Document:

ESOP Loan Docs

 Exhibit 10.3 
 FORM OF 
 ESOP LOAN AGREEMENT 

THIS LOAN AGREEMENT (“Loan Agreement”) is made and entered into as of
                    , 2011, by and between PENTEGRA TRUST COMPANY, AS THE TRUSTEE FOR THE ASHEVILLE SAVINGS BANK, S.S.B. EMPLOYEE STOCK
OWNERSHIP PLAN TRUST (“Borrower”), a trust forming part of the Asheville Savings Bank, S.S.B. Employee Stock Ownership Plan (“ESOP”), and ASB BANCORP, INC. (“Lender”), a corporation organized and existing
under the laws of North Carolina. 
 W I T N E S S E T H 

WHEREAS, the Borrower is authorized to purchase shares of common stock of ASB Bancorp, Inc. (“Common Stock”), either
directly from ASB Bancorp, Inc. or in open market purchases in an amount not to exceed          percent (        %) of the shares of Common Stock
offered in the initial public offering; and 
 WHEREAS, the Borrower is authorized to borrow funds from the Lender for
the purpose of financing authorized purchases of Common Stock; and 
 WHEREAS, the Lender is willing to make a loan to
the Borrower for such purpose. 
 NOW, THEREFORE, the parties agree hereto as follows: 

ARTICLE I 

Definitions 
 The following definitions shall apply for purposes of this Loan Agreement, except to the extent that a different meaning is plainly indicated by the context: 

Business Day means any day other than a Saturday, Sunday or other day on which banks are authorized or required to close
under federal or local law or regulation. 
 Code means the Internal Revenue Code of 1986, as amended (including
the corresponding provisions of any succeeding law). 
 Default means an event or condition which would constitute
an Event of Default. The determination as to whether an event or condition would constitute an Event of Default shall be determined without regard to any applicable requirements of notice or lapse of time. 

ERISA means the Employee Retirement Income Security Act of 1974, as amended (including the corresponding provisions of any
succeeding law). 
 Event of Default means an event or condition described in Article 5 of this Loan Agreement.

 Loan means the loan described in Section 2.1 of this Loan Agreement. 

Loan Documents means, collectively, the Loan Agreement, the Promissory Note and the Pledge Agreement and all other
documents now or hereafter executed and delivered in connection with such documents, including all amendments, modifications and supplements of or to all such documents. 

 Pledge Agreement means the agreement described in Section 2.8(a) of this
Loan Agreement. 
 Principal Amount means the face amount of the Promissory Note, determined as set forth in
Section 2.1(c) of this Loan Agreement. 
 Promissory Note means the promissory note described in
Section 2.3 of this Loan Agreement. 
 Register means the register described in Section 2.9 of this Loan
Agreement. 
 ARTICLE II 
 The Loan; Principal Amount; 
 Interest; Security; Indemnification

 Section 2.1 The Loan; Principal Amount. 

(a) The Lender hereby agrees to lend to the Borrower such amount, and at such time, as shall be determined under this Section 2.1;
provided, however, that in no event shall the aggregate amount lent under this Loan Agreement from time to time exceed the greater of
(i) $                    , or (ii) the aggregate amount paid by the Borrower to purchase up to
         percent (        %) of the shares of Common Stock offered in the initial public offering. 

(b) Subject to the limitations of Section 2.1(a), the Borrower shall determine the amounts borrowed under this Loan Agreement, and
the time at which such borrowings are effected. Each such determination shall be evidenced in a writing which shall set forth the amount to be borrowed and the date on which the Lender shall disburse such amount, and such writing shall be furnished
to the Lender by notice from the Borrower. The Lender shall disburse to the Borrower the amount specified in each such notice on the date specified therein or, if later, as promptly as practicable following the Lender’s receipt of such notice;
provided, however, that the Lender shall have no obligation to disburse funds pursuant to this Agreement following the occurrence of a Default or an Event of Default until such time as such Default or Event of Default shall have been cured.

 (c) For all purposes of this Loan Agreement, the Principal Amount on any date shall be equal to the excess, if any, of:

  

	 	(i)	the aggregate amount disbursed by the Lender pursuant to Section 2.1(b) on or before such date; over 

 

	 	(ii)	the aggregate amount of any repayments of such amounts made before such date. 

 The Lender shall maintain on the Register a record of, and shall record in the Promissory Note, the Principal Amount, any changes in the Principal Amount and the effective date of any changes in the
Principal Amount. 
 Section 2.2 Interest. 

(a) The Borrower shall pay to the Lender interest on the Principal Amount, for the period commencing with the first disbursement of funds
under this Loan Agreement and continuing until the Principal Amount shall be paid in full, at the rate of         % per annum. Interest payable under this Agreement shall be computed on the basis of a
year of 365 days and actual days elapsed (including the first day but excluding the last) occurring during the period to which the computation relates. 

  
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 (b) Accrued interest on the Principal Amount shall be payable by the Borrower on the dates
set forth in Schedule I to the Promissory Note. All interest on the Principal Amount shall be paid by the Borrower in immediately available funds. 
 (c) Anything in this Loan Agreement or the Promissory Note to the contrary notwithstanding, the obligation of the Borrower to make payments of interest shall be subject to the limitation that payments of
interest shall not be required to be made to the Lender to the extent that the Lender’s receipt thereof would not be permissible under the law or laws applicable to the Lender limiting rates of interest which may be charged or collected by the
Lender. Any such payment referred to in the preceding sentence shall be made by the Borrower to the Lender on the earliest interest payment date or dates on which the receipt thereof would be permissible under the laws applicable to the Lender
limiting rates of interest which may be charged or collected by the Lender. Such deferred interest shall not bear interest. 

Section 2.3 Promissory Note. 
 The Loan shall be evidenced by the Promissory Note of the Borrower attached hereto as an exhibit payable to the order of the lender in the Principal Amount and otherwise duly completed. 

Section 2.4 Payment of Trust Loan. 
 The Principal Amount of the Loan shall be repaid in accordance with Schedule I to the Promissory Note on the dates specified therein until fully paid. 

Section 2.5 Prepayment. 
 The Borrower shall be entitled to prepay the Loan in whole or in part, at any time and from time to time; provided, however, that the Borrower shall give notice to the Lender of any such prepayment; and
provided, further, that any partial prepayment of the Loan shall be in an amount not less than $1,000. Any such prepayment shall be: (a) permanent and irrevocable; (b) accompanied by all accrued interest through the date of such
prepayment; (c) made without premium or penalty; and (d) applied on the inverse order of the maturity of the installment thereof unless the Lender and the Borrower agree to apply such prepayments in some other order. 

Section 2.6 Method of Payments. 
 (a) All payments of principal, interest, other charges (including indemnities) and other amounts payable by the Borrower hereunder shall be made in lawful money of the United States, in immediately
available funds, to the Lender at the address specified in or pursuant to this Loan Agreement for notices to the Lender, on the date on which such payment shall become due. Any such payment made on such date but after such time shall, if the amount
paid bears interest, and except as expressly provided to the contrary herein, be deemed to have been made on, and interest shall continue to accrue and be payable thereon until, the next succeeding Business Day. If any payment of principal or
interest becomes due on a day other than a Business Day, such payment may be made on the next succeeding Business Day, and when paid, such payment shall include interest to the day on which payment is in fact made. 

  
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 (b) Notwithstanding anything to the contrary contained in this Loan Agreement or the
Promissory Note, the Borrower shall not be obligated to make any payment, repayment or pre- payment on the Promissory Note if doing so would cause the ESOP to cease to be an employee stock ownership plan within the meaning of Section 4975(e)(7)
of the Code or qualified under Section 401(a) of the Code or cause the Borrower to cease to be a tax exempt trust under Section 501(a) of the Code or if such act or failure to act would cause the Borrower to engage in any “prohibited
transaction” as such term is defined in the Section 4975(c) of the Code and the regulations promulgated thereunder which is not exempted by Section 4975(c)(2) or (d) of the Code and the regulations promulgated thereunder or in
Section 406 of ERISA and the regulations promulgated thereunder which is not exempted by Section 408(b) of ERISA and the regulations promulgated thereunder; provided, however, that in each case, the Borrower, may act or refrain from acting
pursuant to this Section 2.6(b) on the basis of an opinion of counsel, and any opinion of such counsel. The Borrower may consult with counsel, and any opinion of such counsel shall be full and complete authorization and protection in respect of
any action taken or suffered or omitted by it hereunder in good faith and in accordance with such opinion of counsel. Nothing contained in this Section 2.6(b) shall be construed as imposing a duty on the Borrower to consult with counsel. Any
obligation of the Borrower to make any payment, repayment or prepayment on the Promissory Note or refrain from taking any other act hereunder or under the Promissory Note which is excused pursuant to this Section 2.6(b) shall be considered a
binding obligation of the Borrower, or both, as the case may be, for the purposes of determining whether a Default or Event of Default has occurred hereunder or under the Promissory Note and nothing in this Section 2.6(b) shall be construed as
providing a defense to any remedies otherwise available upon a Default or an Event of Default hereunder (other than the remedy of specific performance). 
 Section 2.7 Use of Proceeds of Loan. 
 The entire proceeds of
the Loan shall be used solely for acquiring shares of Common Stock, and for no other purpose whatsoever. 
 Section 2.8
Security. 
 (a) In order to secure the due payment and performance by the Borrower of all of its obligations under
this Loan Agreement, simultaneously with the execution and delivery of this Loan Agreement by the Borrower, the Borrower shall: 
  

	 	(i)	pledge to the Lender as Collateral (as defined in the Pledge Agreement), and grant to the Lender a first priority lien on and security interest in, the Common Stock
purchased with the Principal Amount, by the execution and delivery to the lender of the Pledge Agreement attached hereto as an exhibit; and 

  

	 	(ii)	execute and deliver, or cause to be executed and delivered, such other agreement, instruments and documents as the Lender may reasonably require in order to effect the
purposes of the Pledge Agreement and this Loan Agreement. 

