Document:

Employment Agreement btw the Bank & George E. Jordan

 EXHIBIT 10.02 
 STATE OF NORTH CAROLINA 
 COUNTY OF DAVIE 
 EMPLOYMENT AGREEMENT 
 THIS EMPLOYMENT AGREEMENT (the “Agreement”) is entered into
as of 8th day of April, 2004 (the “Effective Date”), by and between BANK OF THE CAROLINAS (the “Bank”) and GEORGE EDWARD JORDAN (“Employee”). 
 WITNESSETH: 
 WHEREAS, the Bank desires to employ Employee as its
Executive Vice President, and Employee desires to accept such employment; and 
 WHEREAS, in his position with the Bank, Employee will
be expected to provide leadership and guidance in the growth and development of the Bank’s business, and Employee’s knowledge of and his standing and reputation in the Bank’s market area will be of benefit to the Bank in the
development of its business; and, 
 WHEREAS, the Bank and Employee desire to set forth the terms and conditions of Employee’s
employment with the Bank in a written agreement and, for that purpose, the Bank and Employee have agreed to enter into this Agreement. 
 NOW, THEREFORE, in consideration of the premises and mutual promises, covenants and conditions hereinafter set forth, and for other good and valuable considerations, the receipt and sufficiency of which hereby are acknowledged, the
Bank and Employee hereby agree as follows: 
 1. Employment. The Bank agrees to employ Employee, and Employee accepts
employment with the Bank, upon the terms and conditions stated herein. As an employee of the Bank, Employee will (i) serve as Executive Vice President of the Bank and/or in such other or additional executive position or positions as
shall be specified from time to time by the Bank’s Board of Directors, (ii) promote the Bank and its business and engage in business development activities on the Bank’s behalf, and (iii) have such functional
managerial duties and responsibilities as shall be assigned to him by the Bank from time to time. 
 2. Term. Unless
sooner terminated as provided in this Agreement, and subject to the right of either Employee or the Bank to terminate Employee’s employment at any time as provided herein, the term of Employee’s employment with the Bank under this
Agreement (the “Term of Employment”) shall begin on May 17, 2004, or, if before or after that date, on Employee’s first day of active employment with the Bank, and be for a continually renewing period of three (3) years,
with the effect that on May 17, 2005, and on May 17 of each year thereafter to and including May 17, 2018, and without any further action by the Bank or Employee, the Term of Employment automatically shall be extended by one
additional year such that the then current unexpired Term of Employment under this Agreement will be extended to again be three (3) years. Upon the extension that occurs on May 17, 2018, the Term of Employment shall become a fixed three
(3) years, shall not be further extended, and shall expire at the close of the Bank’s business on May 17, 2021. If, following the date of expiration, Employee remains employed by the Bank, such employment shall be on an “at
will” basis. 
 3. Cash Compensation. For all services rendered by Employee to the Bank under this
Agreement, during the Term of Employment the Bank shall pay Employee base salary at an annual rate of ONE HUNDRED TWENTY-FIVE THOUSAND AND NO/100s DOLLARS ($125,000.00) (“Base Salary”). 

 As an executive officer of the Bank, Employee shall be eligible to participate in the Bank’s
Management Incentive Program for any bonus opportunities. Employee’s Base Salary may be increased from time to time during the Term of Employment at the discretion of the Bank’s Board of Directors. Base Salary paid under this Agreement
shall be payable not less frequently than monthly in accordance with the Bank’s payroll policies and procedures. 
 4.
Employee Benefit Plans; Fringe Benefits; Income Taxes. 
 (a) Benefit Plans. During the Term of
Employment, Employee shall be eligible to participate in any and all employee benefit programs maintained by or for the Bank that are generally available to and which cover all the Bank’s officers at Employee’s job level or classification,
subject to the rules applicable to such plans or programs prevailing from time to time. Except as otherwise specifically provided herein, Employee’s participation in such plans and programs shall be subject to and in accordance with the terms
and conditions (including eligibility requirements) of such plans and programs, resolutions of the Bank’s Board of Directors establishing such programs and plans, and the Bank’s normal practices and established policies regarding such
plans and programs. 
 Employee acknowledges that the terms and provisions of the Bank’s employee benefit plans and programs from time
to time may be determined only by reading the actual plan documents under which the Bank or the plan administrator, as applicable, may make certain administrative determinations with discretion, and that the Bank reserves the right to modify or
terminate each plan or program and any benefits provided thereunder. 
 (b) Annual Vacation Leave. During the Term of
Employment, all matters pertaining to the entitlement to, and the accrual and scheduling of, vacation leave shall be determined under the Bank’s standard leave policies and procedures in effect from time to time; provided, however, that the
minimum amount of annual vacation leave to which Employee shall be entitled shall be three weeks or, if longer, the number of weeks provided for in those policies and procedures for persons in Employee’s position or job classification.

 (c) Income Taxes. All cash or other compensation payable or provided to Employee under this Agreement shall be
subject to customary withholding of taxes and such other deductions or withholdings as are required by law or customary for the Bank’s employees. Employee shall be solely responsible for any income taxes owed on account of his receipt from the
Bank of any employee or fringe benefits under this Agreement and, to the extent that the Bank reasonably believes itself obligated to do so, the Bank may withhold any such taxes from cash compensation payable to Employee. 
 5. Standards of Performance and Conduct. During the Term of Employment, Employee faithfully and diligently shall discharge
his obligations under this Agreement, and he shall perform the duties associated with his positions with the Bank in a manner which is reasonably competent and satisfactory to the Bank, and Employee shall comply with and use his best efforts to
implement the Bank’s policies and procedures currently in effect or as are established from time to time by the Bank. 
 In the
execution of his employment duties under this Agreement, Employee shall, at all times and in all material respects, comply with any code of conduct or ethics policies applicable to Employee and/or the Bank’s employees in general, as in effect
as of the Effective Date or as may be adopted, amended or supplemented from time to time subsequent thereto (the “Code of Conduct”), and with all federal and state statutes, and all rules, regulations, administrative orders, statements of
policy and other pronouncements or standards promulgated thereunder, which are applicable to the Bank and its employees, business and operations. 
  

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 6. Termination and Termination Pay. 
 (a) By Employee. The Term of Employment and Employee’s employment under this Agreement may be terminated at any time by Employee
upon 90 days’ written notice to the Bank. Upon such termination, Employee shall be entitled to receive compensation earned under this Agreement through the effective date of such termination and, thereafter, the Bank shall have no further
obligations hereunder. 
 (b) Death or Retirement. The Term of Employment and Employee’s employment under this
Agreement automatically shall be terminated upon his death during the Term of Employment or upon the effective date of Employee’s “Retirement.” Upon any such termination, Employee (or, in the case of Employee’s death, his estate)
shall be entitled to receive any compensation Employee shall have earned prior to the date of termination but which remains unpaid. “Retirement” shall mean any termination of Employee’s employment with the Bank which is treated as a
retirement (whether early, normal or delayed retirement) under the terms of any qualified retirement benefit plan generally applicable to the Bank’s salaried employees and in which Employee is a participant, or any other termination of
employment that Employee and the Bank mutually agree in writing to treat as a Retirement. 
 (c) By the Bank. The Bank
may terminate the Term of Employment and Employee’s employment under this Agreement at any time for “Cause” (as defined below) or without Cause. Upon any such termination by the Bank under this Paragraph 6(c) without
Cause, the Bank shall be obligated to pay Base Salary to Employee at his then current Base Salary rate for the then current unexpired Term of Employment hereunder (which payments shall be made on the same schedule as Employee’s Base
Salary was paid by the Bank during the Term of Employment), and, if Employee chooses to exercise his rights to purchase continued health insurance coverage under the Bank’s health insurance plan pursuant to the Consolidated Omnibus Budget
Reconciliation Act (“COBRA”), the Bank shall reimburse Employee for the cost of such continued insurance coverage for the maximum period during which such coverage is available to Employee under COBRA, but not longer than the unexpired
Term of Employment hereunder, and shall have no further obligations hereunder. The term “without Cause” shall be deemed to include termination of the Agreement by Employee, upon ninety (90) days written notice to the
Bank, because the Bank, without his consent, reduces Employee’s Base Salary, removes him from an executive officer position, requires him to transfer his office more than 50 miles from his current principal work location, or materially breaches
any term of this Agreement; provided, however, that the Bank shall have thirty (30) days in which to correct or cure any such material breach, in which case the Bank shall not be obligated to make the payments provided pursuant to this
Paragraph 6(c). Upon any such termination with Cause, Employee shall have no further rights, and the Bank shall have no further obligations, under this Agreement. 
 For purposes of this Paragraph 6(c), the Bank shall have “Cause” to terminate Employee’s employment if: 
 (i) (A) Employee has breached in any material respect any of the terms or conditions of this Agreement or of the Code of Conduct, or has
failed in any material respect to perform or discharge his duties or responsibilities of employment in the manner provided herein (provided however, that such a breach or failure, other than a breach of the Bank’s Code of Conduct, shall not
give the Bank “Cause” to terminate Employee’s employment if such breach or failure is corrected or cured by Employee to the Bank’s reasonable satisfaction (which shall not be unreasonably withheld by the Bank) within 30 days
following written notice thereof to Employee), or (B) Employee is engaging or has engaged in willful misconduct or conduct which is detrimental in any material respect to the business or business prospects of the Bank or which has had or
likely will have an adverse effect on the Bank’s business or reputation; 
 (ii) The material violation by Employee of any
applicable federal or state law, or any applicable rule, regulation, order or statement of policy promulgated by any governmental agency or authority having jurisdiction over the Bank, including but not limited to the North Carolina Commissioner of
Banks, the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other regulator (a “Regulatory Authority”), that results from Employee’s negligence, willful misconduct or intentional disregard of such law, rule,
regulation, order or policy statement and results in any substantial damage, monetary or otherwise, to the Bank or to the Bank’s reputation; 
  

