Document:

<PAGE>

                                                                   Exhibit 10.33

                           MEMORANDUM OF UNDERSTANDING

     This Memorandum of Understanding ("MOU") is entered into as of the 17th day
                                        ---
of December, 2001 by and between SanDisk Corporation ("SanDisk") and Toshiba
Corporation ("Toshiba") and expresses the intent of both parties with respect to
Flash Vision LLC ("FVC"), Dominion Semiconductor LLC("DSC"), and Toshiba
Yokkaichi Works ("Yokkaichi").

     Whereas, Toshiba desires to restructure its DRAM business; and Whereas,
Toshiba and SanDisk wish to discontinue FVC operations in Manassas, Virginia and
move the FVC business to its Yokkaichi facilities; and

     Whereas, both parties intend to realize equally the benefits of moving the
FVC business to Toshiba's Yokkaichi's facilities; and

     Whereas, the parties desire that the basic concepts of the FVC business
will be preserved in the restructured business as reflected in revised
definitive agreements.

1.   Transfer of FVC operation and Sale of DSC assets
     ------------------------------------------------

SanDisk agrees that FVC transfers its activities and equipments from DSC to
Yokkaichi in the manner and schedule designated by Toshiba (provided Toshiba
will attempt to make such transfer as soon as possible), and that Toshiba sells
DSC property and assets to a third party acquiror on the basis of the following
understanding;

     (a)  Toshiba will bear the cost and expense related to the disposal of the
          following assets of FVC at DSC (so that SanDisk is not financially
          impacted) and reimburse SanDisk and Toshiba in such manner as mutually
          agreed upon by SanDisk and Toshiba; (i) install components
          (approximately *), (ii) CR related assets (approximately *), and (iii)
          miscellaneous (approximately *).

     (b)  Toshiba will bear the transportation and insurance expense related to
          the transfer of FVC equipments.

     (c)  FVC will purchase new install components for hook-up of FVC equipments
          at Yokkaichi (not to exceed *).

     (d)  50% of the re-start-up cost at Yokkaichi will be borne by SanDisk in
          such manner as mutually agreed upon by SanDisk and Toshiba (not to
          exceed *).

     (e)  Toshiba will assure that Toshiba will install the NAND Flash
          manufacturing capacity of no less than * at Yokkaichi after FVC
          equipment is moved to Yokkaichi. In addition to

CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

*    INDICATES THAT CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND
     FILED SEPARATELY WITH THE COMMISSION PURSUANT TO RULE 24b-2. CONFIDENTIAL
     TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

<PAGE>

          50% of the FVC capacity, Toshiba commits to sell SanDisk up to *.
          Further capacity requirements by SanDisk shall be discussed by the
          Parties as specified in the current FlashVision LLC agreement.

     (f)  Toshiba will rearrange the lease arrangement for FVC equipments (with
          the principle to continue the existing scheme) and cover the
          additional cost and fees, if any, relating to such rearrangement. With
          respect to FlashVision's existing lease facilities with ABN AMRO as
          Lessor, Toshiba and SanDisk agree that neither FlashVision nor Toshiba
          nor SanDisk may make an extension request under Section 14.18 of the
          Participation Agreement of either facility without the prior written
          approval of both SanDisk and Toshiba.

2.   Wafer Price and Capacity
--   ------------------------

     (a)  Prior to commencement of DSC wind down, Q1 2002 DSC wafer pricing
          shall remain as per existing agreement. Any wafers manufactured by DSC
          after Q1 2002 will be priced pursuant to paragraph (b), below, as if
          such wafers had been manufactured by Yokkaichi-FVC.

     (b)  After commencement of DSC wind down, SanDisk`s purchase price of
          Yokkaichi-FVC wafers * will be as follows; For wafers of SanDisk`s
          demand up to the first *Lot/Month, Toshiba will sell Yokkaichi wafers
          to FVC at *. FVC will sell those wafers to SanDisk at such Toshiba
          price plus 50% of *.

               (i)  If during the transition from DSC to Yokkaichi * shall be
                    reduced or stopped for a period of time, SanDisk's * will be
                    reduced or stopped accordingly.

     (c)  Prior to commencement of DSC wind down, *.

     (d)  After commencement of DSC wind down, for wafers of SanDisk`s demand
          beyond the first *.

