Document:

CAROLINA FINANCIAL CORPORATION

2013 EQUITY PLAN

 

Form of Stock Option Agreement

 

CAROLINA FINANCIAL CORPORATION

STOCK OPTION AGREEMENT

 

THIS STOCK OPTION AGREEMENT (this “Agreement”)
is entered into as of this        day of                            , between Carolina Financial Corporation, a Delaware corporation (the “Company”),
and                          (the “Optionee”).

 

WHEREAS, on January 16, 2013, the Board of Directors
of the Company adopted a Equity Plan known as the “Carolina Financial Corporation 2013 Equity Plan” (the “Plan”),
and recommended that the Plan be approved by the Company’s shareholders; and

 

WHEREAS, on April 24, 2013, the Company’s
shareholders approved the Plan at the Company’s 2013 annual shareholder meeting; and

 

WHEREAS, the Committee has granted the Optionee
a stock option to purchase the number of shares of the Company’s common stock as set forth below, and in consideration of
the granting of that stock option the Optionee intends to remain in the employ of the Company; and

 

WHEREAS, the Company considers it desirable
and in its best interest that the Optionee be provided an inducement to acquire an ownership interest in the Company and an additional
incentive to advance the interest of the Company through the grant of an option to purchase shares of common stock of the Company
pursuant to the Plan; and

 

WHEREAS, the Company and the Optionee desire
to enter into a written agreement with respect to such option in accordance with the Plan.

 

NOW, THEREFORE, as an employment incentive and
to encourage stock ownership, and also in consideration of the mutual covenants contained herein, the Company and the Optionee
agree as follows.

 

1.           
Incorporation of Plan. This option is granted pursuant to the provisions of the Plan and the terms and definitions
of the Plan are incorporated herein by reference and made a part hereof. A copy of the Plan has been delivered to, and receipt
is hereby acknowledged by, the Optionee.

 

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2.           
Grant of Option. Subject to the provisions stated in this Agreement, the Company hereby evidences its grant to the
Optionee, not in lieu of salary or other compensation, of the right and option (the “Option”) to purchase the number
of shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”), set forth below, exercisable
in the amounts and at the time specified below. This Option is intended to be an .

 

         Date of Grant:         

 

         Number of Shares:         

 

         Exercise Price:         

 

         Option Vesting Schedule:               Options
are exercisable with respect the shares of Common Stock as follows, subject in each case to continued employment by the Company
or a subsidiary of the Company through such date, and subject to the provisions of Section 7 of this Agreement:

 

	No. of Shares	Vesting Date
	 	 
	 	 
	 	 
	 	 
	 	 

 

Option Exercise Period:         All options expire
and are void unless exercised on or before .

 

3.           
Exercise Terms. The Optionee must exercise the Option for at least the lesser of 100 shares or the number of shares
of Stock as to which the Option remains unexercised but exercisable. If this Option is not exercised with respect to all or any
part of the shares subject to this Option prior to its expiration, the shares with respect to which this Option was not exercised
shall no longer be subject to this Option.

 

4.           
Restrictions on Transferability. No Option shall be transferable by an Optionee other than by will or the laws of
descent and distribution or pursuant to a Qualified Domestic Relations Order. During the lifetime of an Optionee, Options shall
be exercisable only by such Optionee (or by such Optionee’s guardian or legal representative, should one be appointed). If
the shares purchased pursuant to the exercise of an Incentive Stock Option are transferred by the Optionee, except pursuant to
the Optionee’s will or the laws of descent and distribution, prior to such date which is the later of two years after the grant
of such Incentive Stock Option or one year after the transfer of the shares to the Optionee pursuant to the exercise of such Incentive
Stock Option, the transfer is a “disqualifying disposition” for tax purposes and the Optionee shall report such transfer
to the Company.

