Document:

Unassociated Document

    PROTOTYPE
      PRODUCT DEVELOPMENT AGREEMENT

     

    THIS
      DEVELOPMENT AGREEMENT (“Agreement”)
      is
      entered into and effective as of this 29th
      day of
      April 2008, by and between Kuong
      U
      Science & Technology (Group) Ltd. (hereinafter referred to as “Party
      A”),
      a
      corporation organized and existing under the laws of Macau, and having its
      principal office at No. 1 Pingbei Road 2, Nanping Science & Technology
      Industrial Park, Zhuhai City, Guangdong Province, China and Zhuhai
      Yuemao Laser Facility Engineering Co., Ltd. (hereinafter referred to as
“Party
      B”),
      a
      Chinese company organized under the laws of the People’s Republic of China
      (“PRC”)
      and
      having its registered office at No.1 Pingbei Road 2, Nanping Science &
Technology Industrial Park, Zhuhai City, Guangdong Province, China. Party A
      and
      Party B are each referred to herein as a “Party”
and
      collectively as the “Parties.”

     

    RECITALS

     

    WHEREAS,
      Party
      A
      and Party B are owned by the same owners.
      

     

    WHEREAS,
      Party A desires to have Party B develop certain prototype products
      (“Products”),
      and
      Party B is willing to develop the Products for Party A pursuant to the terms
      and
      conditions of this Agreement. 

     

    NOW,
      THEREFORE, the Parties agree as follows: 

     

    
      	
              1.

            	
              
                SCOPE
                  OF WORK; SALES
                  RIGHT

              

            

    

     

    
      	
              1.1

            	
              Party
                B agrees to develop the Products of which the sample products are
                more
                specifically described in Appendix 1.

            

    

     

    
      	
              1.2

            	
              Party
                B shall have the right to sell, at its sole discretion, the Products
                to a
                third party.

            

    

     

    
      	
              2.

            	
              
                DELIVERY
                  OF TECHNICAL
                  INFORMATION 

              

            

    

     

    As
      soon
      as practicable at or after the execution of this Agreement, Party A shall
      transfer to Party B all relevant technical information relating to the
      Products.

     

    
      	
              3.

            	
              
                PAYMENT

              

            

    

     

    In
      consideration of the relationship between the two Parties, Party B has been
      developing these prototype products as a courtesy and free of charge. Party
      A
      agrees it will pay Party B a 1% royalty fee on Party A’s actual sales of the
      products. The total amount will be paid when actual sales occur and will be
      paid
      on a quarterly base.

     

    
      	
              4.

            	
              
                INTELLECTUAL
                  PROPERTY
                  OWNERSHIP 

              

            

    

     

    The
      Parties acknowledge and agree that Party A or its affiliates shall own all
      right, title and interest in and to the Products, including without limitation,
      any know-how, trade secrets, plans, designs, processes, formulas, manufacturing
      techniques, discoveries, inventions and ideas, product specifications in
      connection with the development of the Products as well as any and all
      intellectual property rights invented solely by Party B.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              5.

            	
              
                REPRESENTATIONS

              

            

    

     

    Each
      party hereby represents and warrants that it has the full right, authority
      and
      power to enter into this Agreement and to make, assume and fully perform the
      obligations set forth herein, and that this Agreement has been duly executed
      and
      constitutes the valid and binding obligation of such party, and is enforceable
      in accordance with its terms. 

     

    
      	
              6.

            	
              
                CONFIDENTIALITY

              

            

    

     

    
      	
              6.1

            	
              Each
                Party shall maintain the secrecy and confidentiality of, and not
                disclose
                to any third party or person, any proprietary, secret or confidential
                data
                and information relating to the other Party and its business operations
                and other such information as disclosed to a Party by the other Party
                at
                any time during or for the purpose of negotiation and implementation
                of
                this Agreement (“Confidential
                Information”).

            

    

     

    
      	
              6.2

            	
              No
                Party shall use any Confidential Information of the other Party for
                its
                own purposes or any purpose other than implementing this
                Agreement.

            

    

     

    
      	
              7.

            	
              
                TERM
                  AND TERMINATION

              

            

    

     

    
      	
              7.1

            	
              This
                Agreement shall become effective as of the date hereof, shall continue
                in
                full force until expiration or termination of this
                Agreement.

            

    

     

    
      	
              7.2

            	
              Party
                A may, at its sole discretion, terminate this Agreement at any time
                which
                it considers appropriate.

            

    

     

    
      	
              7.3

            	
              Upon
                any breach by Party B of any of its obligations hereunder, Party
                A may
                terminate this Agreement by written notice to Party B. Such notice
                of
                termination shall be effective upon
                receipt.

            

    

     

    
      	
              7.4

            	
              Upon
                the change in ownership of Party B or the consolidation with or merger
                into any other corporation or entity by Party B, Party A may terminate
                this agreement by giving notice to Party B. Such notice of termination
                shall be effective immediately upon
                receipt.