 (b) The Lender shall release from encumbrance under
the Pledge Agreement and transfer to the Borrower, as of the date on which any payment or repayment of the Principal Amount is made, a number of shares of Common Stock held as Collateral determined pursuant to the applicable provisions of the ESOP.

  
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 Section 2.9 Registration of the Promissory Note. 

(a) The Lender shall maintain a Register providing for the registration of the Principal Amount and any stated interest and of transfer
and exchange of the Promissory Note. Transfer of the Promissory Note may be effected only by the surrender of the old instrument and either the reissuance by the Borrower of the old instrument to the new holder or the issuance by the Borrower of a
new instrument to the new holder. The old Promissory Note so surrendered shall be canceled by the Lender and returned to the Borrower after such cancellation. 
 (b) Any new Promissory Note issued pursuant to Section 2.9(a) shall carry the same rights to interest (unpaid and to accrue) carried by the Promissory Note so transferred or exchanged so that there
will not be any loss or gain of interest on the note surrender. Such new Promissory Note shall be subject to all of the provisions and entitled to all of the benefits of this Agreement. Prior to due presentment for registration or transfer, the
Borrower may deem and treat the registered holder of any Promissory Note as the holder thereof for purposes of payment and other purposes. A notation shall be made on each new Promissory Note of the amount of all payments of principal and interest
theretofore paid. 
 ARTICLE III 
 Representations and Warranties of the Borrower 
 The Borrower hereby
represents and warrants to the Lender as follows: 
 Section 3.1 Power, Authority, Consents. 

The Borrower has the power to execute, deliver and perform this Loan Agreement, the Promissory Note and Pledge Agreement, all of which
have been duly authorized by all necessary and proper corporate or other action. 
 Section 3.2 Due Execution,
Validity, Enforceability. 
 Each of the Loan Documents, including, without limitation, this Loan Agreement, the
Promissory Note and the Pledge Agreement, has been duly executed and delivered by the Borrower; and each constitutes the valid and legally binding obligation of the Borrower, enforceable in accordance with its terms. 

Section 3.3 Properties, Priority of Liens. 
 The liens which have been created and granted by the Pledge Agreement constitute valid, first liens on the properties and assets covered by the Pledge Agreement, subject to no prior or equal lien.

 Section 3.4 No Defaults, Compliance with Laws. 

The Borrower is not in default in any material respect under any agreement, ordinance, resolution, decree, bond, note, indenture, order
or judgment to which it is a party or by which it is bound, or any other agreement or other instrument by which any of the properties or assets owned by it is materially affected. 

Section 3.5 Purchase of Common Stock. 
 Upon consummation of any purchase of Common Stock by the Borrower with the proceeds of the Loan, the Borrower shall acquire valid, legal and marketable title to all of the Common Stock so purchased, free
and clear of any liens, other than a pledge to the Lender of the Common Stock so purchased pursuant to the Pledge Agreement. Neither the execution and delivery of the Loan Documents nor the performance of any obligation thereunder violates any
provisions of law or conflicts with or results in a breach of or creates (with or without the giving of notice of lapse of time, or both) a default under any agreement to which the Borrower is a

  
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party or by which it is bound or any of its properties is affected. No consent of any federal, state, or local governmental authority, agency, or other regulatory body, the absence of which could
have a materially adverse effect on the Borrower or the Trustee, is or was required to be obtained in connection with the execution, delivery, or performance of the Loan Documents and the transaction contemplated therein or in connection therewith,
including without limitation, with respect to the transfer of the shares of Common Stock purchased with the proceeds of the Loan pursuant thereto. 
 Section 3.6 ESOP; Contributions. 
 As of the effective date of
the ESOP sponsor’s conversion, the ESOP and the Borrower will be duly created, organized and maintained by the ESOP sponsor in compliance with all applicable laws, regulations and rulings. The ESOP will qualify as an “employee stock
ownership plan” as defined in Section 4975(e)(7) of the Code. The ESOP provides that the ESOP sponsor may make contributions to the ESOP in an amount necessary to enable the Trustee to amortize the Loan in accordance with the terms of the
Promissory Note; provided, however, that no such contributions shall be required if they would adversely affect the qualification of the ESOP under Section 401(a) of the Code. 

Section 3.7 Trustee. 
 The trustee of the ESOP has been duly appointed by the ESOP sponsor. 

Section 3.8 Compliance with Laws; Actions. 
 Neither the execution and delivery by the Borrower of this Loan Agreement or any instruments required thereby, nor compliance with the terms and provisions of any such documents by the lender, constitutes
a violation of any provision of any law or any regulation, order, writ, injunction or decree of any court or governmental instrumentality, or an event of default under any agreement, to which the Borrower is a party, to which the Borrower is bound
or to which the Borrower is subject, which violation or event of default would have a material adverse effect on the Borrower. There is no action or proceeding pending or threatened against either the ESOP or the Borrower before any court or
administrative agency. 
 ARTICLE IV 
 Representations and Warranties of the Lender 
 The Lender hereby represents
and warrants to the Borrower as follows: 
 Section 4.1 Power, Authority, Consents. 

The Lender has the power to execute, deliver and perform this Loan Agreement, the Pledge Agreement and all documents executed by the
Lender in connection with the Loan, all of which have been duly authorized by all necessary and proper corporate or other action. No consent, authorization or approval or other action by any governmental authority or regulatory body, and no notice
by the Lender to, or filing by the Lender with, any governmental authority or regulatory body is required for the due execution, delivery and performance of this Loan Agreement. 

  
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 Section 4.2 Due Execution, Validity, Enforceability. 

This Loan Agreement and the Pledge Agreement have been duly executed and delivered by the Lender, and each constitutes a valid and
legally binding obligation of the Lender, enforceable in accordance with its terms. 
 ARTICLE V 

Events of Default 
 Section 5.1 Events of Default under Loan Agreement. 
 Each of
the following events shall constitute an “Event of Default” hereunder: 
 (a) Failure to make any payment or mandatory
prepayment of principal of the Promissory Note when due, or failure to make any payment of interest on the Promissory Note not later than five (5) Business Days after the date when due. 

(b) Failure by the Borrower to perform or observe any term, condition or covenant of this Loan Agreement or of any of the other Loan
Documents, including, without limitation, the Promissory Note and the Pledge Agreement. 
 (c) Any representation or warranty
made in writing to the Lender in any of the Loan Documents, or any certificate, statement or report made or delivered in compliance with this Loan Agreement, shall have been false or misleading in any material respect when made or delivered.

 Section 5.2 Lender’s Rights upon Event of Default. 

