) From and after the Effective Time, Bancorp will
directly or indirectly cause the persons who served as directors or officers of PSB at the Effective Time to be covered by PSB’s existing directors’ and officers’ liability insurance policy (provided that Bancorp may substitute
therefor policies of at least the same coverage in amounts contained and terms and conditions which are not less advantageous than such policy). Such insurance coverage shall commence at the Effective Time and will be provided for a period of no
less than three years after the Effective Time. 
  

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 (c) The indemnification provided by this Section 5.4 is the sole indemnification provided by
Bancorp to the directors and officers of PSB for service in such positions up to and through the Effective Time. This Section 5.4 is intended to create personal rights in the directors and officers of PSB, who shall be deemed to be third-party
beneficiaries hereof. Notwithstanding any other provision of this Agreement, at the Effective Time, the indemnification rights provided herein shall not be extinguished but shall instead survive for a period of three years after the Effective Time.

 5.5 Notice of Certain Changes or Events. Following the execution of this Agreement and up to the Effective Time, Bancorp
promptly will notify PSB in writing of and provide to it such information as it shall request regarding (i) any material adverse change in Bancorp’s consolidated financial condition, consolidated results of operations, prospects, business,
assets, loan portfolio, investments, properties or operations, or of the actual or prospective occurrence of any condition or event which, with the lapse of time or otherwise, may or could cause, create or result in any such material adverse change,
or (ii) the actual or prospective existence or occurrence of any condition or event which, with the lapse of time or otherwise, has caused or may or could cause any statement, representation or warranty of Bancorp herein to be or become
inaccurate, misleading or incomplete, or which has resulted or may or could cause, create or result in the breach or violation of any of Bancorp’s covenants or agreements contained herein or in the failure of any of the conditions described in
Sections 7.1 or 7.2 below. 
 5.6 Further Action; Instruments of Transfer. Bancorp shall (i) use its best efforts in good
faith to take or cause to be taken all action required of it hereunder as promptly as practicable so as to permit the expeditious consummation of the transactions described herein, (ii) perform all acts and execute and deliver to PSB all
documents or instruments required herein or as otherwise shall be reasonably necessary or useful to or requested of Bancorp in consummating such transactions and (iii) cooperate with PSB fully in carrying out, and will pursue diligently the
expeditious completion of, such transactions. 
 ARTICLE VI. MUTUAL AGREEMENTS 
 6.1 Shareholder Approval. 
 (a) Preparation and Distribution of Notice of Meeting of Shareholders and Proxy Statement. Bancorp and PSB jointly shall prepare a notice of meeting of shareholders and a statement soliciting proxies for distribution to the
shareholders of PSB for the purpose of approving the Plan of Merger (together, the “Proxy Statement”). Such Proxy Statement shall be in such form and shall contain or be accompanied by such information regarding the shareholders’
meeting, this Agreement, the parties hereto, the Merger and other transactions described herein as is required by applicable law and regulations and otherwise as shall be agreed upon by Bancorp and PSB. PSB shall mail of the Proxy Statement to its
shareholders prior to the scheduled date of its shareholders’ meeting in accordance with its bylaws and North Carolina law. 
  

 31 

 (b) Information for Regulatory Applications. Each of Bancorp and PSB shall promptly
respond, and use its best efforts to cause its directors, officers, accountants and affiliates to promptly respond, to requests by the other party and its counsel for information for inclusion in the various applications for regulatory approvals.
Each of Bancorp and PSB hereby covenants with the other that none of such information provided will contain any untrue statement of a material fact or omit any material fact required to be stated therein or necessary in order to make the statements
contained therein, in light of the circumstances under which they were made, not misleading; and, at all times up to and including the Effective Time, none of such information as it may be amended or supplemented, will contain any untrue statement
of a material fact or omit any material fact required to be stated therein or necessary in order to make the statements contained therein, in light of the circumstances under which they were made, not misleading. 
 6.2 Regulatory Approvals. Within 75 days after the date of this Agreement, each of Bancorp, the Bank and PSB shall prepare and file, or
cause to be prepared and filed, all applications for regulatory approvals and actions as may be required of it, by applicable law and regulations with respect to the transactions described herein (including applications to the FDIC, the Commissioner
and to any other applicable federal or state banking, securities or other regulatory authority). Each party shall use its best efforts in good faith to obtain all necessary regulatory approvals required for consummation of the transactions described
herein. Each party shall cooperate with the other party in the preparation of all applications to regulatory authorities and, upon request, promptly shall furnish all documents, information, financial statements or other material that may be
required by any other party to complete any such application; and, before the filing therefor, each party to this Agreement shall have the right to review and comment on the form and content of any such application to be filed by any other party.
Should the appearance of any of the officers, directors, employees or counsel of any of the parties hereto be requested by any other party or by any governmental agency at any hearing in connection with any such application, such party shall
promptly use its best efforts to arrange for such appearance. 
 6.3 Access. Following the date of this Agreement and to and
including the Effective Time, PSB and Bancorp shall each provide the other party and such other party’s employees, accountants, counsel or other representatives, access to all its books, records, files and other information (whether maintained
electronically or otherwise), to all its properties and facilities, and to all its employees, accountants, counsel and consultants as PSB and Bancorp, as the case may be, shall, in its sole discretion, consider to be necessary or appropriate;
provided, however, that any investigation or reviews conducted by Bancorp or PSB shall be performed in such a manner as will not interfere unreasonably with the other party’s normal operations or with relationships with its customers or
employees, and shall be conducted in accordance with procedures established by the parties having due regard for the foregoing. 
 6.4
Costs. Subject to the provisions of Section 8.2(b)(iv) below, and whether or not this Agreement shall be terminated or the Merger shall be consummated, each of Bancorp and PSB shall pay its own legal, accounting and financial
advisory fees and all its other costs and expenses incurred or to be incurred in connection with the execution and performance of its obligations under this Agreement, or otherwise in connection with this Agreement and the transactions described
herein (including, without limitation, all accounting fees, legal fees, filing fees, printing costs, mailing costs, travel expenses, and investment banking fees). 
  

 32 

 6.5 Announcements. No person other than the parties to this Agreement is authorized to make
any public announcements or statements about this Agreement or any of the transactions described herein, and, without the prior review and consent of the others (which consent shall not unreasonably be denied or delayed), no party hereto may make
any public announcement, statement or disclosure as to the terms and conditions of this Agreement or the transactions described herein, except for such disclosures as may be required incidental to obtaining the prior approval of any regulatory
agency or official for the consummation of the transactions described herein. However, notwithstanding anything contained herein to the contrary, prior review and consent shall not be required if in the good faith opinion of counsel to Bancorp, the
Bank or PSB any such disclosure by Bancorp, the Bank or PSB, as the case may be, is required by law or otherwise is prudent. 
 6.6
Confidentiality. Bancorp, the Bank and PSB each shall treat as confidential and not disclose to any unauthorized person any documents or other information obtained from or learned about any other party during the course of the negotiation
of this Agreement and the carrying out of the events and transactions described herein (including any information obtained during the course of any due diligence investigation or review provided for herein or otherwise) and which documents or other
information relates in any way to the business, operations, personnel, customers or financial condition of such other party; and that it will not use any such documents or other information for any purpose except for the purposes for which such
documents and information were provided to it and in furtherance of the transactions described herein. However, the above obligations of confidentiality shall not prohibit the disclosure of any such document or information by any party to this
Agreement to the extent (i) such document or information is then available generally to the public or is already known to the person or entity to whom disclosure is proposed to be made (other than through the previous actions of such party in
violation of this Section 6.6), (ii) such document or information was available to the disclosing party on a nonconfidential basis prior to the same being obtained pursuant to this Agreement, (iii) disclosure is required by subpoena
or order of a court or regulatory authority of competent jurisdiction, or by the SEC or other regulatory authorities in connection with the transactions described herein, or (iv) to the extent that, in the reasonable opinion of legal counsel to
such party, disclosure otherwise is required by law. In the event this Agreement is terminated for any reason, then each of the parties hereto immediately shall return to the other party all copies of any and all documents or other written materials
or information (including computer generated and stored data) of or relating to such other party which were obtained during the course of the negotiation of this Agreement and the carrying out of the events and transactions described herein (whether
during the course of any due diligence investigation or review provided for herein or otherwise) and which documents or other information relates in any way to the business, operations, personnel, customers or financial condition of such other
party. The parties’ obligations of confidentiality under this Section 6.6 shall survive and remain in effect following any termination of this Agreement. 
 6.7 Environmental Studies. At its option, Bancorp may cause to be conducted, at its expense, Phase I and/or Phase II environmental assessments of the Real Property, the real estate subject to any Real
Property Lease, or the Loan Collateral, or any portion thereof, together with 
  