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 (iii) The commission in the course of Employee’s employment with the Bank of an act of
fraud, embezzlement, theft or proven personal dishonesty (whether or not such act or charge results in criminal indictment, charges, prosecution or conviction); 
 (iv) The conviction of Employee of any felony or any criminal offense involving dishonesty or breach of trust, or the occurrence of any event described in Section 19 of the Federal Deposit Insurance Act or
any other event or circumstance which disqualifies Employee from serving as an employee or executive officer of, or a party affiliated with, the Bank; or, in the event Employee becomes unacceptable to, or is removed, suspended or prohibited from
participating in the conduct of the Bank’s affairs (or if proceedings for that purpose are commenced), by any Regulatory Authority; or, 
 (v) The exclusion of Employee by the carrier or underwriter from coverage under the Bank’s then current “blanket bond” or other fidelity bond or insurance policy covering its or their directors, officers or employees,
or the occurrence of any event that the Bank believes, in good faith, will result in Employee being excluded from such coverage, or having coverage limited as to Employee as compared to other covered officers or employees, pursuant to the terms and
conditions of such “blanket bond” or other fidelity bond or insurance policy. 
 (d) Effect of Termination.
Except as otherwise provided below, upon the effective date of any actual termination of Employee’s employment with the Bank under this Agreement for any reason, the provisions of this Agreement, with the exception of Paragraph 7 below and
the Bank’s obligations, if any, for continued payments of Base Salary under Paragraph 6(c) above, likewise shall terminate and be of no further force or effect. Employee’s covenants contained in Paragraph 7 below, and the
Bank’s obligations, if any, under Paragraph 6(c) above, shall survive and remain in effect in accordance with their terms following any actual termination of Employee’s employment. 
 7. Noncompetition; Confidentiality. 
 (a) General. Employee hereby acknowledges and agrees that (i) the Bank will make a significant investment in the development of its business in the geographic area identified below as
the “Relevant Market” and, as a result, will have a valuable economic interest in its business in the “Relevant Market” which it is entitled to protect; (ii) in the course of his service as an employee of the Bank,
Employee will gain substantial knowledge of and familiarity with the Bank’s customers and its dealings with them, and other information concerning the Bank’s businesses, all of which will constitute valuable assets and privileged
information belonging to the Bank; and, (iii) in order to protect the Bank’s interest in its business, it is reasonable and necessary to place certain restrictions on Employee’s ability to compete against the Bank and on his
disclosure of information about the Bank’s business and customers. For that purpose, and in consideration of the Bank’s agreements contained herein, Employee covenants and agrees as provided below. 
 (b) Covenant Not to Compete. During the “Restriction Period” (as defined below), Employee shall not
“Compete” (as defined below), directly or indirectly, with the Bank in the “Relevant Market” (as defined below). 
 For
purposes of this Paragraph 7, the following terms shall have the meanings set forth below: 
 Compete. The term
“Compete” means: (i) soliciting any Person who was a Customer of the Bank on the date of termination of Employee’s employment with the Bank to become a depositor in or a borrower from any other Financial Institution, to
obtain any other service or product from any other Financial Institution, or to change any depository, loan and/or other banking relationship of the Customer from the Bank to another Financial Institution; (ii) acting as a consultant,
officer, director, advisory director, 
  

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 independent contractor, or employee of any Financial Institution that has its main or principal office in the Relevant
Market, or, in acting in any such capacity with any other Financial Institution, to maintain an office or be employed at or assigned to or to have any direct involvement in the management, supervision, business, marketing activities, solicitation of
business for or operation of any office of such Financial Institution located in the Relevant Market; (iii) communicating to any Financial Institution the names or addresses or any financial information concerning any Person who was a
Customer of the Bank on the date of termination of Employee’s employment with the Bank; or (iv) soliciting any person who was an employee of the Bank on the date of termination of Employee’s employment with the Bank to become
an employee of any other Financial Institution. 
 Customer. The term “Customer of the Bank” means any Person
with whom the Bank has a depository or loan relationship, and/or to whom the Bank provides any other service or product. 
 Financial
Institution. The term “Financial Institution” means (i) any federal or state chartered bank, savings bank, savings and loan association or credit union (a “Depository Institution”), (ii) any
holding company for, or corporation that owns or controls, any Depository Institution (a “Holding Company”), (iii) any subsidiary or service corporation of any Depository Institution or Holding Company, or any entity controlled
in any way by any Depository Institution or Holding Company, or (iv) any other Person engaged in the business of making loans of any type, soliciting or taking deposits, or providing any other service or product that is provided by the
Bank or one of its affiliated corporations. 
 Person. The term “Person” means any natural person or any
corporation, partnership, proprietorship, joint venture, limited liability company, trust, estate, governmental agency or instrumentality, fiduciary, unincorporated association or other entity. 
 Relevant Market. The term “Relevant Market” means any county in North Carolina in which the Bank maintains a business
office on the date of any termination of Employee’s employment with the Bank. 
 Restriction Period. The term
“Restriction Period” means the one (1) year period commencing on the effective date of any termination of Employee’s employment with the Bank, whether by Employee or by the Bank, for any reason; provided, however, that in the
case of an involuntary termination of Employee’s employment by the Bank without Cause as defined in Paragraph 6(a) or 6(c) above, the Restriction Period shall be the length of the then current unexpired Term of Employment
during which the Bank is obligated to continue to pay Base Salary to Employee, but, in such case, the Restriction Period shall immediately expire upon a default by the Bank in making the payments for which it is obligated. Notwithstanding anything
contained herein to the contrary, in the event any payment required under Paragraph 6(c) is not made by the Bank by the due date for that payment, the Bank shall not be considered to be in default with respect to that payment for purposes of this
Paragraph 7(b) unless it shall fail to make that payment within ten days after its receipt of written notice from Employee that the payment has not been made. 
 (c) Confidentiality Covenant. Employee covenants and agrees that any and all data, figures, projections, estimates, lists, files, records, documents, manuals or other such materials or
information (whether financial or otherwise, and including any files, data or information maintained electronically, on microfiche or otherwise) relating to the Bank and its lending and deposit operations and related business, regulatory
examinations, financing sources, financial results and condition, Customers (including lists of Customers and former customers and information regarding their accounts and business dealings with The Bank), prospective customers, contemplated
acquisitions (whether of business or assets), ideas, methods, marketing investigations, surveys, research, policies and procedures, computer systems and software, shareholders, employees, officers and directors (herein referred to as
“Confidential Information”) are confidential and proprietary to the Bank and are valuable, special and unique assets of the Bank’s business which are not directly reproducible from any other source and to which Employee has had access
as an officer and employee of the Bank and will have access during his continued employment with the Bank. 
  

