Document:

<PAGE>

STATE OF NORTH CAROLINA

COUNTY OF CATAWBA

                                                            EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT ("Agreement"), is made as of the 1st day of
December, 1999, by and between PEOPLES BANK, Newton, North Carolina, a North
Carolina banking institution (the "Bank"), and JOSEPH F. BEAMAN, JR. (the
"Employee")and is joined in by PEOPLES BANCORP OF NORTH CAROLINA, INC., a North
Carolina corporation (the "Holding Company");

                             W I T N E S S E T H :

     WHEREAS the Employee has heretofore been employed and currently is
rendering services to the Bank as Executive Vice President, Chief Financial
Officer, and Corporate Secretary and,

     WHEREAS the Bank is a North Carolina banking corporation and the Holding
Company is a North Carolina bank holding company and the sole shareholder of the
Bank; and,

     WHEREAS the Bank considers the continued availability of the Employee's
services to be important to the management and conduct of the Bank's and Holding
Company's business, and desires to secure for the Bank and Holding Company the
continued availability of the Employee's services; and,

     WHEREAS the Employee is willing to make his services available to the Bank
and Holding Company on the terms and subject to the conditions set forth herein.

     NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties hereto agree as follows:

     1.   Employment. The Employee is employed as Executive Vice President,
     ---------------
Chief Financial Officer, and Corporate Secretary. The Employee shall render
administrative and management services to the Bank, such as are customarily
performed by persons situated in a similar executive capacity. He shall promote
the business of the Bank and Holding Company
<PAGE>

and perform such other duties as shall from time to time be reasonably described
by the President of the Bank.

     2.   Compensation.
     -----------------

          A. Base Salary. The Bank shall pay the Employee during the term of
          --------------
     this Agreement a base salary at the rate of $127,752 per annum, payable in
     monthly installments or more frequently as the Bank elects; provided, that
     the rate of such salary shall be reviewed annually by the Bank. Such rate
     of salary may be increased (but not decreased) from time to time in such
     amounts as the Bank, in its discretion, may decide.

          B. Management Incentive Plan. The Employee shall be entitled to
          ----------------------------
     participate in an equitable manner with other key management personnel of
     the Bank in the Bank's management incentive plan adopted in 1998.

          C. Other Compensation. The Bank shall further pay to the Employee an
          ---------------------
     automobile allowance in the amount of $250.00 for use by the employee for
     his personal automobile during his employment with the Bank on a monthly
     basis. The Employee shall assume and be responsible for all tax
     consequences with respect to such additional compensation.

     3.   Discretionary Bonuses. The Employee shall be entitled to participate
     --------------------------
in an equitable manner with all other key management personnel of the Bank in
discretionary bonuses authorized and declared by the Directors of the Bank. No
other compensation provided for in this Agreement shall be deemed a substitute
for the Employee's right to participate in such discretionary bonuses when and
as are declared by the Board of Directors.

     4.   Additional Benefits.
     ------------------------

          A.    Participation in Retirement and Medical Plan. The Employee
          --------------------------------------------------
     shall be entitled to participate in any plan of the Bank relating to
     pension, profit sharing or other retirement benefits and health, medical
     and disability coverage, or reimbursement plans that the Bank may adopt for
     the benefit of its
<PAGE>

     employees subject to the eligibility rules of such plan.

          B.   Officer Benefits/Expenses. The Employee shall be eligible to
          ------------------------------
     participate in any fringe benefits which may be or become applicable to the
     Bank's executive employees, commensurate with the responsibilities and
     functions to be performed by the Employee under this Agreement.
     Additionally, the Employee shall be entitled to four (4) weeks of paid
     vacation, as an exception to uniform employee policies promulgated by the
     Directors, and such sick leave as is established by such policies. The Bank
     shall reimburse the Employee for all out-of-pocket reasonable and necessary
     business expenses which the Employee shall incur in connection with his
     services on behalf of the Bank. Additionally, the Employee shall be
     entitled to life insurance in the amount of two times his annual salary;
     the same amount in accidental death and dismemberment insurance; dependent
     life insurance upon his spouse in the amount of Two Thousand Dollars
     ($2,000.00); and disability insurance as which will compensate the Employee
     66-2/3% of his salary after he is out of work pursuant to company policy
     for thirty (30) calendar days. The Employer shall pay all premiums for the
     insurance noted above.

