Common use of CHANGE IN CONTROL OF THE BANK Clause in Contracts

CHANGE IN CONTROL OF THE BANK. (a) If : (i) at the effective time of, or any time within 24 months following, a “Change in Control” (as defined below), the Bank terminates Employee’s employment other than for Cause (as defined in Paragraph 6(d) above), or (ii) at the effective time of, or any time within 365 days following, a “Change in Control” (as defined below), Employee voluntarily terminates his own employment with the Bank, then (subject to the limitations set forth herein, and except as provided below) Employee shall be entitled to receive from the Bank, and the Bank shall be obligated to pay or cause to be paid to Employee, an amount equal to 2.99 multiplied by Employee’s annual Base Salary in effect at the time the Change in Control became effective or in effect at the time the termination of Employee’s employment becomes effective, whichever is greater (and which amount shall be subject to adjustment as provided in Paragraph 8(g) below). Notwithstanding anything contained in this Paragraph 8(a) to the contrary, in the case of a voluntary termination of Employee’s employment pursuant to Paragraph 8(a)(ii) above, the Bank shall not be obligated to make the above payment to Employee if, at the time of such termination, events have occurred, or circumstances exist, that constitute “Cause” to terminate Employee’s employment as described in Paragraph 6(d) above, other than the circumstances described in Paragraph 6(d)(i)(A). (b) For purposes of this Agreement, a “Change in Control” shall be defined and interpreted in a manner that is consistent with Section 409A of the Internal Revenue Code of 1986, as amended, and regulations promulgated thereunder, as applicable (“Section 409A”) and shall be deemed to have occurred if: (i) after the Effective Date, any “Person” (as such term is defined in Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934, as amended), directly or indirectly, acquires beneficial ownership of voting stock, or acquires irrevocable proxies or any combination of voting stock and irrevocable proxies, representing more than 50% of any class of voting securities of the Bank or its parent bank holding company, Bank of the Carolinas Corporation (“BankCorp”), or in any manner acquires control of the election of a majority of the directors of the Bank or BankCorp; or (ii) the Bank or BankCorp consolidates or merges with or into another corporation, or otherwise is reorganized, where the Bank or BankCorp is not the resulting or surviving corporation in such transaction; or (iii) all or substantially all the Bank’s or BankCorp’s assets are sold or otherwise transferred to or acquired by any other corporation, association or other person, entity, or group. However, notwithstanding anything contained herein to the contrary, for purposes of this Agreement the term “Change in Control” shall not include a transaction approved by the Bank’s or BankCorp’s Board of Directors that results in the Bank or BankCorp merging with, transferring its assets to, or becoming the subsidiary of, a corporation or entity newly formed at the direction of the Bank’s or BankCorp’s Board of Directors for the purpose of such transaction (including a corporation or entity so formed for the purpose of a corporate reorganization of the Bank or BankCorp, serving as the Bank’s parent bank holding company, or effecting a reincorporation of BankCorp in a different state), and in connection with which transaction BankCorp’s shareholders (other than those who exercise statutory rights of dissent and appraisal) continue to hold substantially all of BankCorp’s voting stock or become the holders of substantially all of the voting stock of any such newly formed corporation. Further, notwithstanding the other provisions of this Paragraph 8, a transaction or event shall not be considered a Change in Control if, prior to the consummation or occurrence of such transaction or event, the Bank and Employee agree in writing that the same shall not be treated as a Change in Control for purposes of this Agreement, in which event Employee shall be deemed to have forever waived all right to any payment under this Agreement as a result of that transaction or event, but not to any future transaction or event. (c) For purposes of this Paragraph 8, all references to the Bank shall include any “Successor” (as defined below) to the Bank which shall have assumed and become liable for the Bank’s obligations hereunder (whether such assumption is by agreement, operation of law, or otherwise). “Successor” refers to any Person or entity (corporate or otherwise) into which the Bank (or any such Successor) shall be merged or consolidated or to which all or substantially all the Bank’s (or any such Successor’s) assets shall be transferred in any manner.