 33 

 such other studies, testing and intrusive sampling and analyses as Bancorp shall deem necessary or desirable
(collectively, the “Environmental Survey”); provided, however, that the Environmental Survey, to the extent possible, shall be performed in such a manner as will not interfere unreasonably with PSB’s normal operations, and provided
further, however, that PSB shall use its best efforts to obtain any required consents of third parties to permit any Environmental Survey of any Loan Collateral. Bancorp shall attempt in good faith to complete all such Phase I and/or Phase II
environmental assessments within 60 days following the date of this Agreement and thereafter to conduct and complete any such additional studies, testing, sampling and analyses as promptly as practicable. Subject to the provisions of
Section 8.2(b)(iv) below, the costs of the Environmental Survey shall be paid by Bancorp. If (i) the final results of any Environmental Survey (or any related analytical data) reflect that there likely has been any discharge, disposal,
release or emission by any person of any Hazardous Substance on, from or relating to any of the Real Property, real estate subject to a Real Property Lease or Loan Collateral at any time prior to the Effective Time, or that any action has been taken
or not taken, or a condition or event likely has occurred or exists, with respect to any of the Real Property, real estate subject to a Real Property Lease or Loan Collateral which constitutes or would constitute a violation of any Environmental
Laws, and if, (ii) based on the advice of its legal counsel or other consultants, Bancorp believes that PSB or, following the Merger, Bancorp or the Bank, could become responsible for the remediation of such discharge, disposal, release or
emission or for other corrective action with respect to any such violation, or that PSB or, following the Merger, Bancorp or the Bank, could become liable for monetary damages (including without limitation any civil or criminal penalties or
assessments) resulting therefrom (or that, in the case of any of the Loan Collateral, PSB or, following the Merger, Bancorp or the Bank, could incur any such liability if it acquired title to such Loan Collateral), and if, (iii) based on the
advice of their legal counsel or other consultants, Bancorp reasonably believes the amount of expenses or liability which either of them could incur or for which either of them could become responsible or liable on account of any and all such
remediation, corrective action or monetary damages at any time during the next twenty years could equal or exceed an aggregate of $200,000, then Bancorp shall give PSB prompt written notice thereof (together with all information in its possession
relating thereto) and, at Bancorp’s sole option and discretion, at any time thereafter and up to the Effective Time, it may terminate this Agreement without further obligation or liability to PSB or its shareholders. 
 6.8 Certain Modifications. Bancorp and PSB shall consult with each other with respect to PSB’s loan, litigation and real estate
valuation policies and practices (including loan classifications and levels of reserves) and PSB shall make such modifications or changes to its policies and practices, if any, prior to the Effective Time, as may be mutually agreed upon. Bancorp and
PSB also shall consult with each other with respect to the character, amount and timing of restructuring and Merger-related expense charges to be taken by each of them in connection with the transactions contemplated by this Agreement and shall take
such charges in accordance with GAAP as may be mutually agreed upon by them. The representations, warranties and covenants of each of Bancorp and PSB contained in this Agreement shall not be deemed to be inaccurate or breached in any respect as a
consequence of any modifications or charges undertaken by reason of this Section 6.8. 
 6.9 Transition Team. Bancorp and
PSB shall create a transition team comprised of staff and representatives of PSB and staff and representatives of Bancorp and the Bank (the 
  

 34 

 “Transition Team”). The purpose of the Transition Team shall be to provide detailed guidance to Bancorp in
fulfilling and consummating the Merger, to maintain open lines of communication between PSB and Bancorp, and to handle customer inquiries regarding the Merger. The Transition Team shall meet as necessary until the Effective Time. Members of the
Transition Team shall receive no separate compensation for such service. 
 ARTICLE VII. CONDITIONS PRECEDENT TO MERGER 
 7.1 Conditions to all Parties’ Obligations. Notwithstanding any other provision of this Agreement to the contrary, the obligations of
each of the parties to this Agreement to consummate the transactions described herein shall be conditioned upon the satisfaction of each of the following conditions precedent on or prior to the Closing Date: 
 (a) Corporate Action. All corporate action necessary to authorize the execution, delivery and performance of this Agreement and the Plan of
Merger in consummation of the transactions contemplated hereby and thereby shall have been duly and validly taken, including, without limitation, the approval of the shareholders of PSB of the Plan of Merger. 
 (b) Regulatory Approvals. (i) The Merger and other transactions described herein shall have been approved, to the extent required by
law, by the FDIC, the Commissioner and by all other governmental or regulatory agencies or authorities having jurisdiction over such transactions, (ii) no governmental or regulatory agency or authority shall have withdrawn its approval of such
transactions or imposed any condition on such transactions or conditioned its approval thereof, which condition is reasonably deemed by Bancorp or PSB to be materially disadvantageous or burdensome or to so adversely affect the economic or business
benefits of this Agreement to Bancorp or PSB’s shareholders as to render it inadvisable for it to consummate the Merger; (iii) all applicable waiting periods following regulatory approvals shall have expired without objection to the Merger
by the FDIC or other applicable regulatory authorities; and (iv) all other consents, approvals and permissions, and the satisfaction of all of the requirements prescribed by law or regulation, necessary to the carrying out of the transactions
contemplated herein shall have been procured. 
 (c) Adverse Proceedings, Injunction, Etc. There shall not be (i) any
order, decree or injunction of any court or agency of competent jurisdiction which enjoins or prohibits the Merger or any of the other transactions described herein or any of the parties hereto from consummating any such transaction, (ii) any
pending or threatened investigation of the Merger or any of such other transactions by the FDIC, or any actual or threatened litigation under federal antitrust laws relating to the Merger or any other such transaction, (iii) any suit, action or
proceeding by any person (including any governmental, administrative or regulatory agency), pending or threatened before any court or governmental agency in which it is sought to restrain or prohibit PSB, Bancorp or the Bank from consummating the
Merger or carrying out any of the terms or provisions of this Agreement, or (iv) any other suit, claim, action or proceeding pending or threatened against PSB, Bancorp or the Bank or any of their respective officers or directors which shall
reasonably be considered by PSB or Bancorp to be materially burdensome in relation to the proposed Merger or materially adverse in relation to the financial condition, results of operations, prospects, businesses, assets, loan portfolio,
investments, properties or operations of either such corporation, and which has not been dismissed, terminated or resolved to the satisfaction of all parties hereto within 90 days of the institution or threat thereof. 
  