     5.   Term. The initial term of employment under this Agreement shall be for
     ---------
the period commencing December 1, 1999 and ending three (3) calendar years after
such date. At the end of each one-year period following such commencing date,
this Agreement shall automatically be extended for an additional one (1) year
period beyond the then-effective expiration date, unless written notice from the
Bank or the Employee is received sixty (60) days prior to an anniversary date
advising the other party that this Agreement shall not be further extended, or
in the event the Employee and Employer agree to a further extension before the
expiration of this Agreement. The parties intend that this Agreement shall be a
continuing employment agreement, unless written notice is given as provided in
this Paragraph, or unless this Agreement is otherwise terminated as provided in
this Agreement.
<PAGE>

     6.   Loyalty/Non-Competition.
     ----------------------------

          A.   The Employee shall devote his full efforts and entire business
     time to the performance of his duties under this Agreement.

          B.   During the term of this Agreement, or any renewals or extensions
     thereof, and for a period of one (1) year after termination, the Employee
     shall not, within Catawba, Alexander, Iredell or Lincoln Counties, North
     Carolina, directly or indirectly, own, manage, operate, join, control or
     participate in the management, operation or control of or be employed by or
     connected in any manner with any depository institution or financial
     services business which competes with the Bank or the Holding Company
     without the prior written consent of the Bank. Notwithstanding the
     foregoing, the Employee shall be free without such consent to purchase or
     hold as an investment or otherwise up to 5% of the outstanding stock or
     other securities of any corporation which has its securities publicly
     traded on any recognized securities exchange or in any over-the-counter
     market.

               The Employee shall hold in confidence all knowledge or
     information of a confidential nature with respect to the business of the
     Bank or the Holding Company, received by him during the term of this
     Agreement, and will not disclose or make use of such information without
     the prior written consent of the Bank.

               The Employee acknowledges that it would not be possible to
     ascertain the amount of monetary damages in the event of a breach by the
     Employee under the provisions of this Paragraph 6. The Employee agrees that
     in the event of the breach of this Paragraph, injunctive relief enforcing
     the terms of this Paragraph is an appropriate remedy.

               The Bank and Employee further agree that in the event the Bank
     shall terminate the employment of the Employee for cause or should the
     Employee resign his employment during any period of the term of his
     employment contract, then and in that event, the non-competition provisions
     of this Agreement shall be applicable. If, however, the Bank should
     terminate
<PAGE>

     the employment of the Employee without cause during the last year of said
     Agreement, the non-competition provisions of this Agreement shall not be
     applicable, and the Bank shall not proceed with respect to the remedies as
     set forth above.

     7.   Standards. The Employee shall perform his duties under this Agreement
     --------------
in accordance with such reasonable standards expected of employees with
comparable positions in comparable organizations and as may be established from
time-to-time by the Board of Directors. The Bank shall provide the Employee with
the working facilities and staff customary at the Bank for similar executives
and necessary for him to perform his duties.

     8.   Termination and Termination Pay.
     ------------------------------------

          A.   The Employee's employment under this Agreement shall be
     terminated upon the following occurrences:

               (1)  The death of the Employee during the term of this Agreement,
          in which event the Employee's estate shall be entitled to receive the
          compensation due the Employee through the last day of the calendar
          month in which his death shall have occurred and for a period of three
          (3) months thereafter.

               (2)  The Employee's employment under this Agreement may be
          terminated by the Bank at any time or by the Employee upon sixty (60)
          days written notice to the Employee or the Bank, as the case may be.
          Upon such termination by the Employee or by the Bank "for cause," the
          Employee shall be entitled to receive compensation under this
          Agreement through the effective date of such termination and such
          other benefits, if any, as may be provided by the terms of other plans
          and programs of the Bank in the event of termination.

          Any such termination by the Bank other than termination "for cause"
          shall not prejudice the Employee's right to compensation or benefits
          under this Agreement. The Employee shall have no right to receive
          compensation
<PAGE>

          or benefits for any period after termination "for cause." Termination
          "for cause" shall include termination because of Employee's personal
          dishonesty, in-competence, 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 any material breach of any provision of this Agreement.

               (3)  If the Employee is removed or permanently prohibited from
         participating in the conduct of the Bank's affairs by any order issued
         by any regulatory agency, all obligations of the Bank under this
         Agreement shall terminate as of the effective date of the order. The
         rights of the Employee vested prior to the date of such order shall not
         be affected.

               (4)  All obligations under this Agreement may be terminated:

                    (a)  by the Federal Deposit Insurance Corporation at the
               time it enters into an agreement to provide assistance to or on
               behalf of the Bank under the authority contained in its Rules and
               Regulations; and,

                    (b)  by any regulatory or supervisory agency which enters
               any orders to resolve problems related to the operation of the
               Bank, or when the Bank is determined to be in an unsafe or
               unsound condition. Any rights of the Employee vested prior to
               such time shall not be affected by any such determination or
               order.