     (e)  For the calendar year of 2003 and beyond, the Yokkaichi wafer price
          will be negotiated in accordance with the same pricing scheme as
          mentioned above in (b) and (d). With respect to Yokkaichi-FVC pricing,
          wafer price will be based on equal cost for Toshiba and SanDisk, but
          the price except for the * of FVC equipments will not be higher than
          the price 2002. However, if Toshiba (after consultation with SanDisk)
          makes a capital investment for NAND Flash memory, the wafer price may
          be higher than the price in calendar 2002 to accommodate the extra
          cost to Toshiba. *. If SanDisk desires to purchase more than * of NAND
          * in calendar 2003 and beyond, and Toshiba cannot offer such
          additional capacity at market competitive price, then SanDisk may
          purchase such additional capacity * . If and after SanDisk purchases
          such additional capacity from other source, Toshiba can utilize more
          than * of the total NAND manufacturing capacity notwithstanding the
          restrictions as defined in the existing agreement.

                                       2

*    INDICATES THAT CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND
     FILED SEPARATELY WITH THE COMMISSION PURSUANT TO RULE 24b-2. CONFIDENTIAL
     TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

<PAGE>

3.   Research and Development Expenses.
     ---------------------------------

     (a)  For Q1 - Q4 of calendar year 2002, SanDisk's direct research and
          development payments shall be * for Q1 and * for each Q2, Q3 and Q4.

     (b)  For Q1 - Q4 of calendar year 2002, SanDisk's common research and
          development payments shall be based on * of existing amounts (also
          including caps) as provided in the current agreements.

     (c)  For calendar year 2003 and beyond, SanDisk's common research and
          development payments shall be mutually negotiated by the parties and
          shall not exceed calendar 2002 conditions.

4.   *

5.   Other issues
     ------------

SanDisk and Toshiba will discuss in good faith to find mutually agreeable
solution for the following issues in a timely manner, provided however that
successful conclusion of such discussion is not a precondition for SanDisk`s
agreement to transfer FVC`s activities and assets from DSC to Yokkaichi as well
as SanDisk`s agreement on Toshiba's sales of DSC property and assets to a third
party acquiror as described in 1 above.

     (a)  FVC JV structure

     (b)  FVC lease structure (subject to Paragraph 1 (f), above).

     (c)  2003 and beyond R&D expenses to be shared by SanDisk.

     (d)  Patent Indemnification

6.   Revised Agreements
     ------------------

The parties will use their best efforts to complete revised definitive
agreements by end of Q1 `02.

The parties intend that this MOU shall be binding and enforceable.

                                       3

*    INDICATES THAT CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND
     FILED SEPARATELY WITH THE COMMISSION PURSUANT TO RULE 24b-2. CONFIDENTIAL
     TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

<PAGE>

Acknowledged and agreed by:

SanDisk Corporation

By:      /s/ Eli Harari
   ----------------------------------------------

Title:   President
      -------------------------------------------

Date:    December 17, 2001
     --------------------------------------------

Toshiba Corporation

By:      /s/ Takeshi Nakagawa
   ----------------------------------------------

Title:   President and CEO, Semiconductor Company
       ------------------------------------------

Date:    December 17, 2001
     --------------------------------------------

                                       4Exhibit 10(g)

STATE  OF  NORTH  CAROLINA

COUNTY OF CATAWBA

                                                   EMPLOYMENT AGREEMENT

     THIS  EMPLOYMENT  AGREEMENT  ("Agreement"),  is  made  as of the 1st day of
December,  2001,  by  and  between PEOPLES BANK, Newton, North Carolina, a North
Carolina  banking  institution  (the  "Bank"),  and  A.  JOSEPH  LAMPRON  (the
"Employee") and is joined in by PEOPLES BANCORP OF NORTH CAROLINA, INC., a North
Carolina  corporation  (the  "Holding  Company");

                              W I T N E S S E T H :

     WHEREAS the Employee is currently rendering services to the Bank as
Executive Vice President and Chief Financial Officer, and to the Holding Company
as Executive Vice President, Chief Financial Officer, and Corporate Treasurer,
and,

     WHEREAS the Bank is a North Carolina banking corporation and the Holding
Company is a North Carolina bank holding company and the sole shareholder of the
Bank; and,

     WHEREAS the Bank considers the continued availability of the Employee's
services to be important to the Bank's and Holding Company's business, and
desires to secure for the Bank and Holding Company the continued availability of
the Employee's services; and,

     WHEREAS the Employee is willing to provide services to the Bank and Holding
Company on the terms and subject to the conditions set forth herein.

     NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties hereto agree as follows:

     1.   EMPLOYMENT.  The  Employee is employed as Executive Vice President and
          ----------
          Chief  Financial Officer. The Employee shall render administrative and
          management  services to the Bank, such as are customarily performed by
          persons  situated  in  a  similar  executive

<PAGE>
          capacity. Employee shall promote the business of the Bank and Holding
          Company and perform such other duties as shall from time to time be
          reasonably described by the President of the Bank.

     2. COMPENSATION.
     ---------------

          A.   BASE  SALARY.  The Bank shall pay the Employee during the term of
          -----------------
     this Agreement a base salary at the rate of $100,000.00 per annum, payable
     in monthly installments or more frequently as the Bank elects; provided,
     that the rate of such salary shall be reviewed annually by the Bank. Such
     rate of salary may be increased (but not decreased) from time to time in
     such amounts as the Bank, in its discretion, may decide.

          B.   MANAGEMENT  INCENTIVE  PLAN.  The  Employee  shall be entitled to
          --------------------------------
     participate in an equitable manner with other management personnel of the
     Bank in the Bank's management incentive plan adopted in 1998.

     3.   DISCRETIONARY  BONUSES.  The Employee shall be entitled to participate
     ---------------------------
in an equitable manner with all other key management personnel of the Bank in
discretionary bonuses authorized and declared by the Directors of the Bank for
all members of Bank management.  No other compensation provided for in this
Agreement shall be deemed a substitute for the Employee's right to participate
in such discretionary bonuses when and as are declared by the Board of
Directors, so long as such bonuses are provided for Bank management generally.

     4. ADDITIONAL BENEFITS.
     ----------------------

          A.   PARTICIPATION  IN RETIREMENT AND MEDICAL PLAN. The Employee shall
               ---------------------------------------------
     be entitled to participate in any plan of the Bank relating to pension,
     profit sharing or other retirement benefits and health, medical and
     disability coverage, or reimbursement plans that the Bank may adopt for the
     benefit of its employees subject to the eligibility rules of such plan.

          B.   OFFICER  BENEFITS/EXPENSES.  The  Employee  shall  be eligible to
          -------------------------------
     participate in any fringe benefits which may be or become applicable to the
     Bank's executive employees, commensurate with the

                                        2
<PAGE>
     responsibilities and functions to be performed by the Employee under this
     Agreement. Additionally, the Employee shall be entitled to four (4) weeks
     of paid vacation, as an exception to uniform employee policies promulgated
     by the Directors, and such sick leave as is established by such policies.
     The Bank shall reimburse the Employee for all out-of-pocket reasonable and
     necessary business expenses which the Employee shall incur in connection
     with services on behalf of the Bank. Additionally, the Employee shall be
     entitled to life insurance in the amount of two times annual salary; the
     same amount in accidental death and dismemberment insurance; dependent life
     insurance upon Employee's spouse in the amount of Two Thousand Dollars
     ($2,000.00); and disability insurance as which will compensate the Employee
     66-2/3% of salary after Employee is out of work pursuant to company policy
     for thirty (30) calendar days. The Employer shall pay all premiums for the
     insurance noted above.

     5.   TERM.  The initial term of employment under this Agreement shall be
     ---------
for the period commencing December 1, 2001 and ending three (3) calendar years
after such date.  At the end of each one-year period following such commencing
date, this Agreement shall automatically be extended for an additional one (1)
year period beyond the then-effective expiration date, unless written notice
from the Bank or the Employee is received sixty (60) days prior to an
anniversary date advising the other party that this Agreement shall not be
further extended, or in the event the Employee and Employer agree to a further
extension before the expiration of this Agreement.  The parties intend that this
Agreement shall be a continuing employment agreement, unless written notice is
given as provided in this Paragraph, or unless this Agreement is otherwise
terminated as provided in this Agreement.

     6.   LOYALTY/NON-COMPETITION.
     ----------------------------

          A.   Employee shall devote Employee's full efforts and entire business
     time to the performance of Employee's duties under this Agreement.

          B.   During the term of this Agreement, or any renewals or extensions
     thereof, and for a period of one (1) year after termination, the Employee
     shall not, within Catawba, Alexander, Iredell or Lincoln

                                        3
<PAGE>
     Counties, North Carolina, directly or indirectly, own, manage, operate,
     join, control or participate in the management, operation or control of or
     be employed by or connected in any manner with any depository institution
     or financial services business which competes with the Bank or the Holding
     Company without the prior written consent of the Bank. Notwithstanding the
     foregoing, the Employee shall be free without such consent to purchase or
     hold as an investment or otherwise up to 5% of the outstanding stock or
     other securities of any corporation which has its securities publicly
     traded on any recognized securities exchange or in any over-the-counter
     market.