            

    

     

    
      	
              7.5

            	
              Notwithstanding
                the foregoing, any termination or expiration of this Agreement shall
                not
                release any party from any liability or obligation which has already
                accrued as of the date of such termination or expiration.
                

            

    

     

    
      	
              8.

            	
              
                NOTICE

              

            

    

     

    
      	
              8.1

            	
              All
                notices between the Parties shall be written in Chinese and in English
                and
                delivered, either by courier, registered airmail, fax or telegram,
                to the
                following addresses:

            

    

     

    
      	
              To
                Party A:

            	
              Kuong
                U Science & Technology (Group) Ltd.

            
	 	
              Room
                2308, Yuanyangmingzhu Plaza

            
	 	
              Hujiangxincheng,
                Tianhe District

            
	 	
              Guangzhou,
                Guangdong Province, PRC 510623

            
	 	
              Attention:
                Wensheng Chen

            
	 	
              Tel:
                +86 20-3759-1253

            

    

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    

    
      	
              To
                Party B:

            	
              Zhuhai
                Yuemao Laser Facility Engineering Co., Ltd.

            
	 	
              No.1
                Pingbei Road 2, 

            
	 	
              Nanping
                Science & Technology Industrial Park, 

            
	 	
              Zhuhai
                City, Guangdong Province, PRC 519060

            
	 	
              Attention:
                Ling Chen

            
	 	
              Tel
                : 86-756-8682610,
                8682787

            

    

     

    
      	
              9.

            	
              
                GOVERNING
                  LAW AND DISPUTE
                  RESOLUTION

              

            

    

     

    
      	
              9.1

            	
              This
                Agreement shall be governed by and construed according to the laws
                of the
                United States.

            

    

     

    
      	
              9.2

            	
              Any
                dispute, controversy or claim arising out of or in connection with
                this
                Agreement or the breach, termination or invalidity thereof (“Dispute”)
                shall be settled through friendly consultations between the Parties.
                If no
                settlement can be reached through consultations within 60 days from
                the
                date on which one Party first notifies the other Party in writing
                of the
                existence of a Dispute, then the Dispute shall be submitted to the
                Hong
                Kong International Arbitration Centre (“HKIAC”)
                to be finally settled by arbitration in accordance with the Rules
                of that
                Centre by sole arbitrator appointed in accordance with those
                Rules.

            

    

     

    
      	
              9.3

            	
              The
                place of arbitration shall be Hong Kong. The arbitration proceedings
                shall
                be conducted in English and shall take place in Hong Kong. The arbitration
                award shall be final and binding upon the Parties, and the Parties
                agree
                to be bound thereby and to act
                accordingly.

            

    

     

    
      	
              10.

            	
              
                FORCE
                  MAJEURE

              

            

    

     

    Neither
      Party shall be liable or considered in default for failure to perform any
      obligation under this Agreement because of an occurrence of force majeure,
      which
      for the purpose of this Agreement shall include any event beyond the control
      of
      the Parties which is not foreseeable, or, if foreseeable, is unavoidable, and
      which prevents the completion of any of the obligations of the Parties of this
      Agreement.

     

    
      	
              11.

            	
              
                ASSIGNMENT

              

            

    

     

    This
      Agreement is personal to Party B, and Party B shall not transfer or assign
      this
      Agreement or the rights hereunder, to any third party without the prior written
      consent of Party A or any successor of Party A.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    
      	12.	
              WAIVER

            

    

     

    Any
      waiver by either Party of a breach by the other Party of any obligation under
      this Agreement shall not constitute a waiver of any succeeding breach by such
      other Party of the same obligation. The failure of either Party to exercise
      any
      of its rights provided under this Agreement shall not constitute a waiver of
      such right.

     

    
      	
              13.

            	
              
                SEVERABILITY
                  

              

            

    

     

    No
      provisions of this Agreement found illegal, against public policy or otherwise
      unenforceable shall in any way invalidate or render unenforceable any other
      provision or provisions of this Agreement and each such provision hereunder
      shall be considered separate and severable.

     

    
      	
              14.

            	
              
                ENTIRE
                  AGREEMENT

              

            

    

     

    This
      Agreement constitutes the entire agreement between the Parties relating to
      the
      development of Products and supersedes any prior negotiations, representations,
      understandings, memoranda or commitments in respect thereto.

     

    [The
      remainder of this page is intentionally left blank]

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, THE PARTIES HAVE CAUSED THEIR DULY AUTHORIZED REPRESENTATIVES
      TO EXECUTE THIS AGREEMENT IN DUPLICATE AS OF THE DAY AND YEAR FIRST WRITTEN
      ABOVE.

     

    
      	
              PARTY
                A:

            
	
              KUONG
                U SCIENCE & TECHNOLOGY (GROUP)
                LTD.