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 Employee agrees that (i) all such Confidential Information shall be considered and kept as
the confidential, private and privileged records and information of the Bank, and (ii) during the Term of Employment and at all times following the termination of this Agreement or his employment for any reason, and except as shall be
required in the course of the performance by Employee of his duties on behalf of the Bank or otherwise pursuant to the direct, written authorization of the Bank, Employee will not: divulge any such Confidential Information to any other Person;
remove any such Confidential Information in written or other recorded form from the Bank’s premises; or make any use of any Confidential Information for his own purposes or for the benefit of any Person other than the Bank. However, this
Paragraph 7(c) shall not apply to any Confidential Information which then is in the public domain (provided that Employee was not responsible, directly or indirectly, for permitting such Confidential Information to enter the public domain without
the Bank’s consent), or which is obtained by Employee from a third party which or who is not obligated under an agreement of confidentiality with respect to such information and who did not acquire such Confidential Information in a manner
which constituted a violation of the covenants contained in this Paragraph 7(c) or which otherwise breached any duty of confidentiality. Further, the above obligations of confidentiality shall not prohibit the disclosure of any such Confidential
Information by Employee to the extent such disclosure is required by subpoena or order of a court or regulatory authority of competent jurisdiction or to the extent that, in the reasonable opinion of legal counsel to Employee, disclosure otherwise
is required by law. 
 (d) Reasonableness of Restrictions. If any of the restrictions set forth in this
Paragraph 7 shall be declared invalid for any reason whatsoever by a court of competent jurisdiction, the validity and enforceability of the remainder of such restrictions shall not thereby be adversely affected. Employee acknowledges that the
Bank will have a substantial economic interest in its business in the Relevant Market which this Paragraph 7 specifically is intended to protect, and that the Relevant Market and Restriction Period are limited in scope to the geographic territory
and period of time reasonably necessary to protect the Bank’s economic interest and otherwise are reasonable and proper. In the event the Restriction Period or any other such time limitation is deemed to be unreasonable by a court of competent
jurisdiction, Employee hereby agrees to submit to such reduction of the Restriction Period as the court shall deem reasonable. In the event the Relevant Market is deemed by a court of competent jurisdiction to be unreasonable, Employee hereby agrees
that the Relevant Market shall be reduced by excluding any separately identifiable and geographically severable area necessary to make the remaining geographic restriction reasonable, but this Paragraph 7 shall be enforced as to all other areas
included in the Relevant Market which are not so excluded. 
 (e) Remedies for Breach. Employee understands and
acknowledges that a breach or violation by him of any of the covenants contained in Paragraphs 7(b) and 7(c) shall be deemed a material breach of this Agreement and will cause substantial, immediate and irreparable injury to the Bank, and that the
Bank will have no adequate remedy at law for such breach or violation. In the event of Employee’s actual or threatened breach or violation of the covenants contained in either such Paragraph, the Bank shall be entitled to bring a civil action
seeking, and shall be entitled to, an injunction restraining Employee from violating or continuing to violate such covenant or from any threatened violation thereof, or for any other legal or equitable relief relating to the breach or violation of
such covenant. Employee agrees that, if the Bank institutes any action or proceeding against Employee seeking to enforce any of such covenants or to recover other relief relating to an actual or threatened breach or violation of any of such
covenants, Employee shall be deemed to have waived the claim or defense that the Bank has an adequate remedy at law and shall not urge in any such action or proceeding the claim or defense that such a remedy at law exists. However, the exercise by
the Bank of any such right, remedy, power or privilege shall not preclude the Bank or its successors or assigns from pursuing any other remedy or exercising any other right, power or privilege available to it for any such breach or violation,
whether at law or in equity, including the recovery of damages, all of which shall be cumulative and in addition to all other rights, remedies, powers or privileges of the Bank. 
  

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 Notwithstanding anything contained herein to the contrary, Employee agrees that the provisions of
Paragraphs 7(b) and 7(c) above and the remedies provided in this Paragraph 7(e) for a breach by Employee shall be in addition to, and shall not be deemed to supersede or to otherwise restrict, limit or impair the rights of the Bank under any state
or federal law or regulation dealing with or providing a remedy for the wrongful disclosure, misuse or misappropriation of trade secrets or other proprietary or confidential information. 
 (f) Survival of Covenants. Employee’s covenants and agreements and the Bank’s rights and remedies provided for in
this Paragraph 7 shall survive and remain fully in effect following the actual termination of Employee’s employment with the Bank during the Term of Employment. 
 8. Change in Control of the Bank. 
 (a) If at the effective time of, or any time
within 36 months following, a “Change in Control” (as defined below): 
 (i) the Bank terminates Employee’s employment
other than for “Cause” (as defined in Paragraph 6(c) above), or 
 (ii) a “Termination Event” (as defined below)
occurs and, thereafter, Employee voluntarily terminates his own employment with the Bank in the manner described below, 
 then (subject to
the limitations set forth herein) Employee shall be entitled to receive from the Bank, and the Bank shall be obligated to pay or cause to be paid to Employee, an amount equal to 2.99 multiplied by Employee’s annual Base Salary in effect at the
time the Change in Control became effective or in effect at the time the termination of Employee’s employment becomes effective, whichever is greater. In the case of a termination of Employee’s employment described in Paragraph 8(a)(i)
above, the payments provided for in this Paragraph 8 shall be in lieu of and not in addition to the payments of Base Salary provided for in Paragraph 6(a) and 6(c) above], but, to the extent otherwise required by Paragraph 6(c), the Bank shall
remain obligated to reimburse Employee for the cost of health insurance coverage to the extent described in that Paragraph. 
 (b) For
purposes of this Agreement, a “Change in Control” shall be deemed to have occurred if: 
 (i) after the Effective Date, any
“Person” (as such term is defined in Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934, as amended), directly or indirectly, acquires beneficial ownership of voting stock, or acquires irrevocable proxies or any
combination of voting stock and irrevocable proxies, representing more than 50% of any class of voting securities of the Bank, or in any manner acquires control of the election of a majority of the directors of the Bank; or 
 (ii) the Bank consolidates or merges with or into another corporation, or otherwise is reorganized, where the Bank is not the resulting or
surviving corporation in such transaction; or 
 (iii) all or substantially all the Bank’s assets are sold or otherwise
transferred to or acquired by any other corporation, association or other person, entity or group. 
 However, notwithstanding anything
contained herein to the contrary, for purposes of this Agreement the term “Change in Control” shall not include a transaction approved by the Bank’s Board of Directors that results in the Bank merging with, transferring its assets to
or becoming the subsidiary of, a corporation or entity newly formed at the direction of the Bank’s Board of Directors for the purpose of such transaction (including a corporation or entity so formed for the purpose of serving as the Bank’s
parent bank holding company), and in connection with which transaction the Bank’s shareholders (other than those who exercise statutory rights of dissent and appraisal) become the holders of substantially all of the voting stock of such
corporation. Further, and notwithstanding the other provisions of this Paragraph 8, a transaction or 
  

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 event shall not be considered a Change in Control if, prior to the consummation or occurrence of such transaction or
event, the Bank and Employee agree in writing that the same shall not be treated as a Change in Control for purposes of this Agreement. 
 (c) For purposes of this Paragraph 8, all references to the Bank shall include any “Successor” (as defined below) to the Bank which shall have assumed and become liable for the Bank’s obligations hereunder (whether
such assumption is by agreement, operation of law or otherwise). “Successor” refers to any Person or entity (corporate or otherwise) into which the Bank (or any such Successor) shall be merged or consolidated or to which all or
substantially all the Bank’s (or any such Successor’s) assets shall be transferred in any manner. 
 (d) For purposes of
this Paragraph 8, a “Termination Event” shall be deemed to have occurred if, at the effective time of or within 36 months following a Change in Control, and without his express written consent: 
 (i) Employee’s annual Base Salary rate is reduced below the annual rate in effect as of the effective date of the Change in Control or as the
same shall have been increased from time to time following such effective date; or 
 (ii) Employee’s life insurance, medical or
hospitalization insurance, disability insurance or similar plans or benefits (including any retirement plan) being provided by the Bank to Employee as of the effective date of the Change in Control are reduced in their level, scope or coverage, or
any such insurance, plans or benefits are eliminated without being replaced with substantially similar plans or benefits, unless such reduction or elimination applies proportionately to all salaried employees of the Bank who participated in such
plans or benefits prior to such Change in Control; 
 (iii) Employee is transferred to a job location which is more than 50 miles (by
most direct highway route) from his principal work location at the effective date of the Change in Control; or 
 (iv) (A) if
the Bank continues to exist as a separate entity following the Change in Control, Employee’s position is changed such that he no longer serves in the same position with the Bank that he occupied immediately prior to the Change in Control, or
(B) if as a result of the Change in Control the Bank no longer exists as a separate entity, Employee is not designated as and does not serve as an executive officer of the Bank’s Successor or if he does not report directly to the
Successor’s Chairman, President or Chief Executive Officer. 
 (e) If Employee’s employment is terminated by the Bank
without Cause prior to the effective time of a Change in Control but following the date on which the Bank’s Board of Directors takes action to approve an agreement (including any definitive agreement or an agreement in principle) relating to
the Change in Control, then, for purposes of this Agreement, such termination of employment shall be deemed to have occurred at the effective time of the Change in Control. 
 (f) Amounts payable pursuant to this Paragraph 8 shall be paid not later than the 45th day following the Termination Date. For purposes of this
Agreement, the “Termination Date” will be the effective date of the termination of Employee’s employment which gives rise to the Bank’s payment obligation under this Paragraph 8. 
 (g) In order to become entitled to any payments under Paragraph 8(a)(ii) above, Employee must effectively terminate his employment with the Bank
within 90 days from the date of occurrence of the Termination Event which gives rises to his right to terminate. A Termination Event shall be deemed to have occurred on the date such action or event is implemented or takes effect or, if later, on
the date on which notice of the action or event is given to Employee. The Termination Date of Employee’s termination of employment following a Termination Event shall be the date of delivery by Employee to the Bank (or to any Successor) of a
written notice of termination which describes the Change in Control and 
  