 

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5.           
Notice of Exercise of Option. This Option may be exercised by the Optionee, or by the Optionee’s administrators,
executors or personal representatives, by a written notice (in substantially the form of a Notice of Exercise approved by the Company)
signed by the Optionee, or by such administrators, executors or personal representatives, and delivered or mailed to the Company
as specified in this Agreement to the attention of the Chief Financial Officer or such other officer as the Company may designate.
Any such notice shall (a) specify the number of shares of Common Stock which the Optionee or the Optionee’s administrators,
executors or personal representatives, as the case may be, then elects to purchase hereunder, (b) contain such information as may
be reasonably required by the Company pursuant to this Agreement, and (c) be accompanied by (i) consideration in the form of any
cashless exercise (such consideration having been approved by the Administrator upon the granting of this Option), including by
means of a net exercise whereby the Company issues net Shares and the remaining balance of the Shares to satisfy the Participant’s
tax withholding obligations; (ii) unrestricted shares of Common Stock already owned by the Participant (based on the Fair Market
Value on the date the Option is exercised); (iii) any other form of consideration subsequently approved by the Administrator and
permitted by applicable law; or (iv) a combination of a certified or cashier’s check accompanied by a number of shares of
stock which equal under (i), (ii) or (iii) the total Exercise Price applicable to such shares purchased hereunder. Upon receipt
of any such notice and accompanying payment, and subject to the terms hereof, the Company agrees to issue to the Optionee or the
Optionee’s administrators, executors or personal representatives, as the case may be, stock certificates for the number of
shares specified in such notice registered in the name of the person exercising this Option.

 

6.           
Adjustment in Option. The number of Shares subject to this Option, the Exercise Price, and other matters are subject
to adjustment during the term of this Option in accordance with Sections 4, 6, 8, 9, 10 and 13 of the Plan. In the event of a Change
of Control, (i) this Option will automatically vest in full and (ii) any performance conditions imposed with respect to this Option
shall be deemed to be fully achieved immediately prior to the consummation of the Change of Control.

 

7.           
Termination of Employment.

 

(a)          
In the event of the termination of the Optionee’s employment (including due to retirement) with the Company or any
of its Subsidiaries, other than a termination that is either (i) for Cause, or (ii) for reasons of death or Permanent and Total
Disability, all vesting of the Option shall cease and the Optionee may exercise the vested portion of the Option at any time within
a period ending on the earlier of (a) the last day of the period ending 90 days after such termination of employment or (b) the
expiration date of this Option, to the extent of the number of shares which were vested but not exercised or otherwise forfeited
as of the date of such termination (and thereafter this Option shall be deemed terminated and shall not be or become exercisable).

 

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(b)         
In the event of a termination of the Optionee’s employment for Cause, this Option, to the extent not previously exercised,
shall terminate immediately and shall not thereafter be or become exercisable.

 

(c)          
In the event of termination of employment because of the Optionee’s Permanent and Total Disability, all vesting of
the Option shall cease and the Optionee (or his or her personal representative) may exercise the vested portion of the Option,
within a period ending on the earlier of (a) the last day of the one-year period following the Optionee’s Permanent and Total
Disability or (b) the expiration date of this Option, to the extent of the number of shares which were vested but not exercised
or otherwise forfeited as of the date of such termination.

 

(d)         
In the event of the Optionee’s death while employed by the Company or any of its Subsidiaries or within 90 days after
a termination of such employment (if such termination was not for Cause), the appropriate persons described in Section 5 hereof
or persons to whom all or a portion of this Option is transferred in accordance with Section 4 hereof may exercise this Option,
to the extent vested, at any time within a period ending on the earlier of (a) the last day of the twelve month period following
the Optionee’s death or (b) the expiration date of this Option. If the Optionee was an employee of the Company at the time
of death, all vesting of the Option shall cease as of the date of death, and this Option may be so exercised to the extent of the
number of shares that were vested but not exercised or otherwise forfeited as of the date of death. If the Optionee’s employment
terminated prior to his or her death, all vesting of the Option shall have ceased as of the date of termination, and this Option
may be exercised only to the extent of the number of shares covered by this Option which were vested but not exercised or otherwise
forfeited as of the date of such termination.