               The Employee shall hold in confidence all knowledge or
     information of a confidential nature with respect to the business of the
     Bank or the Holding Company, received during the term of this Agreement,
     and will not disclose or make use of such information without the prior
     written consent of the Bank.

               The Employee acknowledges that it would not be possible to
     ascertain the amount of monetary damages in the event of a breach by the
     Employee under the provisions of this Paragraph 6. The Employee agrees that
     in the event of the breach of this Paragraph, injunctive relief enforcing
     the terms of this Paragraph is an appropriate remedy.

               The Bank and Employee further agree that in the event the Bank
     shall terminate the employment of the Employee for cause or should the
     Employee resign employment during any period of the term of this employment
     contract, then and in that event, the non-competition provisions of this
     Agreement shall be applicable. If, however, the Bank should terminate the
     employment of the Employee without cause during the last year of said
     Agreement, the non-competition provisions of this Agreement shall not be
     applicable, and the Bank shall not proceed with respect to the remedies as
     set forth above.

     7.   STANDARDS. The Employee shall perform under this Agreement in
     --------------
accordance with such reasonable standards expected of employees with comparable
positions in comparable organizations and as may be established from
time-to-time by the Board of Directors. The Bank shall provide the Employee with

                                        4
<PAGE>
the working facilities and staff customary at the Bank for similar executives
and necessary for him to perform his duties under this Agreement.

     8.   TERMINATION  AND  TERMINATION  PAY.
     ----------------------------------------

          A.   The  Employee's  employment  under  this  Agreement  shall  be
     terminated upon the following occurrences:

               (1)  The death of the Employee during the term of this Agreement,
          in which event the Employee's estate shall be entitled to receive the
          compensation due the Employee through the last day of the calendar
          month in which death shall have occurred and for a period of three (3)
          months thereafter.

               (2)  The Employee's employment under this Agreement may be
          terminated by the Bank at any time or by the Employee upon sixty (60)
          days written notice to the Employee or the Bank, as the case may be.
          Upon such termination by the Employee or by the Bank "for cause," the
          Employee shall be entitled to receive compensation under this
          Agreement through the effective date of such termination and such
          other benefits, if any, as may be provided by the terms of other plans
          and programs of the Bank in the event of termination.

          Any such termination by the Bank other than termination "for cause"
          shall not prejudice the Employee's right to compensation or benefits
          under this Agreement. The Employee shall have no right to receive
          compensation or benefits for any period after termination "for cause."
          Termination "for cause" shall include termination because of the
          Employee's personal dishonesty, incompetence, willful misconduct,
          breach of duty involving personal profit, intentional failure to
          perform stated duties, willful violation of any law, rule or
          regulation (other than traffic violations or similar offenses), or
          final cease and desist order,

                                        5
<PAGE>
          or any material breach of any provision of this Agreement. Termination
          "for cause" shall also include any termination pursuant to a
          resolution of the Board of Directors approved by a vote of at least
          eighty-five percent of directors entitled to vote, finding that
          termination of the Employee's Agreement is in the best interests of
          the Bank or the Holding Company.

               (3)  If the Employee is removed or permanently prohibited from
          participating in the conduct of the Bank's affairs by any order issued
          by any regulatory agency, all obligations of the Bank under this
          Agreement shall terminate as of the effective date of the order. The
          rights of the Employee vested prior to the date of such order shall
          not be affected.

               (4)  All  obligations  under  this  Agreement  may be terminated:

                    (a)  by  the  Federal  Deposit  Insurance Corporation at the
               time it enters into an agreement to provide assistance to or on
               behalf of the Bank under the authority contained in its Rules and
               Regulations; and,

                    (b)  by any regulatory or supervisory agency which enters
               any orders to resolve problems related to the operation of the
               Bank, or when the Bank is determined to be in an unsafe or
               unsound condition. Any rights of the Employee vested prior to
               such time shall not be affected by any such determination or
               order.

     9.   SUSPENSION OF EMPLOYMENT.
     -----------------------------

          A.   The suspension of the Employee from office or temporary
     prohibition from participation by the

                                        6
<PAGE>
     Employee in the conduct of the affairs of the Bank pursuant to notice
     served by any supervisory or regulatory agency, unless stayed by
     appropriate proceedings, shall suspend, as of the date of such service, all
     obligations of the Bank under the terms of this Agreement.

