Document:

Senior Subordinated Loan Agreement

 Exhibit 10.1 
 FCSTONE, LLC 
 SENIOR SUBORDINATED LOAN
AGREEMENT 
 This Senior Subordinated Loan Agreement (the “Agreement”) is effective as of the 2nd day of
June, 2008 by and among Bank of Montreal (the “Agent”), BMO Capital Markets Financing, Inc., (the “Lender”) and FCSTONE, LLC, an Iowa limited liability company (the “Borrower”),
who mutually agree as follows: 
 1. (a) The term “Designated Self-Regulatory Organization” or “DSRO” shall
mean the Exchange(s) and/or other Self-Regulatory Organizations which is (are) a party to the Joint Audit Agreement and which has (have) been designated by the Joint Audit Committee as the Borrower’s DSRO. The Borrower’s DSRO is subject to
change from time to time at the Joint Audit Committee’s discretion. 
 (b) The term “Commission” shall mean the
Commodity Futures Trading Commission. 
 (c) The term “Capital Requirements” shall mean the rules, regulations, and
requirements of the Designated Self-Regulatory Organization which were adopted pursuant to Commodity Futures Trading Commission Regulations 1.17 and 1.52. 
 (d) The term “CFTC regulations” shall mean the Commodity Futures Trading Commission’s Minimum Financial Regulations. 
 (e) The term “Adjusted Net Capital” shall mean adjusted net capital as defined in Commodity Futures Trading Commission Regulation 1.17(c)(5). 
 (f) The term “Subordination Agreement” shall mean either a subordinated loan agreement or a secured demand note agreement, as those
terms are defined in Commodity Futures Trading Commission Regulation 1.17(h)(1). 
 2. (a) The Lender agrees to lend to Borrower sums
which, in the aggregate principal amount outstanding at any one time, shall not exceed $25,000,000 (the “Revolving Credit”). Borrower may, subject to the provisions of Sections 7 and 8 hereof governing prepayments and repayments,
request advances, repay and reborrow amounts during the continuation of the Revolving Credit, as Lender in its discretion may deem advisable, subject to the applicable provisions of this Agreement upon the terms and conditions set forth herein. Each
such revolving credit loan made hereunder (an “Advance”) shall mature one year from the date of the Advance and in any case no later than June 2, 2010. 
 (b) No new Advances hereunder shall be made after June 2, 2009. 
 (c) Notwithstanding any term hereof to the contrary, the Lender reserves the right to make any Advance hereunder in their sole and absolute discretion. It is expressly understood and 

 
agreed by Borrower that nothing herein creates any liability on the Lender, its officers, directors, shareholders, successors or permitted assigns to make
any Advance. 
 (d) Whenever Borrower desires the Lender to make any Advance or extend the scheduled maturity date of an Advance, it shall
provide prior notice of such Advance to the Borrower’s DSRO, setting forth the amount of the Advance and the date on which such Advance is to be made. 
 The obligation of Borrower to repay the unpaid principal amount of the Advances made by the Lender shall be evidenced by a single promissory note of Borrower payable to the order of the Lender (individually a “Note” and
collectively the “Notes”) in substantially the form attached hereto as Exhibit A, with blanks appropriately completed, payable to the order of the Lender in a face amount set forth above for the Lender, bearing interest as set forth
in paragraph 3 hereof. The Note shall be dated, and shall be delivered to the Lender, on the date of the execution and delivery of this Agreement by Borrower. The Lender shall, and is hereby authorized by Borrower to, endorse on its books and
records, appropriate notations regarding the Advances evidenced by its Note as specifically provided therein; provided, however, that the failure to make, or error in making, any such notation shall not limit or otherwise affect the
obligations of Borrower hereunder or under the Notes. 
 3. (a) The Borrower shall give written notice to the Agent (which notice shall
be irrevocable once given, and shall be promptly confirmed in writing) by no later than 12:00 Noon (Chicago time) on the date the Borrower requests the Lender to make each Advance. The Borrower shall in any notice requesting any Advance specify the
date of the Advance requested (which shall be a Business Day), the amount of such Advance. Each Advance shall initially constitute part of the Prime Rate Portion except to the extent the Borrower has otherwise timely elected that such Advance, or
any part thereof, constitute part of a LIBOR Portion as provided in Section 3(d) hereof. The Borrower agrees that the Agent may rely on any such telephonic, telex or telegraphic notice given by any person reasonably believed by it to be
authorized to give such notice without the necessity of independent investigation and in the event any notice by such means conflicts with the written confirmation or if such written confirmation is never received by the Agent, such notice shall
govern if the Agent has reasonably acted in reliance thereon. 
 (b) The outstanding principal balance of the Advances (all of the
indebtedness evidenced by the Revolving Subordinated Notes bearing interest at the same rate for the same period of time being hereinafter referred to as a “Portion”) shall bear interest with reference to the Prime Rate (the
“Prime Rate Portion”) or, at the option of the Borrower and subject to the terms and conditions hereof, with reference to an Adjusted LIBOR (“LIBOR Portions”). All of the indebtedness evidenced by the Notes which
bear interest with reference to a particular Adjusted LIBOR for a particular Interest Period shall constitute a single LIBOR Portion and all of the indebtedness evidenced by the Notes that is not part of a LIBOR Portion shall constitute a single
Prime Rate Portion. There shall not be more than 3 LIBOR Portions outstanding at any one time. Anything contained herein to the contrary notwithstanding, the obligation of the Lender to create, continue or effect by conversion any LIBOR Portion
shall be conditioned upon the fact that at the time no Default Condition (as defined in the Commitment Agreement) or event which with the lapse of time, giving of notice, or both would constitute such a Default 

  

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Condition, shall have occurred and be continuing. The Borrower hereby promises to pay interest on each Portion of the indebtedness evidenced by the Notes at
the rates and times specified in this Agreement. Each LIBOR Portion shall be in an amount equal to $1,000,000 or such greater amount which is an integral multiple of $100,000. All interest on the Notes shall be computed on the basis of a year of 360
days for the actual number of days elapsed. 
 (c) The Prime Rate Portion shall bear interest (which the Borrower hereby promises to pay at
the times set forth below) at a rate per annum equal at all times to the Prime Rate, plus 1.50%. Any change in the interest rate on the Prime Rate Portions by reason of a change in the Prime Rate shall be and become effective as of and on the date
of the relevant change in the Prime Rate. Interest on Prime Rate Portions shall be computed on the basis of a year of 360 days and the actual number of days elapsed and shall be payable monthly in arrears on the last day of each month. After the
scheduled maturity date thereof, the unpaid principal amount of each Prime Rate Portion shall bear interest until paid at the rate per annum determined by adding 2% to the Prime Rate from time to time in effect, with any change in such rate by
reason of a change in the Prime Rate to become effective on the day of the relevant change in the Prime Rate and with such interest being payable monthly on the last day of each calendar month commencing with the first such date to occur after the
scheduled maturity date of the Prime Rate Portion and on the date such Prime Rate Portion is paid. 
 (d) Each LIBOR Portion shall bear
interest for each Interest Period selected therefor at a rate per annum determined by adding 3.00% to the Adjusted LIBOR for such Interest Period, provided that if any LIBOR Portion is not paid when due (whether by lapse of time, acceleration, or
otherwise), or at the election of the Agent (acting at the direction of the Lender) upon notice to the Borrower during the existence of any other Default Condition, such Portion shall bear interest, whether before or after judgment until payment in
full thereof, through the end of the Interest Period then applicable thereto at the rate per annum determined by adding 2% to the interest rate which would otherwise be applicable thereto, and effective at the end of such Interest Period such LIBOR
Portion shall automatically be converted into and added to the Prime Rate Portion and shall thereafter bear interest at the interest rate applicable to the Prime Rate Portion after default. Interest on each LIBOR Portion shall be due and payable on
the last day of each Interest Period applicable thereto and, with respect to any Interest Period applicable to a LIBOR Portion in excess of 3 months, on the date occurring every 3 months after the date such Interest Period began and at the
end of such Interest Period, and interest after maturity (whether by lapse of time, acceleration, or otherwise) shall be due and payable upon demand, subject to Section 5 of this Agreement. The Borrower shall notify the Agent on or before
11:00 a.m. (Chicago time) on the third Business Day preceding the end of an Interest Period applicable to a LIBOR Portion whether such LIBOR Portion is to continue as a LIBOR Portion, in which event the Borrower shall notify the Agent of the
new Interest Period selected therefor; and in the event the Borrower shall fail to so notify the Agent, such LIBOR Portion shall automatically be converted into and added to the Prime Rate Portion as of and on the last day of such Interest Period.