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 Termination Event which have occurred. If Employee does not so terminate his employment with the Bank within such 90-day
period following the occurrence of a Termination Event, then he thereafter shall have no rights hereunder with respect to that Termination Event but shall retain rights, if any, hereunder with respect to any other Termination Event occurring within
36 months following the Change in Control and as to which such notice period has not expired. 
 (h) It is the intent of the
parties hereto that all payments made pursuant to this Agreement be deductible by the Bank for federal income tax purposes and not result in the imposition of an excise tax on Employee. Notwithstanding anything contained in this Agreement to the
contrary, any payments to be made to or for the benefit of Employee which are deemed to be “parachute payments” as that term is defined in Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), shall be
modified or reduced to the extent (but only to the extent) which, upon the advice of the Bank’s independent certified public accountants, the Bank’s Board of Directors in good faith deems to be necessary to avoid the imposition of excise
taxes on Employee under Section 4999 of the Code and the disallowance of a deduction to the Bank under Section 280G(a) of the Code. 
 (i) Notwithstanding anything contained herein to the contrary, it is expressly understood and agreed by Employee that Employee shall not be entitled to any payments under this Agreement in the event (i) the Bank
terminates Employee’s employment for Cause, or (ii) Employee voluntarily terminates his or employment with the Bank other than as provided in Paragraph 8(a) above, or (iii) Employee’s employment with the Bank
terminates or is terminated due to his death or Retirement. 
 9. Additional Regulatory Requirements. Notwithstanding
anything contained in this Agreement to the contrary, it is understood and agreed that the Bank (or any of its successors in interest) shall not be required to make any payment or take any action under this Agreement if, in the opinion of counsel to
the Bank such payment or action (i) would be prohibited by or would violate any provision of state or federal law applicable to the Bank, including without limitation the Federal Deposit Insurance Act, as now in effect or hereafter
amended, (ii) would be prohibited by or would violate any applicable rules, regulations, orders or statements of policy, whether now existing or hereafter promulgated, of any Regulatory Authority, or (iii) otherwise would be
prohibited by any Regulatory Authority. 
 10. Successors and Assigns. 
 (a) This Agreement shall inure to the benefit of and be binding upon any corporate or other successor of the Bank which shall acquire, directly or
indirectly, by conversion, merger, consolidation, purchase or otherwise, all or substantially all of the assets of the Bank. 
 (b)
The Bank is contracting for the unique and personal skills of Employee. Therefore, Employee shall be precluded from assigning or delegating his rights or duties hereunder without first obtaining the written consent of the Bank. 
 11. Modification; Waiver; Amendments. No provision of this Agreement may be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing and signed by the parties hereto. No waiver by either party hereto, at any time, of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be
performed by such other party, shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No amendments or additions to this Agreement shall be binding unless in writing and signed by
both parties, except as herein otherwise provided. 
 12. Applicable Law. The parties hereto agree that without regard
to principles of conflicts of laws, the internal laws of the State of North Carolina shall govern and control the validity, interpretation, performance and enforcement of this Agreement. 
  

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 13. Severability. The provisions of this Agreement shall be deemed severable and the
invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. 
 14.
Headings. The section and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. 
 15. Notices. Except as otherwise may be provided herein, all notices, claims, certificates, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been duly given when hand delivered or sent by facsimile transmission by one party to the other, or when deposited by one party with the United States Postal Service, postage
prepaid, and addressed to the other party as follows: 
  

			
	If to the Bank:	  	If to Employee:
		
	Bank of the Carolinas	  	George Edward Jordan
	135 Boxwood Drive	  	304 Duke Drive
	Mocksville, N.C. 27028	  	Lexington, NC 27292
	Attention: President	  	

 16. Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed an original instrument, but all such counterparts together shall constitute but one agreement. 
 17. Entire Agreement. This Agreement contains the entire understanding and agreement of the parties, and there are no agreements, promises, warranties, covenants or undertakings other than those
expressly set forth or referred to herein. 
 IN WITNESS WHEREOF, the Bank has caused this Agreement to be executed under seal by its
duly authorized officer in pursuance of authority duly given by its Board of Directors, and Employee has set hereunto his hand and adopted as his seal the typewritten word “SEAL” appearing beside his name, all as of the day and year first
above written. 
  

					
	 	 	BANK OF THE CAROLINAS
	[Corporate Seal]	 		 	
		 	By:	 	 /S/ Robert E. Marziano

	Attested:	 		 	Robert E. Marziano
		 		 	President and Chief Executive Officer

  

	
	 /S/ Joy L. Chaffin

	Asst. Secretary

  

					
	 	 	 /S/George Edward Jordan
	 	(SEAL)
		 	George Edward Jordan	 	

  

 10Employee Stock Option Plan

 EXHIBIT 10.03 
 BANK OF DAVIE 
 EMPLOYEE STOCK OPTION PLAN 
 BANK OF DAVIE (the “Bank”) hereby adopts this EMPLOYEE STOCK OPTION PLAN (the ”Plan”) as further described herein.

 ARTICLE I 
 PURPOSE
AND SCOPE OF PLAN 
 1.1 Purpose. 
 The purpose of the
Plan is to encourage the continued service of officers and employees of the Bank or any company which is a subsidiary of the Bank (a “Subsidiary”), and to provide an additional incentive for such officers and employees to expand and
improve the profits and prosperity of the Bank and its Subsidiaries, by granting them options to purchase shares of the Bank’s common stock. The Plan also will assist the Bank and its subsidiaries in recruiting and retaining persons to serve as
officers and employees of the Bank and its Subsidiaries. 
 1.2 Stock Subject to Plan. 
 Pursuant to and in accordance with the terms of the Plan, options (“Options”) may be granted from time to time to purchase shares of the Bank’s common stock, $5.00 par value per share (“Common
Stock”). 
 The aggregate number of shares of Common Stock which may be sold upon the exercise of Options granted under the Plan is 74,405 shares, which
maximum number is subject to adjustment as provided in Paragraph 6.1 hereof. Shares of Common Stock sold by the Bank upon the exercise of Options granted hereunder, at the sole discretion of the Bank, may be issued from the Bank’s authorized
but unissued shares, or be issued and outstanding shares purchased by the Bank on the open market or in private transactions. In the event an Option granted under the Plan shall expire or terminate for any reason without having been exercised in
full, then, to the extent the Plan shall remain in effect, the shares covered by the unexercised portion of such Option shall again be available for the grant of Options under the Plan. 
 1.3 Effective Date. 
 The Plan shall become effective as of December 14, 1998 (the “Effective Date,”
which is the date of adoption of the Plan by the Bank’s Board of Directors); provided, however, that notwithstanding anything contained herein to the contrary, the Plan shall be subject to approval of the North Carolina Commissioner of Banks
and other banking regulators to the extent required by law and to approval of the Bank’s shareholders by a vote of the holders of at least two-thirds of the outstanding shares of the Bank’s Common Stock at a meeting of the Bank’s
shareholders held in accordance with North Carolina law. Options may be granted pursuant to the Plan prior to receipt of such approvals, but any such Options granted shall be subject to, and may not become exercisable until, receipt of such
approvals. 
 1.4 Termination Date. Unless sooner terminated as provided herein, the Plan shall terminate at 5:00 P.M. on December 13, 2008 (the
“Termination Date”). Following the Termination Date, no further Options may be granted under the Plan, but such termination shall not effect any Option granted prior to the Termination Date. 