 35 

 7.2 Additional Conditions to PSB’s Obligations. Notwithstanding any other provision of
this Agreement to the contrary, PSB’s separate obligation to consummate the transactions described herein shall be conditioned upon the satisfaction of each of the following conditions precedent on or prior to the Closing Date: 
 (a) Compliance with Laws. Bancorp and the Bank shall have complied in all material respects with all federal and state laws and regulations
applicable to the transactions described herein, except where the violation of or failure to comply with any such law or regulation would not result in a material adverse change to the consolidated financial condition, results of operations,
prospects, businesses, assets, loan portfolio, investments, properties or operations of Bancorp and the Bank considered as one enterprise. 
 (b) Bancorp’s Representations and Warranties and Performance of Agreements; Officers’ Certificate. Unless waived in writing by PSB as provided in Section 10.3 below, (i) each of the representations and
warranties of Bancorp and the Bank contained in this Agreement shall have been true and correct as of the date hereof and shall be true and correct on and as of the Effective Time with the same force and effect as though made on and as of such date,
except (A) for changes which are not, in the aggregate, material and adverse to the consolidated financial condition, results of operations, prospects, businesses, assets, loan portfolio, investments, properties or operations of Bancorp and the
Bank considered as one enterprise, and (B) for the effect of any activities or transactions that may have taken place after the date of this Agreement and are expressly contemplated by this Agreement; and (ii) Bancorp shall have performed
in all material respects all of its obligations, covenants and agreements hereunder to be performed by it on or before the Closing Date. PSB shall have received a certificate dated as of the Closing Date and executed by the chief executive officer
and chief financial officer of Bancorp to the foregoing effect and as to such other matters as may be reasonably requested by PSB. 
 (c)
Legal Opinion of Bancorp’s Counsel. PSB shall have received from Gaeta & Eveson, P.A., Raleigh, North Carolina, counsel for Bancorp, a written opinion dated as of the Closing Date in form and substance customary for
transactions of this nature and otherwise reasonably satisfactory to PSB and its counsel. 
 (d) Other Documents and Information from
Bancorp. Bancorp shall have provided to PSB correct and complete copies of its Articles of Incorporation, bylaws and board of directors resolutions approving this Agreement and the Merger (all certified by its Secretary or any Assistant
Secretary), together with certificates of the incumbency of its officers and such other closing documents and information as may be reasonably requested by PSB or its counsel. 
 7.3 Additional Conditions to Bancorp’s Obligations. Notwithstanding any other provision of this Agreement to the contrary,
Bancorp’s obligations to consummate the transactions described herein shall be conditioned upon the satisfaction of each of the following conditions precedent on or prior to the Closing Date: 
  

 36 

 (a) Material Adverse Change. There shall not have occurred any material adverse change in
the financial condition, results of operations, prospects, businesses, assets, loan portfolio, investments, properties or operations of PSB and there shall not have occurred any event or development and there shall not exist any condition or
circumstance which, with the lapse of time or otherwise, may or could cause, create or result in any such material adverse change. 
 (b)
Compliance with Laws. PSB shall have complied in all material respects with all federal and state laws and regulations applicable to the transactions described herein, except where the violation of or failure to comply with any such law
or regulation would not have a Material Adverse Effect on the financial condition, results of operations, prospects, businesses, assets, loan portfolio, investments, properties or operations of PSB. 
 (c) PSB’s Representations and Warranties and Performance of Agreements; Officers’ Certificate. Unless waived in writing by
Bancorp as provided in Section 10.3 below, (i) each of the representations and warranties of PSB contained in this Agreement shall have been true and correct as of the date hereof and shall be true and correct at and as of the Effective
Time with the same force and effect as though made on and as of such date, except (A) for changes which are not, in the aggregate, material and adverse to the financial condition, results of operations, prospects, businesses, assets, loan
portfolio, investments, properties or operations of PSB, and (B) for the effect of any activities or transactions that may have taken place after the date of this Agreement and are expressly contemplated by this Agreement, and (ii) PSB
shall have performed in all material respects all its obligations, covenants and agreements hereunder to be performed by it on or before the Closing Date. Bancorp shall have received a certificate dated as of the Closing Date and executed by the
chief executive officer and chief financial officer of PSB to the foregoing effect and as to such other matters as may be reasonably requested by Bancorp. 
 (d) Legal Opinion of PSB’s Counsel. Bancorp shall have received from McCoy Weaver Wiggins Cleveland Rose Ray PLLC, Fayetteville, North Carolina, counsel to PSB, a written opinion, dated as of the
Closing Date in form and substance customary for transactions of this nature and otherwise reasonably satisfactory to Bancorp and its counsel. 
 (e) Other Documents and Information from PSB. PSB shall have provided to Bancorp correct and complete copies of PSB’s Articles of Incorporation, bylaws and Board and shareholder resolutions (all certified by PSB’s
Secretary or any Assistant Secretary), together with certificates of the incumbency of PSB’s officers and such other closing documents and information as may be reasonably requested by Bancorp or its counsel. 
 (f) Property. PSB shall have obtained all required consents to the assignment to Bancorp or the Bank of its rights and obligations under
any personal property lease and any Real Property Lease material to the business of PSB, and such consents shall be in such form and substance as shall be satisfactory to Bancorp; and each of the lessors of PSB shall have confirmed in writing that
PSB is not in default under the terms and conditions of any personal property lease or any Real Property Lease. 
  

 37 

 (g) Employment Agreement. Mr. Roland T. Orr shall have entered into the
Employment Agreement described in Section 5.1(a) hereof. 
 ARTICLE VIII. TERMINATION; BREACH; REMEDIES 
 8.1 Mutual Termination. At any time prior to the Effective Time (and whether before or after approval hereof by the shareholders of PSB),
this Agreement may be terminated by the mutual agreement of Bancorp and PSB. Upon any such mutual termination, all obligations of PSB and Bancorp hereunder shall terminate and each party shall pay costs and expenses as provided in Section 6.4
above. 
 8.2 Unilateral Termination. This Agreement may be terminated by either Bancorp or PSB (whether before or after
approval hereof by PSB’s shareholders) upon written notice to the other parties and under the circumstances described below. 
 (a)
Termination by Bancorp. This Agreement may be terminated by Bancorp by action of its board of directors: 
 (i)
if any of the conditions to the obligations of Bancorp (as set forth in Section 7.1 and 7.3 above) shall not have been satisfied or effectively waived in writing by Bancorp by September 15, 2006 (except to the extent that the failure
of such condition to be satisfied has been caused by the failure of Bancorp to satisfy any of its obligations, covenants or agreements contained herein); 
 (ii) if PSB shall have violated or failed to fully perform any of its obligations, covenants or agreements contained in Article IV or Article VI herein in any material respect; 
 (iii) if Bancorp determines at any time that any of PSB’s representations or warranties contained in Article II above or in
any other certificate or writing delivered pursuant to this Agreement shall have been false or misleading in any material respect when made, or that there has occurred any event or development or that there exists any condition or circumstance which
has caused or, with the lapse of time or otherwise, may or could cause any such representations or warranties to become false or misleading in any material respect; 
 (iv) if PSB’s shareholders do not approve the Plan of Merger; 
 (v) if the Merger shall not have become effective on or before September 15, 2006 unless such date is extended as evidenced by
the written mutual agreement of the parties hereto; provided, however, that in the event there is a delay of not more than 30 days caused by circumstances beyond the control of the parties hereto, the dates set forth in this Section 8.2(a)
shall be extended by mutual agreement for up to an additional 60 days; and 
  