 (e) The Borrower shall notify the Agent by 11:00 a.m. (Chicago time) at least 3 Business Days prior to the date upon which the
Borrower requests that any LIBOR Portion be created or that any part of the Prime Rate Portion be converted into a LIBOR Portion (each such 

  

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notice to specify in each instance the amount thereof and the Interest Period selected therefor). If any request is made to convert a LIBOR Portion into
another type of Portion available hereunder, such conversion shall only be made so as to become effective as of the last day of the Interest Period applicable thereto. All requests for the creation, continuance, and conversion of Portions under this
Agreement shall be irrevocable. Such requests may be written or oral and the Agent is hereby authorized to honor telephonic requests for creations, continuances, and conversions received by it from any person the Agent in good faith believes to be
an authorized representative without the need of independent investigation, the Borrower hereby indemnifying the Agent from any liability or loss ensuing from so acting. 
 (f) Notwithstanding any other provisions of this Agreement or the Note, if at any time the Agent shall determine that any change in applicable laws, treaties, or regulations, or in the interpretation thereof, makes it
unlawful for the Lender to create or continue to maintain any LIBOR Portion, it shall promptly so notify the Borrower in writing and the obligation of the Lender to create, continue, or maintain any such LIBOR Portion under this Agreement shall be
suspended until it is no longer unlawful for the Lender to create, continue, or maintain such LIBOR Portion. If the continued maintenance of any such LIBOR Portion is unlawful, the principal amount of the affected LIBOR Portion shall be converted
into part of the Prime Rate Portion hereunder on the date determined by the Agent, subject to the terms and conditions of this Agreement (including, without limitation, Section 3(i) hereof). 
 (g) Notwithstanding any other provision of this Agreement or the Note, if the Agent shall determine prior to the commencement of any Interest Period that
deposits in the amount of any LIBOR Portion scheduled to be outstanding during such Interest Period are not readily available to the Lender in the relevant market or, by reason of circumstances affecting the relevant market, adequate and reasonable
means do not exist for ascertaining Adjusted LIBOR, then the Agent shall promptly give notice thereof to the Borrower and the obligations of the Lender to create, continue, or effect by conversion any such LIBOR Portion in such amount and for such
Interest Period shall be suspended until deposits in such amount and for the Interest Period selected by the Borrower shall again be readily available in the relevant market and adequate and reasonable means exist for ascertaining Adjusted LIBOR.

 (h) With respect to any LIBOR Portion, if the Agent shall determine that any change in any applicable law, treaty, regulation, or
guideline (including, without limitation, Regulation D of the Board of Governors of the Federal Reserve System), or any new law, treaty, regulation, or guideline, or any interpretation of any of the foregoing, by any governmental authority
charged with the administration thereof or any central bank or other fiscal, monetary, or other authority having jurisdiction over the Lender or its lending branch or the LIBOR Portions contemplated by this Agreement (whether or not having the force
of law), shall: 
  

	 	(i)	impose, increase, or deem applicable any reserve, special deposit, or similar requirement against assets held by, or deposits in or for the account of, or loans by, or any other
acquisition of funds or disbursements by, the Lender which is not in any instance already accounted for in computing the interest rate applicable to such LIBOR Portion; 

  

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	 	(ii)	subject the Lender, LIBOR Portion or Note to the extent it evidences a LIBOR Portion to any tax (including, without limitation, any United States interest equalization tax or
similar tax however named applicable to the acquisition or holding of debt obligations and any interest or penalties with respect thereto), duty, charge, stamp tax, fee, deduction, or withholding in respect of this Agreement, any LIBOR Portion or
any Note to the extent it evidences a LIBOR Portion, except such taxes as may be measured by the overall net income or gross receipts of the Lender or its lending branches and imposed by the jurisdiction, or any political subdivision or taxing
authority thereof, in which the Lender’s principal executive office or its lending branch is located; 

  

	 	(iii)	change the basis of taxation of payments of principal and interest due from the Borrower to the Lender hereunder or under the Notes to the extent it evidences any LIBOR Portion
(other than by a change in taxation of the overall net income or gross receipts of the Lender); or 

  

	 	(iv)	impose on the Lender any penalty with respect to the foregoing or any other condition regarding this Agreement, any LIBOR Portion, or its disbursement, or any Note to the extent it
evidences any LIBOR Portion; 

 and the Agent shall determine that the result of any of the foregoing is to increase the cost
(whether by incurring a cost or adding to a cost) to the Lender of creating or maintaining any LIBOR Portion hereunder or to reduce the amount of principal or interest received or receivable by the Lender (without benefit of, or credit for, any
prorations, exemption, credits or other offsets available under any such laws, treaties, regulations, guidelines, or interpretations thereof), then the Borrower shall pay on demand to the Lender from time to time as specified by the Agent such
additional amounts as the Lender shall reasonably determine are sufficient to compensate and indemnify it for such increased cost or reduced amount. If the Lender makes such a claim for compensation, it shall provide to the Borrower a certificate
setting forth the computation of the increased cost or reduced amount as a result of any event mentioned herein in reasonable detail and such certificate shall be conclusive if reasonably determined absent error. 
 (i) In the event the Lender shall incur any loss, cost, or expense (including, without limitation, any loss, cost, or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired or contracted to be acquired by the Lender to fund or maintain any LIBOR Portion or the relending or reinvesting of such deposits or other funds or amounts paid or prepaid to the
Lender) as a result of: 
  

	 	(i)	any payment or conversion of a LIBOR Portion on a date other than the last day of the then applicable Interest Period for any reason, whether before or after default, and whether or
not such payment or conversion is required by any provisions of this Agreement; or 

  

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	 	(ii)	any failure by the Borrower to create, borrow, continue, or effect by conversion a LIBOR Portion on the date specified in a notice given pursuant to this Agreement;

 then upon the demand of the Agent, the Borrower shall pay to the Lender such amount as will reimburse the Lender for such loss, cost, or
expense. If the Lender requests such a reimbursement, it shall provide to the Borrower a certificate setting forth the computation of the loss, cost or expense giving rise to the request for reimbursement in reasonable detail and such certificate
shall be conclusive if reasonably determined absent error. 
 (j) The Lender may, at its option, elect to make, fund or maintain Portions of
the Advances hereunder at such of its branches or offices as the Lender may from time to time elect. 
 (k) Notwithstanding any provision of
this Agreement to the contrary, the Lender shall be entitled to fund and maintain its funding of all or any part of the Revolving Subordinated Note in any manner it sees fit, it being understood, however, that for the purposes of this Agreement all
determinations hereunder (including, without limitation, determinations under Sections 3(g), (h) and (i) hereof) shall be made as if the Lender had actually funded and maintained each LIBOR Portion during each Interest Period
applicable thereto through the purchase of deposits in the relevant market in the amount of such LIBOR Portion, having a maturity corresponding to such Interest Period, and, in the case of any LIBOR Portion bearing an interest rate equal to the
LIBOR for such Interest Period. 
 (l) For purposes of this Agreement, the following terms shall have the following definitions: 

“Adjusted LIBOR” means a rate per annum determined by the Agent in accordance with the following formula: 

 

					
	Adjusted LIBOR =	  	 LIBOR
	  	
		  	100%—Reserve Percentage	  	

 “Reserve Percentage” means, for the purpose of computing Adjusted LIBOR, the
maximum rate of all reserve requirements (including, without limitation, any marginal, emergency, supplemental or other special reserves) imposed by the Board of Governors of the Federal Reserve System (or any successor) under Regulation D on
Eurocurrency liabilities (as such term is defined in Regulation D) for the applicable Interest Period as of the first day of such Interest Period, but subject to any amendments to such reserve requirement by such Board or its successor, and taking
into account any transitional adjustments thereto becoming effective during such Interest Period. For purposes of this definition, LIBOR Portions shall be deemed to be Eurocurrency liabilities as defined in Regulation D without benefit of or credit
for prorations, exemptions or offsets under Regulation D. “LIBOR” means, for each Interest Period, (a) the LIBOR Index Rate for such Interest Period, if such rate is available, and (b) if the LIBOR Index Rate cannot
be determined, the arithmetic average of the rates of interest per 

  

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annum (rounded upward, if necessary, to the nearest 1/100th of 1%) at which deposits in U.S. Dollars in immediately available funds are offered to the
Agent at 11:00 a.m. (London, England time) 2 Business Days before the beginning of such Interest Period by 3 or more major banks in the interbank eurodollar market selected by the Agent for a period equal to such Interest Period and in an
amount equal or comparable to the applicable LIBOR Portion scheduled to be outstanding from the Agent during such Interest Period. “LIBOR Index Rate” means, for any Interest Period, the rate per annum (rounded upwards, if necessary,
to the next higher one hundred-thousandth of a percentage point) for deposits in U.S. Dollars for a period equal to such Interest Period, which appears on the LIBOR01 Page as of 11:00 a.m. (London, England time) on the day 2 Business
Days before the commencement of such Interest Period. “LIBOR01 Page” means the display designated as “Reuters Screen LIBOR01 Page” (or such other page as may replace LIBOR01 Page on that service or such other
service as may be nominated by the British Bankers’ Association as the information vendor for the purpose of displaying British Bankers’ Association Interest Settlement Rates for U.S. Dollar deposits). Each determination of LIBOR made
by the Agent shall be conclusive and binding absent manifest error. 
 “Business Day” means any day other
than a Saturday or Sunday on which the Agent is not authorized or required to close in Chicago, Illinois and, when used with respect to LIBOR Portions, a day on which the Agent is also dealing in United States Dollar deposits in London, England and
Nassau, Bahamas. 
 “Interest Period” means, with respect to (a) any LIBOR Portion, the period
commencing on, as the case may be, the creation, continuation or conversion date with respect to such LIBOR Portion and ending 1, 2, 3 or 6 months thereafter as selected by the Borrower in its notice as provided herein; provided that all of the
foregoing provisions relating to Interest Periods are subject to the following: 
  

	 	(i)	if any Interest Period would otherwise end on a day which is not a Business Day, that Interest Period shall be extended to the next succeeding Business Day, unless in the case of an
Interest Period for a LIBOR Portion the result of such extension would be to carry such Interest Period into another calendar month in which event such Interest Period shall end on the immediately preceding Business Day; 

  

	 	(ii)	no Interest Period may extend beyond the final maturity date of the Note; 

  

	 	(iii)	the interest rate to be applicable to each Portion for each Interest Period shall apply from and including the first day of such Interest Period to but excluding the last day
thereof; and 

  

	 	(iv)	 no Interest Period may be selected if after giving effect thereto the Borrower will be unable to make a principal payment scheduled to be 

  

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made during such Interest Period without paying part of a LIBOR Portion on a date other than the last day of the Interest Period applicable thereto.