 

This Option does not confer upon the Optionee
any right with respect to continuance of employment by the Company or by any of its Subsidiaries. This Option shall not be affected
by any change of employment so long as the Optionee continues to be an employee of the Company or one of its Subsidiaries.

 

8.           
Compliance with Regulatory Matters. The Optionee acknowledges that the issuance of capital stock of the Company is
subject to limitations imposed by federal and state law and the Optionee hereby agrees that the Company shall not be obligated
to issue any shares of Stock upon exercise of this Option that would cause the Company to violate law or any rule, regulation,
order or consent decree of any regulatory authority (including without limitation the Securities and Exchange Commission) having
jurisdiction over the affairs of the Company. The Optionee agrees that he or she will provide the Company with such information
as is reasonably requested by the Company or its counsel to determine whether the issuance of Stock complies with the provisions
described by this Section 8.

 

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9.           
Miscellaneous.

 

(a)          
This Agreement shall be binding upon the parties hereto and their representatives, successors and assigns.

 

(b)         
Unless the context clearly indicates to the contrary, all capitalized terms used herein shall have the meanings as set forth
in this Agreement, or in the event a capitalized term is not clearly described in this Agreement, the meanings as set forth in
the Plan.

 

(c)          
This Agreement is executed and delivered in, and shall be governed by the laws of, the State of South Carolina.

 

(d)         
Income realized by the Optionee pursuant to this Agreement shall not be included in the Grantee’s earnings for the
purpose of any benefit plan of the entity in which the Optionee may be enrolled or for which the Optionee may become eligible unless
otherwise specifically provided for in such plan.

 

(e)          
Any requests or notices to be given hereunder shall be deemed given, and any elections or exercises to be made or accomplished
shall be deemed made or accomplished, upon actual delivery thereof to the designated recipient, or three days after deposit thereof
in the United States mail, registered, return receipt requested and postage prepaid, addressed, if to the Optionee, at the address
set forth below and, if to the Company, to the executive offices of the Company at 288 Meeting Street, Charleston, SC 29401 Attn:
Jerry L. Rexroad, President & CEO.

 

(f)          
This Agreement may not be modified except in writing executed by each of the parties hereto. Notwithstanding the previous
sentence, the Administrator reserves the right to amend the terms of this Agreement as may be necessary or appropriate to avoid
adverse tax consequences under Section 409A of the Code or to comply with any requirements under the Company’s “clawback”
policy regarding incentive compensation, or such “clawback” requirements under the Sarbanes–Oxley Act of 2002
or the Dodd-Frank Wall Street Reform and Consumer Protection Act.

 

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IN WITNESS WHEREOF, the Board of Directors of
the Company has caused this Stock Option Agreement to be executed on behalf of the Company and the Company’s seal to be affixed
hereto and attested by the Secretary or an Assistant Secretary of the Company, and the Optionee has executed this Stock Option
Agreement under seal, all as of the day and year first above written.

 

	 	CAROLINA FINANCIAL CORPORATION
	 	 	 	 
	 	By: 	 	 
	 	 	 	 
	 	Name:  	 	 
	 	 	 	 
	 	Title:  	 	 
	 	 	 	 
	 	OPTIONEE
	 	 	 	 
	 	By: 	 	 
	 	 	 	 
	 	Name:  	 	 
	 	 	 	 
	 	Address:  	 	 

 

    	6CAROLINA FINANCIAL CORPORATION

2013 EQUITY PLAN

 

Restricted
Stock Award Grant Notice

 

	Participant Name:	 
	 	 
	Company: 	 
	 	 
	Notice: 	A summary of the terms of your grant of Restricted Shares is set out in this notice (the “Grant Notice”) but subject always to the terms of the Carolina Financial Corporation 2013 Equity Incentive Plan (the “Plan”) and the Restricted Stock Award Agreement (the “Award Agreement”).  In the event of any inconsistency between the terms of this Grant Notice, the terms of the Plan and the Award Agreement, the terms of the Plan and the Award Agreement shall prevail.
	 	 