CHANGE IN CONTROL OF THE BANK. (a) If : (i) at the effective time of, or any time within 24 36 months following, a “Change in Control” (as defined below), ): (i) the Bank terminates Employee’s employment other than for Cause “Cause” (as defined in Paragraph 6(d6(c) above), or (ii) at the effective time of, or any time within 365 days following, a “Change in ControlTermination Event” (as defined below)) occurs and, thereafter, Employee voluntarily terminates his own employment with the BankBank in the manner described below, then (subject to the limitations set forth herein, and except as provided below) Employee shall be entitled to receive from the Bank, and the Bank shall be obligated to pay or cause to be paid to Employee, an amount equal to 2.99 multiplied by Employee’s annual Base Salary in effect at the time the Change in Control became effective or in effect at the time the termination of Employee’s employment becomes effective, whichever is greater (and which amount shall be subject to adjustment as provided in Paragraph 8(g) below)greater. Notwithstanding anything contained in this Paragraph 8(a) to the contrary, in In the case of a voluntary termination of Employee’s employment pursuant to described in Paragraph 8(a)(ii8(a)(i) above, the payments provided for in this Paragraph 8 shall be in lieu of and not in addition to the payments of Base Salary provided for in Paragraph 6(a) and 6(c) above], but, to the extent otherwise required by Paragraph 6(c), the Bank shall not be remain obligated to make reimburse Employee for the above payment cost of health insurance coverage to Employee if, at the time of such termination, events have occurred, or circumstances exist, that constitute “Cause” to terminate Employee’s employment as extent described in Paragraph 6(d) above, other than the circumstances described in Paragraph 6(d)(i)(A)that Paragraph. (b) For purposes of this Agreement, a “Change in Control” shall be defined and interpreted in a manner that is consistent with Section 409A of the Internal Revenue Code of 1986, as amended, and regulations promulgated thereunder, as applicable (“Section 409A”) and shall be deemed to have occurred if: (i) after the Effective Date, any “Person” (as such term is defined in Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934, as amended), directly or indirectly, acquires beneficial ownership of voting stock, or acquires irrevocable proxies or any combination of voting stock and irrevocable proxies, representing more than 50% of any class of voting securities of the Bank or its parent bank holding company, Bank of the Carolinas Corporation (“BankCorp”)Bank, or in any manner acquires control of the election of a majority of the directors of the Bank or BankCorpBank; or (ii) the Bank or BankCorp consolidates or merges with or into another corporation, or otherwise is reorganized, where the Bank or BankCorp is not the resulting or surviving corporation in such transaction; or (iii) all or substantially all the Bank’s or BankCorp’s assets are sold or otherwise transferred to or acquired by any other corporation, association or other person, entity, entity or group. However, notwithstanding anything contained herein to the contrary, for purposes of this Agreement the term “Change in Control” shall not include a transaction approved by the Bank’s or BankCorp’s Board of Directors that results in the Bank or BankCorp merging with, transferring its assets to, or becoming the subsidiary of, a corporation or entity newly formed at the direction of the Bank’s or BankCorp’s Board of Directors for the purpose of such transaction (including a corporation or entity so formed for the purpose of a corporate reorganization of the Bank or BankCorp, serving as the Bank’s parent bank holding company, or effecting a reincorporation of BankCorp in a different state), and in connection with which transaction BankCorp’s shareholders (other than those who exercise statutory rights of dissent and appraisal) continue to hold substantially all of BankCorp’s voting stock or become the holders of substantially all of the voting stock of any such newly formed corporation. Further, notwithstanding the other provisions of this Paragraph 8, a transaction or event shall not be considered a Change in Control if, prior to the consummation or occurrence of such transaction or event, the Bank and Employee agree in writing that the same shall not be treated as a Change in Control for purposes of this Agreement, in which event Employee shall be deemed to have forever waived all right to any payment under this Agreement as a result of that transaction or event, but not to any future transaction or event. (c) For purposes of this Paragraph 8, all references to the Bank shall include any “Successor” (as defined below) to the Bank which shall have assumed and become liable for the Bank’s obligations hereunder (whether such assumption is by agreement, operation of law, or otherwise). “Successor” refers to any Person or entity (corporate or otherwise) into which the Bank (or any such Successor) shall be merged or consolidated or to which all or substantially all the Bank’s (or any such Successor’s) assets shall be transferred in any manner.