            

    

     

    
      	
              By:

            	
              /s/
                Wensheng
                Chen

            
	
              Name:

            	
              Wensheng
                Chen

            
	
              Title:

            	
              Chairman
                of the Board of Directors

            

    

     

    
      	
              PARTY
                B:

            
	
              ZHUHAI
                YUEMAO LASER FACILITY ENGINEERING CO.,
                LTD.

            

    

     

    
      	
              By:

            	
              
                /s/
                  Ling Chen

              

            
	
              Name:

            	
              Ling
                Chen

            
	
              Title:

            	
              General
                Manager

            

    

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    APPENDIX
      1

     

    
      PRODUCTS

    

    

    
      	
              I.

            	
              Sample
                Prototype Products in PV Module
                Series

            

    

    

    
      	
              Name

            	 	
              Characteristics

            	 	
              Specifications

            
	
              Solar
                modules GYSP-200

            	 	
              Open
                circuit voltage(Voc): 48V 

              Optimum
                operating voltage: (Vmp)37.5V
                

              Short
                circuit current(Isc): 5.46A
                

              Optimum
                operating current(Imp): 5.2A
                

              Peak
                power(Pm): 200W

            	 	
              Monocrystalline
                silicon 

              Dimension(mm):1830x825x50
                

              Tolerance:
                ±5% 

              Weight:16.9kg
                

              Maximum
                system voltage: 1000V DC

            
	 	 	 	 	 
	
              Solar
                modules GYSP-180

            	 	
              Open
                circuit voltage(Voc): 44.9V 

              Optimum
                operating voltage: (Vmp)38.6V
                

              Short
                circuit current(Isc): 5.1A
                

              Optimum
                operating current(Imp): 4.68A
                

              Peak
                power(Pm): 180W

            	 	
              Monocrystalline
                silicon 

              Dimension(mm):
                1715x802x45 

              Tolerance:
                ±5% 

              Weight:
                16.9kg 

              Maximum
                system voltage: 1000V DC

            
	 	 	 	 	 
	
              Solar
                modules GYSP-175

            	 	
              Open
                circuit voltage(Voc): 44.06V 

              Optimum
                operating voltage: (Vmp)35.5V 

              Short
                circuit current(Isc): 5.25A 

              Optimum
                operating current(Imp): 4.95A 

              Peak
                power(Pm): 175W

            	 	
              Monocrystalline
                silicon 

              Dimension(mm):
                1580x808x37 

              Tolerance:
                ±5% 

              Weight:
                15.3kg 

              Maximum
                system voltage: 1000V DC

            
	 	 	 	 	 
	
              Solar
                modules GYSP-160

            	 	
              Open
                circuit voltage(Voc): 43.2V 

              Optimum
                operating voltage (Vmp): 35V 

              Short
                circuit current (Isc): 5.1A 

              Optimum
                operating current (Imp): 4.59A

              Peak
                power(Pm): 160W

            	 	
              Monocrystalline
                silicon 

              Dimension(mm):
                1588x802x45 

              Tolerance:
                ± 5%

              Weight:
                15.6kg 

              Maximum
                system voltage: 1000V DC

            
	 	 	 	 	 
	
               Solar
                modules GYSP-130

            	 	
              Open
                circuit voltage(Voc): 22.6V 

              Optimum
                operating voltage (Vmp): 17.6V

              Short
                circuit current (Isc): 7.83A 

              Optimum
                operating current (Imp): 7.35A

              Peak
                power(Pm): 130W

            	 	
              Monocrystalline
                silicon 

              Dimension(mm):
                1466x656x40 

              Tolerance:
                ± 5% 

              Weight:
                13.2kg 

              Maximum
                system voltage: 1000V DC

            
	 	 	 	 	 
	
              Solar
                modules GYSP-120

            	 	
              Open
                circuit voltage(Voc): 22.5V 

              Optimum
                operating voltage (Vmp): 17.5V 

              Short
                circuit current (Isc): 7.12A

              Optimum
                operating current (Imp): 6.8A 

              Peak
                power(Pm): 120W

            	 	
              Monocrystalline
                silicon 

              Dimension(mm):
                1425X650X40 

              Tolerance:
                ± 5%

              Weight:
                10.8kg 

              Maximum
                system voltage:
                1000V DC

            
	 	 	 	 	 
	
              Solar
                modules GYSP-100

            	 	
              Open
                circuit voltage(Voc): 21.6V 

              Optimum
                operating voltage (Vmp): 17.4V 

              Short
                circuit current (Isc): 7.24A 

              Optimum
                operating current (Imp): 6.14A 

              Peak
                power(Pm): 100W

            	 	
              Monocrystalline
                silicon 

              Dimension(mm):
                1425X650X40 

              Tolerance:
                ± 5% 

              Weight:
                10.8kg 

              Maximum
                system voltage:
                1000V DC

            
	 	 	 	 	 
