NEW CENTURY BANCORP INC (Form: S-8, Received: 07/19/2004 16:35:52)

As filed with the Securities and Exchange Commission on July 19, 2004

Registration No.

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM S-8

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

NEW CENTURY BANCORP, INC.

(Exact Name of Registrant as Specified in its Charter)

NORTH CAROLINA

20-0218264

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer Identification No.)

700 West Cumberland Street

Dunn, North Carolina 28334

(910) 782-7080

(Address, including ZIP Code, and telephone number, including area code, of registrant’s principal executive offices)

New Century Bancorp, Inc. 2004 Incentive Stock Option Plan

New Century Bancorp, Inc. 2000 Incentive Stock Option Plan

New Century Bancorp, Inc. 2000 Nonstatutory Stock Option Plan

(Full title of the plans)

JOHN Q. SHAW, JR.

PRESIDENT AND CHIEF EXECUTIVE OFFICER

NEW CENTURY BANCORP, INC.

700 WEST CUMBERLAND STREET

DUNN, NORTH CAROLINA 28334

(910) 892-7080

(Name and address of agent for service)

WITH COPIES TO :

ANTHONY GAETA, JR., ESQ.

TODD H. EVESON, ESQ.

GAETA & ASSOCIATES, P.A.

8305 FALLS OF NEUSE ROAD, SUITE 203

RALEIGH, NORTH CAROLINA 27615

(919) 845-2558

CALCULATION OF REGISTRATION FEE



Title of Securities to be Registered	Amount to be Registered	Proposed Maximum Offering Price Per Share (1)	Proposed Maximum Aggregate Offering Price (1)	Amount of Registration Fee (1)
Common Stock $1.00 Par Value	466,894	$25.00	$11,672,350	$1,478.89

(1)	Pursuant to Rule 457(c) and Rule 457(h), the Aggregate Offering Price and the Registration Fee have been calculated on the basis of the maximum number of shares to be issued under the Plans and an Offering Price equal to the average of the high and low prices reported on July 15, 2004.

PART I. INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS

Explanatory Note

As permitted by the rules of the Securities and Exchange Commission (the “Commission”), this Registration Statement omits the information specified in Part I (Items 1 and 2) of Form S-8. The documents containing the information specified in Part I will be delivered to participants in the New Century Bancorp, Inc. 2004 Incentive Stock Option Plan, the New Century Bancorp, Inc. 2000 Incentive Stock Option Plan or the New Century Bancorp, Inc. 2000 Nonstatutory Stock Option Plan, as required by Rule 428(b) under the Securities Act of 1933 (“Securities Act”). Such documents are not being filed with the Commission as part of this Registration Statement or prospectuses or prospectus supplements pursuant to Rule 424.

PART II. INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

Item 3.

Incorporation of Documents by Reference

The following documents filed by Registrant with the Commission under the Securities Act are incorporated herein by reference:

(a)

Registrant’s Annual Report on Form 10-KSB for the year ended December 31, 2003;

(b)

Registrant’s Quarterly Report on Form 10-QSB for the period ended March 31, 2004; and Registrant’s Current Reports on Form 8-K dated as of January 9, 2004, March 12, 2004, May 11, 2004 and June 8, 2004.

(c)

Registrant is the successor issuer of New Century Bank. New Century Bank’s common stock was registered under Section 12 of the Securities Exchange Act of 1934 (the “Exchange Act”) pursuant to a registration statement on Form 10-SB filed with the Federal Deposit Insurance Corporation on July 31, 2000. The Registrant filed a Report on Form 8-K with the Commission on September 25, 2003 reporting that it was the successor issuer of New Century Bank pursuant to Rule 12g-3 promulgated under the Exchange Act. A description of Registrant’s common stock is incorporated by reference herein from Exhibit 99.4 filed herewith.

In addition, all documents subsequently filed with the Commission by Registrant pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act after the date hereof prior to the filing of a post-effective amendment which indicates that all securities being offered have been sold or which deregisters all securities then remaining unsold shall be deemed to be incorporated herein by reference and to be a part hereof from the dates of filing of such documents. Any statement contained in a document incorporated, or deemed to be incorporated, by reference herein shall be deemed to be modified or superceded for purposes of this Registration Statement to the extent that a statement contained herein or in any other subsequently filed document that also is, or is deemed to be, incorporated by reference herein modifies or supercedes such statement. Any such statement so modified or superceded shall not be deemed, except as so modified or superceded, to constitute a part of this Registration Statement.

Item 6.

Indemnification of Directors and Officers

Registrant is incorporated under the laws of the State of North Carolina. North Carolina’s Business Corporation Act (the “BCA”) contains provisions prescribing the extent to which directors and officers of a corporation shall or may be indemnified.

The BCA permits a corporation, with certain exceptions, to indemnify a current or former officer or director against liability if he or she acted in good faith and he or she reasonably believed (i) in the case of conduct in his official capacity with the corporation, that his conduct was in the corporation’s best interests; (ii) in all other cases, that his or her conduct was at least not opposed to the corporation’s best interests; and (iii) with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful.