     9.   Suspension of Employment.
     -----------------------------
<PAGE>

          A.   The suspension of the Employee from office or temporary
     prohibition from participation by the Employee in the conduct of the
     affairs of the Bank pursuant to notice served by any supervisory or
     regulatory agency, unless stayed by appropriate proceedings, shall suspend,
     as of the date of such service, all obligations of the Bank under the terms
     of this Agreement.

          B.   In the event the charges specified in a notice served as provided
     in Subparagraph A of this Section shall be dismissed, the Bank shall:

               (1)  pay the Employee the compensation withheld from such
          Employee pursuant to the suspension of the Bank's obligation as
          required in Subparagraph A of this Section; and,

               (2)  reinstate the obligations suspended as required in
          Subparagraph A of this section.

     10.  Change in Control.
     ----------------------

          A.  In the event of a "Change in Control" (as defined in Subparagraph
     (C) below), the term of employment under this Agreement automatically shall
     be extended to a period of three (3) years beginning on the date of the
     Change in Control, and the Bank or its successor shall be bound by the
     terms of this Agreement and shall be prohibited, during the remainder of
     such term, from:

               (1)  Assigning Employee any duties and/or responsibilities that
          are inconsistent with his position, duties, responsibilities or status
          at the time of the Change in Control or with his reporting
          responsibilities or equivalent titles in effect at such time; or

               (2)  Adjusting Employee's annual base salary rate other than in
          accordance with the provisions of Subparagraph (B) below; or
<PAGE>

               (3)  Reducing in level, scope or coverage or eliminating
          Employee's life insurance, medical or hospitalization insurance,
          disability insurance, profit sharing plans, stock option plans, stock
          purchase plans, deferred compensation plans, management retention
          plans, retirement plans, stock ownership plans or similar plans or
          benefits being provided by the Bank or the Holding Company to the
          Employee other than those arising from the Bank's management incentive
          plan as of the effective date of the Change in Control; or

               (4)  Transferring Employee to a location which is an unreasonable
          distance from his current principal work location, without the
          Employee's express written consent.

          B.   In the event of a Change in Control, the Employee's base salary
     shall be adjusted to include an amount equal to the average of the two
     previous years' bonuses arising from the Bank's management incentive plan,
     and/or discretionary bonuses, if any, and such adjusted base salary shall
     be increased by not less than six percent (6%) annually beginning at the
     date of the Change in Control and continuing each year for the three-year
     term thereafter.

          C.   For the purposes of this Agreement, the term "Change in Control"
     shall mean any of the following events:

          (1)  a change in control of a nature that would be required to be
          reported in response to Item 1 of the Current Report on Form 8-K, as
          in effect on the date hereof, pursuant to Section 13 or 15(d) of the
          Securities Exchange Act of 1934, as amended (the "Exchange Act"); or

          (2)  such time as any "person" (as such term is used in Sections 13(d)
          and 14(d) of the Exchange Act), other than a person who beneficially
          owned as of January 1, 1998, more than 5% of the Bank's securities, is
          or
<PAGE>

          becomes the "beneficial owner" (as defined in Rule 13d-3 under the
          Exchange Act), directly or indirectly, of securities of the Holding
          Company or Bank representing 20 percent or more of the combined voting
          power of the outstanding Common Stock of the Holding Company or Common
          Stock of the Bank, as applicable; or

               (3)  individuals who constitute the Board or board of directors
          of the Holding Company on the date hereof (the "Incumbent Board" and
          "Incumbent Holding Company Board," respectively) cease for any reason
          to constitute at least a majority thereof, provided that any person
          becoming a director subsequent to the date hereof whose election was
          approved by a vote of at least three-quarters of the directors
          comprising the Incumbent Board or Incumbent Holding Company Board, as
          applicable, or whose nomination for election by the Bank's or Holding
          Company's shareholders was approved by the Bank's or Holding Company's
          Board of Directors or Nominating Committee, as applicable, shall be
          considered as though he or she were a member of the Incumbent Board or
          Incumbent Holding Company Board, as applicable; or

               (4)  either the Holding Company or the Bank consolidates or
          merges with or into another corporation, association or entity or is
          otherwise reorganized, where neither the Holding Company nor the Bank,
          respectively, is the surviving corporation in such transaction; or

               (5)  all or substantially all of the assets of either the Holding
          Company or the Bank are sold or otherwise transferred to or are
          acquired by any other entity or group.

          Notwithstanding the other provisions of this Paragraph 10, a
     transaction or event shall not be considered a Change in Control if, prior
     to the consummation or occurrence of such transaction or
<PAGE>

     event, Employee, Bank and Holding Company agree in writing that the same
     shall not be treated as a Change in Control for purposes of this Agreement.