	
              Solar
                modules GYSP-80

            	 	
              Open
                circuit voltage(Voc): 21.3 V 

              Optimum
                operating voltage (Vmp): 17.4V 

              Short
                circuit current (Isc): 5.2A 

              Optimum
                operating current (Imp): 4.6A

              Peak
                power(Pm): 80W

            	 	
              Monocrystalline
                silicon 

              Dimension(mm):
                802X802X35 

              Tolerance:
                ±5% 

              Weight:
                9.1kg 

              Maximum
                system voltage: 720V DC

            
	 	 	 	 	 
	
              Solar
                modules GYSP-65

            	 	
              Open
                circuit voltage(Voc): 21.6V 

              Optimum
                operating voltage (Vmp): 17.5V 

              Short
                circuit current (Isc): 3.51A

              Optimum
                operating current (Imp): 3.71A

              Peak
                power(Pm): 65W

            	 	
              Monocrystalline
                silicon 

              Dimension(mm):
                785X650X28 

              Tolerance:
                ±5% 

              Weight:
                5kg 

              Maximum
                system
                voltage: 720V DC

            

    

     

    
      	
              Solar
                modules GYSP-50

            	 	
              Open
                circuit voltage(Voc): 21.8V 

              Optimum
                operating voltage (Vmp): 17.9V 

              Short
                circuit current (Isc): 3.0A 

              Optimum
                operating current (Imp): 2.81A

              Peak
                power(Pm): 50W

            	 	
              Monocrystalline
                silicon 

              Dimension(mm):
                540X710X35 

              Tolerance:
                ±5% 

              Weight:
                5.3kg 

              Maximum
                system voltage: 720V DC

            

    

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    
      	
              Solar
                modules GYSP-40

            	 	
              Open
                circuit voltage(Voc): 21.8V 

              Optimum
                operating voltage (Vmp): 17V 

              Short
                circuit current (Isc): 2.55A 

              Optimum
                operating current (Imp): 2.34A

              Peak
                power(Pm): 40W

            	 	
              Monocrystalline
                silicon 

              Dimension(mm):
                758X534X30 

              Tolerance:
                ±5% 

              Weight:
                5.8kg 

              Maximum
                system voltage: 720V DC

            
	 	 	 	 	 
	
              Solar
                modules GYSP-30

            	 	
              Open
                circuit voltage(Voc): 21.5V 

              Optimum
                operating voltage (Vmp): 16.8V 

              Short
                circuit current (Isc): 2.02A 

              Optimum
                operating current (Imp): 1.79A

              Peak
                power(Pm): 30W

            	 	
              Monocrystalline
                silicon 

              Dimension(mm):
                435X650X25 

              Tolerance:
                ±5% 

              Weight:
                3.5kg 

              Maximum
                system voltage: 720V DC

            
	 	 	 	 	 
	
              Solar
                modules GYSP-20

            	 	
              Open
                circuit voltage(Voc): 21.5V 

              Optimum
                operating voltage (Vmp): 16.9V 

              Short
                circuit current (Isc): 1.35A 

              Optimum
                operating current (Imp): 1.2A

              Peak
                power(Pm): 20W

            	 	
              Monocrystalline
                silicon 

              Dimension(mm):
                605X287X25 

              Tolerance:
                ±5% 

              Weight:
                3.1kg 

              Maximum
                system voltage: 720V DC

            
	 	 	 	 	 
	
              Solar
                modules GYSP-10

            	 	
              Open
                circuit voltage(Voc): 21.5V 

              Optimum
                operating voltage (Vmp): 17V 

              Short
                circuit current (Isc): 0.71A 

              Optimum
                operating current (Imp): 0.58A

              Peak
                power(Pm): 10W

            	 	
              Monocrystalline
                silicon 

              Dimension(mm):
                288X310X28 

              Tolerance:
                ±5% 

              Weight:
                2.1kg 

              Maximum
                system voltage: 720V DC

            

    

     

    
      	
              II.

            	
              Sample
                Products in PV Lighting Unit
                Series

            

    

    

    
      	
              Name

            	 	
              Characteristics
                and Specifications

            
	
              GYSL-1

            	 	
              5V
                2.5AH Lead-Acid Battery 

              8
                W
                light tube 

              Alternative
                charging Mode 

              Car
                charger 

              Adaptor
                

              Solar
                panel 

              Charging
                time: 8 times 

              Continuously
                work for 30 hours 

              Carton
                size 68X40X52

              23.5Kg

            
	 	 	 
	
              GYSL-6

            	 	
              6V
                1.5AH Ni-MH Battery

              7
                Lumination Time 8 hours 

              Continuous
                Working Time 7 days

              Body
                Material plastic body 

              Color
                white/Green/Yellow 

              1
                LED 10000mcd 8h 2Batteries 

              Carton
                size 35X45x56

            
	 	 	 