If an Event of Default under this Loan Agreement shall occur and be continuing, the Lender shall have no rights to assets of the Borrower
other than: (a) contributions (other than contributions of Common Stock) that are made by the ESOP sponsor to enable the Borrower to meet its obligations pursuant to this Loan Agreement and earnings attributable to the investment of such
contributions and (b) “Eligible Collateral” (as defined in the Pledge Agreement); provided, however, that: (i) the value of the Borrower’s assets transferred to the Lender following an Event of Default in satisfaction of the
due and unpaid amount of the Loan shall not exceed the amount in default (without regard to amounts owing solely as a result of any acceleration of the Loan); (ii) the Borrower’s assets shall be transferred to the Lender following an Event
of Default only to the extent of the failure of the Borrower to meet the payment schedule of the Loan; and (iii) all rights of the Lender to the Common Stock purchased with the proceeds of the Loan covered by the Pledge Agreement following an
Event of Default shall be governed by the terms of the Pledge Agreement. 
 ARTICLE VI 

Miscellaneous Provisions 
 Section 6.1 Payments Due to the Lender. 
 If any amount is
payable by the Borrower to the Lender pursuant to any indemnity obligation contained herein, then the Borrower shall pay, at the time or times provided therefor, any such amount and shall indemnify the Lender against and hold it harmless from any
loss or damage resulting from or arising out of the nonpayment or delay in payment of any such amount. If any amounts as to which the Borrower has so indemnified the Lender hereunder shall be assessed or levied against the Lender, the Lender may
notify the Borrower and make immediate payment thereof, together with interest or penalties in connection therewith, and shall thereupon 

  
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be entitled to and shall receive immediate reimbursement therefor from the Borrower, together with interest on each such amount as provided for in Section 2.2(c) of this Loan Agreement.
Notwithstanding any other provision contained in this Loan Agreement, the covenants and agreements of the Borrower contained in this Section 6.1 shall survive: (a) payment of the Promissory Note and (b) termination of this Loan
Agreement. 
 Section 6.2 Payments. 
 All payments hereunder and under the Promissory Note shall be made without set-off or counterclaim and in such amounts as may be necessary in order that all such payments shall not be less than the
amounts otherwise specified to be paid under this Loan Agreement and the Promissory Note, subject to any applicable tax withholding requirements. Upon payment in full of the Promissory Note, the Lender shall mark such Promissory Note
“Paid” and return it to the Borrower. 
 Section 6.3 Survival. 

All agreements, representations and warranties made herein shall survive the delivery of this Loan Agreement and the Promissory Note.

 Section 6.4 Modifications, Consents and Waivers; Entire Agreement. 

No modification, amendment or waiver of or with respect to any provision of this Loan Agreement, the Promissory Note, the Pledge
Agreement, or any of the other Loan Documents, nor consent to any departure from any of the terms or conditions thereof, shall in any event be effective unless it shall be in writing and signed by the party against whom enforcement thereof is
sought. Any such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No consent to or demand on a party in any case shall, of itself, entitle it to any other or further notice or demand in similar
or other circumstances. This Loan Agreement embodies the entire agreement and understanding between the Lender and the Borrower and supersedes all prior agreements and understandings relating to the subject matter hereof. 

Section 6.5 Remedies Cumulative. 
 Each and every right granted to the Lender hereunder or under any other document delivered hereunder or in connection herewith, or allowed it by law or equity, shall be cumulative and may be exercised
from time to time. No failure on the part of the Lender or the holder of the Promissory Note to exercise, and no delay in exercising, any right shall operate as a waiver thereof, nor shall any single or partial exercise of any right preclude any
other or future exercise thereof or the exercise of any other right. The due payment and performance of the obligations under the Loan Documents shall be without regard to any counterclaim, right of offset or any other claim whatsoever which the
Borrower may have against the Lender and without regard to any other obligation of any nature whatsoever which the Lender may have to the Borrower, and no such counterclaim or offset shall be asserted by the Borrower in any action, suit or
proceeding instituted by the Lender for payment or performance of such obligations. 
 Section 6.6 Further
Assurances; Compliance with Covenants. 
 At any time and from time to time, upon the request of the Lender, the
Borrower shall execute, deliver and acknowledge or cause to be executed, delivered and acknowledged, such further documents and instruments and do such other acts and things as the Lender may reasonably request in order to fully effect the terms of
this Loan Agreement, the Promissory pNote, the Pledge Agreement, the other Loan Documents and any other agreements, instruments and documents delivered pursuant hereto or in connection with the Loan. 

  
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 Section 6.7 Notices. 

Except as otherwise specifically provided for herein, all notice, requests, reports and other communications pursuant to this Loan
Agreement shall be in writing, either by letter (delivered by hand or commercial messenger service or sent by registered or certified mail, return receipt requested, except for routine reports delivered in compliance with Article VI hereof which may
be sent by ordinary first-class mail) or telex or telecopier addressed as follows: 
  

	 	(a)	If to the Borrower: 

 Asheville
Savings Bank, S.S.B. 
 Employee Stock Ownership Plan Trust 

c/o Pentegra Retirement Services 
 108 Corporate Park Drive 
 White Plains, NY 10604 

Attn:
                             

 

	 	(b)	If to the Lender: 

 ASB Bancorp,
Inc. 
 11 Church Street 
 Asheville, NC 28801 
 Attn:
                             
 Any notice, request or communication hereunder shall be deemed to have been given on the day on which it is delivered by hand or by commercial messenger service, or sent by telex, or telecopier, to such
party at its address specified above, or, if sent by mail, on the third Business Day after the day deposited in the mail, postage prepaid, addressed as aforesaid. Any party may change the person or address to whom or which notices are to be given
hereunder, by notice duly given hereunder; provided, however, that any such notice shall be deemed to have been given only when actually received by the party to whom it is addressed. 

Section 6.8 Counterparts. 
 This Loan Agreement may be signed in any number of counterparts which, when taken together, shall constitute one and the same document. 

Section 6.9 Construction; Governing Law. 
 The headings used in the table of contents and in this Loan Agreement are for convenience only and shall not be deemed to constitute a part hereof. All uses herein of any gender or of singular or plural
terms shall be deemed to include uses of the other genders or plural or singular terms, as the context may require. All references in this Loan Agreement of an Article or section shall be to an Article or section of this Loan Agreement, unless
otherwise specified. This Loan Agreement, the Promissory Note, the Pledge Agreement and the other Loan Documents shall be governed by, and construed and interpreted in accordance with, the laws of the State of North Carolina. 

  
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 Section 6.10 Severability. 

Wherever possible, each provision of this Loan Agreement shall be interpreted in such manner as to be effective and valid under
applicable law; however, the provisions of this Loan Agreement are severable, and if any clause or provision hereof shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such invalidity or unenforceability shall affect
only such clause or provision, or part thereof, in such jurisdiction and shall not in any manner affect such clause or provision in any other jurisdiction, or any other clause or provisions in this Loan Agreement in any jurisdiction. Each of the
covenants, agreements and conditions contained in this Loan Agreement are independent, and compliance by a party with any of them shall not excuse non-compliance by such party with any other. The Borrower shall not take any action the effect of
which shall constitute a breach or violation of any provision of this Loan Agreement. 
 Section 6.11 Binding Effect:
No Assignment or Delegation. 
 This Loan Agreement shall be binding upon and inure to the benefit of the Borrower and
its successors and the Lender and its successors and assigns. The rights and obligations of the Borrower under this Agreement shall not be assigned or delegated without the prior written consent of the Lender, and any purported assignment or
delegation without such consent shall be void. 
 [Signature page follows] 

  
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 IN WITNESS WHEREOF, the parties have caused this Loan Agreement to be executed as of the
date first written above. 
  

			
	 ASHEVILLE SAVINGS BANK, S.S.B.
 EMPLOYEE STOCK OWNERSHIP PLAN TRUST

	
	 
	Trustee
	
	ASB BANCORP, INC.
		
	By:	 	 
		 	Duly Authorized Officer

  
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 FORM OF 
 PLEDGE AGREEMENT 
 THIS PLEDGE AGREEMENT (“Pledge
Agreement”) is made as of                     , 2011, by and between PENTEGRA TRUST COMPANY, AS TRUSTEE FOR THE ASHEVILLE SAVINGS
BANK, S.S.B. EMPLOYEE STOCK OWNERSHIP PLAN TRUST (“Pledgor”), and ASB BANCORP, INC. (“Pledgee”). 

W I T N E S S E T H 
 WHEREAS, this Pledge Agreement is being executed and delivered to the Pledgee pursuant to the terms of a Loan Agreement (“Loan Agreement”), by and between the Pledgor and the Pledgee;

 NOW, THEREFORE, in consideration of the mutual agreements contained herein and in the Loan Agreement, the parties
hereto do hereby covenant and agree as follows: 
 Section 1. Definitions. The following definitions shall apply for
purposes of this Pledge Agreement, except to the extent that a different meaning is plainly indicated by the context; all capitalized terms used but not defined herein shall have the respective meanings assigned to them in the Loan Agreement:

 Collateral shall mean the Pledged Shares and, subject to Section 5 hereof, and to the extent permitted by
applicable law, all rights with respect thereto, and all proceeds of such Pledged Shares and rights. 
 ESOP shall
mean the Asheville Savings Bank, S.S.B. Employee Stock Ownership Plan. 
 Event of Default shall mean an event so
defined in the Loan Agreement. 
 Liabilities shall mean all the obligations of the Pledgor to the Pledgee,
howsoever created, arising or evidenced, whether direct or indirect, absolute or contingent, now or hereafter existing, or due or to become due, under the Loan Agreement and the Promissory Note. 