 38 

 (vi) under the circumstances described in Section 6.7 above; 
 However, before Bancorp may terminate this Agreement for any of the reasons specified above in (i), (ii) or (iii) of this Section 8.2(a),
it shall give written notice to PSB as provided herein stating its intent to terminate and a description of the specific breach, default, violation or other condition giving rise to its right to so terminate, and, such termination by Bancorp shall
not become effective if, within 30 days following the giving of such notice, PSB shall cure such breach, default or violation or satisfy such condition to the reasonable satisfaction of Bancorp. In the event PSB cannot or does not cure such breach,
default or violation or satisfy such condition to the reasonable satisfaction of Bancorp within such 30-day period, Bancorp shall have 30 days to notify PSB of its intention to terminate this Agreement. A failure to so notify PSB will be deemed to
be a waiver by Bancorp of the breach, default or violation pursuant to Section 10.3 below. 
 (b) Termination by PSB. This
Agreement may be terminated by PSB by action of its board of directors: 
 (i) if any of the conditions of the
obligations of Bancorp (as set forth in Section 7.1 and 7.2 above) shall not have been satisfied or effectively waived in writing by PSB by September 15, 2006 (except to the extent that the failure of such condition to be satisfied has
been caused by the failure of PSB to satisfy any of its obligations, covenants or agreements contained herein); 
 (ii)
if Bancorp shall have violated or failed to fully perform any of its obligations, covenants or agreements contained in Article V or Article VI herein in any material respect; 
 (iii) if PSB determines that any of Bancorp’ representations and warranties contained in Article III herein or in any other
certificate or writing delivered pursuant to this Agreement shall have been false or misleading in any material respect when made, or that there has occurred any event or development or that there exists any condition or circumstance which has
caused or, with the lapse of time or otherwise, may or could cause any such representations or warranties to become false or misleading in any material respect; 
 (iv) if, prior to the Effective Time, a corporation, partnership, person, or other entity or group shall have made a bona fide
proposal to acquire all or substantially all of the capital stock of PSB or to merge with PSB (an “Acquisition Transaction”) that the PSB board of directors determines, in its good faith judgment and in the exercise of its fiduciary
duties, with respect to legal matters on the written opinion of legal counsel, is more favorable to the PSB shareholders and that the failure to terminate this Agreement and accept such alternative Acquisition Transaction would be inconsistent with
the proper exercise of such fiduciary duties; provided, however, that in the event this Agreement is terminated by PSB pursuant to this Section 8.2(b)(iv), PSB shall reimburse Bancorp for its reasonable out-of-pocket expenses relating to the
Merger in an amount not to exceed $150,000. 
  

 39 

 However, before PSB may terminate this Agreement for any of the reasons specified above in clause (i),
(ii) or (iii) of this Section 8.2(b), it shall give written notice to Bancorp as provided herein stating its intent to terminate and a description of the specific breach, default, violation or other condition giving rise to its right
to so terminate, and, such termination by PSB shall not become effective if, within 30 days following the giving of such notice, Bancorp shall cure such breach, default or violation or satisfy such condition to the reasonable satisfaction of PSB. In
the event Bancorp cannot or does not cure such breach, default or violation or satisfy such condition to the reasonable satisfaction of PSB within such 30-day period, PSB shall have 30 days to notify Bancorp of its intention to terminate this
Agreement. A failure to so notify Bancorp will be deemed to be a waiver by PSB of the breach, default or violation pursuant to Section 10.3 below. 
 8.3 Effect of Termination. 
 (a) In the event that this Agreement is terminated by PSB
pursuant to Section 8.2(b)(iv) and within twelve (12) months of such termination, PSB enters into a definitive agreement regarding an Acquisition Transaction or actually consummates an Acquisition Transaction, PSB shall, immediately upon
the consummation of such Acquisition Transaction, make a cash payment to Bancorp in the amount of $500,000. 
 (b) Except as set forth
in subsection (a) of this Section 8.3 and Section 8.2(b)(iv), in the event of the termination of this Agreement, this Agreement shall become void and have no effect except that the provisions of Section 10.2 and Section 6.6
of this Agreement shall survive such termination, and neither party hereto shall have any liability to the other party in connection with such termination. 
 ARTICLE IX. INDEMNIFICATION 
 9.1 Agreement to Indemnify. In the event this Agreement
is terminated for any reason and the Merger is not consummated, then PSB and Bancorp will indemnify each other as provided below. 
 (a)
By PSB. PSB shall indemnify, hold harmless and defend Bancorp from and against any and all claims, disputes, demands, causes of action, suits, proceedings, losses, damages, liabilities, obligations, costs and expenses of every kind and
nature that arise from or are related to claims by third parties, including without limitation reasonable attorneys’ fees and legal costs and expenses in connection therewith, whether known or unknown, and whether now existing or hereafter
arising, which may be threatened against, incurred, undertaken, received or paid by Bancorp: 
 (i) in connection with
or which arise out of or result from or are based upon (A) PSB’s operations or business transactions or its relationship with any of its employees, or (B) PSB’s intentional or grossly negligent failure to comply with any statute
or regulation of any federal, state or local government or agency (or any political subdivision thereof) in connection with the transactions described in this Agreement; 
  

 40 

 (ii) in connection with or which arise out of or result from or are based upon any
fact, condition or circumstance that constitutes an intentional or grossly negligent breach by PSB of, or any intentional or grossly negligent inaccuracy, incompleteness or inadequacy in, any of its representations or warranties under or in
connection with this Agreement, or any failure of PSB to perform any of its covenants, agreements or obligations under or in connection with this Agreement; 
 (iii) in connection with or which arise out of or result from or are based upon any information provided by PSB which is included
in the Proxy Statement and which information causes the Proxy Statement at the time of its mailing to PSB’s shareholders to contain any untrue statement of a material fact or to omit any material fact required to be stated therein or necessary
in order to make the statements contained therein, in light of the circumstances under which they were made, not false or misleading; and 
 (iv) in connection with or which arise out of or result from or are based upon the presence, use, production, generation, handling, transportation, treatment, storage, disposal, distribution, labeling,
reporting, testing, processing, emission, discharge, release, threatened release, control, removal, clean-up or remediation on, from or relating to the Real Property by PSB or any other person of any Hazardous Substances, or any action taken or any
event or condition occurring or existing with respect to the Real Property which constitutes a violation of any Environmental Laws by PSB or any other person. 
 (b) By Bancorp. Bancorp shall indemnify, hold harmless and defend PSB from and against any and all claims, disputes, demands, causes of action, suits, proceedings, losses, damages, liabilities,
obligations, costs and expenses of every kind and nature that arise from or are related to claims by third parties, including without limitation reasonable attorneys’ fees and legal costs and expenses in connection therewith, whether known or
unknown, and whether now existing or hereafter arising, which may be threatened against, incurred, undertaken, received or paid by PSB: 
 (i) in connection with or which arise out of or result from or are based upon (A) Bancorp’s operations or business transactions or its relationship with any of its employees, or
(B) Bancorp’s intentional or grossly negligent failure to comply with any statute or regulation of any federal, state or local government or agency (or any political subdivision thereof) in connection with the transactions described in
this Agreement; 
 (ii) in connection with or which arise out of or result from or are based upon any fact, condition
or circumstance that constitutes an intentional or grossly negligent breach by Bancorp of, or any intentional or grossly negligent inaccuracy, incompleteness or inadequacy in, any of its representations or warranties under or in connection with this
Agreement, or any failure of Bancorp to perform any of its covenants, agreements or obligations under or in connection with this Agreement; and, 
  