          D.   In the event any dispute shall arise between the Employee and the
     Bank or Holding Company (or any successor) as to the terms or
     interpretation of this Agreement, including this Paragraph 10, whether
     instituted by formal legal proceedings or otherwise, including any action
     taken by the Employee to enforce the terms of this Paragraph 10 or in
     defending against any action taken by the Holding Company or the Bank, the
     Bank shall reimburse the Employee for all costs and expenses incurred in
     such proceedings or actions, including attorney's fees, in the event the
     Employee prevails in any such action.

     11.  Disability. If, by reason of physical or mental disability during
     ---------------
the term hereof, Employee is unable to carry out the normal and usual duties of
his employment hereunder, the Employee shall receive his full salary from the
Bank for up to twenty (20) working days for which he is unable to work. Medical
disability shall require a doctor's statement indicating the date the Employee
became disabled as well as a statement that he is medically able to return to
work before he can resume his duties. If, after thirty (30) consecutive days, he
is still unable to return to work, he will be covered by the disability
insurance policy of the Bank, if that policy applies under its terms. While
disabled, the Employee will keep his original date of employment and all
seniority benefits for up to twelve (12) weeks. Group insurance will be kept in
force (Employee will continue to pay for dependent insurance); however, if the
Employee does not return to work from medical leave after twelve (12) weeks, the
Bank may recover the premiums paid to maintain the coverage. A "return to work"
occurs when an Employee returns to work for at least thirty (30) days. Upon
returning to work from such disability, the Employee shall be restored to his
previous position or to an equivalent position with equivalent benefits, pay,
and other conditions of employment.
<PAGE>

     12.  Successors and Assigns.
     ---------------------------

          A.  This Employment Agreement shall enure to the benefit of and be
     binding upon any corporate or other successor of the Bank which shall
     acquire, directly or indirectly, by conversion, merger, consolidation,
     purchase or otherwise, all or substantially all of the assets of the Bank.

          B.   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.

     13.  Amendments. No amendments or additions to this Agreement shall be
     ---------------
binding unless in writing by both parties, except as herein otherwise provided.

     14.  Applicable Law. This Agreement shall be governed in all respects,
     --------------------
whether as to validity, construction, capacity, performance or otherwise, by the
laws of the State of North Carolina, except to the extent that federal law shall
be deemed to apply.

     15.  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.

     16.  Entire Agreement; Counterparts
     -----------------------------------

     A.   This Agreement constitutes the entire agreement between the Employee
     and the Bank with respect to the subject matter hereof and supersedes all
     prior agreements with respect thereto. This Agreement may be executed in
     one or more counterparts, all of which taken together shall constitute one
     and the same instrument.

     B.   This Agreement replaces the Agreement between the parties dated
     February 22, 1994 and the Addendum to the original Agreement and all other
     agreements between the parties prior to the date hereof respecting the
     subject matter hereof. Any and all prior agreements shall be cancelled and
     have no
<PAGE>

     further force or effect when this Agreement becomes effective.

     17.  Notices. Any notice or other communication required or permitted under
     -------------
this Agreement shall be effective only if it is writing, delivered in person or
by reliable overnight courier service or deposited in the mail, postage prepaid,
return receipt requested and addressed as follows:

     Address of the Bank: Peoples Bank, Post Office Box 467, Newton, North
     Carolina, 28658.

     Address of the Holding Company: Peoples Bancorp of North Carolina, Inc.,
     Post Office Box 467, Newton, North Carolina, 28658.

Address of the Employee: Joseph F. Beaman, Jr., 1631 Brentwood Drive, Newton,
North Carolina 28658.

     Notices given in person or by overnight courier service shall be deemed
given when delivered to the address required by this section, and notices given
by mail shall be deemed given three (3) days after deposit in the mail. Any
party hereto may designate, by written notice to the other party in accordance
herewith, any other address to which notices addressed to him shall be sent.

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

                                   PEOPLES BANK, a North Carolina banking
                                   Corporation

                                   By:  /s/ Tony W. Wolfe
                                     -------------------------------------
                                          Tony W. Wolfe, President/
                                          Chief Executive Officer

                                         /s/ Joseph F. Beaman, Jr.
                                      --------------------------------------
                                          Joseph F. Beaman, Jr.
<PAGE>

The Foregoing Agreement is joined in and agreed to by Peoples Bancorp of North
Carolina, Inc.