Pledged Shares shall mean all the Shares of Common Stock of ASB Bancorp, Inc. purchased by the Pledgor with the proceeds of
the loan made by the Pledgee to the Pledgor pursuant to the Loan Agreement, but excluding any such shares previously released pursuant to Section 4 of this Pledge Agreement. 

Section 2. Pledge. To secure the payment of and performance of all the Liabilities, the Pledgor hereby pledges to the
Pledgee, and grants to the Pledgee, a security interest in, and lien upon, the Collateral. 

 Section 3. Representations and Warranties of the Pledgor. The Pledgor
represents, warrants, and covenants to the Pledgee as follows: 
 (a) the execution, delivery and performance of this Pledge
Agreement and the pledging of the Collateral hereunder do not and will not conflict with, result in a violation of, or constitute a default under, any agreement binding upon the Pledgor; 

(b) the Pledged Shares are and will continue to be owned by the Pledgor free and clear of any liens or rights of any other person except
the lien hereunder and under the Loan Agreement in favor of the Pledgee, and the security interest of the Pledgee in the Pledged Shares and the proceeds thereof is and will continue to be prior to and senior to the rights of all others; 

(c) this Pledge Agreement is the legal, valid, binding and enforceable obligation of the Pledgor in accordance with its terms;

 (d) the Pledgor shall, from time to time, upon request of the Pledgee, promptly deliver to the Pledgee such stock powers,
proxies, and similar documents, satisfactory in form and substance to the Pledgee, with respect to the Collateral as the Pledgee may reasonably request; and 
 (e) subject to the first sentence of Section 4(b) of this Pledge Agreement, the Pledgor shall not, so long as any Liabilities are outstanding, sell, assign, exchange, pledge or otherwise transfer or
encumber any of its rights in and to any of the Collateral. 
 Section 4. Eligible Collateral. 

(a) As used herein the term “Eligible Collateral” shall mean the amount of Collateral which has an aggregate fair market value
equal to the amount by which the Pledgor is in default (without regard to any amounts owing solely as the result of an acceleration of the Loan Agreement) or such lesser amount of Collateral as may be required pursuant to Section 13 of this
Pledge Agreement. 
 (b) The Pledged Shares shall be released from this Pledge Agreement in a manner conforming to the
requirements of Treasury Regulations Section 54.4975-7(b)(8), as the same may be from time to time amended or supplemented, and the applicable provisions of the ESOP. Subject to the Treasury Regulations, the Pledgee may from time to time, after
any Default or Event of Default, and without prior notice to the Pledgor, transfer all or any part of the Eligible Collateral in the name of the Pledgee or its nominee, without disclosing that such Eligible Collateral is subject to any rights of the
Pledgor and may from time to time, whether before or after any of the Liabilities shall become due and payable, without notice to the Pledgor, take all or any of the following actions: (i) notify the parties obligated on any of the Eligible
Collateral to make payment to the Pledgee of any amounts due or due to become due thereunder, (ii) release or exchange all or any part of the Eligible Collateral, or compromise or extend or renew for any period (whether or not longer than the
original period) any obligations of any nature of any party with respect thereto, and (iii) take control of any proceeds of the Eligible Collateral. 

  
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 Section 5. Delivery. 

(a) The Pledgor shall deliver to the Pledgee upon execution of this Pledge Agreement (i) either (A) certificates for the
Pledged Shares, each certificate duly signed in blank by the Pledgor or accompanied by a stock transfer power duly signed in blank by the Pledgor and each such certificate accompanied by all required documentary or stock transfer tax stamps, or
(B) if the Trustee does not yet have possession of the Pledged Shares, an assignment by the Pledgor of all the Pledgor’s rights to and interest in the Pledged Shares and (ii) an irrevocable proxy, in form and substance satisfactory to
the Pledgee, signed by the Pledgor with respect to the Pledged Shares. 
 (b) Subject to the provisions of Section 6 of
this Pledge Agreement, the Pledgor shall (i) be entitled to exercise any and all voting and other rights pertaining to the Collateral or any part thereof for any purpose not inconsistent with the terms of this Pledge Agreement, and (ii) be
entitled to receive any and all cash dividends or other distributions paid in respect of the Collateral. 
 Section 6.
Events of Default. 
 (a) If a Default or Event of Default shall be existing, in addition to the rights it may have under
the Loan Agreement, the Promissory Note, and this Pledge Agreement, or by virtue of any other instrument, (i) the Pledgee may exercise, with respect to the Eligible Collateral, from time to time, any rights and remedies available to it under
the Uniform Commercial Code as in effect from time to time in the State of North Carolina or otherwise available to it and (ii) the Pledgee shall have the right, for and in the name, place and stead of the Pledgor, to execute endorsement,
assignments, stock powers and other instruments of conveyance or transfer with respect to all or any of the Eligible Collateral. Written notification of intended disposition of any of the Eligible Collateral shall be given by the Pledgee to the
Pledgor at least three (3) business days before such disposition. No action of the Pledgee permitted hereunder shall impair or affect its rights in and to the Eligible Collateral. All rights and remedies of the Pledgee expressed hereunder are
in addition to all other rights and remedies possessed by it, including, without limitation, those contained in the documents referred to in the definition of Liabilities in Section 1 hereof. 

(b) In any sale of any of the Eligible Collateral after a Default or an Event of Default shall have occurred, the Pledgee is hereby
authorized to comply with any limitation or restriction in connection with such sale as it may be advised by counsel is necessary in order to avoid violation of applicable law (including, without limitation, compliance with such procedures as may
restrict the number of prospective bidders and purchasers or further restrict such prospective bidders or purchasers to persons who will represent and agree that they are purchasing for their own account for investment and not with a view to the
distribution or resale of such Eligible Collateral), or in order to obtain such required approval of the sale or of the purchase by any governmental regulatory authority or official, and the Pledgor further agrees that such compliance shall not
result in such sale’s being considered or deemed not to have been made in a commercially reasonable manner, nor shall the Pledgee be liable or accountable to the Pledgor for any discount allowed by reason of the fact that such Eligible
Collateral is sold in compliance with any such limitation or restriction. 

  
 3 

 Section 7. Payment in Full. Upon the payment in full of all outstanding
Liabilities, this Pledge Agreement shall terminate and the Pledgee shall forthwith assign, transfer and deliver to the Pledgor, against receipt and without recourse to the Pledgee, all Collateral then held by the Pledgee pursuant to the Pledge
Agreement. 
 Section 8. No Waiver. No failure or delay on the part of the Pledgee in exercising any right or remedy
hereunder or under any other document which confers or grants any rights to the Pledgee in respect of the Liabilities shall operate as a waiver thereof nor shall any single or partial exercise of any such rights or remedy preclude any other or
further exercise thereof or the exercise of any other right or remedy of the Pledgee. 
 Section 9. Binding Effect; No
Assignment or Delegation. This Pledge Agreement shall be binding upon and inure to the benefit of the Pledgor, the Pledgee and their respective successors and assigns, except that the Pledgor may not assign or transfer its rights hereunder
without the prior written consent of the Pledgee (which consent shall not unreasonably be withheld). Each duty or obligation of the Pledgor to the Pledgee pursuant to the provisions of this Pledge Agreement shall be performed in favor of any person
or entity designated by the Pledgee, and any duty or obligation of the Pledgee to the Pledgor may be performed by any other person or entity designated by the Pledgee. 
 Section 10. Governing Law. This Pledge Agreement shall be governed by and construed in accordance with the laws of the State of North Carolina applicable to agreements to be performed wholly
within the State of North Carolina. 
 Section 11. Notices. All notices, requests, instructions or documents
hereunder shall be in writing and delivered personally or sent by United States mail, registered or certified, return receipt requested, with proper postage prepaid as follows: 

 

	 	(a)	If to the Pledgee: 

 ASB Bancorp,
Inc. 
 11 Church Street 
 Asheville, NC 28801 
 Attn:
                              

 

	 	(b)	If to the Pledgor: 

 Asheville
Savings Bank, S.S.B. 
 Employee Stock Ownership Plan Trust 

c/o Pentegra Retirement Services 
 108 Corporate Park Drive 
 White Plains, NY 10604 

Attn:
                             

  
 4 

 
or at such other address as either of the parties may designate by written notice to the other party. If delivered personally, the date on which a notice, request, instruction or document is
delivered shall be the date on which such delivery is made, and, if delivered by mail, the date on which such notice, request, instruction, or document is deposited in the mail shall be the date of delivery. Each notice, request, instruction or
document shall bear the date on which it is delivered. 
 Section 12. Interpretation. Wherever possible each
provision of this Pledge Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision herein shall be prohibited by or invalid under such law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions hereof. 