	Type of Award: 	Restricted Stock Award
	 	 
	Stock:	Shares of common stock, $0.01 par value per share, of the Company 
	 	 
	Number of Shares	 
	of Stock Subject	 
	to Grant: 	 
	 	 
	Grant Date:	 
	 	 
	Vesting Schedule:  	Restricted Shares granted will vest (i.e., restrictions shall lapse) in accordance with the following schedule, provided that you have provided continuous employment to the Company or any Participating Employer through each such vesting date:
	 	 
	 	First anniversary of the Grant Date –       vested
	 	 
	 	Second anniversary of the Grant Date – an additional      vested
	 	 
	 	Third anniversary of the Grant Date – an additional      vested.
	 	 
	 	Fourth anniversary of the Grant Date – an additional      vested.
	 	 
	 	Fifth anniversary of the Grant Date – an additional      vested.
	 	 
	 	In addition, the Restricted Shares granted will not vest until      .
	 	 
	 	In the event of a Change of Control, all unvested Restricted Shares will automatically vest in full immediately prior to the consummation of the Change of Control.
	 	 

 

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	Acceptance:   	You acknowledge receipt of, and understand and agree to, this Grant Notice, the Award Agreement and the Plan. You further acknowledge that as of the Grant Date, this Grant Notice, the Award Agreement and the Plan set forth the entire understanding between you and the Company or any Participating Employer regarding the Restricted Shares and supersede all prior oral and written Award Agreements on the subject.

 

IN WITNESS WHEREOF, the Company and the Participant
have duly executed and delivered this Grant Notice as of the Grant Date.

	CAROLINA FINANCIAL CORPORATION	PARTICIPANT
	 	 
	By: ________________________________	_____________________________
	 	 
	Print Name: __________________________	[Name]
	 	 
	Title: _______________________________	Address: _____________________
	 	 
	 	_____________________________
	 	 
	 	_____________________________

 

Attachments:

		1.	Restricted Stock Award Agreement

		2.	2013 Equity Incentive Plan

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CAROLINA FINANCIAL CORPORATION

Restricted Stock Award Agreement

Pursuant to the Restricted
Stock Grant Notice (the “Grant Notice”) and this Restricted Stock Award Agreement (this “Award Agreement”),
Carolina Financial Corporation (the “Company”) has granted the Participant, as identified in the Grant Notice,
the number of restricted shares of the Company’s Common Stock under the Company’s 2013 Equity Incentive Plan (the “Plan”)
indicated in the Grant Notice (the “Restricted Shares”). Capitalized terms not defined in this Award Agreement
but defined in the Plan or the Grant Notice will have the same definitions as in the Plan or the Grant Notice, respectively.

1.                 
Restrictions and Vesting Schedule. The Restricted Shares
are being awarded to Participant subject to the transfer and forfeiture conditions set forth in this Award Agreement and the Plan
(the “Restrictions”). Subject to the provisions of Section 2 below, the Restricted Shares will vest, and Restrictions
shall lapse, as provided in the Participant’s Grant Notice. The period from the Date of Grant through the last Vesting Date
set forth in the Grant Notice is referred to as the “Restriction Period.” Except to the extent vesting accelerates
pursuant to the terms of the Grant Notice or Section 2 below, any unvested Restricted Shares shall be automatically forfeited upon
Participant’s Termination from Service. 

2.                 
Acceleration of Vesting upon a Change in Control. In the
event of a Change of Control, all unvested Restricted Shares will automatically vest in full immediately prior to the consummation
of the Change of Control.