                                  PEOPLES BANCORP OF NORTH CAROLINA, INC., a
                                  North Carolina Corporation

                                  by: /s/   Tony W. Wolfe
                                    ------------------------------------------
                                        Tony W. Wolfe
                                        President/Chief Executive Officer<PAGE>

STATE OF NORTH CAROLINA

COUNTY OF CATAWBA

                                                            EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT ("Agreement"), is made as of the 1st day of
December, 1999, by and between PEOPLES BANK, Newton, North Carolina, a North
Carolina banking institution (the "Bank"), and CLIFTON A. WIKE (the
"Employee")and is joined in by PEOPLES BANCORP OF NORTH CAROLINA, INC., a North
Carolina corporation (the "Holding Company");

                             W I T N E S S E T H :

         WHEREAS the Employee has heretofore been employed and currently is
rendering services to the Bank as Senior Vice President; Commercial Business
Development and,

         WHEREAS the Bank is a North Carolina banking corporation and the
Holding Company is a North Carolina bank holding company and the sole
shareholder of the Bank; and,

         WHEREAS the Bank considers the continued availability of the Employee's
services to be important to the management and conduct of the Bank's and Holding
Company's business, and desires to secure for the Bank and Holding Company the
continued availability of the Employee's services; and,

         WHEREAS the Employee is willing to make his services available to the
Bank and Holding Company on the terms and subject to the conditions set forth
herein.

         NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties hereto agree as follows:

         1.    Employment. The Employee is employed as Senior Vice President,
         ----------------
Commercial Business Development. The Employee shall render administrative and
management services to the Bank, such as are customarily performed by persons
situated in a similar executive capacity. He shall promote the business of the
Bank and Holding Company and perform such other duties as shall from
<PAGE>

time to time be reasonably described by the President of the Bank.

         2.    Compensation.
         ------------------

               A.  Base Salary. The Bank shall pay the Employee during the term
               ---------------
         of this Agreement a base salary at the rate of $93,482 per annum,
         payable in monthly installments or more frequently as the Bank elects;
         provided, that the rate of such salary shall be reviewed annually by
         the Bank. Such rate of salary may be increased (but not decreased) from
         time to time in such amounts as the Bank, in its discretion, may
         decide.

               B.  Management Incentive Plan. The Employee shall be entitled to
               -----------------------------
         participate in an equitable manner with other key management personnel
         of the Bank in the Bank's management incentive plan adopted in 1998.

         3.    Discretionary Bonuses. The Employee shall be entitled to
         ---------------------------
participate in an equitable manner with all other key management personnel of
the Bank in discretionary bonuses authorized and declared by the Directors of
the Bank. No other compensation provided for in this Agreement shall be deemed a
substitute for the Employee's right to participate in such discretionary bonuses
when and as are declared by the Board of Directors.

         4.    Additional Benefits.
         -------------------------

               A.   Participation in Retirement and Medical Plan. The Employee
               -------------------------------------------------
         shall be entitled to participate in any plan of the Bank relating to
         pension, profit sharing or other retirement benefits and health,
         medical and disability coverage, or reimbursement plans that the Bank
         may adopt for the benefit of its employees subject to the eligibility
         rules of such plan.

               B.   Officer Benefits/Expenses. The Employee shall be eligible to
               ------------------------------
         participate in any fringe benefits which may be or become applicable to
         the Bank's executive employees, commensurate with the responsibilities
         and functions to be performed by the Employee under this Agreement.
         Additionally, the
<PAGE>

         Employee shall be entitled to four (4) weeks of paid vacation, as an
         exception to uniform employee policies promulgated by the Directors,
         and such sick leave as is established by such policies. The Bank shall
         reimburse the Employee for all out-of-pocket reasonable and necessary
         business expenses which the Employee shall incur in connection with his
         services on behalf of the Bank. Additionally, the Employee shall be
         entitled to life insurance in the amount of two times his annual
         salary; the same amount in accidental death and dismemberment
         insurance; dependent life insurance upon his spouse in the amount of
         Two Thousand Dollars ($2,000.00); and disability insurance as which
         will compensate the Employee 66-2/3% of his salary after he is out of
         work pursuant to company policy for thirty (30) calendar days. The
         Employer shall pay all premiums for the insurance noted above.

         5.    Term. The initial term of employment under this Agreement shall
         ----------
be for the period commencing December 1, 1999 and ending three (3) calendar
years after such date. At the end of each one-year period following such
commencing date, this Agreement shall automatically be extended for an
additional one (1) year period beyond the then-effective expiration date, unless
written notice from the Bank or the Employee is received sixty (60) days prior
to an anniversary date advising the other party that this Agreement shall not be
further extended, or in the event the Employee and Employer agree to a further
extension before the expiration of this Agreement. The parties intend that this
Agreement shall be a continuing employment agreement, unless written notice is
given as provided in this Paragraph, or unless this Agreement is otherwise
terminated as provided in this Agreement.