Section 13. Construction. All provisions hereof shall be construed so as to maintain (a) the ESOP as a tax-qualified,
leveraged employee stock ownership plan under Section 401(a) and 4975(e)(7) of the Internal Revenue Code of 1986, as amended (the “Code”), (b) the ESOP Trust as exempt from taxation under Section 501(a) of the Code, and
(c) the loan as an exempt loan under Section 54.4975-7(b) of the Treasury Regulations and as described in Department of Labor Regulation Section 2550.408b-3. 
 [Signature page follows] 

  
 5 

 IN WITNESS WHEREOF, this Pledge Agreement has been duly executed by the parties
hereto as of the day and year first above written. 
  

			
	 ASHEVILLE SAVINGS BANK, S.S.B.
 EMPLOYEE STOCK OWNERSHIP PLAN TRUST

	
	 
	Trustee 
	
	ASB BANCORP, INC.
		
	By:	 	 
		 	Duly Authorized Officer

  
 6 

 FORM OF 
 PROMISSORY NOTE 
 FOR VALUE RECEIVED, the undersigned, AS
TRUSTEES FOR THE ASHEVILLE SAVINGS BANK, S.S.B. EMPLOYEE STOCK OWNERSHIP PLAN TRUST (the “Borrower”), hereby promises to pay to the order of ASB BANCORP, INC. (the “Lender”) up to
             Dollars ($            ), payable in accordance with the Loan Agreement made and entered into between
the Borrower and the Lender of even date herewith (“Loan Agreement”) pursuant to which this Promissory Note is issued. 
 The Principal Amount of this Promissory Note shall be payable in accordance with the schedule attached hereto (“Schedule I”). 

This Promissory Note shall bear interest at the rate per annum set forth or established under the Loan Agreement, such interest to be
payable in accordance with Schedule I. 
 Anything herein to the contrary notwithstanding, the obligation of the Borrower to
make payments of interest shall be subject to the limitation that payments of interest shall not be required to be made to the Lender to the extent that the Lender’s receipt thereof would not be permissible under the law or laws applicable to
the Lender limiting rates on interest which may be charged or collected by the Lender. Any such payments of interest which are not made as a result of the limitation referred to in the preceding sentence shall be made by the Borrower to the Lender
on the earliest interest payment date or dates on which the receipt thereof would be permissible under the laws applicable to the Lender limiting rates of interest which may be charged or collected by the Lender. Such deferred interest shall not
bear interest. 
 Payments of both principal and interest on this Promissory Note are to be made at the principal office of the
Lender or such other place as the holder hereof shall designate to the Borrower in writing, in lawful money of the United States of America in immediately available funds. 
 Failure to make any payments of principal on this Promissory Note when due, or failure to make any payment of interest on this Promissory Note not later than five (5) Business Days after the date
when due, shall constitute a default hereunder, whereupon the principal amount of accrued interest on this Promissory Note shall immediately become due and payable in accordance with the terms of the Loan Agreement. 

This Promissory Note is secured by a Pledge Agreement between the Borrower and the Lender of even date herewith and is entitled to the
benefits thereof. 
  

			
	 ASHEVILLE SAVINGS BANK, S.S.B.
 EMPLOYEE STOCK OWNERSHIP PLAN TRUST

	
	 
	TrusteeOfficer Employment Agreement

 Exhibit 10.5 
 FORM OF EXECUTIVE OFFICER EMPLOYMENT AGREEMENT 
 THIS EMPLOYMENT
AGREEMENT (the “Agreement”) is entered into as of the      day of             , 2011, by and between ASB BANCORP, INC., a North
Carolina corporation (“Company”), ASHEVILLE SAVINGS BANK, a North Carolina chartered savings bank (the “Bank”), and
                             (“Executive”). 

RECITALS 

WHEREAS, Company and the Bank wish to employ Executive in positions of substantial responsibility; 

WHEREAS, Company, the Bank and Executive desire to enter into an employment agreement pursuant to the terms of this Agreement;

 NOW, THEREFORE, in consideration of the mutual promises of the parties hereto and for other good and valuable
consideration, the receipt and adequacy whereof each party hereby acknowledges, Company, the Bank and Executive hereby agree as follows: 
 1.
DEFINITIONS: The following terms shall have the following meanings for all purposes of this Agreement: 
 Base
Salary means the annual base compensation specified in Section 4 below. 
 Board means, unless otherwise
indicated by the context, the Board of Directors of Company and the Board of Directors of the Bank. 
 Cause means any of
the reasons listed in Section 7(d) below for which this Agreement may be terminated or Executive may be discharged prior to the end of the Term hereof. 
 Change of Control means and shall be deemed to have occurred upon the occurrence of any of the following events. 
 (1) The acquisition by any “person” or “group” (as defined in or pursuant to Sections 13(d) and 14(d) of the Exchange Act) (other than Company, any Subsidiary or any Company or
Subsidiary’s employee benefit plan), directly or indirectly, as “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act) of securities representing fifty percent (50%) or more of either the then outstanding shares or
the combined voting power of the then outstanding securities of Company or the Bank; 
 (2) Either a majority of the directors
of Company elected at Company’s annual stockholders meeting shall have been nominated for election other than by or at the direction of the “incumbent directors” of Company, or the “incumbent directors” shall cease to
constitute a majority of the directors of Company. The term “incumbent director” shall mean any director who was a director of Company on the Effective Date and any individual who becomes a director of Company subsequent to the Effective
Date and who is elected or nominated by or at the direction of at least majority of the then incumbent directors; or 

  

 (3) The consummation of (x) a merger, consolidation or other business combination of
Company with any other “person” or “group” (as defined in or pursuant to Sections 13(d) and 14(d) of the 1934 Act) or affiliate thereof, other than a merger or consolidation that would result in the outstanding common stock of
Company immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into common stock of the surviving entity or a parent or affiliate thereof) more than fifty percent (50%) of the outstanding common
stock of Company or such surviving entity or a parent or affiliate thereof outstanding immediately after such merger, consolidation or other business combination, or (y) a plan of complete liquidation of Company or the Bank or an agreement for
the sale or disposition of all or substantially all of Company’s or the Bank’s assets. 
 Code means the
Internal Revenue Code of 1986, as amended. 
 Effective Date means the first day of the initial Term. 

Exchange Act means the Securities Exchange Act of 1934, as amended. 

Good Reason means the occurrence of any of the conditions listed in Section 7(f) below which is followed by the resignation
of Executive within twelve (12) months after such occurrence. 
 Protected Customer shall mean any person, business
or entity who or which: 
 (1) Was known by Executive to have purchased products or services from Company, the
Bank or any Subsidiary other than the Bank during the two-year period immediately preceding Executive’s last day of employment with the Bank; or 
 (2) Purchased products or services from Company, the Bank or any Subsidiary other than the Bank during the two-year period immediately preceding Executive’s last day of employment with the Bank, and
about whom Executive had access to confidential or proprietary information during this period; or 
 (3) Was
known by Executive to have received (during the one-year period prior to Executive’s last day of employment with the Bank) but not yet acted upon a proposal by Company, the Bank or any Subsidiary other than the Bank for the purchase of products
or performance of services. 
 Resignation for Good Reason means resignation by Executive in accordance with the
provisions of Section 7(f) below. 
 Restricted Period means the one-year period described in Section 9(a)
below 
 Subsidiary means any corporation at least a majority of the stock of which is owned by Company, either directly
or through one or more other Subsidiaries, and any other entity controlled, directly or indirectly, by Company or any other Subsidiary. 
 Term means the term of this Agreement specified in Section 3 and 8(a) below, including the initial term and any extended term. 

Termination for Cause means discharge of Executive prior to the end of the Term in accordance with the provisions of
Section 7(d) below for any of the reasons listed therein. 
 Termination without Cause means discharge of Executive
prior to the end of the Term in accordance with the provisions of Section 7(e) below. 