	
              GYSL-2

            	 	
              5V
                2.5AH Lead-Acid Battery 

              8W
                Light Tube 

              Alternative
                charging Mode 

              Car
                charger 

              Adaptor
                

              Solar
                panel 

              Charging
                time: 8 times 

              Continuously
                work for 30 hours 

              Carton
                size 65X42X42.5 

              10.5Kg

            
	 	 	 
	
              GYSL-3

            	 	
              Stainless
                Steel Body 

              8W
                Light Tube 

              Continuously
                work for 30 hours 

              Carton
                size 65X42X42.5 

              16.5Kg

            
	 	 	 
	
              GYSL-4

            	 	
              175W
                Solar Energy system 

              70Ah
                Battery 

              Controller
                7A 

              Energy
                Conservation Lamp 15W 

              Lumination
                Time 8 hours 

              Continuous
                Working Time 7 days

            

    

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    
      	
              GYSL-5

            	 	
              6V
                1.5AH Ni-MH Battery 

              7W
                Light Tube 

              Charging
                time: 8 times 

              Continuously
                work for 30 hours 

              Carton
                size 35X42X120 

              Color
                White

            
	 	 	 
	
              GYSL-7

            	 	
              100W
                Solar Energy system 

              60Ah
                Battery 

              Controller
                10A 

              Energy
                Conservation Lamp 15W 

              Lumination
                Time 8 hours 

              Continuous
                Working Time 7 days

            
	 	 	 
	
              GYSL-8

            	 	
              45W
                Solar Energy system 

              50Ah
                Battery 

              Controller
                7A 

              Energy
                Conservation Lamp 12W 

              Lumination
                Time 8 hours 

              Continuous
                Working Time 7 days

            
	 	 	 
	
              GYSL-9

            	 	
              40W
                Solar Energy system 

              65Ah
                Battery 

              Controller
                6A 

              Energy
                Conservation Lamp 11W 

              Lumination
                Time 8 hours 

              Continuous
                Working Time 7 days

            
	 	 	 
	
              GYSL-10

            	 	
              80W
                Solar Energy system 

              100Ah
                Battery 

              Controller
                7A 

              Energy
                Conservation Lamp 10W 

              Lumination
                Time 8 hours 

              Continuous
                Working Time 7 days

            

    

     

    
      
        
        

      

      
        8EXHIBIT
      10.12

    

    AMENDED
      AND RESTATED

    CHANGE-IN-CONTROL
      PROTECTIVE AGREEMENT

    

    THIS
      AMENDED AND RESTATED AGREEMENT (the
      “Agreement”) entered
      into this 24th day of April 2008 (the “Effective Date”), by and between
FIRST
      SOUTH BANK
      (the
“Bank”), FIRST
      SOUTH BANCORP, INC.
      (the
“Company”), and WILLIAM
      L. WALL
      (the
“Employee”).

    

    WHEREAS,
      the
      Employee has heretofore been employed by the Bank as an executive officer;
      and

    

    WHEREAS,
      the
      Board of Directors of each of the Company, the Bank and the Employee have
      determined that it is necessary and appropriate to enter into this Amended
      and
      Restated Agreement to ensure the Employee’s continued service on terms
      consistent with his role and his importance to the success of the Company and
      the Bank; 

    

    NOW,
      THEREFORE,
      the
      undersigned parties AGREE as follows: 

    

    1. Defined
      Terms

    

    When
      used
      anywhere in the Agreement, the following terms shall have the meanings set
      forth
      herein.

    

    (a) “Change
      in Control”
      shall
      mean any one of the following events: (i) the acquisition by any person (or
      persons acting as a group) of ownership, holding or power to vote more than
      25%
      of the voting stock of the Company or the Bank, (ii) the acquisition by any
      person (or persons acting as a group) of the ability to control the election
      of
      a majority of the Company’s or the Bank’s directors, (iii) the acquisition of a
      controlling influence over the management or policies of the Company or of
      the
      Bank, or (iv) during any period of two consecutive years, individuals (the
      “Continuing Directors”) who at the beginning of such period constitute the Board
      of Directors of the Company or of the Bank (the “Existing Board”) cease for any
      reason to constitute at least two-thirds thereof, provided that any individual
      whose election or nomination for election as a member of the Existing Board
      was
      approved by a vote of at least two-thirds of the Continuing Directors then
      in
      office shall be considered a Continuing Director. For purposes of this
      paragraph, the terms “person” or “persons acting as a group” shall be construed
      within the meaning of Section 13(d) of the Securities Exchange Act of 1934
      and
      shall refer to an individual or a corporation, partnership, trust, association,
      joint venture, pool, syndicate, sole proprietorship, unincorporated organization
      or any other form of entity not specifically listed herein.

     

    (b) “Code”
      shall
      mean the Internal Revenue Code of 1986, as amended from time to time, and as
      interpreted through applicable rulings and regulations in effect from time
      to
      time.