         6.    Loyalty/Non-Competition.
         -----------------------------

               A.  The Employee shall devote his full efforts and entire
         business time to the performance of his duties under this Agreement.

               B.  During the term of this Agreement, or any renewals or
         extensions thereof, and for a period of one (1) year after termination,
         the Employee shall not, within Catawba, Alexander, Iredell or Lincoln
         Counties, North Carolina, directly or indirectly, own, manage, operate,
         join, control or participate in the
<PAGE>

         management, operation or control of or be employed by or connected in
         any manner with any depository institution or financial services
         business which competes with the Bank or the Holding Company without
         the prior written consent of the Bank. Notwithstanding the foregoing,
         the Employee shall be free without such consent to purchase or hold as
         an investment or otherwise up to 5% of the outstanding stock or other
         securities of any corporation which has its securities publicly traded
         on any recognized securities exchange or in any over-the-counter
         market.

                    The Employee shall hold in confidence all knowledge or
         information of a confidential nature with respect to the business of
         the Bank or the Holding Company, received by him during the term of
         this Agreement, and will not disclose or make use of such information
         without the prior written consent of the Bank.

                    The Employee acknowledges that it would not be possible to
         ascertain the amount of monetary damages in the event of a breach by
         the Employee under the provisions of this Paragraph 6. The Employee
         agrees that in the event of the breach of this Paragraph, injunctive
         relief enforcing the terms of this Paragraph is an appropriate remedy.

                    The Bank and Employee further agree that in the event the
         Bank shall terminate the employment of the Employee for cause or should
         the Employee resign his employment during any period of the term of his
         employment contract, then and in that event, the non-competition
         provisions of this Agreement shall be applicable. If, however, the Bank
         should terminate the employment of the Employee without cause during
         the last year of said Agreement, the non-competition provisions of this
         Agreement shall not be applicable, and the Bank shall not proceed with
         respect to the remedies as set forth above.

         7.    Standards. The Employee shall perform his duties under this
         ---------------
Agreement in accordance with such reasonable standards expected of employees
with comparable positions in comparable organizations and as may be established
from time-to-time by the Board of Directors. The Bank shall provide the Employee
with
<PAGE>

the working facilities and staff customary at the Bank for similar executives
and necessary for him to perform his duties.

         8.    Termination and Termination Pay.
         -------------------------------------

               A.   The Employee's employment under this Agreement shall be
         terminated upon the following occurrences:

                    (1)  The death of the Employee during the term of this which
               event the Employee's estate shall be entitled to receive the
               compensation due the Employee through the last day of the
               calendar month in which his death shall have occurred and for a
               period of three (3) months thereafter.

                    (2)  The Employee's employment under this Agreement may be
               terminated by the Bank at any time or by the Employee upon sixty
               (60) days written notice to the Employee or the Bank, as the case
               may be. Upon such termination by the Employee or by the Bank "for
               cause," the Employee shall be entitled to receive compensation
               under this Agreement through the effective date of such
               termination and such other benefits, if any, as may be provided
               by the terms of other plans and programs of the Bank in the event
               of termination.

               Any such termination by the Bank other than termination "for
               cause" shall not prejudice the Employee's right to compensation
               or benefits under this Agreement. The Employee shall have no
               right to receive compensation or benefits for any period after
               termination "for cause." Termination "for cause" shall include
               termination because of Employee's personal dishonesty, in-
               competence, 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
<PAGE>

               desist order, or any material breach of any provision of this
               Agreement.

                    (3)  If the Employee is removed or permanently prohibited
               from participating in the conduct of the Bank's affairs by any
               order issued by any regulatory agency, all obligations of the
               Bank under this Agreement shall terminate as of the effective
               date of the order. The rights of the Employee vested prior to the
               date of such order shall not be affected.

                    (4)  All obligations under this Agreement may be terminated:

                         (a)  by the Federal Deposit Insurance Corporation at
                    the time it enters into an agreement to provide assistance
                    to or on behalf of the Bank under the authority contained in
                    its Rules and Regulations; and,

                         (b)  by any regulatory or supervisory agency which
                    enters any orders to resolve problems related to the
                    operation of the Bank, or when the Bank is determined to be
                    in an unsafe or unsound condition. Any rights of the
                    Employee vested prior to such time shall not be affected by
                    any such determination or order.