3.                 
Assignment or Transfer of Shares. Unless otherwise provided
by the Board, prior to the vesting of the Restricted Shares, Participant may not directly or indirectly, by operation of law or
otherwise, voluntarily or involuntarily, sell, assign, pledge, encumber, charge or otherwise transfer any of the Restricted Shares
still subject to Restrictions. The Restricted Shares shall be forfeited if Participant violates or attempts to violate these transfer
Restrictions. After any Stock has been released from the Restrictions, Participant shall not directly or indirectly, by operation
of law or otherwise, voluntarily or involuntarily, sell, assign, pledge, encumber, charge or otherwise transfer any interest in
the Stock except in compliance with the provisions herein and the provisions of applicable securities laws.

4.                 
Delivery of Shares. The Company shall enter such Award of
Restricted Stock in book entry form with appropriate restrictions noted with respect thereto.

5.                 
Rights of Participant. Subject to the provisions of this
Award Agreement, Participant shall exercise all rights and privileges of a shareholder of the Company with respect to the Restricted
Shares deposited pursuant to Section 4. Participant shall be deemed to be the holder for purposes of receiving any dividends that
may be paid with respect to such shares of Stock and for the purpose of exercising any voting rights relating to such shares of
Stock, even if some or all of such shares of Stock have not yet vested and been released from the Restrictions.

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6.                 
Restrictive Legends. The Company’s book entry notations
representing the Stock shall have been noted with a legend in substantially the following form:

“THE SHARES
REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS SET FORTH IN A RESTRICTED STOCK AWARD AGREEMENT BETWEEN THE COMPANY
AND THE REGISTERED HOLDER, OR SUCH HOLDER’S PREDECESSOR IN INTEREST, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF
THE COMPANY. ANY TRANSFER OR ATTEMPTED TRANSFER OF ANY SHARES SUBJECT TO SUCH RESTRICTED STOCK AWARD IS VOID WITHOUT THE PRIOR
EXPRESS WRITTEN CONSENT OF THE COMPANY.”

The Company shall
remove or cause the removal of the foregoing legend as and to the extent of the lapse of the applicable Restrictions.

7.                 
Section 83(b) Election. Participant understands that Section
83(a) of the Code taxes as ordinary income the difference between the amounts paid for the Stock and the fair market value of the
Stock as of the date any Restrictions on the Stock lapse. Participant understands that Participant may elect to be taxed at the
time the Restricted Shares are granted rather than when and as the Restrictions lapse, by filing an election under Section 83(b)
(“83(b) Election”) of the Code with the Internal Revenue Service within 30 days from the Date of Grant.
Even if the fair market value of the Restricted Shares at the time of the Grant equals the amount paid for the Stock, if any, the
83(b) Election must be made to avoid income under Section 83(a) in the future. Participant understands that failure to file such
an 83(b) Election in a timely manner may result in adverse tax consequences for Participant. Participant further understands that
an additional copy of such 83(b) Election is required to be filed with his or her federal income tax return for the calendar year
in which the Grant Date in connection with this Award Agreement falls. Participant further acknowledges and understands that
it is Participant’s decision as to whether to file such 83(b) Election, and neither the Company nor the Company’s legal
or financial advisors shall have any obligation or responsibility with respect to such filing. Participant acknowledges that
the foregoing is only a summary of the effect of United States federal income taxation with respect to purchase of the Stock hereunder,
and does not purport to be complete. Participant further acknowledges that the Company has directed Participant to seek independent
advice regarding the applicable provisions of the Code, the income tax laws of any municipality, state or foreign country in which
Participant may reside, and the tax consequences of Participant’s death. Participant assumes all responsibility for filing
an 83(b) Election and paying all taxes resulting from such election or the lapse of the Restrictions on the Stock. 

8.                 
Refusal to Transfer. The Company shall not be required to
transfer on its books any shares of Stock of the Company which shall have been transferred in violation of any of the provisions
set forth in this Award Agreement. 