          B.   In the event the charges specified in a notice served as provided
     in Subparagraph A of this Section shall be dismissed, the Bank shall:

               (1)  pay the Employee the compensation withheld from such
          Employee pursuant to the suspension of the Bank's obligation as
          required in Subparagraph A of this Section; and,

               (2)  reinstate the obligations suspended as required in
          Subparagraph A of this section.

     10.  CHANGE IN CONTROL.
     ----------------------

          A.   In the event of a "Change in Control" (as defined in Subparagraph
               (C) below), the term of employment under this Agreement
               automatically shall be extended to a period of three (3) years
               beginning on the date of the Change in Control, and the Bank or
               its successor shall be bound by the terms of this Agreement and
               shall be prohibited, during the remainder of such term, from:

          (1)  Assigning Employee any duties and/or responsibilities that are
               inconsistent with his position, duties, responsibilities or
               status at the time of the Change in Control or with his reporting
               responsibilities or equivalent titles in effect at such time; or

          (2)  Adjusting Employee's annual base salary rate other than in
               accordance with Subparagraph (B) below; or

          (3)  Reducing in level, scope or coverage or eliminating Employee's
               life insurance, medical or hospitalization insurance, disability
               insurance,

                                        7
<PAGE>
               profit sharing plans, stock option plans, stock purchase plans,
               deferred compensation plans, management retention plans,
               retirement plans, stock ownership plans or similar plans or
               benefits being provided by the Bank or the Holding Company to the
               Employee other than those arising from the Bank's management
               incentive plan as of the effective date of the Change in Control;
               or

          (4)  Transferring Employee to a location which is an unreasonable
               distance from the Employee's current principal work location,
               without the Employee's express written consent.

          B.   In the event of a Change in Control, the Employee's base salary
     shall be adjusted to include an amount equal to the average of the two
     previous years' bonuses arising from the Bank's management incentive plan,
     and/or discretionary bonuses, if any, and such adjusted base salary shall
     be increased by not less than six percent (6%) annually beginning at the
     date of the Change in Control and continuing each year for the three-year
     term thereafter.

          C.   For the purposes of this Agreement, the term "Change in Control"
     shall mean any of the following events:

          (1)  a change in control of a nature that would be required to be
          reported in response to Item 1 of the Current Report on Form 8-K, as
          in effect on the date hereof, pursuant to Section 13 or 15(d) of the
          Securities Exchange Act of 1934, as amended (the "Exchange Act"); or

          (2)  such time as any "person" (as such term is used in Sections 13(d)
          and 14(d) of the Exchange Act), other than a person who beneficially
          owned as of January 1, 1998, more than 5% of the Bank's securities, is
          or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
          Exchange Act), directly or indirectly, of securities of the Holding
          Company or Bank representing 20 percent or more of the combined voting
          Power

                                        8
<PAGE>
          of the outstanding Common Stock of the Holding Company or Common Stock
          of the Bank, as applicable; or

               (3)  individuals who constitute the Board or board of directors
          of the Holding Company on the date hereof (the "Incumbent Board" and
          "Incumbent Holding Company Board," respectively) cease for any reason
          to constitute at least a majority thereof, provided that any person
          becoming a director subsequent to the date hereof whose election was
          approved by a vote of at least three-quarters of the directors
          comprising the Incumbent Board or Incumbent Holding Company Board, as
          applicable, or whose nomination for election by the Bank's or Holding
          Company's shareholders was approved by the Bank's or Holding Company's
          Board of Directors or Nominating Committee, as applicable, shall be
          considered as though he or she were a member of the Incumbent Board or
          Incumbent Holding Company Board, as applicable; or

               (4)  either the Holding Company or the Bank consolidates or
          merges with or into another corporation, association or entity or is
          otherwise reorganized, where neither the Holding Company nor the Bank,
          respectively, is the surviving corporation in such transaction; or

               (5)  all or substantially all of the assets of either the Holding
          Company or the Bank are sold or otherwise transferred to or are
          acquired by any other entity or group.

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

                                        9
<PAGE>
          D.   In the event any dispute shall arise between the Employee and the
     Bank or Holding Company (or any successor) as to the terms or
     interpretation of this Agreement, including this Paragraph 10, whether
     instituted by formal legal proceedings or otherwise, including any action
     taken by the Employee to enforce the terms of this Paragraph 10 or in
     defending against any action taken by the Holding Company or the Bank, the
     Bank shall reimburse the Employee for all costs and expenses incurred in
     such proceedings or actions, including attorney's fees, in the event the
     Employee prevails in any such action.