CHANGE IN CONTROL OF THE BANK. (a) If : (i) at In the effective time of, or any time within 24 months following, event of a “Change in Control” (during the Term of Employment, as defined below)herein, and the Employee either (i) is terminated by the Bank terminates Employee’s employment other than (except “for Cause (Cause” as defined in Paragraph 6(d) Section 4.2 above), or (ii) at or the effective time of, or any time within 365 days following, a “Employee voluntarily resigns during the one-year period after the Change in Control” (as defined below), Employee voluntarily terminates his own employment with the Bankbut before she reaches age 75, then (subject to the limitations set forth herein, and except as provided below) Employee shall be entitled to receive from severance compensation in an equal to two (2) times the Bank, sum of: (i) her Base Salary then in effect and (ii) the Bank shall be obligated to pay or cause to be bonus paid to Employee, an amount equal Employee for the previous year. Employee shall also be entitled to 2.99 multiplied by Employee’s annual Base Salary in effect at the time the Change in Control became effective or in effect at the time the termination of Employee’s employment becomes effective, whichever is greater (and which amount shall be subject to adjustment as provided in Paragraph 8(g) below). Notwithstanding anything contained in this Paragraph 8(a) to the contrary, in the case of a voluntary termination of Employee’s employment pursuant to Paragraph 8(a)(ii) above, the Bank shall not be obligated to make the above payment any other amounts owing to Employee if, at the time of such terminationtermination date. All amounts payable to Employee pursuant to this Section 5 shall be paid in a lump sum within 14 days following the date of termination or resignation. For purposes of this Section 5, “Change in Control” of the Bank shall mean the occurrence of any of the following events have occurredthat does not also constitute a Non-Control Transaction: (i) During any twelve (12) month period, the individuals who are members of the Board of Mountain Valley Bancshares, Inc., the Bank’s holding company (the “Holding Company”) (the “Incumbent Board”), cease for any reason to constitute at least 50% of the Board of the Holding Company; provided, however, that if the election, or circumstances existnomination for election by the Holding Company’s shareholders, that constitute “Cause” to terminate Employee’s employment as described of any new director was approved in Paragraph 6(d) aboveadvance by a vote of at least 50% of the Incumbent Board, other than the circumstances described in Paragraph 6(d)(i)(A). (b) For such new director shall, for purposes of this Agreement, be considered as a “Change in Control” shall be defined and interpreted in a manner that is consistent with Section 409A member of the Internal Revenue Code Incumbent Board. (ii) A future acquisition (other than directly from the Bank or the Holding Company) of 1986, as amended, and regulations promulgated thereunder, as applicable any voting securities of the Bank or the Holding Company (the “Section 409AVoting Securities”) and shall be deemed to have occurred if: (i) after the Effective Date, by any “Person” (as such the term “person” is defined in Sections 3(a)(9used for purposes of Section 13(d) and 13(d)(3or 14(d) of the Securities Exchange Act Act) immediately after which such Person has “Beneficial Ownership” (within the meaning of 1934Rule 13d-3 promulgated under the Exchange Act) of 50% or more of the combined voting power of the Bank’s or the Holding Company’s then outstanding Voting Securities. (iii) Any Person, or more than one Person acting as amended)a group, acquires (or has acquired during the 12 month period ending of the date of the most recent acquisition by such Person or Persons) securities of the Company representing 30% or more of the Voting Securities; provided, however, that the event described in this paragraph (iii) shall not be deemed to be a Change in Control by virtue of any of the following acquisitions: (A) by the Bank or the Holding Company, (B) by any employee benefit plan (or related trust) sponsored or maintained by the Bank