 41 

 (iii) in connection with or which arise out of or result from or are based upon
any information provided by Bancorp which is included in the Proxy Statement and which information causes the Proxy Statement at the time of its mailing to PSB’s shareholders to contain any untrue statement of a material fact or to omit any
material fact required to be stated therein or necessary in order to make the statements contained therein, in light of the circumstances under which they were made, not false or misleading. 
 9.2 Procedure for Claiming Indemnification. 
 (a) By Bancorp. If any matter subject to indemnification hereunder arises in the form of a claim against Bancorp or its successors and assigns (herein referred to as a “Third Party Claim”),
Bancorp promptly shall give notice and details thereof, including copies of all pleadings and pertinent documents, to PSB. Within 15 days of such notice, PSB either (i) shall pay the Third Party Claim either in full or upon agreed compromise or
(ii) shall notify Bancorp that PSB disputes the Third Party Claim and intends to defend against it, and thereafter shall so defend and pay any adverse final judgment or award in regard thereto. Such defense shall be controlled by PSB and the
cost of such defense shall be borne by PSB except that Bancorp shall have the right to participate in such defense at its own expense and provided that PSB shall have no right in connection with any such defense or the resolution of any such Third
Party Claim to impose any cost, restriction, limitation or condition of any kind upon Bancorp or its successors or assigns. Bancorp agrees that it shall cooperate in all reasonable respects in the defense of any such Third Party Claim, including
making personnel, books and records relevant to the Third Party Claim available to PSB without charge therefor except for out-of-pocket expenses. If PSB fails to take action within 15 days as hereinabove provided or, having taken such action,
thereafter fails diligently to defend and resolve the Third Party Claim, Bancorp shall have the right to pay, compromise or defend the Third Party Claim and to assert the indemnification provisions hereof. Bancorp also shall have the right,
exercisable in good faith, to take such action as may be necessary to avoid a default prior to the assumption of the defense of the Third Party Claim by PSB. 
 (b) By PSB. If any matter subject to indemnification hereunder arises in the form of a claim against PSB or its successors and assigns (herein referred to as a “Third Party Claim”), PSB
promptly shall give notice and details thereof, including copies of all pleadings and pertinent documents, to Bancorp. Within 15 days of such notice, Bancorp either (i) shall pay the Third Party Claim either in full or upon agreed compromise or
(ii) shall notify PSB that Bancorp disputes the Third Party Claim and intends to defend against it, and thereafter shall so defend and pay any adverse final judgment or award in regard thereto. Such defense shall be controlled by Bancorp and
the cost of such defense shall be borne by Bancorp except that PSB shall have the right to participate in such defense at its own expense and provided that Bancorp shall have no right in connection with any such defense or the resolution of any such
Third Party Claim to impose any cost, restriction, limitation or condition of any kind upon PSB or its successors and assigns. PSB agrees that it shall cooperate in all reasonable respects in the defense of any such Third Party Claim, including
making personnel, books and records relevant to the Third Party Claim available to Bancorp without charge therefor except for out-of-pocket expenses. If Bancorp fails to take action within 15 days as hereinabove provided or, having taken such
action, thereafter fails diligently to defend and resolve the Third Party Claim, PSB shall have the right to 
  

 42 

 pay, compromise or defend the Third Party Claim and to assert the indemnification provisions hereof. PSB also shall have
the right, exercisable in good faith, to take such action as may be necessary to avoid a default prior to the assumption of the defense of the Third Party Claim by Bancorp. 
 ARTICLE X. MISCELLANEOUS PROVISIONS 
 10.1 Reservation of Right to Revise
Structure. Notwithstanding any provision herein to the contrary, Bancorp shall have the unilateral right to revise the structure of the Merger for any reason Bancorp may deem advisable; provided, however, that no such change will
(i) alter or change the amount or kind of consideration to be received by the shareholders of PSB in the Merger or (ii) adversely affect the tax treatment to the shareholders of PSB as a result of receiving such consideration. In the event
of such election by Bancorp, the parties hereto shall execute one or more appropriate amendments to this Agreement. 
 10.2 Survival of
Representations, Warranties, Indemnification and Other Agreements. 
 (a) Representations, Warranties and Other
Agreements. None of the representations, warranties or agreements herein shall survive the effectiveness of the Merger, and no party shall have any right after the Effective Time to recover damages or any other relief from any other party to
this Agreement by reason of any breach of representation or warranty, any nonfulfillment or nonperformance of any agreement contained herein, or otherwise; provided, however, that the parties’ agreements contained in Section 6.6 above, and
Bancorp’s covenants contained in Sections 5.1 through 5.4 above shall survive the effectiveness of the Merger. 
 (b)
Indemnification. The parties’ indemnification agreements and obligations pursuant to Section 9.1 above shall become effective only in the event this Agreement is terminated, and neither of the parties shall have any obligations
under Section 9.1 in the event of or following consummation of the Merger. 
 10.3 Waiver. Any term or condition of this
Agreement may be waived (except as to matters of regulatory approvals and approvals required by law), either in whole or in part, at any time by the party which is, and whose shareholders are, entitled to the benefits thereof, provided, however,
that any such waiver shall be effective only upon a determination by the waiving party (through action of its board of directors) that such waiver would not adversely affect the interests of the waiving party or its shareholders; and, provided
further, that no waiver of any term or condition of this Agreement by any party shall be effective unless such waiver is in writing and signed by the waiving party or as provided in Sections 8.2(a) and 8.2(b) above, or be construed to be a waiver of
any succeeding breach of the same term or condition. No failure or delay of any party to exercise any power, or to insist upon a strict compliance by any other party of any obligation, and no custom or practice at variance with any terms hereof,
shall constitute a waiver of the right of any party to demand full and complete compliance with such terms. 
 10.4 Amendment.
This Agreement may be amended, modified or supplemented at any time or from time to time prior to the Effective Time, and either before or after its approval 
  

 43 

 by the shareholders of PSB, by an agreement in writing approved by a majority of the Boards of Directors of Bancorp and
PSB executed in the same manner as this Agreement; provided however, that the provisions of this Agreement relating to the manner or basis in which shares of PSB Stock are converted into cash shall not be amended after the approval of this Agreement
and Plan of Merger by the shareholders of PSB without the requisite approval of such shareholders of such amendment. 
 10.5
Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if delivered personally or by courier, or mailed by certified mail, return receipt requested, postage prepaid, and
addressed as follows: 
 (a) If to PSB, to: 
 Attn: Mr. Roland T. Orr 
 Progressive State Bank 
 308 North Chestnut Street 
 Lumberton, North Carolina 28358 
 With copy to: 
 Alfred E. Cleveland, Esq. 
 McCoy Weaver Wiggins Cleveland Rose Ray PLLC 
 202 Fairway Drive 
 Fayetteville, NC 28305 
 (b) If to Bancorp, to: 
 Attention: Mr. John Q. Shaw, Jr. 
 New Century Bancorp, Inc. 
 700 W. Cumberland St. 
 Dunn, North Carolina 28334 
 With copy to: 
 Anthony Gaeta, Jr., Esq. 
 Gaeta & Eveson, P.A. 
 8305 Falls of Neuse Road, Suite 203 
 Raleigh, North Carolina 27615 
 10.6 Further Assurance. PSB and Bancorp shall each furnish to the other such further assurances with respect to the matters contemplated
herein and their respective agreements, covenants, representations and warranties contained herein, including the opinion of legal counsel, as such other party may reasonably request. 
 10.7 Headings and Captions. Headings and captions of the sections and Sections of this Agreement have been inserted for convenience of
reference only and do not constitute a part hereof. 
  