  
 2 

 2. EMPLOYMENT:  
 (a) During the Term, Executive shall serve as [            ], reporting to
[            ]. Executive will perform all duties and have all powers associated with such positions as and as may be set forth in the Bylaws of Company or the Bank. In addition, Executive
shall be responsible for establishing the business objectives, policies and strategic plans of Company and the Bank in conjunction with the Board. Executive agrees that, during the Term, Executive will devote full business time and energy to the
business, affairs and interests of Company and the Bank and serve diligently and to the best of Executive’s ability. Executive may serve as a director, trustee or officer of other corporations and entities, including without limitation
charitable organizations, and engage in other activities to the extent those activities and services do not inhibit the performance of Executive’s duties hereunder or, in the opinion of the Board, conflict with the business of Company, the Bank
or any Subsidiary. 
 (b) Notwithstanding anything in this Agreement to the contrary, unless otherwise agreed to by the
parties, if Executive is then serving as a director of the Company and/or the Bank, Executive shall be deemed to have resigned as a director of Company and the Bank effective immediately after termination of Executive’s employment for Cause,
regardless of whether the Executive submits a formal, written resignation as director. [FOR CEO CONTRACT ONLY] 
 (c) References in this Agreement to services rendered for Company and compensation, benefits, indemnification and liability insurance payable or provided by Company shall include services rendered for and
compensation, benefits, indemnification and liability insurance payable or provided by the Bank and any Subsidiary other than the Bank, and references in this Agreement to “ Company “shall mean and include the Bank and any Subsidiary other
than the Bank if Executive performs any services therefor, as the context may require. 
 3. TERM: The initial term of this
Agreement shall be for the period beginning on             , 2011 and continuing for a             -month period
through and including             , 201     subject, however, to earlier termination in the manner provided in this Agreement. Commencing as of the first
anniversary of the Effective Date and continuing as of each anniversary of the Effective Date thereafter, the disinterested members of the Board may, in the sole discretion of the Board, extend the Agreement term for an additional year, so that the
remaining term of the Agreement again becomes             (__) full months from the applicable anniversary of the Effective Date, unless the Executive elects not to extend the term
of this Agreement by giving written notice at least thirty (30) days prior to the applicable anniversary date. Notwithstanding the foregoing, the term of this Agreement shall be extended pursuant to Section 8(a) below upon the occurrence
of a Change of Control. 
 4. BASE SALARY; INCENTIVE COMPENSATION: 

(a) Executive shall receive an annual Base Salary at the rate of
$            , payable in substantially equal installments no less frequently than monthly (less any amounts withheld as required by law or pursuant to any benefits plan). At least
annually, Company shall review and, in its sole discretion, may increase, Executive’s Base Salary. If Executive’s Base Salary is increased by Company, such increased Base Salary shall then constitute the Base Salary for all purposes of
this Agreement. 
 (b) Executive will be entitled to participate in any incentive compensation, bonus plans or arrangements of
the Company on the same terms as other senior officers. Nothing paid to Executive under any such plans or arrangements will be deemed to be in lieu of other compensation to which Executive is entitled under this Agreement. 

  
 3 

 5. EMPLOYEE BENEFITS AND REIMBURSEMENTS:  

(a) During the Term, Executive shall participate in any retirement, group insurance, hospitalization, incentive or deferred compensation
and other benefit or compensation plans of the Bank presently in effect or hereafter adopted and generally available to all Company’s senior officers, subject to the terms and conditions specified in such plans. Executive shall also be entitled
to any additional compensation, benefits or perquisites, if any, that may be provided specifically to or for Executive by Company or the Bank from time to time. During the Term, to the extent provided by corporate policies, Executive shall be
reimbursed for expenditures (including travel, entertainment, parking and business meetings) made in pursuance and furtherance of the business and good will of Company 
 (b) Vacation and Leave. Executive will be entitled to vacation leave, sick leave, holidays and other paid absences in accordance with the Bank’s policies and procedures for senior
officers. 
 6. INDEMNIFICATION: 
 (a) Company, the Bank and any Subsidiary other than the Bank for which Executive provides services shall indemnify and hold Executive harmless from and against all liability and expense resulting from
(1) all acts or omissions of Executive while acting in the capacity of a director, officer, trustee, or fiduciary and/or employee of Company, the Bank and any such Subsidiary during Executive’s employment as such director, officer, and/or
employee and (2) acts or omissions of Company, the Bank and any such Subsidiary occurring or alleged to have occurred during or prior to Executive’s employment, on terms and conditions no less favorable to Executive than the terms and
conditions providing for indemnification of officers and directors under the Articles or Certificate of Incorporation and the Bylaws of Company, the Bank charter and each such Subsidiary’s governing documents. 

(b) The Bank shall carry directors and officers liability insurance in such amounts as the Bank in its discretion deems appropriate, and
any payments made under such policy to Executive or on Executive’s behalf shall be offset against the indemnification obligation set forth in Section 6(a). 
 (c) Notwithstanding the foregoing, the indemnification provided by Section 6(a) shall not apply, and Executive shall not be indemnified, with respect to any acts or omissions which constitute wanton
or willful misconduct or willful gross negligence. The indemnity obligation set forth in this Section 6 shall be subject to the prohibitions and limitations established by applicable law and as set forth in applicable regulations adopted by any
federal or state bank regulatory agency having jurisdiction over Company, the Bank or any Subsidiary other than the Bank for which Executive performs services. 
 (d) The provisions of this Section 6 shall survive termination of this Agreement. 
 7.
TERMINATION: Executive’s employment under this Agreement may be terminated under any of the following conditions. 
 (a) Disability: If Executive is unable to perform the essential functions of Executive’s positions on a full-time basis for a period of six (6) consecutive months (or for such shorter
period ending with Executive’s eligibility for and receipt of long-term disability benefits under an insurance policy or employee benefit plan provided or made available to Executive by Company) by reason of illness or other physical or mental
disability, Company shall have the right to terminate Executive’s employment under this Agreement at the end of the applicable period by written notice thereof. If Executive’s employment is so terminated, Executive shall be paid any salary
and benefits to which Executive may be entitled until 

  
 4 

 
the end of the payroll period in which the date of termination occurs, and thereafter, Company shall have no further obligation for additional compensation and benefits under this Agreement. A
condition of disability shall be determined by Company on the basis of competent evidence. A written opinion of a licensed physician certified in his field of specialization and acceptable to Company, or Executive’s entitlement to or receipt of
long-term disability benefits under any insurance policy or employee benefit plan provided or made available to Executive by Company or under federal Social Security law, shall be conclusive evidence of disability. 

(b) Death: In the event of Executive’s death during the Term, Executive’s estate, legal representatives or named
beneficiaries (as directed by Executive in writing) shall be paid Base Salary at the rate in effect at the time of Executive’s death for a period of one (1) month after the date of Executive’s death and shall be paid for any accrued
and unused paid time off. Such additional compensation and accrued and unused paid time off shall be paid in a single lump sum within thirty (30) days from Executive’s date of death. 

(c) Resignation By Executive: Upon thirty (30) days prior notice, Executive may resign or voluntarily leaves the employ of
Company, other than under circumstances treated as Resignation for Good Reason. In the event of Executive’s resignation under this Section 7(c), Executive shall be paid any accrued and unpaid salary and accrued and unused paid time off
through Executive’s date of resignation. 
 (d) Termination For Cause: Company may, in its sole discretion, by
written notice to Executive, terminate Executive’s employment immediately for Cause upon the occurrence of any of the following: 
 (1) Executive’s willful failure to follow or to cooperate in carrying out any of the lawful policies of Company or the Bank or the lawful directions of the Board; 

(2) Continued and willful neglect by Executive of Executive’s duties for or on behalf of Company, the Bank or any
Subsidiary other than the Bank for which Executive provides services; 
 (3) Willful misconduct of Executive in
connection with the performance of any of Executive’s duties, including, by way of example, but not limitation, misappropriation of funds or property of Company, the Bank or a Subsidiary other than the Bank or a depositor therein or borrower
therefrom, or securing or attempting to secure personally any profit in connection with any transaction entered into on behalf of Company, the Bank or Subsidiary other than the Bank to the prejudice of the Bank or its Subsidiaries; 

(4) Conduct by Executive which results in Executive’s suspension and/or temporary prohibition or removal and/or
permanent prohibition from participation in the conduct of the affairs of Company, the Bank or any Subsidiary other than the Bank pursuant to the rules and regulations of the primary federal or state banking agency for Company, the Bank or the other
Subsidiary or any other federal or state banking agency having regulatory jurisdiction over Company, the Bank or the other Subsidiary; 
 (5) Conviction of Executive of a felony or any misdemeanor involving moral turpitude or Executive’s willful violation of any law, rule or regulation to which Company, the Bank or other Subsidiary for
which Executive performs services is subject or of a final order or other formal administrative action entered into, by or imposed upon Company, the Bank or any such Subsidiary; 

  
 5 

 (6) Willful violation of any code of conduct or standards of ethics
applicable to employees of Company or the Bank that results in material and demonstrable damage to the business or reputation of Company or the Bank; or 
 (7) The issuance of a permanent injunction or similar remedy against Executive preventing Executive from executing or performing all or part of this Agreement. 

If Executive’s employment is Terminated for Cause or Company has Cause for termination and Executive voluntarily resigns, Executive
shall not be entitled to any further compensation or benefits under this Agreement other than payment for any accrued and unused paid time off. 