 ARTICLE II 
 DEFINITIONS 
 2.1 Bank. “Bank” refers to Bank of Davie and to any successor to the Bank which shall
have assumed or become liable for the Bank’s obligations pursuant to any Option granted or Option Agreement entered into pursuant to the Plan. 
 2.2
Board. “Board” refers to the Bank’s Board of Directors. 
 2.3 Committee. “Committee” refers to the committee of and
appointed or designated by the Board to administer the Plan as described in Article III below. 
 2.4 Common Stock. “Common Stock” refers to
the common stock of the Bank, par value $5.00 per share. 
 2.5 Date of Grant. The “Date of Grant” of an Option refers to the effective date
of action by the Committee granting such Option. 
 2.6 Employee. “Employee” refers to any person who is a full-time employee of the Bank or
of any of the Bank’s Subsidiaries. 
 2.7 Exercise Price. “Exercise Price” refers to the price per share to be paid by an Optionee for
the purchase of Option Stock upon the exercise of an Option. 
 2.8 Expiration Date. “Expiration Date” refers to the date set by the
Committee at which time any unexercised portion of an Option automatically will terminate and be of no further force or effect. 
 2.9 Modification,
Extension or Renewal. “Modification” refers to any change in an Option which alters or modifies the original terms, conditions or benefits of the Option granted to the Optionee. “Extension” refers to the granting to the
Optionee of an additional period of time within which to exercise the Option beyond the Expiration Date originally prescribed in the Option Agreement. “Renewal” refers to the granting of an Option to the Optionee with the same rights and
privileges and on the same terms and conditions as contained in an original Option after expiration or termination of the original Option. 
 2.10
Non-Employee Director. “Non-Employee Director” refers to a member of the Board who satisfies the definition of that term contained in Rule 16b-3(b)(3) under the Securities Exchange Act of 1934, as such rule may be amended from time to
time. 
 2.11 Option. “Option” refers to a right granted to an Employee by the Bank pursuant to the Plan to purchase shares of Common Stock
at the Exercise Price set by the Committee for such Option and on the terms and conditions set forth herein and in the Option Agreement relating to such Option. 
 2.12 Option Agreement. “Option Agreement” refers to a formal written agreement executed between the Bank and an Optionee setting forth the terms and conditions of an Option. 
 2.13 Option Stock. “Option Stock” refers to the shares of Common Stock covered by an Option and which may be purchased by the Optionee upon the
exercise, in whole or in part, of such Option. 
 2.14 Optionee. “Optionee” refers to an Employee to whom an Option is granted pursuant to
the Plan. 
 2.15 Regulatory Authority. “Regulatory Authority” refers to any governmental agency or authority having jurisdiction over the
Bank or its Subsidiaries, including but not limited to the Federal Deposit Insurance Corporation, the North Carolina Banking Commissioner, the North Carolina State Banking Commission, the Federal Reserve Board. 
  

 2 

 ARTICLE III 
 PLAN ADMINISTRATION 
 3.1 General. 
 The Plan shall be administered by the Committee which shall be composed solely of two or more Non-Employee Directors. Members of the Committee shall serve at the pleasure of the Board, and the Board, from time to time
and at its discretion, may remove members from (with or without cause) or add members to the Committee or fill any vacancies on the Committee, however created. 
 3.2 Duties. 
 In its administration of the Plan, the Committee shall have the authority, power and duty:

  

	(a)	to make any and all determinations regarding persons who are eligible to receive Options under the Plan; 

  

	(b)	to construe and interpret the terms and provisions of the Plan and any and all Option Agreements entered into pursuant to the Plan; 

  

	(c)	to make, adopt, amend, rescind, and interpret such rules and regulations not inconsistent with the Plan or law as it from time to time deems reasonable and necessary for the
interpretation and administration of the Plan; 

  

	(d)	to prescribe the form or forms of the Option Agreements and other instruments evidencing or relating to any Options granted under the Plan and of any other instruments
required under the Plan and to change such forms from time to time; 

  

	(e)	to determine: 

  

	 	(i)	the Employees to whom Options shall be granted pursuant to the Plan and the timing of such grant or grants, and to cause Options to be granted to Employees it selects;

  

	 	(ii)	the number of shares of Option Stock to be covered by each Option granted; 

  

	 	(iii)	the Exercise Price to be paid for Option Stock upon exercise of the Option as set forth in the Option Agreement and as determined in accordance with Paragraph 4.3 hereof;

  

	 	(iv)	the Expiration Date of each Option granted, and the period within which any such Option may be exercised; 

  

	 	(v)	any other term and/or condition of each Option (which need not be identical from Option to Option) so long as not inconsistent with the Plan; and, 

 

	(f)	to make all other determinations and take all other actions provided for herein or deemed by it, in its discretion, to be necessary or advisable to administer the Plan in a
proper and effective manner. 

  

 3 

 3.3 Meetings and Voting. 
 The Committee shall select one of its members as Chairman and shall hold meetings at such times and places as it shall deem necessary or desirable. A majority of the members of the Committee shall constitute a quorum for all matters with
respect to administration of the Plan, and acts of a majority of the members of the Committee present at meetings at which a quorum is present, or acts reduced to and approved in writing by all of the members of the Committee without a meeting,
shall be valid acts of the Committee. 
 3.4 Choice of Form of Option. 
 The Committee shall have the discretion to cause any Option granted pursuant to the Plan to be granted with the intent that it qualify for treatment as an “Incentive Stock Option” (an “ISO”) as
defined in §422 of the Internal Revenue Code of 1986, as amended (the “Code”), or with the intent that it be treated as a “Nonqualified Stock Option” (an “NSO”). ISOs and NSOs shall collectively be referred to
herein as “Options” unless reference is specifically made only to one or the other, and, in the case of any such reference only to one, such reference shall be deemed to be made to the exclusion of the other. 
 3.5 Effect of Committee Action. 
 All actions, decisions and
determinations of the Committee in connection with the grant of Options or the administration, interpretation or construction of, or questions or other matters concerning, the Plan or any Option granted, shall (i) be made consistent and
in accordance with the terms of the Plan and, with respect to an ISO, shall be designed to cause the Plan and each such ISO to continue to comply with applicable provisions of the Code, and (ii) shall be final, conclusive and binding on
all persons, including the Bank, its shareholders, Optionees and any other person claiming any interest in any Option; provided, however, that any action, decision, interpretation or determination, other than those respecting the actual grant of
Options, shall be subject to review by the Board of Directors either on its own initiative, at the request of the Committee or on application of any aggrieved party. In such a case, the determination of the Board of Directors on such review shall be
final and binding on all affected parties. 
 3.6 Indemnification. 
 To the extent permitted by applicable law, and in addition to such other rights of indemnification that members of the Committee may have as Directors of the Bank, the members of the Committee shall be indemnified by
the Bank against the reasonable expenses, including attorneys’ fees, actually and necessarily incurred in connection with the defense of any action, suit or proceeding, or in connection with any appeal thereof, to which they or any of them may
be made a party by reason of any action taken or omitted in good faith under or in connection with administration of the Plan or any Option granted hereunder and against all amounts paid by them in settlement thereof (provided such settlement is
approved by independent legal counsel selected by the Bank) or paid by them in satisfaction of a judgment in any such action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that
any such Committee member is liable for gross negligence or misconduct in the performance of his duties; provided, however, that within thirty (30) days after institution of any such action, suit or proceeding, such Committee member(s) shall in
writing offer the Bank the opportunity, at its own expense, to handle and defend same. 
  

 4 

 ARTICLE IV 
 GRANT AND TERMS OF OPTIONS 
 4.1 Authorization to Grant Options. 
 Pursuant to the Plan, from time to time prior to the Termination Date the Bank may grant Options to Employees to purchase shares of Common Stock. Options may only be
granted by action of the Committee, and no person shall have any rights under the Plan or with respect to any Option except pursuant to such action of the Committee. 
 4.2 Number of Shares. 
 The number of shares of Option Stock covered by each Option shall be set by the Committee at
the time such Option is granted and shall be specified in the Option Agreement evidencing such Option; provided, however, that the number of shares of Option Stock covered by Options granted from time to time to any one Employee under the Plan may
not exceed 40% of the aggregate number of shares of Common Stock originally available for the grant of Options under the Plan from time to time. The number of shares of Option Stock covered by each Option shall be subject to adjustment in the manner
described in Paragraph 6.1 below. 
 4.3 Exercise Price. 
 At the time an Option is granted, the Committee shall set the Exercise Price applicable to such Option. The Exercise Price shall be determined by the Committee in the manner described below and shall be specified in the Option Agreement
evidencing the Option. The Exercise Price applicable to each Option shall be subject to adjustment in the manner described in Paragraph 6.1 below. 
 The
Exercise Price for each share of Option Stock covered by an Option shall not be less than one hundred percent (100%) of the fair market value of one share of the Common Stock on the Date of Grant of such Option (the “Fair Market
Value”). The Fair Market Value on any particular date shall be, (i) if the Common Stock is not then listed on the Nasdaq Stock Market, the fair market value of a share of the Common Stock as determined by the Committee in its sole
discretion in such manner as it shall deem to be reasonable and appropriate, or, (ii) if the Common Stock is listed on the Nasdaq Stock Market, the average of the bid and asked prices for a share of the Common Stock as quoted by Nasdaq
on such date.
 4.4 Option Agreements. 
 Each Option
granted under the Plan shall be evidenced by an Option Agreement which shall be executed and delivered by the Optionee and by or on behalf of the Bank and which shall (i) specify whether such Option is intended to be an ISO or an NSO,
(ii) contain such other information as is provided or permitted herein to be contained in the Option Agreement, and (iii) not contain any provisions inconsistent with the Plan. Following the execution of an Option Agreement
evidencing an Option, such Option shall be effective as of the Date of Grant of such Option. 
 4.5 Limits on Grant of ISOs. 
 Notwithstanding anything contained herein to the contrary: 
  

	(a)	in the case of an ISO granted to an Employee who owns, immediately before the ISO is granted, more than ten percent (10%) of the total combined voting power of all
classes of Common Stock of the Bank, the Exercise Price per share with respect to such ISO, as determined by the Committee and stated in the Option Agreement, shall not be less than one hundred ten percent (110%) of the Fair Market Value as of
the Date of Grant of the ISO; and, 

  

 5 

	(b)	the aggregate Fair Market Value (determined as of the Date of Grant of the Option) of the Option Stock for which an Optionee may be granted ISOs exercisable for the first
time in any calendar year (including ISOs granted under all option plans of the Bank or any of its Subsidiaries) shall not exceed $100,000. This $100,000 limitation shall not apply to the grant of NSOs. 