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 10.8 Entire Agreement. This Agreement (including all schedules and exhibits attached hereto
and all documents incorporated herein by reference) contains the entire agreement of the parties with respect to the transactions described herein and supersedes any and all other oral or written agreement(s) heretofore made, and there are no
representations or inducements by or to, or any agreements between, any of the parties hereto other than those contained herein in writing. 
 10.9 Severability of Provisions. The invalidity or unenforceability of any term, phrase, clause, Section, restriction, covenant, agreement or other provision hereof shall in no way affect the validity or enforceability of any
other provision or part hereof. 
 10.10 Assignment. This Agreement may not be assigned by either party hereto except with the
prior written consent of the other party hereto. 
 10.11 Counterparts. Any number of counterparts of this Agreement may be
signed and delivered, each of which shall be considered an original and all of which together shall constitute one agreement. 
 10.12
Governing Law. This Agreement is made in and shall be construed and enforced in accordance with the laws of North Carolina. 
 10.13 Inspection. Any right of Bancorp or PSB hereunder to investigate or inspect the assets, books, records, files and other information of the other in no way shall establish any presumption that Bancorp or PSB should have
conducted any investigation or that such right has been exercised by Bancorp or PSB or their agents, representatives or others. Any investigations or inspections that have been made by Bancorp or PSB or their agents, representatives or others prior
to the Closing Date shall not be deemed in any way in derogation or limitation of the covenants, representations and warranties made by or on behalf of PSB or Bancorp in this Agreement. 
  

 45 

 IN WITNESS WHEREOF, PSB and Bancorp each has caused this Agreement to be executed in its name by
its duly authorized officers and its corporate seal to be affixed hereto as of the date first above written. 
  

					
		 	PROGRESSIVE STATE BANK
			
		 	By	 	 /s/ Roland T. Orr

		 		 	Roland T. Orr
		 		 	President and Chief Executive Officer
	ATTEST:	 		 	
			
	 /s/ Thomas A. Jernigan
	 		 	
	Assistant Secretary	 		 	
		
		 	NEW CENTURY BANCORP, INC.
			
		 	By	 	 /s/ John Q. Shaw, Jr.

		 		 	John Q. Shaw, Jr.
		 		 	President and Chief Executive Officer
			
	ATTEST:	 		 	
			
	 /s/ Brenda B. Bonner
	 		 	
	Secretary	 		 	
		
		 	NEW CENTURY BANK SOUTH
			
		 	By	 	 /s/ William L. Hedgepeth

		 		 	William L. Hedgepeth
		 		 	President and Chief Executive Officer
			
	ATTEST:	 		 	
			
	 /s/ Donna M. Warren
	 		 	
	Secretary	 		 	

  

 46 

 SCHEDULES AND EXHIBITS TO 
 AGREEMENT AND PLAN OF MERGER 
  

			
	SCHEDULE	  	DESCRIPTION
	A	  	Plan of Merger
		
	EXHIBIT	  	DESCRIPTION
	A	  	Employment Agreement with Roland T. Orr

  

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 SCHEDULE A 
 PLAN OF MERGER 
 By and Between 
 NEW CENTURY BANK SOUTH 
 and 
 PROGRESSIVE STATE BANK 
 1.01.
Names of the Merging Corporations. The names of the banking corporations proposed to be merged are New Century Bank South (“New Century”) and Progressive State Bank (“PSB”). 
 1.02. Nature of Transaction; Plan of Merger. Subject to the provisions of this Plan of Merger, at the “Effective Time” specified
in the Articles of Merger filed with the North Carolina Secretary of State, PSB will be merged into and with New Century pursuant to Section 53-12 of the North Carolina General Statutes (the “Merger”). 
 1.03. Effect of Merger. At the Effective Time, and by reason of the Merger, the separate corporate existence of PSB shall cease while the
corporate existence of New Century, as the surviving corporation in the Merger, shall continue with all of its purposes, objects, rights, privileges, powers and franchises, all of which shall be unaffected and unimpaired by the Merger.

 1.04 Surviving Corporation. Following the Merger, New Century shall continue to operate as a North Carolina banking
corporation and will conduct its business at the then legally established branch and main offices of New Century and PSB. The duration of the corporate existence of New Century, as the surviving corporation in the Merger, shall be perpetual and
unlimited. 
 1.05. Terms and Conditions of the Merger. The Merger shall be effected pursuant to the terms and conditions of
this Plan of Merger and of the Agreement and Plan of Merger, dated as of February     , 2006, by and among PSB, New Century and New Century’s sole shareholder, New Century Bancorp, Inc. (the “Agreement”).

 1.06 Assets and Liabilities of PSB. At the Effective Time, and by reason of the Merger, and in accordance with applicable
law, all property, assets and rights of every kind and character of PSB (including without limitation all real, personal or mixed property, all debts due on whatever account, all other choses in action and every other interest of or belonging to or
due to PSB, whether tangible or intangible) shall be transferred to and vest in New Century, and New Century shall succeed to all the rights, privileges, immunities, powers, purposes and franchises of a public or private nature of PSB (including all
trust and other fiduciary properties, powers and rights), all without any conveyance, assignment or further act or deed; and, New Century shall become responsible for all other liabilities, duties and obligations of every kind, nature and
description of PSB (including duties as trustee or fiduciary) as of the Effective Time. 
 1.07. Articles of Incorporation, Bylaws and
Management. The Articles of Incorporation and Bylaws of New Century in effect at the Effective Time shall be the Articles of Incorporation and Bylaws of New Century as the surviving corporation in the Merger. 
  

 48 

 1.08. Conversion of Shares and Merger Consideration. 
 (a) New Century Stock. Each share of common stock of New Century, par value $5.00 per share, issued and outstanding immediately prior to the
Effective Time shall continue to be issued and outstanding and shall not be affected by the Merger. 
 (b) PSB Stock. Except as
otherwise provided herein, at the Effective Time, all rights of PSB’s shareholders with respect to all then outstanding shares of the common stock of PSB, $1.00 par value per share (“PSB Stock”), shall cease to exist, and the holders
of shares of PSB Stock shall cease to be and shall have no further rights as shareholders of PSB. At the Effective Time, each such outstanding share of PSB Stock (except for shares held, other than in a fiduciary capacity or as a result of debts
previously contracted, by PSB, New Century or New Century Bancorp, Inc., which shall be canceled in the Merger, and for Dissenting Shares (as defined in Section 1.7 of the Agreement) shall be converted, without any action on the part of the
holder of such shares, into the right to receive the Per Share Cash Consideration (as defined in Article 1.08(d) below) in accordance with this Article 1.08. Following the Effective Time, certificates representing shares of PSB Stock outstanding at
the Effective Time shall evidence only the right to receive the Per Share Cash Consideration. No share of PSB Stock, other than Dissenting Shares (as defined in Section 1.7 of the Agreement), shall be deemed to be outstanding or have any rights
other than those set forth in this Article 1.08 after the Effective Time. 
 (c) PSB Options. At the Effective Time, each
unexpired and unexercised outstanding option, whether or not then vested or exercisable in accordance with its terms, to purchase shares of PSB Stock (the “PSB Options”) previously granted by PSB pursuant to stock option agreements (the
“PSB Option Agreements”) shall be cancelled and converted, without any action on the part of the holder of such PSB Option, into the right to receive via certified check from Bancorp within 10 days following the Effective Time the Per
Share Cash Consideration (as defined in Article 1.08(d) below) minus the exercise price per share for each PSB Option held as evidenced in the PSB Option Agreement governing such PSB Option. Following the Effective Time, PSB Option Agreements
representing PSB Options shall evidence only the right to receive the Per Share Cash Consideration minus the exercise price per share of the PSB Options. No PSB Option shall be deemed to be outstanding or have any rights other than those set forth
in this Article 1.08 after the Effective Time. 
 (d) Per Share Cash Consideration. For purposes of this Plan of Merger, the
“Per Share Cash Consideration” shall be $21.30. 
 1.09 Closing; Effective Time. The closing of the Merger and other
transactions contemplated by the agreement between New Century Bancorp, Inc., New Century and PSB shall take place at the offices of New Century Bancorp, Inc. in Dunn, North Carolina, or at such other place as New Century shall designate, on a date
mutually agreeable to New Century and PSB (the “Closing Date”) after the expiration of any and all required waiting periods following the effective date of required approvals of the Merger by governmental or regulatory authorities (but in
no event more that sixty (90) days following the expiration of all such required waiting periods). 
  