Notwithstanding anything herein to the contrary, except as “willful” may be otherwise defined by the rules and regulations of the primary
federal or state banking agency for the Bank for which Executive performs services or any other federal or state banking agency having regulatory jurisdiction over the Bank for which Executive performs services, (x) no act or failure to act on
Executive’s part shall be considered “willful” unless done, or omitted to be done, by Executive in bad faith and without reasonable belief that Executive’s action or omission was in the best interest of Company or the Bank for
which Executive performs services, and (y) no failure to act on Executive’s part shall be considered “willful” if such failure is a result of a condition of disability within the meaning of Section 7(a) of this Agreement.
Executive shall not be deemed to have been Terminated for Cause under this Agreement unless and until there is delivered to Executive a copy of a resolution adopted at a meeting of the Company Board called and held for the purpose, which resolution
shall (x) contain findings that Executive has committed an act constituting Cause, and (y) specify the particulars thereof. The resolution of the Board shall be deemed to have been duly adopted if and only if it is adopted by the
affirmative vote of a majority of the directors then in office, excluding Executive. Notice of the meeting and the proposed termination for Cause shall be given to Executive a reasonable time before the meeting of the Board. Executive and
Executive’s counsel (if the Executive chooses to have counsel present) shall have a reasonable opportunity to be heard by the Board at the meeting. 
 (e) Termination Without Cause: Company may, in its sole discretion, by written notice to Executive terminate Executive’s employment under this Agreement immediately without Cause at any time
(other than following a Change of Control, in which case a termination without Cause is governed by Section 8 of this Agreement). In the event of such termination, Executive shall continue to be paid the Base Salary that Executive is entitled
to receive as of the date Executive is Terminated without Cause through the expiration of the then current Term. Nothing in this Section shall affect Executive’s rights to receive any benefit which has been earned but not paid with respect to
Executive’s performance prior to the date of such termination. In addition, the Bank shall continue Executive’s health and life insurance coverage at the Bank’s expense through the expiration of the then current Term. The payments
described in this Section 7(e) will be due Executive regardless of any subsequent employment attained by Executive. 
 (f)
Resignation For Good Reason: 
 (1) Executive may Resign for Good Reason upon the occurrence of any of the
following conditions without Executive’s prior written consent: 
 (A) a material change in Executive’s
positions, authority and responsibilities relative to Executive’s positions, authority and responsibilities at the Effective Date; 
 (B) a liquidation or dissolution of Company or the Bank, other than liquidations or dissolutions that are caused by reorganizations that do not affect the status of Executive; 

  
 6 

 (C) a reduction in Executive’s Base Salary; 

(D) a relocation of Executive’s principal place of employment by more than thirty-five (35) miles from its
location as of the Effective Date; or 
 (E) a material breach of this Agreement by Company or the Bank.

 (2) Resignation for Good Reason shall be effected by delivering to Company, within twelve (12) months
after the occurrence of one of the conditions described above, a written notice specifying a date for termination of employment (a) which is not less than thirty (30) days after the date of the notice, and (b) which is not more than
ninety (90) days after the date of the notice. The notice shall also state that Executive is resigning for Good Reason as contemplated by this Section 7(f) and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for Resignation for Good Reason hereunder. If within the notice period, Company cures or corrects any circumstances providing a basis for Resignation for Good Reason pursuant to Sections 7(f)(1)(A) or (E) only, Executive shall
not be entitled to Resign for Good Reason. 
 (3) If Executive Resigns for Good Reason at any time after the date
of this Agreement (other than a Resignation for Good Reason during the Term after a Change of Control, which shall be governed by Section 8 below), then Executive shall continue to be paid the Base Salary that Executive is entitled to receive
as of the date Executive is Resigns for Good Reason through the expiration of the then current Term. Nothing in this Section shall affect Executive’s rights to receive any benefit which has been earned but not paid with respect to
Executive’s performance prior to the date of such termination. In addition, the Bank shall continue Executive’s health and life insurance coverage at the Bank’s expense through the expiration of the then current Term. The payments
described in this Section 7(f) will be due Executive regardless of any subsequent employment attained by Executive which is not in violation of this Agreement. 
 8. CHANGE OF CONTROL: Notwithstanding the preceding provisions of this Agreement, upon the occurrence of a Change of Control, the following provisions shall apply: 

(a) The Term shall be extended to a period of one (1) year after the date on which the Change of Control occurs if the remaining
Term as of the Change of Control effective date is less than one (1) year. 
 (b) If, during the Term, as extended pursuant
to Section 8(a), either Executive’s employment is Terminated without Cause or Executive Resigns for Good Reason, in either case, Company shall provide to Executive the following severance benefits: 

(1) Company shall pay to Executive, in lieu of the compensation specified in Sections 7(e) or 7(f), a severance payment
(subject to any applicable payroll or other taxes required to be withheld) equal to three (3) times the sum of (i) Executive’s Base Salary at the rate then in effect, or if greater, in effect immediately preceding the Change of
Control and (ii) the average of the cash bonuses paid or accrued on Executive’s behalf with respect to the three (3) completed calendar years preceding the effective date of the Change of Control (or, if Executive has not been
employed for three (3) years, the average of the completed calendar years in which Executive was employed). In addition, the Bank shall continue Executive’s health and life insurance coverage at the Bank’s expense for a thirty-six
(36) month period following Executive’s Termination without Cause or Resignation for Good Reason. 

(2) The payments described in this Section 8 shall be due Executive regardless of any subsequent employment obtained
by Executive. 

  
 7 

 (c) In the event that the aggregate payments or benefits to be made or afforded to Executive
in the event of a Change of Control (whether under this Agreement or otherwise) would be deemed to include an “excess parachute payment” under Code Section 280G or any successor thereto, then such payments or benefits shall be reduced
to the extent necessary to avoid treatment as an “excess parachute payment”, with the reduction among such payments and benefits to be made first to payments and benefits payable or provided under this Agreement. 

9. NONCOMPETITION, NONSOLICITATION AND NONDISCLOSURE: 
 (a) Executive hereby covenants and agrees that, for a period of one (1) year following a termination of employment in the circumstances described in Sections 7(e) or (f), Executive shall not, without
the written consent of Company, either directly or indirectly: 
 (i) become an officer, employee, consultant,
director, independent contractor, agent, joint venturer, partner or trustee of any business whatsoever that competes with the business of Company, the Bank or any Subsidiary other than the Bank. 

(ii) solicit, offer employment to, or take any other action intended (or that a reasonable person acting in like
circumstances would expect) to have the effect of causing any officer or employee of Company, the Bank or any Subsidiary other than the Bank to terminate his employment and accept employment or become affiliated with, or provide services for
compensation in any capacity whatsoever to, any business whatsoever that competes with the business of Company, the Bank or any Subsidiary other than the Bank; or 

(iii) solicit, provide any information, advice or recommendation or take any other action intended (or that a reasonable
person acting in like circumstances would expect) to have the effect of causing any Protected Customer to terminate an existing business or commercial relationship with Company, the Bank or any Subsidiary other than the Bank. 

(iv) For purposes of this Section 9(a), a business that “competes with the business of Company, the Bank or any
Subsidiary other than the Bank” shall mean a depository financial institution doing business within twenty-five (25) miles of any office of the Bank in existence on the date of Executive’s termination of employment. 

(b) During the Term and thereafter, Executive shall hold in a fiduciary capacity for the benefit of Company and its Subsidiaries all
secret or confidential information, knowledge or data relating to Company and its Subsidiaries and their respective businesses, which shall have been obtained by Executive during Executive’s employment by Company, the Bank and any Subsidiary
other than the Bank and which shall not be or become public knowledge (other than by acts by Executive or representatives of Executive in violation of this Agreement). Executive shall not, without the prior written consent of as applicable, Company,
the Bank and such other Subsidiary or as may otherwise be required by law or legal process, communicate or divulge any such information, knowledge or data to anyone other than Company, the Bank and such other Subsidiary and those designated by them.
After the end of the Restricted Period, the existence and identity of the customers and employees of Company, the Bank, and any Subsidiaries other than the Bank shall not constitute secret or confidential information, knowledge or data. 

(c) During any period in which Section 9(a) is effective, Section 9(a) shall not preclude Executive from holding any publicly
traded stock provided Executive does not acquire any stock interest in any one company in excess of one percent (1%) of the outstanding voting stock of that company. 