or the Holding Company, or (C) by an underwriter temporarily holding securities pursuant to an offering of such securities. (iv) When any one Person, or more than one Person acting as a group, acquires (or has acquired during the twelve (12)-month period ending on the date of the most recent acquisition by such Person or Persons) assets from the Bank or the Holding Company that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all of the assets of such entity (determined without regard to any liabilities associated with such assets) immediately prior to such acquisition or acquisitions, without regard to assets transferred to: (A) a shareholder or owner of the entity (immediately before the asset transfer) in exchange for or with respect to its stock, (B) an organization, 50% or more of the total value or voting power of which is owned directly or indirectly, by the entity immediately after the transfer, (C) a Person, or more than one Person acting as a group, that owns, directly or indirectly, acquires beneficial ownership 50% or more of the total value or voting stockpower of the entity immediately after the transfer or (D) an organization, or acquires irrevocable proxies or any combination of voting stock and irrevocable proxies, representing more than at least 50% of any class the total value or voting power of voting securities which is owned, directly or indirectly, by a Person, or more than one Person acting as a group, that owns, directly or indirectly, 50% or more of the Bank total value or its parent bank holding company, Bank voting power of the Carolinas Corporation (“BankCorp”), or in any manner acquires control of entity immediately after the election of a majority of the directors of the Bank or BankCorp; or (ii) the Bank or BankCorp consolidates or merges with or into another corporation, or otherwise is reorganized, where the Bank or BankCorp is not the resulting or surviving corporation in such transaction; or (iii) all or substantially all the Bank’s or BankCorp’s assets are sold or otherwise transferred to or acquired by any other corporation, association or other person, entity, or group. However, notwithstanding anything contained herein to the contrary, for purposes of this Agreement the term “Change in Control” shall not include a transaction approved by the Bank’s or BankCorp’s Board of Directors that results in the Bank or BankCorp merging with, transferring its assets to, or becoming the subsidiary of, a corporation or entity newly formed at the direction of the Bank’s or BankCorp’s Board of Directors for the purpose of such transaction (including a corporation or entity so formed for the purpose of a corporate reorganization of the Bank or BankCorp, serving as the Bank’s parent bank holding company, or effecting a reincorporation of BankCorp in a different state), and in connection with which transaction BankCorp’s shareholders (other than those who exercise statutory rights of dissent and appraisal) continue to hold substantially all of BankCorp’s voting stock or become the holders of substantially all of the voting stock of any such newly formed corporation. Further, notwithstanding the other provisions of this Paragraph 8, a transaction or event shall not be considered a Change in Control if, prior to the consummation or occurrence of such transaction or event, the Bank and Employee agree in writing that the same shall not be treated as a Change in Control for purposes of this Agreement, in which event Employee shall be deemed to have forever waived all right to any payment under this Agreement as a result of that transaction or event, but not to any future transaction or eventtransfer. (c) For purposes of this Paragraph 8, all references to the Bank shall include any “Successor” (as defined below) to the Bank which shall have assumed and become liable for the Bank’s obligations hereunder (whether such assumption is by agreement, operation of law, or otherwise). “Successor” refers to any Person or entity (corporate or otherwise) into which the Bank (or any such Successor) shall be merged or consolidated or to which all or substantially all the Bank’s (or any such Successor’s) assets shall be transferred in any manner.