9.                 
No Employment Rights. This Award Agreement is not an employment
contract and nothing in this Award Agreement shall confer upon the Participant any right to continued employment with or service
to the Company or any Subsidiary, as the case may be, nor shall it interfere in any way with the right of the Company or any Subsidiary
to terminate the employment or service of the Participant at any time.

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10.             
Governing Plan Document. The Restricted Shares granted hereunder
are subject to all the provisions of the Plan, the provisions of which are hereby incorporated by reference herein, and is further
subject to all interpretations, amendments, rules and regulations which may from time to time be promulgated and adopted pursuant
to the Plan. Capitalized terms used herein and not defined shall have the meanings assigned in the Plan. In the event of any conflict
between the provisions of this Award Agreement and those of the Plan, the provisions of the Plan shall control.

11.             
Adjustments. The Restricted Shares shall be subject to adjustments
as provided in Sections 4, 8, 9, 10 and 13 of the Plan.

12.             
Acknowledgements. No waiver of any breach of any provision
of this Award Agreement by the Company shall be construed to be a waiver of any succeeding breach or as a modification of such
provision. 

13.             
Miscellaneous. 

(a)               
Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (a) when personally delivered to the party to be notified; (b) when sent by
confirmed facsimile to the party to be notified; (c) five business days after deposit in the United States Mail postage prepared
by certified or registered mail with return receipt requested at any time other than during a general discontinuance of postal
service due to strike, lockout, or otherwise (in which case notice, request, waiver or other communication shall be effectively
given upon receipt) and address to the party to be notified as set forth above; or (d) two business days after deposit with
a national recognized overnight delivery service, postage prepaid, addressed to the party to be notified as set forth above with
next-business-day delivery guaranteed. A party may change its notice address by giving the other party ten days’ written
of the new address in the manner set forth above. 

(b)              
Successors and Assigns.  This Award Agreement shall inure
to the benefit of the successors and assigns of the Company and, subject to the restrictions on transfer herein set forth, be binding
upon Participant, Participant’s successors, and assigns. 

(c)               
Governing Law. This Award Agreement shall be governed by and construed
in accordance with the laws of the State of South Carolina, without reference to principles of conflict of laws. 

(d)              
Entire Award Agreement; Amendment. This Award Agreement, along
with the Grant Notice and the Plan constitute the entire Award Agreement between the parties with respect to the subject matter
hereof and supersedes and merges all prior agreements or understandings, whether written or oral. This Award Agreement may only
be amended as described in Section 10 of the Plan.

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ATTACHMENT A

ELECTION
UNDER SECTION 83(B)

OF
THE INTERNAL REVENUE CODE OF 1986

 

The undersigned taxpayer
hereby elects, pursuant to §83(b) of the Internal Revenue Code, to include in taxpayer’s gross income or alternative
minimum tax income, as applicable, for the current taxable year, the amount of any income that may be taxable to taxpayer in connection
with taxpayer’s receipt of the property described below:

 

1.          The taxpayer’s name, address
and taxpayer identification number are as follows:

 

Name:

Address:

 

SS#

 

2.           
Description of property with respect to which the election is being made:

 

shares of Common
Stock of Carolina Financial Corporation, a South Carolina corporation (the “Company”) granted pursuant to a
Restricted Stock Award under the Company’s Equity Incentive Plan.

 

3.           
The date on which the property was transferred is.

 

The taxable year for which
the election is made is calendar year .

 

4.           
The property is subject to the following restrictions:

 

The Restricted Shares are subject
to a vesting schedule pursuant to which restrictions on transfer will lapse.

 

5.          The
fair market value at time of transfer (determined without regard to any restriction other than a restriction which by its terms
will never lapse) of such property is $           .

 

6.          Furnishing statement to employer:

 

A copy of this statement
has been furnished to the Company.

 

	Dated: 	_______________________________________
	 	Taxpayer: 

 

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