 For purposes of determining an Interest Period, a month means a period starting on one day in a calendar month and ending
on a numerically corresponding day in the next calendar month, provided, however, if an Interest Period begins on the last day of a month or if there is no numerically corresponding day in the month in which an Interest Period is to end, then
such Interest Period shall end on the last Business Day of such month. 
 “Prime Rate” at any time shall mean
the rate of interest then most recently announced by Bank of Montreal as its prime commercial rate, or its equivalent, for U.S. Dollar loans to borrowers located in the United States. 
 (m) All indemnities and other provisions relative to reimbursement to the Lender of amounts sufficient to protect the yield of the Lender with respect to
the Advances, including, but not limited to, Sections 3(h) and (i) hereof, shall survive the termination of this Agreement and the payment of the Notes. 
 4. The Lender hereby subordinates any right to receive any payment with respect to this Agreement, together with accrued interest or compensation, to the prior payment or provision for payment in full of all claims of
all present and future creditors of the Borrower arising out of any matter occurring prior to the scheduled final maturity date of the Advances, except for claims which are the subject of subordination agreements which rank on the same priority as
or are junior to the claim of the Lender under this Agreement. 
 5. The proceeds of this Agreement shall be used and dealt with by the
Borrower as part of its capital and shall be subject to the risks of its business. 
 6. The Borrower shall have the right to deposit any
cash proceeds of this subordinated loan agreement in an account or accounts in its own name in any bank or trust company. 
 7. Borrower, at
its option, but not at the option of the Agent or the Lender, may make a payment of all or any portion of any Advance made hereunder prior to the scheduled maturity date thereof, (hereinafter referred to as a “Prepayment”) in a
minimum principal amount of $100,000. No Prepayment may be made before the expiration of one year from the date this Agreement becomes effective unless it is a Special Prepayment made pursuant to paragraph 8 hereof. No Prepayment shall be made
if, after giving effect thereto (and to all payments of payment obligations under any other subordination agreements then outstanding, the maturity or accelerated maturities of which are scheduled to fall due within six months after the date such
Prepayment is to occur pursuant to this provision, or on or prior to the date on which the payment obligation with respect to such Prepayment is scheduled to mature disregarding this provision, whichever date is earlier) without reference to any
projected profit or loss of the Borrower, the Adjusted Net Capital of the Borrower is less than the greatest of 1) 120% of the appropriate minimum dollar amount required by CFTC Regulations; or 2) 120% of the firm’s risk based capital
requirement calculated in accordance with CFTC Regulations; or 3) if the Borrower is a 

  

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securities broker or dealer, the amount of net capital specified in Rule 15c3-1d(b)(7) of the Regulations of the Securities and Exchange Commission
[17C.F.R.240.15c3-1d(b)(7)]; or 4) the minimum capital requirement defined by the DSRO. Notwithstanding the above, no Prepayment shall occur without the prior written approval of the Designated Self-Regulatory Organization. 
 8. Borrower, at its option, but not at the option of the Agent or the Lender, may make a payment of all or any part of the Advances prior to the
scheduled maturity date thereof (hereinafter referred to as a “Special Prepayment”) in a minimum principal amount of $100,000 if the written consent of the Designated Self-Regulatory Organization is first obtained. Provided,
however, that no such prepayment shall be made if: 
 (a) After giving effect thereto (and to all payments of payment
obligations under any other subordination agreements then outstanding, the maturities or accelerated maturities of which are scheduled to fall due within six months after the date such Special Prepayment is to occur pursuant to this provision, or on
or prior to the date on which the payment obligation in respect to such Special Prepayment is scheduled to mature disregarding this provision, whichever date is earlier) without reference to any projected profit or loss of the Borrower, the Adjusted
Net Capital of the Borrower is less than the greatest of 1) 200% of the appropriate minimum dollar amount required by CFTC Regulations, or 2) 125% of the firm’s risk based capital requirement calculated in accordance with CFTC
Regulations; or 3) if the Borrower is a securities broker or dealer, the amount of net capital specified in Rule 15c3-1d(c)(5)(ii) of the regulations of the Securities and Exchange Commission, [17C.F.R.240.15c3-1d(5)(ii)]; or 4) the minimum
capital requirement as defined by the DSRO; or 
 (b) Pretax losses during the latest three month period were greater than 15%
of current excess adjusted net capital. 
 9. (a) The payment obligation of the Borrower in respect of this Agreement shall be suspended and
shall not mature if, after giving effect to payment of such payment obligation (and to all payments of payment obligations of the Borrower under any other subordination agreements then outstanding which are scheduled to mature on or before such
payment obligation), the Adjusted Net Capital of the Borrower would be less than the greatest of 1) 120% of the appropriate minimum dollar amount required by CFTC Regulations; or 2) 120% of the firm’s risk based capital requirement
calculated in accordance with CFTC Regulations; or 3) if the Borrower is a securities broker or dealer, the amount of net capital specified in Rule 15c3-1d(b)(8)(i) of the Regulations of the Securities and Exchange Commission,
[17C.F.R.240.15c3-1d(b)(8)(i)]; or 4) the minimum capital requirement as defined by the DSRO. Provided that if the payment obligation of the Borrower hereunder does not mature and is suspended as a result of the requirements of this paragraph
for a period of not less than six months, the Borrower shall then commence the rapid and orderly liquidation of its entire business, but the right of the Lender to receive payment, together with accrued interest or compensation shall remain
subordinate as required by the provisions of this Agreement. 
 (b) In the event the Borrower is required to commence a rapid and orderly
liquidation, as permitted in paragraph 9(a), the date on which the liquidation commences shall be the 

  

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maturity date for any subordination agreement of the Borrower then outstanding, but the rights of the Lender to receive payment, together with accrued
interest or compensation, shall remain subordinate as required by the provisions of such agreements. 
 10. Subject to the provisions of
paragraph 9 of this Agreement, the Lender may, upon prior written notice to the Borrower and the Designated Self-Regulatory Organization and, if required, the Commission, given not earlier than six months after the effective date of this Agreement,
accelerate the date on which the payment obligation of the Borrower, together with accrued interest or compensation, is scheduled to mature to a date not earlier than six months after giving of such notice, but the rights of the Lender to receive
payment, together with accrued interest or compensation, shall remain subordinate as required by the provisions of this Agreement. 
 11.
Notwithstanding the provisions of paragraph 9 of this Agreement, the payment obligation of the Borrower with respect to this Agreement, together with accrued interest and compensation, shall mature in the event of any receivership, insolvency,
liquidation pursuant to the Securities Investor Protection Act of 1970 or otherwise, bankruptcy, assignment for the benefit of creditors, reorganization whether or not pursuant to the bankruptcy laws, or any other marshalling of the assets and
liabilities of the Borrower, but the right of the Lender to receive payment, together with accrued interest or compensation, shall remain subordinate as required by the provisions of this Agreement. 
 12. The Borrower shall immediately notify the Designated Self-Regulatory Organization and the Commission if, after giving effect to all payments of
payment obligations under subordination agreements then outstanding which are then due or mature within the following six months without reference to any projected profit or loss of the Borrower, its adjusted net capital would be less than the
greatest of 1) 120% of the appropriate minimum dollar amount required by CFTC Regulations; or 2) 120% of the firm’s risk based capital requirements calculated in accordance with CFTC Regulations; or 3) if Borrower is a securities
broker or dealer, the amount of net capital specified in Rules 15c3-1d(c)(2) of the Regulations of the Securities and Exchange Commission, [17C.F.R.240.15c3-1d(b)(c)(2)]; or 4) the minimum capital requirement as defined by the DSRO. 

13. Neither this Agreement nor any note or other instrument made hereunder is entered into in reliance upon the standing of the Borrower as a member
organization of any commodity exchange or securities exchange or upon any such exchange’s surveillance of the Borrower or its capital position. The Lender is not relying upon any such exchange to provide any information concerning or relating
to the Borrower. No such exchange has a responsibility to disclose to the Lender any information concerning or relating to the Borrower which it may have now or at any future time. Neither any such exchange nor any officer or employee of any such
exchange shall be liable to the Lender with respect to this Agreement, the Indebtedness, the repayment thereof, any interest or compensation thereon or any damages resulting from the breach of this Agreement. Neither the Designated Self-Regulatory
Organization nor the Commission is a guarantor of this Agreement. 
  