 49 

 EXHIBIT A 
 STATE OF NORTH CAROLINA 
 COUNTY OF CUMBERLAND 
 EMPLOYMENT AGREEMENT 
 THIS AGREEMENT entered into as of
            , 2006 by and between NEW CENTURY BANK SOUTH (hereinafter referred to as the “Bank”) and ROLAND T. ORR (hereinafter referred to as
“Orr”). 
 W I T N E S S E T H: 
 WHEREAS, the expertise and experience of Orr and his relationships and reputation in the financial institutions industry are extremely valuable to the Bank; and 
 WHEREAS, it is in the best interests of the Bank to maintain an experienced and sound executive management team to manage the Bank and to further
the Bank’s overall strategies to protect and enhance the value of the investments of the shareholders of its parent company, New Century Bancorp, Inc.; and 
 WHEREAS, the Bank and Orr desire to enter into this Agreement to establish the scope, terms and conditions of Orr’s employment by the Bank. 
 NOW, THEREFORE, for and in consideration of the premises and mutual promises, covenants and conditions hereinafter set forth, and other good and
valuable considerations, the receipt and sufficiency of which hereby are acknowledged, the Bank and Orr hereby agree as follows: 
 1.
Employment. The Bank hereby agrees to employ Orr, and Orr hereby agrees to serve as an officer of the Bank, all upon the terms and conditions stated herein. As an officer of the Bank, Orr will (i) serve as Executive Vice President of
the Bank, and (ii) have such other duties and responsibilities, and render to the Bank such other management services, as are customary for persons in Orr’s position with the Bank or as shall otherwise be reasonably assigned to him from
time to time by the Bank. Orr shall faithfully and diligently discharge his duties and responsibilities under this Agreement and shall use his best efforts to implement the policies established by the Bank. Orr hereby agrees to devote such number of
hours of his working time and endeavors to the employment granted hereunder as Orr and the Bank shall deem to be necessary to discharge his duties hereunder, and, for so long as employment hereunder shall exist, Orr shall not engage in any other
occupation which requires a significant 

 amount of Orr’s personal attention during the Bank’s regular business hours or which otherwise interferes with
Orr’s attention to or performance of his duties and responsibilities as an officer of the Bank hereunder except with the prior written consent of the Bank. However, nothing herein contained shall restrict or prevent Orr from personally, and for
Orr’s own account, trading in stocks, bonds, securities, real estate or other forms of investment for Orr’s own benefit so long as said activities do not interfere with Orr’s attention to or performance of his duties and
responsibilities as an officer of the Bank hereunder. 
 During the term of this Agreement, Orr shall be allowed, in his sole discretion, to
maintain his primary work location in either Lumberton or Fayetteville, North Carolina. 
 2. Compensation. For all services
rendered by Orr to the Bank under this Agreement, the Bank shall pay Orr a base salary at a rate of $150,000.00 per annum. Salary paid under this Agreement shall be payable in cash not less frequently than monthly. All compensation hereunder shall
be subject to customary withholding taxes and such other employment taxes as are required by law. 
 3. Participation in Retirement and
Employee Benefit Plans; Fringe Benefits. Subject to the terms and conditions of this Agreement, Orr shall be entitled to participate in any and all employee benefit programs and compensation plans from time to time maintained by the Bank and
available to all employees of the Bank, all in accordance with the terms and conditions (including eligibility requirements) of such programs and plans of the Bank, resolutions of the Bank’s Board of Directors establishing such programs and
plans, and the Bank’s normal practices and established policies regarding such programs and plans. 
 In addition to the other
compensation and benefits described in this Agreement, the Bank shall: 
 (i) Assume payment of Orr’s dues for the Pine Crest Country
Club provided that Orr shall be responsible for all personal expenses for use of such club; 
 (ii) Reimburse Orr for all reasonable expenses
incurred by him in the performance of his duties under this Agreement and documented to the reasonable satisfaction of the Bank pursuant to established policies; 
 (iii) Provide to Orr an automobile mutually acceptable to the Bank and Orr for his use while performing the Bank’s business. The Bank shall pay all taxes and insurance for said vehicle and shall pay all operating
expenses for the use of same during use for and about the Bank’s business. Orr shall pay operating costs for said vehicle while same is being used for personal and family purposes; 
  

 2 

 (iv) Permit Orr to participate in all savings, pension and retirement plans (including supplemental
retirement plans), practices, policies and programs applicable generally to all employees of the Bank. Without limiting the foregoing, such plans shall include the Bank’s 401(k) Savings Plan; 
 4. Term. Unless sooner terminated as provided in this Agreement and subject to the right of either Orr or the Bank to terminate Orr’s
employment at any time as provided herein, the term of this Agreement and Orr’s employment with the Bank hereunder shall be for a period commencing on the date hereof and continuing for a period of six (6) months. 
 5. Confidentiality. Orr hereby acknowledges and agrees that (i) in the course of his service as an officer of the Bank, he will gain
substantial knowledge of and familiarity with the Bank’s customers and its dealings with them, and other information concerning the Bank’s business, all of which constitutes valuable assets and privileged information that is particularly
sensitive due to the fiduciary responsibilities inherent in the banking business. In consideration of the Bank’s agreements contained herein, Orr covenants and agrees that any and all data, figures, projections, estimates, lists, files,
records, documents, manuals or other such materials or information (financial or otherwise) relating to the Bank and its banking business, regulatory examinations, financial results and condition, lending and deposit operations, customers (including
lists of the Bank’s customers and information regarding their accounts and business dealings with the Bank), policies and procedures, computer systems and software, shareholders, employees, officers and directors (herein referred to as
“Confidential Information”) are proprietary to the Bank and are valuable, special and unique assets of the Bank’s business to which Orr will have access during his employment with the Bank. Orr 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) at all times during the term of his employment with the Bank and except as shall be required in the
course of the performance by Orr of his duties on behalf of the Bank or otherwise pursuant to the direct, written authorization of the Bank, Orr will not: divulge any such Confidential Information to any other Person or Financial Institution; remove
any such Confidential Information in written or other recorded 
  