 ARTICLE V 
 EXERCISE OF OPTIONS

 5.1 Waiting Period. 
 No Option may be exercised
unless and until the Optionee shall have completed one year (or such other or longer period as shall be determined by the Committee and specified in the Option Agreement evidencing that Option) of continuous, full time service in the employment of
the Bank or any of its Subsidiaries following the Date of Grant of the Option, but thereafter, subject to earlier termination as described herein, may be exercised as provided herein and in the Option Agreement evidencing such Option. The waiting
period provided herein shall not operate to extend the Expiration Date or other date of termination of an Option set forth or provided for herein or in the Option Agreement evidencing such Option. 
 5.2 Term; Conditions on Exercise; Expiration or Termination. 
 The
Expiration Date of each Option shall be set by the Committee at the time the Option is granted and shall be specified in the Option Agreement evidencing the Option, but in no event shall be more than ten years following the Date of Grant of the
Option. However, notwithstanding any thing contained herein to the contrary, in the case of an ISO granted to an Employee who owns, immediately before the ISO is granted, more than ten percent (10%) of the total combined voting power of all
classes of Common Stock of the Bank, the Expiration Date shall not be more than 5 years following the Date of Grant of the ISO. 
 Subject to the other terms
and conditions contained in the Plan, each Option may be exercised by the Optionee at such times or intervals and on such other terms and conditions (if any) as are determined by the Committee and specified in the Option Agreement evidencing the
Option. 
 Notwithstanding anything contained herein or in any Option Agreement to the contrary, to the extent that an Option shall not previously have been
exercised in the manner required by the Plan, it shall expire and terminate at 5:00 P.M. on its Expiration Date. In addition to the termination provisions set forth above, Options granted pursuant to the Plan shall terminate or may be terminated as
provided in Paragraphs 5.7 and 6.1 below. Upon the expiration or termination of all or any portion of an Option, such Option or portion thereof shall, without any further act by the Bank, expire and no longer be exercisable or confer any rights to
any person to purchase shares of Common Stock under the Plan. 
 5.3 Notice of Exercise. 
 To exercise an Option in whole or in part, the Optionee or other person then entitled to exercise the Option or portion thereof shall notify the Bank by delivering written notice of such exercise (a “Notice of
Exercise”) to the President or the Secretary of the Bank. Such written notice shall be substantially in the form attached hereto as Exhibit A and shall specify the number of shares of Option Stock to be purchased. A Notice of Exercise shall not
be effective (and the Bank shall have no obligation to sell any Option Stock to the Optionee pursuant to such Notice) unless it satisfies the terms and conditions set forth herein and actually is received by the Bank as provided above prior to the
Expiration Date or other termination of the Option to be exercised. 
  

 6 

 In the event an Option or portion thereof is being exercised by a person other than the Optionee (as provided in
Paragraph 5.7(c) below), the Notice of Exercise shall be accompanied by appropriate proof of the right of such person(s) to exercise the Option. 
 5.4
Payment Upon Exercise. 
 The Exercise Price of Option Stock being purchased upon the exercise of an Option (in part or in whole) shall be paid by the
Optionee in full at the time of such exercise. Such payment may be made (i) in cash, (ii) by official bank check, bank money order or other certified funds, or (iii) in the discretion of the Committee, by a
combination thereof. No Option Stock shall be issued or delivered until full payment of the Exercise Price therefor has been made. 
 5.5 Restrictions.

 At the time an Option is granted, the Committee shall have the authority, in its sole discretion, to impose restrictions of any nature on the exercise
of such Option (including restrictions in the form of a schedule by which an Option becomes exercisable in increments over a period of time) and on the Option Stock acquired by the Optionee upon such exercise. Without limiting the generality of the
foregoing, the Committee may impose conditions restricting absolutely the transferability of Option Stock acquired through exercise of any Option for such periods as the Committee may determine. Any such restrictions imposed by the Committee shall
be specified in the Option Agreement. 
 5.6 Nontransferability. 
 Options granted hereunder shall not be assignable or transferable except by will or by the laws of descent and distribution, and, during the lifetime of the Optionee, may be exercised only by him. More particularly, but without limiting the
generality of the foregoing, an Option may not be sold, assigned, transferred (except as noted herein), pledged or hypothecated in any way and shall not be subject to execution, attachment or similar process. 
 5.7 Termination of Employment. 
  

	(a)	Voluntary and Involuntary Terminations. In the event an Optionee’s employment with the Bank or any Subsidiary shall terminate or be terminated prior to the Expiration
Date of his or her Option for any reason other than his or her death or “Disability” (as defined below), then the status of the Optionee’s Option shall be as specified below. Authorized leaves of absence and transfers of employment by
an Optionee between the Bank and a Subsidiary, or between two Subsidiaries, without a break in service, shall not constitute terminations of employment for purposes of the Plan. The Committee shall determine whether any other absence for military or
government service or for any other reasons shall constitute a termination of employment for purposes of the Plan, and the Committee’s determination shall be final. 

  

	 	(i)	If, prior to the Expiration Date of his or her Option, an Optionee voluntarily terminates his or her employment with the Bank or any of its Subsidiaries other than as a result of
“Retirement” (as defined below), then, to the extent it shall not previously have been exercised in the manner required by the Plan, the Option immediately shall terminate and be of no further force or effect on the effective date of such
termination of employment. 

  

 7 

	 	(ii)	If, prior to the Expiration Date of his or her Option, an Optionee voluntarily terminates his or her employment with the Bank or any of its Subsidiaries as a result of
“Retirement” (as defined below), the Option shall remain in effect and, to the extent it shall not previously have been exercised, the Optionee shall have the right to exercise the Option at any time before but not later than 5:00 P.M. on
the 90th day following the effective date of such Retirement (but not later than the Expiration Date of the Option) in accordance with the terms of the Plan and, to the extent not so exercised, at that time the Option shall terminate and be of no
further force or effect. 

 The termination of an Optionee’s employment with the Bank or any of its
Subsidiaries which is treated as a “retirement” under the terms of any qualified retirement plan maintained by the Bank from time to time, or the termination of an Optionee’s employment at such earlier time or under such other
circumstances as the Committee shall agree in writing to treat as “Retirement” for purposes of the Plan, shall be deemed to be a “Retirement” for purposes of the Plan. 
  

	 	(iii)	If, prior to the Expiration Date of his or her Option, an Optionee’s employment is terminated by the Bank or any of its Subsidiaries other than for “Cause” (as
defined below), the Option shall remain in effect and, to the extent it shall not previously have been exercised, the Optionee shall have the right to exercise the Option at any time before but not later than 5:00 P.M. on the 90th day following the
date of such termination (but not later than the Expiration Date of the Option) in accordance with the terms of the Plan and, to the extent not so exercised, at that time the Option shall terminate and be of no further force or effect.

  

	 	(iv)	If, prior to the Expiration Date of his or her Option, an Optionee’s employment is terminated by the Bank or any of its Subsidiaries for Cause, then, to the extent it
shall not previously have been exercised in the manner required by the Plan, the Option immediately shall terminate and be of no further force or effect on the earlier of the date such termination of employment is effective or the date on which the
determination is made to terminate the Optionee’s employment for Cause. 