CHANGE IN CONTROL OF THE BANK. (a) If : (i) at the effective time of, or any time within 24 months following, a “Change in Control” (as defined below), ): (i) the Bank terminates Employee’s employment other than for Cause “Cause” (as defined in Paragraph 6(d6(c) above), or (ii) at the effective time of, or any time within 365 days following, a “Change in ControlTermination Event” (as defined below)) occurs and, thereafter, Employee voluntarily terminates his own employment with the BankBank in the manner described below, then (subject to the limitations set forth herein, and except as provided below) Employee shall be entitled to receive from the Bank, and the Bank shall be obligated to pay or cause to be paid to Employee, an amount equal to 2.99 multiplied by Employee’s annual Base Salary in effect at the time the Change in Control became effective or in effect at the time the termination of Employee’s employment becomes effective, whichever is greater (and which amount shall be subject to adjustment as greater. The payments provided in Paragraph 8(g) below). Notwithstanding anything contained for in this Paragraph 8(a8 shall be paid in a lump-sum payment within thirty (30) to days following the contrary, in effective date of termination of Employee’s employment. In the case of a voluntary termination of Employee’s employment pursuant to described in Paragraph 8(a)(ii8(a)(i) above, the Bank payments provided for in this Paragraph 8 shall be in lieu of and not be obligated in addition to make the above payment to Employee if, at the time payments of such termination, events have occurred, or circumstances exist, that constitute “Cause” to terminate Employee’s employment as described Base Salary provided for in Paragraph 6(d6(a) and 6(c) above, other than but, to the circumstances extent otherwise required by Paragraph 6(c), the Bank shall remain obligated to reimburse Employee for the cost of health insurance coverage to the extent described in Paragraph 6(d)(i)(A)that Paragraph. (b) For purposes of this Agreement, a “Change in Control” shall be defined and interpreted in a manner that is consistent with Section 409A of the Internal Revenue Code of 1986, as amended, and regulations promulgated thereunder, as applicable (“Section 409A”) ), and shall be deemed to have occurred if: (i) after the Effective Date, any “Person” (as such term is defined in Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934, as amended), directly or indirectly, acquires beneficial ownership of voting stock, or acquires irrevocable proxies or any combination of voting stock and irrevocable proxies, representing more than 50% of any class of voting securities of the Bank or its parent bank holding company, Bank of the Carolinas Corporation (“BankCorp”), or in any manner acquires control of the election of a majority of the directors of the Bank or BankCorp; or (ii) the Bank or BankCorp consolidates or merges with or into another corporation, or otherwise is reorganized, where the Bank or BankCorp is not the resulting or surviving corporation in such transaction; or (iii) all or substantially all the Bank’s or BankCorp’s assets are sold or otherwise transferred to or acquired by any other corporation, association or other person, entity, entity or group. However, notwithstanding anything contained herein to the contrary, for purposes of this Agreement the term “Change in Control” shall not include a transaction approved by the Bank’s or BankCorp’s Board of Directors that results in the Bank or BankCorp merging with, transferring its assets to, to or becoming the subsidiary of, a corporation or entity newly formed at the direction of the Bank’s or BankCorp’s Board of Directors for the purpose of such transaction (including a corporation or entity so formed for the purpose of a corporate reorganization of the Bank or BankCorp, serving as the Bank’s parent bank holding company, or effecting a reincorporation of BankCorp in a different state), and in connection with which transaction BankCorp’s shareholders (other than those who exercise statutory rights of dissent and appraisal) continue to hold substantially all of BankCorp’s voting stock or become the holders of substantially all of the voting stock of any such newly formed corporation. Further, and notwithstanding the other provisions of this Paragraph 8, a transaction or event shall not be considered a Change in Control if, prior to the consummation or occurrence of such transaction or event, the Bank and Employee agree in writing that the same shall not be treated as a Change in Control for purposes of this Agreement, in which event Employee shall be deemed to have forever waived all right to any payment under this Agreement as a result of that transaction or event, but not to any future transaction or event. (c) For purposes of this Paragraph 8, all references to the Bank shall include any “Successor” (as defined below) to the Bank which shall have assumed and become liable for the Bank’s obligations hereunder (whether such assumption is by agreement, operation of law, law or otherwise). “Successor” refers to any Person or entity (corporate or otherwise) into which the Bank (or any such Successor) shall be merged or consolidated or to which all or substantially all the Bank’s (or any such Successor’s) assets shall be transferred in any manner.