    

    (c) “Good
      Reason”
      shall
      mean any of the following events, which has not been consented to in advance
      by
      the Employee in writing: (i) the requirement that the Employee move his personal
      residence, or perform his principal executive functions, more than thirty (30)
      miles from his primary office as of the date of the Change in Control; (ii)
      a
      material reduction in the Employee’s base compensation as in effect on the date
      of the Change in Control or as the same may be increased from time to time;
      (iii) the failure by the Bank or the Company to continue to provide the Employee
      with compensation and benefits provided for on the date of the Change in
      Control, as the same may be increased from time to time, or with benefits
      substantially similar to those provided to him under any of the employee benefit
      plans in which the Employee now or hereafter becomes a participant, or the
      taking of any action by the Bank or the Company which would directly or
      indirectly reduce any of such benefits or deprive the Employee of any material
      fringe benefit enjoyed by him at the time of the Change in Control; (iv) the
      assignment to the Employee of duties and responsibilities materially different
      from those normally associated with his position; (v) a failure to elect or
      reelect the Employee to the Board of Directors of the Bank or the Company,
      if
      the Employee is serving on such Board on the date of the Change in Control;
      (vi)
      a material diminution or reduction in the Employee’s responsibilities or
      authority (including reporting responsibilities) in connection with his
      employment with the Bank or the Company; or (vii) a material reduction in the
      secretarial or other administrative support of the Employee. 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (d) “Just
      Cause” shall mean, in the good faith determination of the Bank’s Board
      of Directors, the Employee’s personal dishonesty, incompetence, willful
      misconduct, breach of fiduciary duty involving personal profit, intentional
      failure to perform stated duties, willful violation of any law, rule or
      regulation (other than traffic violations or similar offenses) or final
      cease-and-desist order, or material breach of any provision of this Agreement.
      The Employee shall have no right to receive compensation or other benefits
      for
      any period after termination for Just Cause. No act, or failure to act, on
      the
      Employee’s part shall be considered “willful” unless he has acted, or failed to
      act, with an absence of good faith and without a reasonable belief that his
      action or failure to act was in the best interest of the Bank and the Company.
      Notwithstanding the foregoing, the Employee shall not be deemed to have been
      terminated for Just Cause unless there shall have been delivered to the Employee
      a copy of a resolution duly adopted by the affirmative vote of not less than
      a
      majority of the membership of the Bank’s Board at a meeting called and held for
      that purpose (after reasonable notice to the Employee and an opportunity for
      the
      Employee to be heard before the Board), finding that in the good faith opinion
      of the Boards the Employee was guilty of conduct and specifying the particulars
      thereof in detail.

    

    (e) “Protected
      Period”
      shall
      mean the period that begins on the date that is six (6) months before a Change
      in Control and ends on later of the second anniversary of the effective date
      of
      a Change in Control or the expiration of this Agreement.

    

    2. Trigger
      Events

    

    The
      Employee shall be entitled to the severance benefits set forth in Section 3
      of
      this Agreement in the event that (i) the Employee voluntarily terminates
      employment for any reason within the 30-day period beginning on the effective
      date of a Change in Control, (ii) the Employee voluntarily terminates employment
      within 90 days of an event that both occurs during the Protected Period and
      constitutes Good Reason, or (iii) the Bank, the Company, or their successor(s)
      in interest terminate the Employee’s employment for any reason other than Just
      Cause during the Protected Period.

    

    
      
        3. 
          Severance
          Benefit 

      

    

    

    If
      the
      Employee becomes entitled to collect severance benefits pursuant to Section
      2
      hereof, the Bank shall pay the Employee a severance benefit equal to two (2)
      times the Employee’s base annual salary at the rate in effect when the Protected
      Period begins. Said sum shall be paid in one lump sum within ten (10) days
      of
      the later of the date of the Change in Control and the Employee’s last day of
      employment with the Bank or the Company. In addition, upon the Employee’s
      termination of employment during the Protected Period for any reason other
      than
      Just Cause, the Employee and his spouse shall continue to participate in the
      Bank’s group health insurance program for the remainder of their respective
      lives on the terms set forth herein. The Bank shall fund the cost of such
      continuation coverage on the same terms as the Bank funded the cost of coverage
      for the Employee and his spouse immediately prior to the Employee’s termination
      of employment (i.e., the Employee will pay the same dollar amount toward the
      premium costs as he paid immediately prior to his termination of employment),
      and the Bank shall fund the balance of such costs. If, for any reason, the
      Employee or his spouse cannot be continued under the Bank’s group health
      insurance program for the period contemplated by this subparagraph, the Bank
      shall reimburse the Employee or his spouse for the cost of any substitute
      coverage obtained by the Employee or his spouse that provides substantially
      similar benefits. Such reimbursement shall be in an amount determined by
      reference to the dollar amount paid by the Employee immediately prior to his
      termination of employment, with the remaining amount paid by the
      Bank.