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 14. This Agreement shall be binding upon the Lender and the Borrower and their respective, heirs,
executors, administrators, successors and assigns. 
 15. Any note or other written instrument evidencing the Indebtedness shall bear on its
face an appropriate legend stating that such note or instrument is issued subject to the provisions of this Agreement, which shall be adequately referred to and incorporated by reference herein. 
 16. This Agreement shall not be subject to cancellation by any party; no payment shall be made with respect thereto and this Agreement shall not be
terminated, rescinded or modified by mutual consent or otherwise if the effect thereof would be inconsistent with the Capital Requirements or, if applicable, the CFTC Regulations. 
 17. This Agreement is governed by the internal laws of the State of Illinois. 
 18. Any notice required or provided for herein shall be deemed to have been given or received when it has been delivered in person or has been deposited,
postage prepaid, by United States certified or registered mail, addressed to the person for whom intended: 
  

	 	(a)	If for Borrower: 

 FCStone, LLC

 10330 NW Prairie View Drive 
 Kansas City, Missouri 64153 
 Attention: William Dunaway 
  

	 	(b)	If for Agent: 

 Bank of Montreal

 115 South LaSalle Street 
 Chicago, Illinois 60603 
 Attention: Futures and Securities Division 
  

	 	(c)	If for Borrower’s Designated Self-Regulatory Organization: 

 Chicago Mercantile Exchange 
 20 South Wacker Drive 
 Chicago, Illinois 60606 
 19. Upon this Agreement becoming effective it shall supersede all prior agreements of the parties with respect to the Advances. 
  

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 IN WITNESS WHEREOF, the parties hereto have set their hands
this 2nd day of June, 2008. 
  

									
	 FCSTONE, LLC
	 		 	BANK OF MONTREAL, as agent
					
	By	 	 /s/ William Dunaway
	 		 	By	 	 /s/ Linda C. Haven

	Its:	 	CFO	 		 	Its	 	Managing Director
				
	BMO CAPITAL MARKETS FINANCING, INC.	 		 		 	
					
	By	 	 /s/ Linda C. Haven
	 		 		 	
	Its:	 	Managing Director	 		 		 	

  

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 SUBORDINATION AGREEMENT 
 INFORMATION STATEMENT 
  

			
	Name and address of Lender:	 	BMO Capital Markets Financing, Inc.
		 	115 South LaSalle Street
		 	Chicago, Illinois 60603
		
		 	Attention: Futures and Securities Division

 Business relationship of Lender to clearing member: 
  

			
	 Partner
	 	            N/A            
		
	 Stockholder
	 	            N/A            

 Other Lender is a lending institution with no ownership interest in the clearing member. 
 Did the clearing member carry funds or securities for the Lender at or about the time the proposed Subordinated Agreement was filed? 
 Yes                    No    X     

 EXHIBIT A 
 FCSTONE, LLC 
 SUBORDINATED NOTE

  

			
		  	Chicago, Illinois
	 $25,000,000
	  	June 2, 2008

 The undersigned, FCSTONE, LLC, an Iowa limited liability company, for value
received, hereby promises to pay to the order of BMO Capital Markets Financing, Inc. (the “Lender”) at the principal office of the Agent in Chicago, Illinois, the principal sum of Twenty-Five Million and No/100 Dollars ($25,000,000)
or, if less, the aggregate unpaid principal amount of Advances made by the Lender to the undersigned which are governed by the Senior Subordinated Loan Agreement dated as of June 2, 2008 (and, if amended, all amendments thereto) (the
“Agreement”) among the undersigned, Bank of Montreal, as agent, and the Lender. 
 AS PROVIDED
IN THE AGREEMENT THE PAYMENT OF PRINCIPAL OF AND INTEREST ON THIS
NOTE IS EXPRESSLY SUBORDINATED TO THE PAYMENT OF ALL OTHER CLAIMS ON
THE UNDESIGNED THAT ARE NOT SIMILARLY SUBORDINATED. 
 All amounts payable by the Borrower hereunder shall be paid in full, without setoff, counterclaim or reduction and without any deduction for, and free from, any and all present or future taxes, levies, duties, fees,
charges, deductions, withholdings or liabilities with respect thereto or any restrictions or conditions of any nature whatsoever. In the event that the Borrower is compelled by law to make any such deduction or withholding, the Borrower shall
nevertheless pay the Lender such amounts as will result in receipt by the Lender of the sum it would have received had no such deduction or withholding been required to be made. This Note shall be subject to the Agreement, and all principal and
interest payable hereunder shall be due and payable in accordance with the terms of the Agreement. The holder shall endorse on its books and records the principal amount of each advance made the maturity thereof, all payments of principal and
interest, the principal balance from time to time outstanding and the interest rate applicable thereto. Such record shall be prima facie evidence as to all such amounts. The failure to so record any of the foregoing shall not, however, limit or
otherwise affect the obligations of FCSTONE, LLC under the Agreement or under this Note to repay the principal amount of the advance made to it by said Lender under the Agreement, together with all interest accruing thereon.

 The undersigned further promises to pay to the order of the Lender interest on the principal sum hereunder from time to time outstanding
at the rates and at the times set forth in the Agreement. Interest after maturity shall be payable on demand. 

 The Borrower promises to pay costs of collection, including reasonable attorneys’ fees, if default
is made in the payment of this Note. 
  

			
	FCSTONE, LLC
		
	By	 	
	Name:	 	  

	Its:	 	  

  

 -2- 

 Schedule attached to Subordinated Note dated June 2, 2008 of FCStone, LLC payable to the order of Bank of
Montreal. 
  

							
	 DATE
	  	AMOUNT OF
LOAN MADE	  	AMOUNT OF
PRINCIPAL REPAID	  	UNPAID
PRINCIPAL BALANCEEmployment Agreement of T. Allen Liles

 Exhibit 10.1 
 EMPLOYMENT AGREEMENT 
 This EMPLOYMENT AGREEMENT (this “Agreement”) is entered into effective as of this 2nd day of              June             , 2008, by and among
Carolina Bank Holdings, Inc., a North Carolina corporation (the “Corporation”), Carolina Bank, a North Carolina-chartered bank and wholly owned subsidiary of Carolina Bank Holdings, Inc. (the “Bank”),
and T. Allen Liles, Executive Vice President and Chief Financial Officer of the Corporation and the Bank (the “Executive”). The Corporation and the Bank are referred to in this Agreement individually and together as the
“Employer.” 
 WHEREAS, the Executive is the Executive Vice President and
Chief Financial Officer of the Employer, possessing unique skills, knowledge, and experience relating to the Employer’s business, and the Executive has made and is expected to continue to make major contributions to the profitability, growth,
and financial strength of the Employer and affiliates, 
 WHEREAS, the Employer and the Executive intend
that this Agreement shall supersede and replace in its entirety the July 24, 2001 Employment Agreement, as the same may have been amended, between the Executive and the Bank, and 
 WHEREAS, none of the conditions or events included in the definition of the term “golden parachute
payment” that is set forth in Section 18(k)(4)(A)(ii) of the Federal Deposit Insurance Act [12 U.S.C. 1828(k)(4)(A)(ii)] and in Federal Deposit Insurance Corporation Rule 359.1(f)(1)(ii) [12 CFR 359.1(f)(1)(ii)] exists or, to the best
knowledge of the Employer, is contemplated insofar as the Employer or any affiliates are concerned. 
 NOW
THEREFORE, in consideration of these premises, the mutual covenants contained herein, and other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree
as follows. 
 ARTICLE 1 
 EMPLOYMENT 
 1.1        Employment. The
Employer hereby employs the Executive to serve as Executive Vice President and Chief Financial Officer according to the terms and conditions of this Agreement and for the period stated in section 1.3. The Executive hereby accepts employment
according to the terms and conditions of this Agreement and for the period stated in section 1.3. 
 1.2        Duties. As Executive Vice President and Chief Financial Officer, the Executive shall serve under the direction of the Employer’s board of directors and in accordance with the
Employer’s Articles of Incorporation and Bylaws, as each may be amended or restated from time to time. The Executive shall serve the Employer faithfully, diligently, competently, and to the best of the Executive’s ability. The Executive
shall exclusively devote full working time, energy, and attention to the business of the Employer and to the promotion of the Employer’s interests throughout the term of this Agreement. Without the written consent of the Corporation and the
Bank, the Executive shall not render services to or for any person, firm, corporation, or other entity or organization in exchange for compensation, regardless of the form in which the compensation is paid and regardless of whether it is paid
directly or indirectly to the Executive. 