 3 

 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 or Financial Institution other than the Bank. However, following the termination of Orr’s employment with the Bank, this paragraph shall not apply to any Confidential Information which then is in the public domain
(provided that Orr 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 Orr from a third party which or who is not obligated
under an agreement of confidentiality with respect to such information. 
 (a) Remedies for Breach. Orr understands and agrees
that a breach or violation by him of the covenants contained in Paragraph 5 of this Agreement will be deemed a material breach of this Agreement and will cause irreparable injury to the Bank, and that it would be difficult to ascertain the amount of
monetary damages that would result from any such violation. In the event of Orr’s actual or threatened breach or violation of the covenants contained in Paragraph 5, the Bank shall be entitled to bring a civil action seeking an injunction
restraining Orr from violating or continuing to violate those covenants or from any threatened violation thereof, or for any other legal or equitable relief relating to the breach or violation of such covenant. Orr agrees that, if the Bank
institutes any action or proceeding against Orr 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, Orr 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. 
 Notwithstanding anything
contained herein to the contrary, Orr agrees that the provisions of this Paragraph 5 and the remedies provided herein for a breach by Orr 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 the Trade Secrets Protection Act contained in Article 24, Chapter 66 of the North Carolina General Statutes, or any other 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. 
  

 4 

 (b) Survival of Covenants. Orr’s covenants and agreements and the Bank’s rights
and remedies provided for in this Paragraph 5 shall survive any termination of this Agreement or Orr’s employment with the Bank. 
 6. Termination and Termination Pay. 
 (a) Orr’s employment under this Agreement may be terminated at any
time by Orr upon sixty (60) days written notice to the Bank. Upon such termination, Orr shall be entitled to receive compensation through the effective date of such termination; provided, however, that the Bank, in its sole discretion, may
elect for Orr not to serve out part or all of said notice period. 
 (b) Orr’s employment under this Agreement shall be
terminated upon the death of Orr during the term of this Agreement. Upon any such termination, Orr estate shall be entitled to receive any compensation due to Orr computed through the last day of the calendar month in which his death shall have
occurred but which remains unpaid. 
 (c) In the event Orr becomes disabled during the term of his employment hereunder and it is
determined by the Bank that Orr is permanently unable to perform his duties under this Agreement, the Bank shall continue to compensate Orr at the level of compensation described in Paragraph 2 above, and shall continue to provide Orr each of the
other benefits set forth or described in this Agreement, for the remaining term of this Agreement, less any other payments provided under any disability income plan of the Bank which is applicable to Orr. In the event of any disagreement between Orr
and the Bank as to whether Orr is physically or mentally incapacitated such as will result in the termination of Orr’s employment pursuant to this Paragraph 6(c), the question of such incapacity shall be submitted to an impartial and reputable
physician for determination, selected by mutual agreement of Orr 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 Orr), and such determination of the question of
such incapacity by such physician or physicians shall be final and binding on Orr 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 6 (c).

  

 5 

 (d) The Bank may terminate Orr’s employment at any time for any reason with or without
“Cause” (as defined below), but any termination by the Bank other than termination for “Cause”, (as defined below) shall not prejudice Orr’s right to compensation or other benefits under this Agreement for its remaining
term. Following any termination of Orr’s employment by the Bank for “Cause”, Orr shall have no further rights under this Agreement (including any right to receive compensation or other benefits for any period after such termination).

 For purposes of this Paragraph 6 (d), the Bank shall have “Cause” to terminate Orr’s employment upon: 
 (i) A determination by the Bank, in good faith, that Orr (A) has breached in any material respect any of the terms or conditions of
this Agreement, or (B) is engaging or has engaged in willful misconduct or conduct which is detrimental to the business prospects of the Bank or which has had or likely will have a material adverse effect on the Bank’s business or
reputation. Prior to any termination by the Bank of Orr’s employment for a breach, failure to perform or conduct described in this subparagraph (i), the Bank shall give Orr written notice which describes such breach, failure to perform or
conduct and if during a period of five business (5) days following such notice Orr cures or corrects the same to the reasonable satisfaction of the Bank, then this Agreement shall remain in full force and effect. However, notwithstanding the
above, if the Bank has given written notice to Orr on a previous occasion of the same or a substantially similar breach, failure to perform or conduct, or of a breach, failure to perform or conduct which the Bank determines in good faith to be of
substantially similar import, or if the Bank determines in good faith that the then current breach, failure to perform or conduct is not reasonably curable, then termination under this subparagraph (i) shall be effective immediately and Orr
shall have no right to cure such breach, failure to perform or conduct. 
 (ii) The violation by Orr 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 or any of its affiliates or subsidiaries (a “Regulatory Authority”, including
without limitation the Federal Deposit Insurance Corporation, the North Carolina Commissioner of Banks or any other banking regulator having legal jurisdiction over the Bank), which results from Orr’s gross 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 any of its affiliates or subsidiaries or to the Bank’s reputation; 
  

 6 

 (iii) The commission in the course of Orr’s employment with the Bank of an act of fraud,
embezzlement, theft or proven personal dishonesty (whether or not resulting in criminal prosecution or conviction); 
 (iv) The
conviction of Orr 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
Orr from serving as an employee or executive officer of, or a party affiliated with, the Bank or its bank holding company; 
 (v) Orr
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; and, 
 (vi) The occurrence of any event believed by the Bank, in good faith, to have resulted in Orr being excluded from coverage, or having coverage
limited as to Orr as compared to other covered officers or employees, under the Bank’s then current “blanket bond” or other fidelity bond or insurance policy covering its directors, officers or employees. 
 7. Additional Regulatory Requirements. Notwithstanding anything contained in this Agreement to the contrary, it is understood and agreed
that the Bank (or 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 Regulatory Authority to be insolvent, in default or operating in an unsafe
or unsound manner, or if (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 and Chapter 53 of the North Carolina General Statutes 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. 
  

 7 

 8. Successors and Assigns. 
 (a) This Agreement shall inure to the benefit of and he 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 Orr. Therefore, Orr shall be precluded from assigning or delegating his rights or duties hereunder without first obtaining the written consent of the Bank. 
 9. 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. 
 10. 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. 
  

	 	11.	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. 

  

	 	12.	Previous Agreements. Orr and the Bank acknowledge and agree that Orr was a party to a certain employment agreement by and between Orr and Progressive State Bank,
Lumberton, North Carolina (“Progressive”) dated February 15, 2005 (the “Progressive Agreement”) and that as of the date of this Agreement Progressive has been merged with and into the Bank with the Bank as the surviving
financial institution. Orr and the Bank further acknowledge that pursuant to the provisions of Paragraph 2 of the Progressive Agreement, upon the payment to Orr of the sum of 2.95 times Orr’s annual salary as of the date hereof under the
Progressive Agreement, 

  

 8 

 the Progressive Agreement is terminated, null, void and of no further effect; provided, however, that
both Orr and the Bank acknowledge and agree that such termination and nullification of the Progressive Agreement shall not affect Orr’s right to receive the benefits of the Bank Owned Life Insurance and rights under the Supplemental Employment
Retirement Plan created by Progressive in favor of Orr. 
 IN WITNESS WHEREOF, the parties have executed this Agreement under seal and
in such form as to be binding as of the day and year first hereinabove written. 
  

					
		 	NEW CENTURY BANK SOUTH
			
		 	By:	 	  

		 		 	William L. Hedgepeth, President and CEO
			
	ATTEST:	 		 	
	                                      
                  	 		 	
	                                      
  , Secretary	 		 	
			
		 		 	  

		 		 	Roland T. Orr

  

 9

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