CHANGE IN CONTROL OF THE BANK. (a) If : (i) at the effective time of, or any time within 24 36 months following, a “Change in Control” (as defined below), the Bank terminates Employee’s employment other than for Cause (as defined in Paragraph 6(d) above), or (ii) at the effective time of, or any time within 365 days following, a “Change in Control” (as defined below), Employee voluntarily terminates his own employment with the Bank, then (subject to the limitations set forth herein, and except as provided below) Employee shall be entitled to receive from the Bank, and the Bank shall be obligated to pay or cause to be paid to Employee, an amount equal to 2.99 multiplied by Employee’s annual Base Salary in effect at the time the Change in Control became effective or in effect at the time the termination of Employee’s employment becomes effective, whichever is greater (and which amount shall be subject to adjustment as provided in Paragraph 8(g) below). Notwithstanding anything contained in this Paragraph 8(a) to the contrary, in the case of a voluntary termination of Employee’s employment pursuant to Paragraph 8(a)(ii) above, the Bank shall not be obligated to make the above payment to Employee if, at the time of such termination, events have occurred, or circumstances exist, that constitute “Cause” to terminate Employee’s employment as described in Paragraph 6(d) above, other than the circumstances described in Paragraph 6(d)(i)(A). (b) For purposes of this Agreement, a “Change in Control” shall be defined and interpreted in a manner that is consistent with Section 409A of the Internal Revenue Code of 1986, as amended, and regulations promulgated thereunder, as applicable (“Section 409A”) and shall be deemed to have occurred if: (i) after the Effective Date, any “Person” (as such term is defined in Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934, as amended), directly or indirectly, acquires beneficial ownership of voting stock, or acquires irrevocable proxies or any combination of voting stock and irrevocable proxies, representing more than 50% of any class of voting securities of the Bank or its parent bank holding company, Bank of the Carolinas Corporation (“BankCorp”), or in any manner acquires control of the election of a majority of the directors of the Bank or BankCorp; or (ii) the Bank or BankCorp consolidates or merges with or into another corporation, or otherwise is reorganized, where the Bank or BankCorp is not the resulting or surviving corporation in such transaction; or (iii) all or substantially all the Bank’s or BankCorp’s assets are sold or otherwise transferred to or acquired by any other corporation, association or other person, entity, or group. However, notwithstanding anything contained herein to the contrary, for purposes of this Agreement the term “Change in Control” shall not include a transaction approved by the Bank’s or BankCorp’s Board of Directors that results in the Bank or BankCorp merging with, transferring its assets to, or becoming the subsidiary of, a corporation or entity newly formed at the direction of the Bank’s or BankCorp’s Board of Directors for the purpose of such transaction (including a corporation or entity so formed for the purpose of a corporate reorganization of the Bank or BankCorp, serving as the Bank’s parent bank holding company, or effecting a reincorporation of BankCorp in a different state), and in connection with which transaction BankCorp’s shareholders (other than those who exercise statutory rights of dissent and appraisal) continue to hold substantially all of BankCorp’s voting stock or become the holders of substantially all of the voting stock of any such newly formed corporation. Further, notwithstanding the other provisions of this Paragraph 8, a transaction or event shall not be considered a Change in Control if, prior to the consummation or occurrence of such transaction or event, the Bank and Employee agree in writing that the same shall not be treated as a Change in Control for purposes of this Agreement, in which event Employee shall be deemed to have forever waived all right to any payment under this Agreement as a result of that transaction or event, but not to any future transaction or event. (c) For purposes of this Paragraph 8, all references to the Bank shall include any “Successor” (as defined below) to the Bank which shall have assumed and become liable for the Bank’s obligations hereunder (whether such assumption is by agreement, operation of law, or otherwise). “Successor” refers to any Person or entity (corporate or otherwise) into which the Bank (or any such Successor) shall be merged or consolidated or to which all or substantially all the Bank’s (or any such Successor’s) assets shall be transferred in any manner.