 
Nothing in this section 1.2 shall prevent the Executive from managing personal investments and affairs, provided that doing so does not interfere with the
proper performance of the Executive’s duties and responsibilities under this Agreement. 
 1.3        Term. The initial term of this Agreement shall be for a period of three years, commencing on the effective date first written above. On the first anniversary of the effective date
and on each anniversary thereafter, this Agreement shall be extended automatically for one additional year unless the Employer’s board of directors determines that the term shall not be extended. If the board of directors determines not to
extend the term, it shall promptly notify the Executive in writing. If the board decides not to extend the term of this Agreement, this Agreement shall nevertheless remain in force until its term expires. The board’s decision not to extend the
term of this Agreement shall not – by itself – give the Executive any rights under this Agreement to claim an adverse change in position, compensation, or circumstances or otherwise to claim entitlement to severance benefits under Articles
4 or 5 of this Agreement. References herein to the term of this Agreement mean the initial term, as the same may be extended. Unless sooner terminated, the Executive’s employment shall terminate when the Executive attains age 65. 
 ARTICLE 2 
 COMPENSATION 
 2.1        Base Salary. In consideration of the
Executive’s performance of the obligations under this Agreement, the Employer shall pay or cause to be paid to the Executive a salary at the annual rate of not less than $156,346.26, payable in installments twice monthly. The Executive’s
salary shall be reviewed annually by the Governance Committee of the Employer’s board of directors or by such other board committee as has jurisdiction over executive compensation. In the discretion of the committee having jurisdiction over
executive compensation (x) the Executive’s salary may be increased to account for increases in the cost of living, but cost-of-living increases, if any, shall not occur more frequently than annually, and (y) the
Executive’s salary also may be increased beyond the amount necessary to account for cost of living increases. However, the Executive’s salary shall not be reduced. The Executive’s salary, as the same may be increased from time to
time, is referred to in this Agreement as the “Base Salary.” 
 2.2        Benefit Plans and Perquisites. The Executive shall be entitled throughout the term of this Agreement to participate in any and all officer or employee compensation, bonus, incentive,
and benefit plans in effect from time to time, including without limitation plans providing pension, medical, dental, disability, and group life benefits, including the Employer’s 401(k) Plan, and to receive any and all other fringe benefits
provided from time to time, provided that the Executive satisfies the eligibility requirements for any such plans or benefits. Without limiting the generality of the foregoing – 
 (a)        Participation in stock plans. The Executive shall be eligible to participate in stock option
plans and other stock-based compensation, incentive, bonus, or purchase plans existing on the date of this Agreement or adopted during the term of this Agreement. 
 (b)        Club dues. During the term of this Agreement, the Employer shall pay or cause to be paid the Executive’s membership dues in the Asheboro Country Club and
reimburse the Executive for expenses associated with use of the club for business purposes. 
  

 2 

 (c)        Reimbursement of business expenses. The
Executive shall be entitled to reimbursement for all reasonable business expenses incurred performing the obligations under this Agreement, including but not limited to all reasonable business travel and entertainment expenses incurred while acting
at the request of or in the service of the Employer and reasonable expenses for attendance at annual and other periodic meetings of trade associations. 
 2.3        Vacation. The Executive shall be entitled to paid annual vacation and sick leave in accordance with the policies established from time to time by the Employer.

 ARTICLE 3 
 EMPLOYMENT TERMINATION 
 3.1        Termination
Because of Death or Disability. (a) Death. The Executive’s employment shall terminate automatically at the Executive’s death. If the Executive dies in active service to the Employer, the Executive’s estate shall
receive any sums due to the Executive as Base Salary and reimbursement of expenses through the end of the month in which death occurred, any bonus earned or accrued through the date of death, including any unvested amounts awarded for previous
years, and for twelve months after the Executive’s death the Employer shall provide without cost to the Executive’s family continuing health care coverage under COBRA substantially identical to that provided for the Executive before death.

 (b)        Disability. By delivery of written notice 30 days in advance to the Executive,
the Employer may terminate the Executive’s employment if the Executive is disabled. For purposes of this Agreement the Executive shall be considered “disabled” if an independent physician selected by the Employer and
reasonably acceptable to the Executive or the Executive’s legal representative determines that, because of illness or accident, the Executive is unable to perform the Executive’s duties and will be unable to perform the Executive’s
duties for a period of 90 consecutive days. The Executive shall not be considered disabled, however, if the Executive returns to work on a full-time basis within 30 days after the Employer gives notice of termination due to disability. If the
Executive’s employment terminates because of disability, the Executive shall receive the salary earned through the date on which termination became effective, any unpaid bonus or incentive compensation due to the Executive for the calendar year
preceding the calendar year in which the termination became effective, any payments the Executive is eligible to receive under any disability insurance program in which the Executive participates, and such other benefits to which the Executive may
be entitled under the Employer’s benefit plans, policies, and agreements, or the provisions of this Agreement. 
 3.2        Involuntary Termination with Cause. The Employer may terminate the Executive’s employment with Cause. If the Executive’s employment terminates with Cause, the Executive
shall receive the Base Salary through the date on which termination becomes effective and reimbursement of expenses to which the Executive is entitled when termination becomes effective. For purposes of this Agreement “Cause”
means any of the following – 
 (a)        an intentional act of fraud, embezzlement, or theft
by the Executive in the course of employment. For purposes of this Agreement no act or failure to act on the Executive’s part shall be deemed to have been intentional if it was due primarily to an error in judgment or negligence. An act or
failure to act on the Executive’s part shall be considered intentional if it is not in good faith and if it is without a reasonable belief that the action or failure to act is in the Employer’s best interests, or 
  

 3 

 (b)        a willful violation by the Executive of any applicable
law or significant policy of the Employer or an affiliate that, in the Employer’s judgement, results in an adverse effect on the Employer or the affiliate, regardless of whether the violation leads to criminal prosecution or conviction. For
purposes of this Agreement applicable laws include any statute, rule, regulatory order, statement of policy, or final cease-and-desist order of any governmental agency or body having regulatory authority over the Bank, or 
 (c)        the Executive’s gross negligence or gross neglect of duties or intentional and material failure
to perform stated duties after written notice thereof, or 
 (d)        intentional wrongful damage
by the Executive to the Employer’s business or property, including without limitation the Employer’s reputation, which in the Employer’s sole judgment causes material harm to the Employer, or 
 (e)        disloyalty or dishonesty by the Executive in the performance of the Executive’s duties, or a
breach of the Executive’s fiduciary duties for personal profit, in any case whether in the Executive’s capacity as a director or officer, or 
 (f)        failure of the Executive to comply with this Agreement, which in the sole judgment of the Employer is a material failure to comply and is not corrected by the
Executive within ten days after receiving written notice from the Employer, or 
 (g)        removal
of the Executive from office or permanent prohibition of the Executive from participating in the Employer’s affairs by an order issued under section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act, 12 U.S.C. 1818(e)(4) or (g)(1), or

 (h)        occurrence of any event that results in the Executive being excluded from coverage, or
having coverage limited for the Executive as compared to other executives of the Employer, under the Employer’s blanket bond or other fidelity or insurance policy covering its directors, officers, or employees, or 
 (i)        conviction of the Executive for or plea of no contest to a felony or conviction of or plea of no
contest to a misdemeanor involving moral turpitude, or the actual incarceration of the Executive for 45 consecutive days or more. 
 3.3        Involuntary Termination Without Cause and Voluntary Termination with Good Reason. With written notice to the Executive 90 days in advance, the Employer may terminate the
Executive’s employment without Cause. Termination shall take effect at the end of the 90-day period. With advance written notice to the Employer as provided in clause (y), the Executive may terminate employment with Good Reason. If the
Executive’s employment terminates involuntarily without Cause or voluntarily but with Good Reason, the Executive shall be entitled to the benefits specified in Article 4 of this Agreement. For purposes of this Agreement a voluntary termination
by the Executive shall be considered a voluntary termination with Good Reason if the conditions stated in both clauses (x) and (y) are satisfied – 
 (x)        a voluntary termination by the Executive shall be considered a voluntary termination with Good
Reason if any of the following occur without the Executive’s advance 

  

 4 

 
written consent, and the term Good Reason shall mean the occurrence of any of the following without the Executive’s advance written consent –

 1)        a material diminution of the Executive’s Base Salary, 

2)        a material diminution of the Executive’s authority, duties, or
responsibilities, 
 3)        a material diminution in the authority, duties, or
responsibilities of the supervisor to whom the Executive is required to report, 
 4)        a material diminution in the budget over which the Executive retains authority, 
 5)        a material change in the geographic location at which the Executive must perform services for the Employer, or 
 6)        any other action or inaction that constitutes a material breach by the Employer of this
Agreement. 
 (y)        the Executive must give notice to the Employer of the existence of
one or more of the conditions described in clause (x) within 90 days after the initial existence of the condition, and the Employer shall have 30 days thereafter to remedy the condition. In addition, the Executive’s voluntary
termination because of the existence of one or more of the conditions described in clause (x) must occur within 24 months after the initial existence of the condition. 
 3.4        Voluntary Termination by the Executive Without Good Reason. If the Executive terminates
employment voluntarily but without Good Reason, the Executive shall receive the Base Salary and expense reimbursement to which the Executive is entitled through the date on which termination becomes effective. 
 ARTICLE 4 
 SEVERANCE COMPENSATION 
 4.1        Cash Severance
after Termination Without Cause or Termination with Good Reason. (a) Subject to the possibility that cash severance after employment termination might be delayed under section 4.1(b), if the Executive’s employment terminates
involuntarily but without Cause or voluntarily but with Good Reason, 30 days after employment termination the Employer shall pay to the Executive in a single lump sum cash in an amount equal to two times the Executive’s Base Salary on the date
notice of employment termination is given, without discount for the time value of money. The Employer and the Executive acknowledge and agree that the compensation and benefits under this section 4.1 shall not be payable if compensation and benefits
are payable or shall have been paid to the Executive under Article 5 of this Agreement. 
 (b)        If when employment termination occurs the Executive is a specified employee within the meaning of section 409A of the Internal Revenue Code of 1986, if the cash severance payment under
section 4.1(a) would be considered deferred compensation under section 409A, and finally if an exemption from the six-month delay requirement of section 409A(a)(2)(B)(i) is 