  
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 (d) The parties agree that the restrictions contained in this Section 9 are reasonable
and fair. If Executive competes in violation of the terms of this Section 9, the parties agree that Company will be irreparably harmed without an adequate remedy at law. Accordingly, Executive acknowledges that if Executive breaches or
threatens to breach any provision of this Section 9, Company shall be entitled to an injunction, both preliminary and permanent, restraining Executive from such breach or threatened breach, but such injunctive relief shall not preclude Company
from pursuing all other legal or equitable remedies arising out of such a breach. 
 10. REFORMATION: The parties have attempted
to limit Executive’s right to compete only to the extent necessary to protect Company, the Bank and Subsidiaries other than the Bank from unfair competition. The parties recognize, however, that reasonable people may differ in making such a
determination. Consequently, the parties hereby agree that, if the scope or enforceability of a restrictive covenant set forth in Section 9 is in any way disputed at any time, a court or other trier of fact may modify and reform such provision
to substitute such other terms as are reasonable to protect the legitimate business interests of Company, the Bank and Subsidiaries other than the Bank. 
 11. NOTICES: For the purposes of this Agreement, notices or other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when hand
delivered to the party to whom directed or mailed by United States certified mail, return receipt requested, postage prepaid, addressed to such party at such party’s address last known by the party giving such notice. Each party may, from time
to time, and shall, upon request of another party, designate an address to which notices should be sent. Notices of change of address shall be effective only upon receipt. 
 12. MODIFICATION; WAIVERS; APPLICABLE LAW: No provisions of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing, signed
by Executive, and on behalf of Company, by such officers as may be specifically designated by Company. No waiver of any breach, condition or provision of this Agreement by any party hereto at any time shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by any party that are not set forth
expressly in this Agreement. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of North Carolina, except to the extent that federal applies. 

13. INVALIDITY - ENFORCEABILITY: The invalidity or enforceability of any provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall remain in full force and effect. Any provision in this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective only to the
extent of such prohibition or unenforceability without invalidating or affecting the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. 
 14. SUCCESSOR RIGHTS: This Agreement shall inure to the benefit of and be enforceable by Executive’s
personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees, and shall be binding upon Company and any successor to Company. If Executive should die while any amounts would still be payable to
Executive hereunder all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to Executive’s devisee, legatee or other designee or, if there is no such designee, to Executive’s estate.

 15. ATTORNEY’S FEES: In the event that either party incurs costs and fees, including attorney’s fees, in enforcing
its rights under this Agreement, the party substantially prevailing in such suit or action including any appeal shall be entitled to recover from the other all such costs and reasonable attorney’s fees. 

  
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 16. EFFECT OF FEDERAL BANKING STATUTES AND REGULATIONS: Notwithstanding anything herein
contained to the contrary, any payments to Executive by the Employer whether pursuant to this Agreement or otherwise, are subject to and conditioned upon their compliance with Section 18(k) of the Federal Deposit Insurance Act, 12 U.S.C.
Section 1828(k), and the regulations promulgated thereunder in 12 C.F.R. Part 359. In addition, Executive agrees that this Agreement is subject to amendment at any time in order to comply with laws that are applicable to Company and the Bank
(including regulations and rules relating to any governmental program in which Company or the Bank may participate). 
 17.
HEADINGS: Descriptive headings contained in this Agreement are for convenience only and shall not control or affect the meaning or construction of any provision hereof. 
 18. EFFECT ON PRIOR AGREEMENTS: This Agreement supersedes all prior agreements, either expressed or implied, between the parties hereto with respect to the employment of Executive.

 19. INTERNAL REVENUE CODE SECTION 409A/CONTINUATION OF BENEFITS/REIMBURSEMENTS: This Agreement is intended to and shall comply
with Section 409A of the Code. All references to a termination of employment and separation from service shall mean and be administered to comply with the definition of “separation from service” in Section 409A of the Code. All
reimbursements provided under this Agreement shall comply with Section 409A of the Code and shall be subject to the following requirements: 
 (a) The amount of expenses eligible for reimbursement, during Executive’s taxable year may not affect the expenses eligible for reimbursement to be provided in another taxable year, and 

(b) The reimbursement of an eligible expense must be made by December 31 following the taxable year in which the expense was
incurred. The right to reimbursement is not subject to liquidation or exchange for another benefit. 
 If Executive is a “specified
employee” (as defined under Section 409A of the Code) at the time of separation from service, to the extent that any amount payable under this Agreement constitutes “deferred compensation” under Section 409A of the Code (and
is not otherwise excepted from Section 409A of the Code coverage by virtue of being considered “separation pay” or a “short term deferral” or otherwise) and is payable to Executive based upon a separation from service (other
than death or “disability” as defined under Section 409A of the Code), such amount shall not be paid until the first day following the six (6) month anniversary of Executive’s separation from service. Any right to a series
of installment payments shall be treated as a right to a series of separate payments for purposes of Section 409A of the Code. Payment of any accrued and unused paid time off, unless expressly provided otherwise herein shall be made in a single
lump sum within thirty (30) days of separation from service. 
 20. ARBITRATION OF DISPUTES: Any dispute or controversy
arising under or in connection with this Agreement shall be settled exclusively by binding arbitration, as an alternative to civil litigation and without any trial by jury to resolve such claims, conducted by a single arbitrator who is certified by
the American Arbitration Association and is mutually acceptable to Executive and Company, sitting in a location selected by the Employer within fifty (50) miles from the main office of the Employer, in accordance with the rules of the American
Arbitration Association’s National Rules for the Resolution of Employment Disputes then in effect. Judgment may be entered on the arbitrator’s award in any court having jurisdiction. 

  
 10 

 21. COUNTERPARTS: This Agreement may be executed in counterparts. 

22. ALTERNATIVE LUMP-SUM PAYMENT: For purposes of Sections 8 and 9, if (x) under the terms of the applicable policy or policies
for the insurance benefits it is not possible to continue Executive’s coverage or (y) if when employment termination occurs, Executive is a specified employee within the meaning of Section 409A of the Code, if any of the
continued insurance coverage benefits would be considered deferred compensation under Section 409A of the Code, and finally if an exemption from the six-month delay requirement of Section 409A(a)(2)(B)(i) of the Code is not available for
that particular insurance benefit, instead of continued insurance coverage the Bank shall pay or cause to be paid to Executive in a single lump sum an amount in cash equal to the present value of the Bank’s projected cost to maintain that
particular insurance benefit had Executive’s employment not terminated, assuming continued coverage for             . The lump-sum payment shall be made within five
(5) business days after employment termination or, if Executive is a specified employee within the meaning of Section 409A of the Code and an exemption from the six-month delay requirement of Section 409A(a)(2)(B)(i) of the Code is
not available, on the first business day of the seventh month after the month in which Executive’s employment terminates. 
 23.
REGULATORY REQUIREMENTS: 
 (a) If the Executive is removed and/or permanently prohibited from participating in
the conduct of the Employer’s affairs by an order issued under Section 8(e)(4) or 8(g)(1) of the Federal Deposit Insurance Act (“FDIA”) (12 U.S.C. 1818(e)(4) and (g)(1)), all obligations of the Employer under this Agreement shall
terminate, as of the effective date of such order, except for the payment of Annual Base Salary due and owing under Section 3.1 on the effective date of said order, and reimbursement under Section 3.5 of expenses incurred as of the
effective date of termination. 
 (b) If the Executive is suspended and/or temporarily prohibited from participating in the
conduct of the Employer’s affairs by a notice served under Section 8(e)(3) or 8(g)(1) of the FDIA (12 U.S.C. 1818(e)(3) and (g)(1)), all obligations of the Employer under this Agreement shall be suspended as of the date of service unless
stayed by appropriate proceedings. If the charges in the notice are dismissed, the Employer shall reinstate (in whole or in part) any of its obligations which were suspended. 
 (c) If the Employer is in default (as defined in Section 3(x)(1) of the FDIA), all obligations under this Agreement shall terminate as of the date of default, but the vested rights of the parties
shall not be affected. 
 (d) All obligations under this Agreement shall be terminated, except to the extent a determination is
made that continuation of the contract is necessary for the continued operation of the Employer (1) by the director of the Federal Deposit Insurance Corporation (the “FDIC”) or his or her designee (the “Director”), at the
time the FDIC enters into an agreement to provide assistance to or on behalf of the Employer under the authority contained in Section 13(c) of the FDIA; or (2) by the Director, at the time the Director approves a supervisory merger to
resolve problems related to operation of the Employer when the Employer is determined by the Director to be in an unsafe and unsound condition. Any rights of the Executive that have already vested, however, shall not be affected by such action.

 (e) All obligations under this Agreement are further subject to such conditions, restrictions, limitations and forfeiture
provisions as may separately apply pursuant to any applicable state banking laws. 
 (f) Notwithstanding anything contained in
this Agreement to the contrary, no payments shall be made pursuant any provision herein in contravention of the requirements of Section 2[18(k)] of the Federal Deposit Insurance Act (12 U.S.C. 1828(k)). 

  
 11 

 IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the date
first above written. 
  

			
	HOLDING COMPANY
		
	By:	 	 
		 	

  

			
	ASHEVILLE SAVINGS BANK
		
	By:	 	 
	
	 
		 	Executive

  
 12

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