 For purposes of this Paragraph 5.7(a), the Bank
or its Subsidiary shall have “Cause” to terminate an Optionee’s employment upon: 
  

	 	(A)	A determination by the Bank or its Subsidiary, in good faith, that the Optionee (1) has failed in any material respect to perform or discharge his duties or
responsibilities of employment in a reasonably competent manner, or (2) is engaging or has engaged in willful misconduct or conduct which is detrimental to the business prospects of the Bank or its Subsidiary or which has had or likely
will have a material adverse effect on the Bank’s or its Subsidiary’s business or reputation; 

  

	 	(B)	The violation by the Optionee of any applicable federal or state law, or any applicable rule, regulation, order or statement of policy promulgated by any Regulatory Authority
which results from the Eligible Employee’s gross negligence, willful misconduct or intentional disregard of such law, rule, regulation, order or policy statement and results in any substantial damage, monetary or otherwise, to the Bank or its
Subsidiary or to its or its Subsidiary’ s reputation; 

  

 8 

	 	(C)	The commission in the course of the Optionee’s employment of an act of fraud, embezzlement, theft or proven personal dishonesty, or the Optionee’s being charged
with any felony or other crime involving moral turpitude (whether or not such act or charge involves the Bank or its assets or results in criminal indictment, charges, prosecution or conviction); 

  

	 	(D)	The conviction of the Optionee of any felony or any criminal offense involving dishonesty or breach of trust, or the occurrence of any event described in Section 19 of
the Federal Deposit Insurance Act or any other event or circumstance which disqualifies the Optionee from serving as an employee or executive officer of, or a party affiliated with, the Bank or its Subsidiary; or, in the event the Optionee becomes
unacceptable to, or is removed, suspended or prohibited from participating in the conduct of the Bank’s or its Subsidiary’s affairs (or if proceedings for that purpose are commenced), by any Regulatory Authority; 

 

	 	(E)	The exclusion of the Optionee by the carrier or underwriter from coverage under the Bank’s then current “blanket bond” or other fidelity bond or insurance
policy covering its or its Subsidiary’s directors, officers or employees, or the occurrence of any event which the Bank or its Subsidiary believes, in good faith, will result in the Optionee being excluded from such coverage, or having coverage
limited as to the Optionee as compared to other covered officers or employees, pursuant to the terms and conditions of such “blanket bond” or other fidelity bond or insurance policy; or, 

  

	 	(F)	Optionee’s excessive use of any addictive drug or use of any controlled substance, as defined at 21 U.S.C. § 802 and listed on Schedules I through V of 21 U.S.C.
§ 812, as revised from time to time, and as defined by other federal laws and regulations, his use of legal drugs that have not been obtained legally or are not being taken as prescribed by a licensed physician, or his use of alcohol in a
manner that adversely affects the performance of his or her employment duties, prevents him or her from performing his or her employment duties safely or creates a risk to the safety of others at the workplace. 

 For purposes of this Plan, the determination of whether any termination of an Optionee’s employee was for Cause shall be within the sole discretion
of the Committee. 
  

	(b)	Disability of Optionee: If, prior to the Expiration Date of his or her Option, an Optionee becomes “Disabled” (as defined below) and, as a result, his or her
employment with the Bank or any of its Subsidiaries is terminated, the Option shall remain in effect and, to the extent it shall not previously have been exercised, the Optionee’s Option shall remain in effect and the Optionee shall have the
right to exercise the Option at any time before but not later than the 90th day following the effective date of such termination (but not later than the Expiration Date of the Option) in accordance with the terms of the Plan and, to the extent not
so exercised, at that time the Option shall terminate and be of no further force or effect. For purposes of this Paragraph 5.7(b), an Optionee shall be considered “Disabled” at such time as he or she is determined to be permanently
disabled such as would qualify the Optionee for benefits under the Bank’s long term disability insurance plan which is applicable to the Optionee. 

  

 9 

	(c)	Death of Optionee: If, prior to the Expiration Date of his or her Option, an Optionee shall die while employed by the Bank or a Subsidiary, then, following the date of the
Optionee’s death, the Option shall remain in effect and, to the extent it shall not previously have been exercised, the Optionee’s designated beneficiary (determined either by will or other writing delivered to the Committee in advance),
or if no designated beneficiary, the personal representative of his estate, shall have the right to exercise the Option at any time before but not later than 5:00 P.M. on the Expiration Date of the Option in accordance with the terms of the Plan
and, to the extent not so exercised, at that time the Option shall terminate and be of no further force or effect. Any references herein to an Optionee shall be deemed to include any person entitled to exercise an Option after the death of such
Optionee under the terms of this Plan. 

 5.8 Modification, Extension and Renewal of Options. 
 Subject to the provisions of Paragraph 6.1 below, any Option may be Modified, Extended or Renewed (as those terms are defined in Article II) only upon the agreement of
the Committee and the Optionee. Any such agreement shall be in the form of a written amendment to the Option Agreement evidencing the Option being Modified, Extended or Renewed and which shall set forth the terms of any such Modification, Extension
or Renewal. 
 5.9 Other Provisions. 
 In addition to the
items required to be in the Option Agreement evidencing an Option, such Option Agreement may contain such other terms, conditions and provisions applicable to such Option or the exercise thereof (including any and all limitations or restrictions as
shall be necessary to comply with any applicable federal and state securities laws and regulations) as the Committee shall, at its sole discretion, deem necessary or desirable; provided, however, that the Committee may not impose any such terms,
conditions or provisions that are inconsistent with any provisions of the Plan. 
 5.10 Issuance of Option Stock. 
 A stock certificate representing the number of shares of Option Stock purchased by the Optionee upon the proper exercise of an Option shall be issued and delivered by the
Bank as soon as practicable after receipt of a valid and effective Notice of Exercise and full payment of the Exercise Price relating to those shares. Such certificate shall be delivered to or on the written order of the person exercising the
Option. 
 ARTICLE VI 
 GENERAL PROVISIONS 
 6.1 Adjustment of Options. 
  

	(a)	Changes in Capitalization; Stock Splits and Dividends. In the event of (i) any dividend payable by the Bank in shares of Common Stock, or
(ii) any recapitalization, reclassification, split-up, consolidation or combination of, or other change in or offering of rights to the holders of, Common Stock, or (iii) an exchange of the outstanding shares of Common Stock
for a different number or class of shares of stock or other securities of the Bank in connection with a merger, consolidation or other reorganization of or involving the Bank (provided the Bank shall be the surviving or resulting corporation in any
such merger or consolidation), then the Committee shall, in such a manner as it shall determine in its sole discretion, appropriately adjust the number and class or kind of shares which may be issued under the Plan and of the securities

  

 10 

 which shall be subject to outstanding Options and/or the Exercise Price applicable to any outstanding
Option, all computed on a basis prior to the event described in such event. However, in no event shall any such adjustment change the aggregate Exercise Price for Option Stock to be purchased upon the exercise of any Option. 
 In the event of an increase in the number of outstanding shares of the Bank’s Common Stock in connection with any of the events described above,
then, at the Committee’s option and discretion, the aggregate number of shares of Common Stock authorized to be issued under the Plan may be increased by an amount equal to 10% of the number of additional shares issued by the Bank in connection
with such event. 
 Subject to review by the Board of Directors of the Bank, any such adjustments made by the Committee shall be consistent
with changes in the Bank’s outstanding Common Stock resulting from the above events and, when made, shall be final, conclusive and binding on all persons, including, without limitation, the Bank, its shareholders and each Optionee or other
person having any interest in any Option so adjusted. Any fractional shares resulting from any such adjustment shall be eliminated. However, notwithstanding anything contained herein to the contrary, no Option which is intended to be an ISO shall be
adjusted in a manner that causes the Option to fail to continue to qualify as an ISO. 
  

	(b)	Dissolution; Merger or Consolidation; Sale of Assets. In the event of a dissolution or liquidation of the Bank, the sale of substantially all the Bank’s assets, or a
merger or consolidation of the Bank with or into any other corporation or entity (or any other such reorganization or similar transaction) in which the Bank is not the surviving or resulting corporation, and if a provision is not made in such
transaction for the continuance of this Plan or the assumption of Options by any successor to the Bank or for the substitution for Options of new options covering shares of any successor corporation or a parent or subsidiary thereof, then, in such
event, and to the extent such Options have not previously been exercised, all rights of Optionees pursuant to all outstanding Options shall terminate and be of no further effect immediately prior to the effective time of such dissolution,
liquidation, sale, merger, consolidation or other reorganization (or at such other time and pursuant to such rules and regulations as the Committee shall determine and promulgate to the Optionees). However, to the extent such Options shall not
previously have been exercised, and notwithstanding any provisions of the Plan or any Option Agreement to the contrary, each such Option shall become exercisable, and may be exercised, in full immediately prior to the effective time of any such
event. The Committee shall give each Optionee at least ninety (90) days prior written notice of the effective time of an event which gives rise to an immediate purchase right under this Paragraph 6.1. 

  

	(c)	Miscellaneous. The grant of an Option shall not affect in any way the right or power of the Bank to (i) enter into or effect any adjustment, recapitalization,
reclassification, reorganization or any other change in the Bank’s capital or business structure or its business, (ii) to merge or consolidate, or to dissolve, liquidate, sell or transfer all or any part of its business or assets,
or (iii) to issue bonds, debentures, preferred or other preference stock ahead of or affecting Common Stock or the rights thereof. 