  

 5 

 
not available, the Executive’s cash severance payment under section 4.1(a) shall be paid to the Executive in a single lump sum without interest on the
first day of the seventh month after the month in which the Executive’s employment terminates. References in this Agreement to Internal Revenue Code section 409A include rules, regulations, and guidance of general application issued by the
Department of the Treasury under section 409A. 
 4.2        Post-Termination Insurance
Coverage. (a) Subject to section 4.2(b), if the Executive’s employment terminates involuntarily but without Cause, voluntarily but with Good Reason, or because of disability, the Employer shall continue or cause to be continued at the
Employer’s expense and on behalf of the Executive and the Executive’s dependents and beneficiaries medical and dental insurance coverage as in effect during and in accordance with the same schedule prevailing in the 12 months preceding the
date of the Executive’s termination. The insurance benefits provided by this section 4.2(a) shall be reduced if the Executive obtains disability, medical, or dental insurance benefits through another employer, or eliminated entirely if the
other employer’s insurance benefits are equivalent or superior to the benefits provided under this section 4.2(a). If the insurance benefits are reduced, they shall be reduced by an amount such that the Executive’s aggregate insurance
benefits for the period specified in this section 4.2(a) are equivalent to the benefits to which the Executive would have been entitled had the Executive not obtained disability, medical, or dental insurance benefits through another employer. The
medical and dental insurance coverage shall continue until the first to occur of (w) the Executive’s return to employment with the Employer or another employer providing equivalent or superior insurance benefits, (x) the
Executive’s attainment of age 65, (y) the Executive’s death, or (z) the end of the term remaining under this Agreement when the Executive’s employment terminates. This section 4.2 shall not be interpreted to
limit any benefits to which the Executive or the Executive’s dependents or beneficiaries may be entitled under any of the Employer’s employee benefit plans, agreements, programs, or practices after the Executive’s employment
termination, including without limitation retiree medical benefits. 
 (b)        If
(x) under the terms of the applicable policy or policies for the insurance benefits specified in section 4.2(a) it is not possible to continue the Executive’s coverage or (y) when employment termination occurs the
Executive is a specified employee within the meaning of section 409A of the Internal Revenue Code of 1986, if any of the continued insurance benefits specified in section 4.2(a) would be considered deferred compensation under section 409A, and
finally if an exemption from the six-month delay requirement of section 409A(a)(2)(B)(i) is not available for that particular insurance benefit, instead of continued insurance coverage under section 4.2(a) the Employer shall pay to the Executive in
a single lump sum an amount in cash equal to the present value of the Employer’s projected cost to maintain that particular insurance benefit had the Executive’s employment not terminated, assuming continued coverage for the lesser of 36
months or the number of months until the Executive attains age 65. The lump-sum payment shall be made 30 days after employment termination or, if section 4.1(b) applies and a six-month delay is required under Internal Revenue Code section 409A, on
the first day of the seventh month after the month in which the Executive’s employment terminates. 
 4.3        Release. The Executive shall be entitled to no compensation or other benefits under this Article 4 unless the Executive enters into a release in form satisfactory to the Executive
and the Employer acknowledging the Employer’s and the Executive’s remaining obligations and discharging both parties, as well as the Employer’s officers, directors, and employees for their actions for or on behalf of the Employer,
from any other claims or obligations arising out of the Executive’s employment by the Employer, including the 

  

 6 

 
circumstances of the Executive’s employment termination. The non-compete and other covenants contained in Article 7 of this Agreement are not contingent
on the Executive entering into a release under this section 4.3 and shall be effective regardless of whether the Executive enters into the release. 
 ARTICLE 5 
 CHANGE IN CONTROL 
 5.1        Change in Control Benefits. (a) If a Change in Control occurs during the term of this
Agreement, the Employer shall make or cause to be made a lump-sum payment to the Executive in an amount in cash equal to three times the Executive’s annual compensation. For this purpose annual compensation means (x) the
Executive’s Base Salary when the Change in Control occurs plus (y) any cash bonus or cash incentive compensation earned for the calendar year ended immediately before the year in which the Change in Control occurs, regardless of
when the cash bonus or cash incentive compensation earned for the preceding calendar year is paid and regardless of whether all or part of the bonus or incentive compensation is subject to elective deferral or vesting. Annual compensation shall be
calculated without regard to any deferrals under qualified or nonqualified plans, but annual compensation shall not include interest or other earnings credited to the Executive under qualified or nonqualified plans or any compensation paid to the
Executive in the Executive’s capacity as a director. The amount payable to the Executive hereunder shall not be reduced to account for the time value of money or discounted to present value. The payment required under this paragraph (a) is
payable no later than five business days after the Change in Control occurs. If the Executive receives payment under section 5.1 the Executive shall not be entitled to any additional severance benefits under section 4.1 of this Agreement after
employment termination. The Executive shall be entitled to benefits under this section 5.1 on no more than one occasion. 
 (b)        If a Change in Control occurs during the term of this Agreement the Employer shall cause the Executive to become fully vested in awards under any stock option, stock incentive, or other
non-qualified plans, programs, or arrangements in which the Executive participated if (x) the plan, program, or arrangement does not address the effect of a change in control or termination after a change in control and
(y) award vesting occurs automatically with the passage of time or years of service. Provided the Executive is at the time a covered employee within the meaning of Internal Revenue Code section 162(m), accelerated vesting in or
entitlement to awards shall not occur under this section 5.1(b) in the case of any award for which vesting or entitlement is based on achievement of performance conditions, whether the conditions have to do with individual performance or corporate
performance measures, including but not limited to stock price or financial statement or other financial measures. 
 5.2        Change in Control Defined. For purposes of this Agreement “Change in Control” means a change in control as defined in Internal Revenue Code section 409A and
rules, regulations, and guidance of general application thereunder issued by the Department of the Treasury, including – 
 (a)        Change in ownership: a change in ownership of the Employer occurs on the date any one person or group accumulates ownership of Employer stock constituting more than 50% of the total
fair market value or total voting power of Employer stock, or 
  

 7 

 (b)        Change in effective control:
(x) any one person or more than one person acting as a group acquires within a 12-month period ownership of Employer stock possessing 30% or more of the total voting power of Employer stock, or (y) a majority of the
Employer’s board of directors is replaced during any 12-month period by directors whose appointment or election is not endorsed in advance by a majority of the Employer’s board of directors, or 
 (c)        Change in ownership of a substantial portion of assets: a change in ownership of a substantial
portion of the Employer’s assets occurs if in a 12-month period any one person or more than one person acting as a group acquires from the Employer assets having a total gross fair market value equal to or exceeding 40% of the total gross fair
market value of all of the Employer’s assets immediately before the acquisition or acquisitions. For this purpose, gross fair market value means the value of the Employer’s assets, or the value of the assets being disposed of, determined
without regard to any liabilities associated with the assets. 
 ARTICLE 6 
 CONFIDENTIALITY AND CREATIVE WORK 
 6.1        Non-disclosure. The Executive covenants and agrees not to reveal to any person, firm, or
corporation any confidential information of any nature concerning the Employer or its business, or anything connected therewith. As used in this Article 6, the term “confidential information” means all of the Employer’s
and affiliates’ confidential and proprietary information and trade secrets in existence on the date hereof or existing at any time during the term of this Agreement, including but not limited to – 
 (a)        the whole or any portion or phase of any business plans, financial information, purchasing data,
supplier data, accounting data, or other financial information, 
 (b)        the whole or any
portion or phase of any research and development information, design procedures, algorithms or processes, or other technical information, 
 (c)        the whole or any portion or phase of any marketing or sales information, sales records, customer lists, prices, sales projections, or other sales information, and 
 (d)        trade secrets, as defined from time to time by the laws of the State of North Carolina. 
 However, confidential information excludes information that – as of the date hereof or at any time after the date hereof – is published or
disseminated without obligation of confidence or that becomes a part of the public domain (x) by or through action of the Employer, or (y) otherwise than by or at the direction of the Executive. This section 6.1 does not
prohibit disclosure required by an order of a court having jurisdiction or a subpoena from an appropriate governmental agency or disclosure made by the Executive in the ordinary course of business and within the scope of the Executive’s
authority. 
 6.2        Return of Materials. The Executive agrees to deliver or return to the
Employer upon termination, upon expiration of this Agreement, or as soon thereafter as possible, all written information and any other similar items furnished by the Employer or prepared by the Executive in connection with the Executive’s
services hereunder. The Executive will retain no copies thereof after termination of this Agreement or termination of the Executive’s employment. 
  