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    4. Excise
      Tax Indemnification

    

    (a) For
      purposes of this Agreement, “Covered Benefits” shall mean any payment or benefit
      paid or provided to the Employee by the Company, the Bank or any affiliate
      or
      any successor in interest to the Company or the Bank (whether pursuant to this
      Agreement or otherwise) that will be (or in the opinion of Tax Counsel (as
      defined below) might reasonably be expected to be) subject to any excise tax
      (the “Excise Tax”) imposed under Section 4999 of the Internal Revenue Code of
      1986, as amended (the “Code”). In the event that at any time during or after the
      Term of Employment the Employee shall receive any Covered Benefits, the Company
      shall pay to the Employee an additional amount (the “Gross-Up Payment”) such
      that the net amount retained by the Employee from the Gross-Up Payment, after
      deduction of any federal, state and local income taxes, Excise Tax, and FICA
      and
      Medicare withholding taxes on the Gross-Up Payment, shall be equal to the Excise
      Tax on the Covered Benefits. For purposes of determining the amount of such
      Excise Tax on the Covered Benefits, the amount of the Covered Benefits that
      shall be taken into account in calculating the Excise Tax shall be equal to
      (i)
      the Covered Benefits, less (ii) the amount of such Covered Benefits that, in
      the
      opinion of tax counsel selected by the Company and reasonably acceptable to
      the
      Employee (“Tax Counsel”), are not parachute payments (within the meaning of
      Section 280G(b)(1) of the Code).

    

    (b) For
      purposes of this Section 4, the Employee shall be deemed to pay federal income
      taxes at the highest marginal rate of federal income taxation in the calendar
      year in which the Excise Tax is payable and state and local income taxes at
      the
      highest marginal rate of taxation in the state and locality of the Employee’s
      residence on the effective date of the Employee’s termination, net of the
      reduction in federal income taxes which could be obtained from deduction of
      such
      state and local taxes. Except as otherwise provided herein, all determinations
      required to be made under this Section 13 shall be made by Tax Counsel, which
      determinations shall be conclusive and binding on the Employee and Company,
      absent manifest error.

    

    (c) The
      Company shall indemnify and hold the Employee harmless from any and all losses,
      costs and expenses (including without limitation, reasonable attorney’s fees,
      reasonable accountant’s fees, interest, fines and penalties of any kind) which
      the Employee incurs as a result of any administrative or judicial review of
      the
      Employee’s liability under Section 4999 of the Code by the Internal Revenue
      Service or any comparable state agency through and including a final judicial
      determination or final administrative settlement of any dispute arising out
      of
      the Employee’s liability for the Excise Tax or otherwise relating to the
      classification for purposes of Section 280G of the Code of any of the Covered
      Benefits or other payment or benefit in the nature of compensation made or
      provided to the Employee by the Company. The Employee shall promptly notify
      the
      Company in writing whenever the Employee receives notice of the commencement
      of
      any judicial or administrative proceeding, formal or informal, in which the
      federal tax treatment under Section 4999 of the Code of any amount paid or
      payable under this Agreement or otherwise is being reviewed or is in dispute
      (including a notice of audit or other inquiry concerning the reporting of the
      Employee’s liability under Section 4999). The Company may assume control at its
      expense over all legal and accounting matters pertaining to such federal or
      state tax treatment (except to the extent necessary or appropriate for the
      Employee to resolve any such proceeding with respect to any matter unrelated
      to
      the Covered Benefits or other payment or benefit in the nature of compensation
      made or provided to the Employee by the Company) and the Employee shall
      cooperate fully with the Company in any such proceeding. The Employee shall
      not
      enter into any compromise or settlement or otherwise prejudice any rights the
      Company may have in connection therewith without prior consent of the Company.
      In the event that the Company elects not to assume control over such matters,
      the Company shall promptly reimburse the Employee for all expenses related
      thereto as and when incurred upon presentation of appropriate documentation
      relating thereto. 

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    5. Term
      of the Agreement

    

    This
      Agreement shall remain in effect for the period commencing on the Effective
      Date
      and ending on the earlier of (i) the date 12 months after the Effective Date,
      and (ii) the date on which the Employee terminates employment with the Bank;
      provided that the Employee’s rights hereunder shall continue following the
      termination of this employment with the Bank under any of the circumstances
      described in Section 2 hereof. Additionally, on each annual anniversary date
      from the Effective Date, the term of this Agreement shall be extended for an
      additional one-year period beyond the then effective expiration date provided
      the Board of Directors of the Bank determines in a duly adopted resolutions
      that
      the performance of the Employee has met the requirements and standards of the
      Board, and that this Agreement shall be extended. 

    

    6. Termination
      or Suspension Under Federal Law

    

    (a) Any
      payments made to the Employee pursuant to this Agreement, or otherwise, are
      subject to and conditioned upon their compliance with 12 U.S.C. Section 1828(k)
      and any regulations promulgated thereunder.