CHANGE IN CONTROL OF THE BANK. (a) If : (i) at the effective time of, or any time within 24 months following, a “Change in Control” (as defined below), ): (i) the Bank terminates Employee’s employment other than for Cause “Cause” (as defined in Paragraph 6(d6(c) above), or (ii) at the effective time of, or any time within 365 days following, a “Change in ControlTermination Event” (as defined below)) occurs and, thereafter, Employee voluntarily terminates his own employment with the BankBank in the manner described below, then (subject to the limitations set forth herein, and except as provided below) Employee shall be entitled to receive from the Bank, and the Bank shall be obligated to pay or cause to be paid to Employee, an amount equal to 2.99 multiplied by Employee’s annual Base Salary in effect at the time the Change in Control became effective or in effect at the time the termination of Employee’s employment becomes effective, whichever is greater (and which amount shall be subject to adjustment as greater. The payments provided in Paragraph 8(g) below). Notwithstanding anything contained for in this Paragraph 8(a8 shall be paid in a lump-sum payment within thirty (30) to days following the contrary, in the case effective date of a voluntary termination of Employee’s employment pursuant and shall be in lieu of any other payments provided for in this Agreement, but, to the extent otherwise required by Paragraph 8(a)(ii) above6(c), the Bank shall not be remain obligated to make reimburse Employee for the above payment cost of health insurance coverage to Employee if, at the time of such termination, events have occurred, or circumstances exist, that constitute “Cause” to terminate Employee’s employment as extent described in Paragraph 6(d) above, other than the circumstances described in Paragraph 6(d)(i)(A)that Paragraph. (b) For purposes of this Agreement, a “Change in Control” shall be defined and interpreted in a manner that is consistent with Section 409A of the Internal Revenue Code of 1986, as amended, and regulations promulgated thereunder, as applicable (“Section 409A”) ), and shall be deemed to have occurred if: (i) after the Effective Date, any “Person” (as such term is defined in Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934, as amended), directly or indirectly, acquires beneficial ownership of voting stock, or acquires irrevocable proxies or any combination of voting stock and irrevocable proxies, representing more than 50% of any class of voting securities of the Bank or its parent bank holding company, Bank of the Carolinas Corporation (“BankCorp”), or in any manner acquires control of the election of a majority of the directors of the Bank or BankCorp; or (ii) the Bank or BankCorp consolidates or merges with or into another corporation, or otherwise is reorganized, where the Bank or BankCorp is not the resulting or surviving corporation in such transaction; or (iii) all or substantially all the Bank’s or BankCorp’s assets are sold or otherwise transferred to or acquired by any other corporation, association or other person, entity, or group. However, notwithstanding anything contained herein to the contrary, for purposes of this Agreement the term “Change in Control” shall not include a transaction approved by the Bank’s or BankCorp’s Board of Directors that results in the Bank or BankCorp merging with, transferring its assets to, or becoming the subsidiary of, a corporation or entity newly formed at the direction of the Bank’s or BankCorp’s Board of Directors for the purpose of such transaction (including a corporation or entity so formed for the purpose of a corporate reorganization of the Bank or BankCorp, serving as the Bank’s parent bank holding company, or effecting a reincorporation of BankCorp in a different state), and in connection with which transaction BankCorp’s shareholders (other than those who exercise statutory rights of dissent and appraisal) continue to hold substantially all of BankCorp’s voting stock or become the holders of substantially all of the voting stock of any such newly formed corporation. Further, and notwithstanding the other provisions of this Paragraph 8, a transaction or event shall not be considered a Change in Control if, prior to the consummation or occurrence of such transaction or event, the Bank and Employee agree in writing that the same shall not be treated as a Change in Control for purposes of this Agreement, in which event Employee shall be deemed to have forever waived all right to any payment under this Agreement as a result of that transaction or event, but not to any future transaction or event. (c) For purposes of this Paragraph 8, all references to the Bank shall include any “Successor” (as defined below) to the Bank which shall have assumed and become liable for the Bank’s obligations hereunder (whether such assumption is by agreement, operation of law, or otherwise). “Successor” refers to any Person or entity (corporate or otherwise) into which the Bank (or any such Successor) shall be merged or consolidated or to which all or substantially all the Bank’s (or any such Successor’s) assets shall be transferred in any manner.