 8 

 6.3        Creative Work. The Executive agrees that all
creative work and work product, including but not limited to all technology, business management tools, processes, software, patents, trademarks, and copyrights developed by the Executive during the term of this Agreement, regardless of when or
where such work or work product was produced, constitutes work made for hire, all rights of which are owned by the Employer. The Executive hereby assigns to the Employer all rights, title, and interest, whether by way of copyrights, trade secret,
trademark, patent, or otherwise, in all such work or work product, regardless of whether the same is subject to protection by patent, trademark, or copyright laws. This section 6.3 shall not be construed to require assignment to the Employer of the
Executive’s right, title, and interest in creative work and work product, including but not limited to inventions, patents, trademarks, and copyrights, developed by the Executive entirely on the Executive’s own time and without using the
Employer’s equipment, supplies, facilities, or trade secrets unless the creative work or work product (x) relates to the Employer’s business or actual or demonstrably anticipated research or development or
(y) results from any work performed by the Executive for the Employer. However, to enable the Employer to determine the rights of the Employer and the Executive in any creative work and work product developed by the Executive that the
Executive considers nonassignable under this section 6.3, including but not limited to inventions, patents, trademarks, and copyrights, the Executive shall during the term of this Agreement timely report to the Employer all such creative work and
work product. 
 6.4        Injunctive Relief. The Executive acknowledges that it is
impossible to measure in money the damages that will be suffered by the Employer if the Executive fails to observe the obligations imposed by this Article 6. Accordingly, if the Employer institutes an action to enforce the provisions hereof, the
Executive hereby waives the claim or defense that an adequate remedy at law is available to the Employer and the Executive agrees not to urge in any such action the claim or defense that an adequate remedy at law exists. 
 6.5        Affiliates’ Confidential Information is Covered. For purposes of this Agreement the term
“affiliate” includes the Corporation, the Bank, and any entity that directly or indirectly through one or more intermediaries controls, is controlled by, or is under common control with the Corporation or the Bank.

 6.6        Acknowledgments. The Executive hereby acknowledges that the enforcement of
Article 6 of this Agreement is necessary to ensure the preservation, protection, and continuity of the business, trade secrets, and goodwill of the Employer, and that the restrictions set forth in Article 6 are reasonable in terms of time, scope,
territory, and in all other respects. The Executive acknowledges that it is impossible to measure in money the damages that will accrue to the Employer if the Executive fails to observe the obligations imposed by Article 6. Accordingly, if the
Employer institutes an action to enforce the provisions of Article 6, the Executive hereby waives the claim or defense that an adequate remedy at law is available to the Employer and the Executive agrees not to urge in any such action the claim or
defense that an adequate remedy at law exists. The existence of any claim or cause of action by the Executive against the Employer shall not constitute and shall not be asserted as a defense by the Executive to enforcement of Article 6. 

6.7        Survival of Obligations. The Executive’s obligations under Article 6 shall survive
employment termination regardless of the manner in which termination occurs and shall be binding upon the Executive’s heirs, executors, and administrators. 
  

 9 

 ARTICLE 7 
 COMPETITION AFTER EMPLOYMENT TERMINATION 
 7.        Restrictions on the Executive’s Post-Employment Activities. These restrictions have been negotiated, presented to and accepted by the Executive
contemporaneous with the offer and acceptance by the Executive of this Agreement and the benefits promised in a Salary Continuation Agreement signed or to be signed in 2008 by the Executive and the Bank. The Employer’s decision to enter into
this Agreement and the Salary Continuation Agreement is conditioned upon the Executive’s agreement to be bound by the restrictions contained in this Article 7. 
 (a)        Promise of no solicitation. The
Executive promises and agrees that during the Restricted Period (as defined below), and in the Restricted Territory (as defined below), the Executive will1: 
 1.        not directly or indirectly solicit, or attempt to solicit any
Customer (as defined below) to accept or purchase Financial Products or Services (as defined below) of the same nature, kind or variety as provided to the Customer by the Employer during the two years immediately preceding the Executive’s
employment termination with the Employer, 
 2.        not directly or indirectly
influence, or attempt to influence any Customer, joint venturer or other business partner of the Employer to alter that person or entity’s business relationship with the Employer in any respect, and 
 3.        not accept the Financial Products or Services business of any Customer or provide Financial
Products or Services to any Customer on behalf of anyone other than the Employer. 
 (b)        Promise of no competition. The Executive promises and agrees that during the Restricted Period in the Restricted Territory, the Executive will not engage, undertake or
participate in the business of providing, selling, marketing or distributing Financial Products or Services of a similar nature, kind or variety (x) as offered by the Employer to Customers during the two years immediately preceding the
Executive’s employment termination with the Employer, or (y) as offered by the Employer to any of its Customers during the Restricted Period.2 Subject to the above provisions and conditions of this subparagraph (b), the Executive promises that during the Restricted Period the Executive will not become employed by or serve as a director, partner,
consultant, agent, or owner of 5% or more of the outstanding stock of or contractor to any entity providing these prohibited Financial Products or Services which is located in, or conducts business in the Restricted Territory. 
  
  
 1 For Example,
the promise of no solicitation applies if the Executive is conducting prohibited business in the Restricted Territory or if the entity with, for or to whom the Executive is conducting prohibited business is located within the Restricted
Territory. 
 2 For Example, the promise of no competition applies if the Executive is conducting prohibited business in the Restricted Territory or if the entity with, for or to whom the Executive is conducting prohibited
business is located within the Restricted Territory. 
  

 10 

 (c)        Promise of no raiding/hiring. The Executive
promises and agrees that during the Restricted Period, the Executive will not solicit or attempt to solicit and will not encourage or induce in any way, any employee, joint venturer or business partner of the Employer to terminate an
employment or contractual relationship with the Employer. The Executive agrees that the Executive will not hire any person employed by Employer during the two-year period prior to the Executive’s employment termination with the Employer
or any person employed by the Employer during the Restricted Period. 
 (d)        Promise of no
disparagement. The Executive promises and agrees that during the Restricted Period, the Executive will not cause statements to be made (whether written or oral) that reflect negatively on the business reputation of the Employer.

 (e)        Acknowledgment. The Executive and the Employer acknowledge and agree that the
provisions of this Article 7 have been negotiated and carefully determined to be reasonable and necessary for the protection of legitimate business interests of the Employer. Both parties agree that a violation of Article 7 is likely to cause
immediate and irreparable harm that will give rise to the need for court ordered injunctive relief. In the event of a breach or threatened breach by the Executive of any provision of this Agreement, the Employer shall be entitled to obtain an
injunction restraining the Executive from violating the terms of this Agreement and to institute an action against the Executive to recover damages from the Employee for such breach. These remedies for default or breach are in addition to any other
remedy or form of redress provided under North Carolina law. The parties acknowledge that the provisions of this Article 7 survive termination of the employment relationship, but the provisions of this Article 7 shall be null and void if a Change in
Control occurs before employment termination. The parties agree that if any of the provisions of this Article 7 are deemed unenforceable by a court of competent jurisdiction, that such provisions may be stricken as independent clauses by the court
in order to enforce the remaining territory restrictions and that the intent of the parties is to afford the broadest restriction on post-employment activities as set forth in this agreement. Without limiting the generality of the foregoing, without
limiting the remedies available to the Employer for violation of this Agreement, and without constituting an election of remedies, if the Executive violates any of the terms of Article 7 the Executive shall forfeit on the Executive’s own behalf
and that of beneficiary(ies) any rights to and interest in any severance or other benefits under this Agreement or other contract the Executive has with the Bank or the Corporation. 
 (f)        Definitions: 
 1.        “Restricted Period” as used herein means one year immediately following the Executive’s termination and/or separation of employment with the Employer,
regardless of the reason for termination and/or separation. The Restricted Period shall be extended in an amount equal to any time period during which a violation of Article 7 of this Agreement is proven. 
 2.        “Restricted Territory” as used herein means all of Alamance, Forsyth, Guilford, and Randolph
Counties in North Carolina and any other county in which the Bank has an office when the Executive’s employment termination occurs. The parties agree that if any of these separate territories are deemed too broad to be enforced by a court of
competent jurisdiction, that the territories are divisible and severable territories which may be stricken as independent clauses by the court in order to enforce the remaining territory restrictions. 
  

 11 

 3.        “Customer” as used herein means any
individual, joint venturer, entity of any sort, or other business partner of the Employer, with, for or to whom the Employer has provided Financial Products or Services during the last two years of the Executive’s employment with the Employer;
or any individual, joint venturer, entity of any sort, or business partner whom the Employer has identified as a prospective customer of Financial Products or Services within the last two years of the Executive’s employment with the Employer.