    

    (b) If
      the
      Employee is removed and/or permanently prohibited from participating in the
      conduct of the Bank’s affairs by an order issued under Sections 8(e)(4) or
      8(g)(1) of the Federal Deposit Insurance Act (“FDIA”) (12 U.S.C. 1818(e)(4) or
      (g)(1)), all obligations of the Bank under this Agreement shall terminate,
      as of
      the effective date of the order, but the vested rights of the parties shall
      not
      be affected.

    (c) If
      the
      Bank is in default (as defined in Section 3(x)(1) of FDIA), all obligations
      under this Agreement shall terminate as of the date of default; however, this
      Paragraph shall not affect the vested rights of the parties.

    

    (d) If
      a
      notice served under Section 8(e)(3) or (g)(1) of the FDIA (12 U.S.C. 1818(e)(3)
      and (g)(1)) suspends and/or temporarily prohibits the Employee from
      participating in the conduct of the Bank’s affairs, the Bank’s obligations under
      this Agreement shall be suspended as of the date of such service, unless stayed
      by appropriate proceedings. If the charges in the notice are dismissed, the
      Bank
      may in its discretion (i) pay the Employee all or part of the compensation
      withheld while its contract obligations were suspended, and (ii) reinstate
      (in
      whole or in part) any of its obligations which were suspended.

    

    7. Expense
      Reimbursement

    

    In
      the
      event that any dispute arises between the Employee and the Bank as to the terms
      or interpretation of this Agreement, whether instituted by formal legal
      proceedings or otherwise, including any action that the Employee takes to
      enforce the terms of this Agreement or to defend against any action taken by
      the
      Bank or the Company, the Employee shall be reimbursed for all costs and
      expenses, including reasonable attorneys’ fees, arising from such dispute,
      proceedings or actions, provided that the Employee shall obtain a final judgment
      in favor of the Employee in a court of competent jurisdiction or in binding
      arbitration under the rules of the American Arbitration Association. Such
      reimbursement shall be paid within ten (10) days of Employee’s furnishing to the
      Bank or the Company written evidence, which may be in the form, among other
      things, of a cancelled check or receipt, of any costs or expenses incurred
      by
      the Employee.

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    8. Successors
      and Assigns; Source of Payments

    

    (a) This
      Agreement shall inure to the benefit of and be binding upon any corporate or
      other successor of the Bank or Company which shall acquire, directly or
      indirectly, by merger, consolidation, purchase or otherwise, all or
      substantially all of the assets or stock of the Bank or Company. 

    

    (b) Since
      the
      Bank is contracting for the unique and personal skills of the Employee, the
      Employee shall be precluded from assigning or delegating his rights or duties
      hereunder without first obtaining the written consent of the Bank.

    

    (c) The
      payments and benefits due the Employee under this Agreement, if any, shall
      be
      paid or provided by the Bank; provided, however, that the Company
      agrees that it shall be jointly and severally liable with the Bank for the
      payment of all amounts and the provision of all benefits due the Employee under
      any provision of this Agreement. 

    

    9. Amendments

    

    No
      amendments or additions to this Agreement shall be binding unless made in
      writing and signed by all of the parties, except as herein otherwise
      specifically provided.

    

    10. Applicable
      Law

    

    Except
      to
      the extent preempted by federal law, the laws of the State of North Carolina
      shall govern this Agreement in all respects, whether as to its validity,
      construction, capacity, performance or otherwise.

    

    11. Severability
      

    

    The
      provisions of this Agreement shall be deemed severable and the invalidity or
      unenforceability of any provision shall not affect the validity or
      enforceability of the other provisions hereof.

    

    12. Entire
      Agreement

    

    This
      Agreement, together with any understanding or modifications thereof as agreed
      to
      in writing by the parties, shall constitute the entire agreement between the
      parties hereto.

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF,
      the
      parties have executed this Amended and Restated Agreement on the day and year
      first hereinabove written.

    

    

      
        	
                ATTEST:

              	 	
                FIRST
                  SOUTH BANK

              
	 	 	 	 
	
                /s/
                  Kristie W. Hawkins

              	 	
                By:

              	
                /s/
                  Thomas A. Vann

              
	
                Assistant
                  Secretary

              	 	 	
                Its
                  President

              
	 	 	 	 
	
                ATTEST:

              	 	 	
                FIRST
                  SOUTH BANCORP, INC.

              
	 	 	 	 
	
                /s/
                  Kristie W. Hawkins

              	 	
                By:

              	
                /s/
                  Thomas A. Vann

              
	
                Assistant
                  Secretary

              	 	 	
                Its
                  President

              
	 	 	 	 
	
                WITNESS:

              	 	 	 
	 	 	 	 
	
                /s/
                  Kristie W. Hawkins

              	 	 	
                /s/
                  William L. Wall

              
	
                 

              	 	 	
                William
                  L. Wall

              

      

    

    
      
        
        

      

      
        6

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