 6.2 Rights as a Shareholder. 
 Neither an Optionee nor any other person shall have any rights as a stockholder with respect to any shares of
Option Stock covered by an Option until such Option shall have been validly exercised in the manner described herein and in the Option Agreement relating to such Option, full payment of the Exercise Price has been made for such shares, and a stock
certificate representing the Option Stock purchased upon such exercise shall have been registered on the Bank’s stock records in the name of and delivered to such 
  

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 person. Except to the extent of adjustments made pursuant to Paragraph 6.1 above, no adjustment on behalf of the Optionee
shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property), distributions or other rights for which the record date for determining the shareholders entitled to receive the same is prior to the date of
registration and delivery of the stock certificate(s) representing the Option Stock. 
 6.3 No Right to Employment. 
 Neither the Plan nor the grant of an Option, nor any Option Agreement evidencing any such Option, is intended or shall be deemed or interpreted to constitute an
employment agreement or to confer upon an Optionee any right of employment with the Bank or any of its Subsidiaries, including without limitation any right to continue in the employ of the Bank or any of its Subsidiaries, or to interfere with,
restrict or otherwise limit in any way the right of the Bank or any Subsidiary to discharge or terminate the employment of any Optionee at any time for any reason whatsoever, with or without Cause. 
 6.4 Legal Restrictions. 
 If in the opinion of legal counsel for the
Bank the issuance or sale of any shares of Option Stock by the Bank pursuant to the exercise of an Option would not be lawful without registration under the Securities Act of 1933 (the “1933 Act”) or without some other action being taken,
or for any other reason, or would require the Bank to obtain approval from any governmental authority or regulatory body having jurisdiction deemed by such counsel to be necessary to such issuance or sale, then the Bank shall not be obligated to
issue or sell any Option Stock pursuant to the exercise of any Option to any Optionee or to any other authorized person unless a registration statement that complies with the provisions of the 1933 Act in respect of such shares is in effect at the
time thereof and all other required or appropriate action has been taken under and pursuant to the terms and provisions of the 1933 Act or other applicable law, or the Bank receives evidence satisfactory to such counsel that the issuance and sale of
such shares, in the absence of an effective registration statement or other action, would not constitute a violation of the 1933 Act or other applicable law, or unless any such required approval shall have been obtained. The Bank is in no event
obligated to register any such shares, to comply with any exemption from registration requirements or to take any other action which may be required in order to permit, or to remedy or remove any prohibition or limitation on, the issuance or sale of
Option Stock to any Optionee or other authorized person. 
 The Committee, as a condition of the grant of an Option and/or the exercise thereof, may require
that the Optionee execute one or more undertakings in such form as the Committee shall prescribe to the effect that such shares are being acquired for investment purposes only and not with a view to the distribution or resale thereof. 
 Notwithstanding anything contained herein to the contrary, it is understood and agreed that neither the Bank nor any of its Subsidiaries (or any of their successors in
interest) shall be required to take any action under this Plan or any Option granted hereunder if: 
  

	(a)	the Bank is declared by any Regulatory Authority to be insolvent; or, 

  

	(b)	in the opinion of legal counsel to the Bank, such payment or action: 

  

	 	(i)	would be prohibited by or would violate any provision of state or federal law applicable to the Bank or any of its Subsidiaries, including without limitation the Federal
Deposit Insurance Act as now in effect or hereafter amended; 

  

 12 

	 	(ii)	would be prohibited by or would violate any applicable rules, regulations, orders or statements of policy, whether now existing or hereafter promulgated, of any Regulatory
Authority; or, 

  

	 	(iii)	otherwise would be prohibited by any Regulatory Authority. 

 6.5
No Obligation to Purchase Shares. 
 The granting of an Option pursuant to the Plan shall impose no obligation on the Optionee to purchase any shares
covered by such Option. 
 6.6 Payment of Taxes. 
 Each
Optionee shall be responsible for all federal, state, local or other taxes of any nature as shall be imposed pursuant to any law or governmental regulation or ruling on any Option or the exercise thereof or on any income which an Optionee is deemed
to recognize in connection with an Option. If the Committee shall determine to its reasonable satisfaction that the Bank or any of its Subsidiaries is required to pay or withhold the whole or any part of any estate, inheritance, income, or other tax
with respect to or in connection with any Option or the exercise thereof, then the Bank or such Subsidiary shall have the full power and authority to withhold and pay such tax out of any shares of Common Stock being purchased by the Optionee or from
the Optionee’s salary or any other funds otherwise payable to the Optionee, or, prior to and as a condition of exercising such Option, the Bank may require that the Optionee pay to it in cash the amount of any such tax which the Bank, in good
faith, deems itself required to withhold. 
 6.7 Choice of Law. 
 The validity, interpretation and administration of the Plan, any Option Agreement, and of any rules, regulations, determinations or decisions made thereunder, and the rights of any and all persons having or claiming to have any interest
therein or thereunder, shall be determined exclusively in accordance with the laws of the State of North Carolina. Without limiting the generality of the foregoing, the period within which any action in connection with the Plan must be commenced
shall be governed by the laws of the State of North Carolina, without regard to the place where the act or omission complained of took place, the residence of any party to such action, or the place where the action may be brought or maintained.

 6.8 Modification of Plan. 
 The Board, upon
recommendation of the Committee, may, from time to time, amend, modify, suspend, terminate or discontinue the Plan at any time without notice, provided, however, that no such action by the Board shall adversely affect any Optionee’s rights
under any then outstanding Options without such Optionee’s prior written consent; and, provided further that, except as shall be required to comport with changes in the Code, any modification or amendment of the Plan that
(i) increases the aggregate number of shares of Common Stock which may be issued upon the exercise of Options (other than as provided in Paragraph 6.1 above), (ii) changes the formula by which the Exercise Price is
determined, (iii) changes the provisions of the Plan with respect to the determination of Employees to whom Options may be granted or, (iv) otherwise materially increases the benefits accruing to Optionees under the Plan,
shall be subject to the approval of the Bank’s shareholders. In the event the Board shall terminate or discontinue the Plan, such action shall not operate to deprive any Optionee of any rights theretofore acquired by him or her under the Plan,
and any Options outstanding as of the date of any such termination shall remain in full force and effect according to their terms as though the Plan had not been terminated. 
  

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 6.9 Application of Funds. 
 The proceeds received by the Bank from the sale of Common Stock pursuant to Options granted under the Plan will be used for general corporate purposes. 
 6.10 Notices. 
 Except as otherwise provided herein, any notice which the Bank or an Optionee may be required or permitted to give to the
other under this Plan shall be in writing and shall be deemed duly given when delivered personally or deposited in the United States mail, first class postage prepaid, and properly addressed. Notice, if to the Bank, shall be sent to its President at
the address of the Bank’s then current corporate office. Any notice sent by mail by the Bank to an Optionee shall be sent to the most current address of the Optionee as reflected on the records of the Bank or its Subsidiaries as of the time
said notice is required. In the case of a deceased Optionee, any notice shall be given to the Optionee’s personal representative if such representative has delivered to the Bank evidence satisfactory to the Bank of such representative’s
status as such and has informed the Bank of the address of such representative by notice pursuant to this Paragraph 6.10. 
 6.11 Conformity With
Applicable Laws and Regulations. 
 With respect to persons who are subject to Section 16 of the 1934 Act, the Plan and each Option granted and
transaction under it are intended to, and shall be interpreted so as to, be consistent with the requirements, and satisfy applicable conditions, of Rule 16b-3 of the Securities and Exchange Commission (as such Rule may be modified, amended or
superseded from time to time). To the extent any provision of the Plan or any Option Agreement, or any action by the Committee or the Board, shall fail to so comply, then, to the extent permitted by law and deemed advisable by the Committee, such
provision or action shall be deemed null and void. 
 6.12 Successors and Assigns. 
 Subject to Paragraph 5.6 above, this Plan shall bind and inure to the benefit of the Bank, any Optionee, and their respective successors, assigns, personal or legal representatives and heirs. 
 6.13 Severability. 
 It is intended that each provision of this Plan
shall be viewed as separate and divisible, and in the event that any provision hereof shall be held to be invalid or unenforceable, the remaining provisions shall continue to be in full force and effect. 
 6.14 Titles. 
 Titles of Articles and Paragraphs are provided herein
for convenience only, do not modify or affect the meaning of any provision herein, and shall not serve as a basis for interpretation or construction of this Plan. 
 6.15 Gender and Number. 
 As used herein, the masculine gender shall include the feminine and neuter, the singular number the plural, and
vice versa, whenever such meanings are appropriate. 
  

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