CHANGE IN CONTROL OF THE BANK. (a) If : (i) at the effective time of, or any time within 24 36 months following, a “Change in Control” (as defined below), ): (i) the Bank terminates Employee’s employment other than for Cause “Cause” (as defined in Paragraph 6(d6(c) above), or (ii) at the effective time of, or any time within 365 days following, a “Change in ControlTermination Event” (as defined below)) occurs and, thereafter, Employee voluntarily terminates his own employment with the BankBank in the manner described below, then (subject to the limitations set forth herein, and except as provided below) Employee shall be entitled to receive from the Bank, and the Bank shall be obligated to pay or cause to be paid to Employee, an amount equal to 2.99 multiplied by Employee’s annual Base Salary in effect at the time the Change in Control became effective or in effect at the time the termination of Employee’s employment becomes effective, whichever is greater (and which amount shall be subject to adjustment as greater. The payments provided in Paragraph 8(g) below). Notwithstanding anything contained for in this Paragraph 8(a) 8 shall be in lieu of any other payments provided for in this Agreement, but, to the contrary, in the case of a voluntary termination of Employee’s employment pursuant to extent otherwise required by Paragraph 8(a)(ii) above6(c), the Bank shall not be remain obligated to make reimburse Employee for the above payment cost of health insurance coverage to Employee if, at the time of such termination, events have occurred, or circumstances exist, that constitute “Cause” to terminate Employee’s employment as extent described in Paragraph 6(d) above, other than the circumstances described in Paragraph 6(d)(i)(A)that Paragraph. (b) For purposes of this Agreement, a “Change in Control” shall be defined and interpreted in a manner that is consistent with Section 409A of the Internal Revenue Code of 1986, as amended, and regulations promulgated thereunder, as applicable (“Section 409A”) and shall be deemed to have occurred if: (i) after the Effective Date, any “Person” (as such term is defined in Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934, as amended), directly or indirectly, acquires beneficial ownership of voting stock, or acquires irrevocable proxies or any combination of voting stock and irrevocable proxies, representing more than 50% of any class of voting securities of the Bank or its parent bank holding company, Bank of the Carolinas Corporation (“BankCorp”)Bank, or in any manner acquires control of the election of a majority of the directors of the Bank or BankCorpBank; or (ii) the Bank or BankCorp consolidates or merges with or into another corporation, or otherwise is reorganized, where the Bank or BankCorp is not the resulting or surviving corporation in such transaction; or (iii) all or substantially all the Bank’s or BankCorp’s assets are sold or otherwise transferred to or acquired by any other corporation, association or other person, entity, or group. However, notwithstanding anything contained herein to the contrary, for purposes of this Agreement the term “Change in Control” shall not include a transaction approved by the Bank’s or BankCorp’s Board of Directors that results in the Bank or BankCorp merging with, transferring its assets to, or becoming the subsidiary of, a corporation or entity newly formed at the direction of the Bank’s or BankCorp’s Board of Directors for the purpose of such transaction (including a corporation or entity so formed for the purpose of a corporate reorganization of the Bank or BankCorp, serving as the Bank’s parent bank holding company, or effecting a reincorporation of BankCorp in a different state), and in connection with which transaction BankCorp’s shareholders (other than those who exercise statutory rights of dissent and appraisal) continue to hold substantially all of BankCorp’s voting stock or become the holders of substantially all of the voting stock of any such newly formed corporation. Further, notwithstanding the other provisions of this Paragraph 8, a transaction or event shall not be considered a Change in Control if, prior to the consummation or occurrence of such transaction or event, the Bank and Employee agree in writing that the same shall not be treated as a Change in Control for purposes of this Agreement, in which event Employee shall be deemed to have forever waived all right to any payment under this Agreement as a result of that transaction or event, but not to any future transaction or event. (c) For purposes of this Paragraph 8, all references to the Bank shall include any “Successor” (as defined below) to the Bank which shall have assumed and become liable for the Bank’s obligations hereunder (whether such assumption is by agreement, operation of law, or otherwise). “Successor” refers to any Person or entity (corporate or otherwise) into which the Bank (or any such Successor) shall be merged or consolidated or to which all or substantially all the Bank’s (or any such Successor’s) assets shall be transferred in any manner.