         9.    Suspension of Employment.
         ------------------------------

               A.   The suspension of the Employee from office or temporary
         prohibition from participation by the Employee in the conduct of the
         affairs of the Bank pursuant to notice served by any supervisory or
         regulatory agency, unless stayed by appropriate proceedings, shall
         suspend, as of the date of such service, all obligations of the Bank
         under the terms of this Agreement.
<PAGE>

               B.   In the event the charges specified in a notice served as
         provided in Subparagraph A of this Section shall be dismissed, the Bank
         shall:

                    (1)  pay the Employee the compensation withheld from such
               Employee pursuant to the suspension of the Bank's obligation as
               required in Subparagraph A of this Section; and,

                    (2)  reinstate the obligations suspended as required in
               Subparagraph A of this section.

         10.   Change in Control.
         -----------------------

               A.  In the event of a "Change in Control" (as defined in
         Subparagraph (C) below), the term of employment under this Agreement
         automatically shall be extended to a period of three (3) years
         beginning on the date of the Change in Control, and the Bank or its
         successor shall be bound by the terms of this Agreement and shall be
         prohibited, during the remainder of such term, from:

                    (1)  Assigning Employee any duties and/or responsibilities
               that are inconsistent with his position, duties, responsibilities
               or status at the time of the Change in Control or with his
               reporting responsibilities or equivalent titles in effect at such
               time; or

                    (2)  Adjusting Employee's annual base salary rate other than
               in accordance with the provisions of Subparagraph (B) below; or

                    (3)  Reducing in level, scope or coverage or eliminating
               Employee's life insurance, medical or hospitalization insurance,
               disability insurance, profit sharing plans, stock option plans,
               stock purchase plans, deferred compensation plans, management
               retention plans, retirement plans, stock ownership plans or
               similar plans or benefits being provided by the Bank or the
               Holding Company to the Employee
<PAGE>

               other than those arising from the Bank's management incentive
               plan as of the effective date of the Change in Control; or

                    (4)  Transferring Employee to a location which is an
               unreasonable distance from his current principal work location,
               without the Employee's express written consent.

               B.   In the event of a Change in Control, the Employee's base
          salary shall be adjusted to include an amount equal to the average of
          the two previous years' bonuses arising from the Bank's management
          incentive plan, and/or discretionary bonuses, if any, and such
          adjusted base salary shall be increased by not less than six percent
          (6%) annually beginning at the date of the Change in Control and
          continuing each year for the three-year term thereafter.

               C.   For the purposes of this Agreement, the term "Change in
          Control" shall mean any of the following events:

               (1)  a change in control of a nature that would be required to be
               reported in response to Item 1 of the Current Report on Form 8-K,
               as in effect on the date hereof, pursuant to Section 13 or 15(d)
               of the Securities Exchange Act of 1934, as amended (the "Exchange
               Act"); or

               (2)  such time as any "person" (as such term is used in Sections
               13(d) and 14(d) of the Exchange Act), other than a person who
               beneficially owned as of January 1, 1998, more than 5% of the
               Bank's securities, is or becomes the "beneficial owner" (as
               defined in Rule 13d-3 under the Exchange Act), directly or
               indirectly, of securities of the Holding Company or Bank
               representing 20 percent or more of the combined voting power of
               the outstanding Common Stock of the Holding Company or Common
               Stock of the Bank, as applicable; or
<PAGE>

                    (3)  individuals who constitute the Board or board of
               directors of the Holding Company on the date hereof (the
               "Incumbent Board" and "Incumbent Holding Company Board,"
               respectively) cease for any reason to constitute at least a
               majority thereof, provided that any person becoming a director
               subsequent to the date hereof whose election was approved by a
               vote of at least three-quarters of the directors comprising the
               Incumbent Board or Incumbent Holding Company Board, as
               applicable, or whose nomination for election by the Bank's or
               Holding Company's shareholders was approved by the Bank's or
               Holding Company's Board of Directors or Nominating Committee, as
               applicable, shall be considered as though he or she were a member
               of the Incumbent Board or Incumbent Holding Company Board, as
               applicable; or

                    (4)  either the Holding Company or the Bank consolidates or
               merges with or into another corporation, association or entity or
               is otherwise reorganized, where neither the Holding Company nor
               the Bank, respectively, is the surviving corporation in such
               transaction; or

                    (5)  all or substantially all of the assets of either the
               Holding Company or the Bank are sold or otherwise transferred to
               or are acquired by any other entity or group.

               Notwithstanding the other provisions of this Paragraph 10, a
          transaction or event shall not be considered a Change in Control if,
          prior to the consummation or occurrence of such transaction or event,
          Employee, Bank and Holding Company agree in writing that the same
          shall not be treated as a Change in Control for purposes of this
          Agreement.