 4.        “Financial Products or Services” as used herein means any product or service
that a financial institution or a financial holding company could offer by engaging in any activity that is financial in nature or incidental to such a financial activity under section 4(k) of the Bank Holding Company Act of 1956 and that is offered
by the Employer or an affiliate on the date of the Executive’s employment termination, including but not limited to banking activities and activities that are closely related and a proper incident to banking, or other products or services of
the type of which the Executive was involved during the Executive’s employment with the Employer. 
 ARTICLE 8 

 MISCELLANEOUS 
 8.1        Successors and Assigns. (a) This Agreement is binding on successors. This Agreement shall be binding upon the Employer and any successor to the Employer, including any
persons acquiring directly or indirectly all or substantially all of the business or assets of the Employer by purchase, merger, consolidation, reorganization, or otherwise. But this Agreement and the Employer’s obligations under this Agreement
are not otherwise assignable, transferable, or delegable by the Employer. By agreement in form and substance satisfactory to the Executive, the Employer shall require any successor to all or substantially all of the business or assets of the
Employer expressly to assume and agree to perform this Agreement in the same manner and to the same extent the Employer would be required to perform had no succession occurred. 
 (b)        This Agreement is enforceable by the Executive’s heirs. This Agreement shall inure to the
benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, and legatees. 
 (c)        This Agreement is personal in nature and is not assignable. This Agreement is personal in nature. Without written consent of the other parties, no party shall
assign, transfer, or delegate this Agreement or any rights or obligations under this Agreement except as expressly provided herein. Without limiting the generality or effect of the foregoing, the Executive’s right to receive payments hereunder
is not assignable or transferable, whether by pledge, creation of a security interest, or otherwise, except for a transfer by the Executive’s will or by the laws of descent and distribution. If the Executive attempts an assignment or transfer
that is contrary to this section 8.1, the Employer shall have no liability to pay any amount to the assignee or transferee. 
 8.2        Governing Law, Jurisdiction and Forum. This Agreement shall be construed under and governed by the internal laws of the State of North Carolina, without giving effect to any conflict
of laws provision or rule (whether of the State of North Carolina or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of North Carolina. By entering into this Agreement, the Executive
acknowledges that the 

  

 12 

 
Executive is subject to the jurisdiction of both the federal and state courts in the State of North Carolina. Any actions or proceedings instituted under
this Agreement shall be brought and tried solely in courts located in Guilford County, North Carolina or in the federal court having jurisdiction in Greensboro, North Carolina. The Executive expressly waives the right to have any such actions or
proceedings brought or tried elsewhere. 
 8.3        Entire Agreement. This Agreement sets
forth the entire agreement of the parties concerning the employment of the Executive. Any oral or written statements, representations, agreements, or understandings made or entered into prior to or contemporaneously with the execution of this
Agreement are hereby rescinded, revoked, and rendered null and void. This Agreement supersedes and replaces in its entirety the July 24, 2001 Employment Agreement between the Executive and the Bank, as the same may have been amended, and from
and after the date of this Agreement the July 24, 2001 Employment Agreement shall be of no further force or effect. 
 8.4        Notices. Any notice under this Agreement shall be deemed to have been effectively made or given if in writing and personally delivered, delivered by mail properly addressed in a
sealed envelope, postage prepaid by certified or registered mail, delivered by a reputable overnight delivery service, or sent by facsimile. Unless otherwise changed by notice, notice shall be properly addressed to the Executive if addressed to the
address of the Executive on the books and records of the Employer at the time of the delivery of such notice, and properly addressed to the Employer if addressed to Carolina Bank, 528 College Road, Greensboro, North Carolina 27410, Attention:
Corporate Secretary. 
 8.5        Severability. If there is a conflict between any provision
of this Agreement and any statute, regulation, or judicial precedent, the latter shall prevail, but the affected provisions of this Agreement shall be curtailed and limited solely to the extent necessary to bring them within the requirements of law.
If any provision of this Agreement is held by a court of competent jurisdiction to be indefinite, invalid, void or voidable, or otherwise unenforceable, the remainder of this Agreement shall continue in full force and effect unless that would
clearly be contrary to the intentions of the parties or would result in an injustice. 
 8.6        Captions and Counterparts. The captions in this Agreement are solely for convenience. The captions do not define, limit, or describe the scope or intent of this Agreement. This
Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument. 
 8.7        Amendment and Waiver. This Agreement may not be amended, released, discharged, abandoned, changed, or modified except by an instrument in writing signed by
each of the parties hereto. The failure of any party hereto to enforce at any time any of the provisions of this Agreement shall not be construed to be a waiver of any such provision or affect the validity of this Agreement or any part thereof or
the right of any party thereafter to enforce each and every such provision. No waiver or any breach of this Agreement shall be held to be a waiver of any other or subsequent breach. 
 8.8        Payment of Legal Fees. The Employer is aware that after a Change in Control management could
cause or attempt to cause the Employer to refuse to comply with its obligations under this Agreement, or could institute or cause or attempt to cause the Employer to institute litigation seeking to have this Agreement declared unenforceable, or
could take or 

  

 13 

 
attempt to take other action to deny Executive the benefits intended under this Agreement. In these circumstances the purpose of this Agreement would be
frustrated. The Employer desires that the Executive not be required to incur the expenses associated with the enforcement of rights under this Agreement, whether by litigation or other legal action, because the cost and expense thereof would
substantially detract from the benefits intended to be granted to the Executive hereunder. The Employer desires that the Executive not be forced to negotiate settlement of rights under this Agreement under threat of incurring expenses. Accordingly,
if after a Change in Control occurs it appears to the Executive that (x) the Employer has failed to comply with any of its obligations under this Agreement, or (y) the Employer or any other person has taken any action to
declare this Agreement void or unenforceable, or instituted any litigation or other legal action designed to deny, diminish, or to recover from the Executive the benefits intended to be provided to the Executive hereunder, the Employer irrevocably
authorizes the Executive from time to time to retain counsel of the Executive’s choice, at the Employer’s expense as provided in this section 8.8, to represent the Executive in the initiation or defense of any litigation or other legal
action, whether by or against the Employer or any director, officer, stockholder, or other person affiliated with the Employer, in any jurisdiction. Despite any existing or previous attorney-client relationship between the Employer and any counsel
chosen by the Executive under this section 8.8, the Employer irrevocably consents to the Executive entering into an attorney-client relationship with that counsel, and the Employer and the Executive agree that a confidential relationship shall exist
between the Executive and that counsel. The fees and expenses of counsel selected from time to time by the Executive as provided in this section shall be paid or reimbursed to the Executive by the Employer on a regular, periodic basis upon
presentation by the Executive of a statement or statements prepared by counsel in accordance with counsel’s customary practices, up to a maximum aggregate amount of $125,000, whether suit be brought or not, and whether or not incurred in trial,
bankruptcy, or appellate proceedings. The Employer’s obligation to pay the Executive’s legal fees provided by this section 8.8 operates separately from and in addition to any legal fee reimbursement obligation the Employer may have with
the Executive under any separate severance or other agreement. Despite anything in this Agreement to the contrary, however, the Employer shall not be required to pay or reimburse Executive’s legal expenses if doing so would violate section
18(k) of the Federal Deposit Insurance Act [12 U.S.C. 1828(k)] and Rule 359.3 of the Federal Deposit Insurance Corporation [12 CFR 359.3]. 
 8.9        Consultation with Counsel and Interpretation of this Agreement. The Executive has had the assistance of counsel of the Executive’s choosing in the negotiation of this Agreement
or the Executive has chosen not to have the assistance of counsel. Both parties hereto having participated in the negotiation and drafting of this Agreement, they hereby agree that there shall not be strict interpretation against either party in any
review of this Agreement in which interpretation of the Agreement is an issue. 
 8.10      Compliance with
Internal Revenue Code Section 409A. The Employer and the Executive intend that their exercise of authority or discretion under this Agreement shall comply with section 409A of the Internal Revenue Code of 1986. If when the Executive’s
employment terminates the Executive is a specified employee, as defined in section 409A of the Internal Revenue Code of 1986, and if any payments under this Agreement, including Articles 4 or 5, will result in additional tax or interest to the
Executive because of section 409A, then despite any provision of this Agreement to the contrary the Executive shall not be entitled to the payments until the earliest of (x) the date that is at least six months after termination of the
Executive’s employment for reasons other than the Executive’s death, (y) the date of the Executive’s death, 

  

 14 

 
or (z) any earlier date that does not result in additional tax or interest to the Executive under section 409A. As promptly as possible after the
end of the period during which payments are delayed under this provision, the entire amount of the delayed payments shall be paid to the Executive in a single lump sum. If any provision of this Agreement does not satisfy the requirements of section
409A, the provision shall be applied in a manner consistent with those requirements despite any contrary provision of this Agreement. If any provision of this Agreement would subject the Executive to additional tax or interest under section 409A,
the Employer shall reform the provision. However, the Employer shall maintain to the maximum extent practicable the original intent of the applicable provision without subjecting the Executive to additional tax or interest, and the Employer shall
not be required to incur any additional compensation expense as a result of the reformed provision. References in this Agreement to section 409A of the Internal Revenue Code of 1986 include rules, regulations, and guidance of general application
issued by the Department of the Treasury under Internal Revenue Code section 409A. 
 IN WITNESS
WHEREOF, the parties have executed this Employment Agreement as of the date first written above. 
  

									
	EXECUTIVE	 		 	CAROLINA BANK HOLDINGS, INC.
					
	/s/ T. Allen Liles        	 		 	By:	 	 /s/ Robert T. Braswell
	 	
	T. Allen Liles	 		 		 		 	
		 		 	Its:	 	 President & CEO
	 	
				
		 		 	CAROLINA BANK	 	
					
		 		 	By:	 	 /s/ Gunnar N. R. Fromen
	 	
					
		 		 	Its:	 	 Executive Vice President
	 	

  

					
	 Guilford County
	  	)	  	
		  	)	  	ss:
	 State of North Carolina
	  	)	  	

 Before me this
            2nd             day of
            June            , 2008, personally appeared the above named T. Allen Liles and
    Robert T. Braswell    , who acknowledged that they did sign the foregoing instrument and that the same was their free act and deed. 
  

							
		 		 	 /s/ Jane E. McConnell
	 	
	(Notary Seal)	 		 	Notary Public	 	
			
		 		 	My Commission Expires: July 7, 2008

  

 15

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