     11.  DISABILITY.     If, by reason of physical or mental disability during
     ---------------
the term hereof, Employee is unable to carry out the normal and usual duties of
employment hereunder, the Employee shall receive full salary from the Bank for
up to twenty (20) working days for which Employee is unable to work.  Medical
disability shall require a doctor's statement indicating the date the Employee
became disabled as well as a statement that Employee is medically able to return
to work before resuming duties.  If, after thirty (30) consecutive days,
Employee is still unable to return to work, Employee will be covered by the
disability insurance policy of the Bank, if that policy applies under its terms.
While disabled, the Employee will keep Employee's original date of employment
and all seniority benefits for up to twelve (12) weeks.  Group insurance will be
kept in force (Employee will continue to pay for dependent insurance); however,
if the Employee does not return to work from medical leave after twelve (12)
weeks, the Bank may recover the premiums paid to maintain the coverage.  A
"return to work" occurs when an Employee returns to work for at least thirty
(30) days.  Upon returning to work from such disability, the Employee shall be
restored to Employee's previous position or to an equivalent position with
equivalent benefits, pay, and other conditions of employment.

     12.  SUCCESSORS AND ASSIGNS.
     ---------------------------

          A.   This Employment Agreement shall enure to the benefit of and be
     binding upon any corporate or other successor of the Bank which shall
     acquire, directly or indirectly, by conversion, merger, consolidation,
     purchase or otherwise, all or substantially all of the assets of the Bank.

                                       10
<PAGE>
          B.   Since the Bank is contracting for the unique and personal skills
     of the Employee, the Employee shall be precluded from assigning or
     delegating Employee's rights or duties hereunder without first obtaining
     the written consent of the Bank.

     13.  AMENDMENTS.  No amendments or additions to this Agreement shall be
     ---------------
binding unless in writing by both parties, except as herein otherwise provided.

     14.  APPLICABLE LAW.  This Agreement shall be governed in all respects,
     -------------------
whether as to validity, construction, capacity, performance or otherwise, by the
laws of the State of North Carolina, except to the extent that federal law shall
be deemed to apply.

     15.  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.

     16.  ENTIRE AGREEMENT; COUNTERPARTS.
     ---  ------------------------------

     A.   This Agreement constitutes the entire agreement between the Employee
     and the Bank with respect to the subject matter hereof and supersedes all
     prior agreements with respect thereto. This Agreement may be executed in
     one or more counterparts, all of which taken together shall constitute one
     and the same instrument.

     17.  NOTICES.     Any notice or other communication required or permitted
     ------------
under this Agreement shall be effective only if it is writing, delivered in
person or by reliable overnight courier service or deposited in the mail,
postage prepaid, return receipt requested and addressed as follows:

     Address of the Bank: Peoples Bank, Post Office Box 467, Newton, North
     Carolina, 28658.

     Address of the Holding Company: Peoples Bancorp of North Carolina, Inc.,
     Post Office Box 467, Newton, North Carolina, 28658.

                                       11
<PAGE>
     Address of the Employee: A. Joseph Lampron, 7824 Nine Iron Court, Denver,
     NC 28037.

     Notices given in person or by overnight courier service shall be deemed
given when delivered to the address required by this section, and notices given
by mail shall be deemed given three (3) days after deposit in the mail.  Any
party hereto may designate, by written notice to the other party in accordance
herewith, any other address to which notices addressed to him shall be sent.

     IN WITNESS WHEREOF, THE PARTIES HAVE EXECUTED THIS AGREEMENT THE DAY AND
YEAR FIRST WRITTEN.

                         PEOPLES BANK, a North Carolina banking
                         Corporation

                         By:  /s/  Tony  W.  Wolfe
                         ---------------------------------------
                              Tony  W.  Wolfe,  President/
                              Chief  Executive  Officer

                                  EMPLOYEE

                             /s/  A.  Joseph  Lampron
                         ---------------------------------------
                             A.  Joseph  Lampron

THE  FOREGOING  AGREEMENT IS JOINED IN AND AGREED TO BY PEOPLES BANCORP OF NORTH
CAROLINA,  INC.

                         PEOPLES  BANCORP  OF  NORTH  CAROLINA,  INC.,  a  North
                         Carolina  Corporation

                         by:  /s/  Tony  W.  Wolfe
                         ---------------------------------------
                              Tony  W.  Wolfe
                              President/Chief  Executive  Officer

                                       12
<PAGE>

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