               D.   In the event any dispute shall arise between the Employee
          and the Bank or Holding Company (or any successor) as to the terms or
          interpretation of this Agreement, including this Paragraph 10, whether
          instituted by formal legal proceedings or otherwise,
<PAGE>

          including any action taken by the Employee to enforce the terms of
          this Paragraph 10 or in defending against any action taken by the
          Holding Company or the Bank, the Bank shall reimburse the Employee for
          all costs and expenses incurred in such proceedings or actions,
          including attorney's fees, in the event the Employee prevails in any
          such action.

          11.   Disability. If, by reason of physical or mental disability
          ----------------
during the term hereof, Employee is unable to carry out the normal and usual
duties of his employment hereunder, the Employee shall receive his full salary
from the Bank for up to twenty (20) working days for which he is unable to work.
Medical disability shall require a doctor's statement indicating the date the
Employee became disabled as well as a statement that he is medically able to
return to work before he can resume his duties. If, after thirty (30)
consecutive days, he is still unable to return to work, he will be covered by
the disability insurance policy of the Bank, if that policy applies under its
terms. While disabled, the Employee will keep his original date of employment
and all seniority benefits for up to twelve (12) weeks. Group insurance will be
kept in force (Employee will continue to pay for dependent insurance); however,
if the Employee does not return to work from medical leave after twelve (12)
weeks, the Bank may recover the premiums paid to maintain the coverage. A
"return to work" occurs when an Employee returns to work for at least thirty
(30) days. Upon returning to work from such disability, the Employee shall be
restored to his previous position or to an equivalent position with equivalent
benefits, pay, and other conditions of employment.

          12.  Successors and Assigns.
          ---------------------------

               A.   This Employment Agreement shall enure to the benefit of and
          be binding upon any corporate or other successor of the Bank which
          shall acquire, directly or indirectly, by conversion, merger,
          consolidation, purchase or otherwise, all or substantially all of the
          assets of the Bank.

               B.   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.
<PAGE>

          13.  Amendments. No amendments or additions to this Agreement shall be
          ---------------
binding unless in writing by both parties, except as herein otherwise provided.

          14.  Applicable Law. This Agreement shall be governed in all respects,
          --------------------
whether as to validity, construction, capacity, performance or otherwise, by the
laws of the State of North Carolina, except to the extent that federal law shall
be deemed to apply.

          15.  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.

          16.  Entire Agreement; Counterparts.
          -----------------------------------

          A.   This Agreement constitutes the entire agreement between the
          Employee and the Bank with respect to the subject matter hereof and
          supersedes all prior agreements with respect thereto. This Agreement
          may be executed in one or more counterparts, all of which taken
          together shall constitute one and the same instrument.

          B.   This Agreement replaces the Agreement between the parties dated
          November 28, 1995 and all other agreements between the parties prior
          to the date hereof respecting the subject matter hereof. Any and all
          prior agreements shall be cancelled and have no further force or
          effect when this Agreement becomes effective.

          17.  Notices. Any notice or other communication required or permitted
          ------------
under this Agreement shall be effective only if it is writing, delivered in
person or by reliable overnight courier service or deposited in the mail,
postage prepaid, return receipt requested and addressed as follows:

          Address of the Bank: Peoples Bank, Post Office Box 467, Newton, North
          Carolina, 28658.

          Address of the Holding Company: Peoples Bancorp of North Carolina,
          Inc., Post Office Box 467, Newton, North Carolina, 28658.
<PAGE>

Address of the Employee: Clifton A. Wike, Post Office Box 694, Catawba, North
Carolina 28609.

          Notices given in person or by overnight courier service shall be
deemed given when delivered to the address required by this section, and notices
given by mail shall be deemed given three (3) days after deposit in the mail.
Any party hereto may designate, by written notice to the other party in
accordance herewith, any other address to which notices addressed to him shall
be sent.

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

                                   PEOPLES BANK, a North Carolina banking
                                   Corporation

                                   By: /s/ Tony W. Wolfe
                                   ---------------------------------------
                                          Tony W. Wolfe, President/
                                          Chief Executive Officer

                                       /s/ Clifton A. Wike
                                   ---------------------------------------
                                          Clifton A. Wike

The Foregoing Agreement is joined in and agreed to by Peoples Bancorp of North
Carolina, Inc.

                                   PEOPLES BANCORP OF NORTH CAROLINA, INC., a
                                   North Carolina Corporation

                                   by: /s/ Toney W. Wolfe
                                      --------------------------------------
                                          Tony W. Wolfe
                                          President/Chief Executive Officer

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