A corporation may not indemnify an officer or director in connection with a proceeding by or in the right of the corporation in which he or she was adjudged liable to the corporation or in connection with any other proceeding charging improper personal benefit to him or her, whether or not involving action in his official capacity, in which he or she was adjudged liable on the basis that personal benefit was improperly received by him or her unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability, but in view of all the circumstances of the case, he or she is fairly and reasonably entitled to indemnity for such reasonable expenses incurred which the court shall deem proper.

The BCA requires a corporation to indemnify an officer or director in the defense of any proceeding to which he or she was a party against reasonable expenses to the extent that he or she is wholly successful on the merits or otherwise in his or her defense. Indemnification under the BCA generally shall be made by the corporation only upon a determination that indemnification of the director or officer was proper under the circumstances because he or she met the applicable standard of conduct. Such determination may be made by; or (i) the Board of Directors by a majority vote of a quorum consisting of directors who are not parties to such proceeding; or (ii) if such a quorum is not obtainable, by majority vote of a committee duly designated by the Board of Directors consisting solely of two or more directors not at the time party to such proceeding; or (iii) if such quorum is not obtainable, or, even if obtainable if a quorum of disinterested directors so directs, by independent legal counsel in a written opinion; or (iv) by the stockholders of the corporation.

The BCA permits a corporation to provide for indemnification of directors and officers in its Articles of Incorporation or Bylaws or by contract or otherwise, against liability in various proceedings, and to purchase and maintain insurance policies on behalf of these individuals. The Articles of Incorporation of the Registrant provide that current and former directors, officers, employees and agents of the Registrant, who are, were, or are threatened to be made a party to any threatened, pending or completed civil, criminal, administrative, investigative, or arbitrative action, suit or proceeding or appeal, shall be indemnified and held harmless to the fullest extent permitted by law. This indemnification provided by the Registrant’s Articles of Incorporation applies to all liability and expense, including, but not limited to, attorney’s fees, judgments, fines, excise taxes, settlement amounts, and attorney’s fees associated with the enforcement of such indemnification. The Bylaws of the Registrant provide for the indemnification of directors, officers, employees and agents to the maximum extent permitted by law.

Item 8.

Exhibits

The following exhibits are filed herewith or incorporated herein by reference as a part of the Registration Statement.


Exhibit Number		Description

4.1		Specimen of Registrant’s Common Stock certificate *

5.1		Opinion of Gaeta & Associates, P.A. as to the legality of the securities being registered (filed herewith)

23.1		Consent of Dixon Hughes PLLC (filed herewith)

23.2		Consent of Gaeta & Associates, P.A. (contained in the opinion filed herewith as Exhibit 5.1)

24.1		Power of Attorney (filed herewith)

99.1		2004 Incentive Stock Option Plan (filed herewith)

99.2		2000 Incentive Stock Option Plan (filed herewith)

99.3		2000 Nonstatutory Stock Option Plan (filed herewith)

99.4		Description of Registrant’s Capital Stock (filed herewith)

*	Incorporated by reference to Registrant’s Annual Report on 10-KSB for the year ended December 31, 2003 as filed with the SEC on March 30, 2004.

Item 9.

Undertakings

(a) The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(i)

To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

(ii)

To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set

forth in the “Calculation of Registration Fee” table in the effective Registration Statement;

(iii)

To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the Registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the Registration Statement.

(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(b) The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Dunn, State of North Carolina, on July 19, 2004.


NEW CENTURY BANCORP, INC.

By:		/s/ J OHN Q. S HAW , J R .
		John Q. Shaw, Jr. President and Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement on Form S-8 has been signed by the following persons in the capacities on July 19, 2004.


SIGNATURE		CAPACITY

/s/ J OHN Q. S HAW , J R . John Q. Shaw, Jr.		Director, President, and Chief Executive Officer

/s/ L ISA F. C AMPBELL Lisa F. Campbell		Senior Vice President, Chief Financial Officer, and Secretary

/s/ C. L. T ART , J R .* C. L. Tart, Jr.		Chairman of the Board

/s/ O SCAR N. H ARRIS * Oscar N. Harris		Vice Chairman of the Board

/s/ J. G ARY C ICCONE * J. Gary Ciccone		Director

/s/ T.C. G ODWIN , J R .* T. C. Godwin, Jr.		Director

/s/ G ERALD W. H AYES * Gerald W. Hayes		Director

/s/ J OHN W. M C C AULEY * John W. McCauley		Director

/s/ C ARLIE C. M C L AMB * Carlie C. McLamb		Director

/s/ A NTHONY E. R AND * Anthony E. Rand		Director



* By:		/s/ J OHN Q. S HAW , J R .
		John Q. Shaw Attorney-In-Fact

EXHIBIT INDEX


EXHIBIT NUMBER		DESCRIPTION OF EXHIBIT
4.1		Specimen of Registrant’s Common Stock *

5.1		Opinion of Gaeta & Associates, P.A. as to the legality of the securities being registered

23.1		Consent of Dixon Hughes PLLC

23.2		Consent of Gaeta & Associates, P.A. (Included in Exhibit 5.1)

24.1		Power of Attorney (filed herewith)

99.1		2004 Incentive Stock Option Plan (filed herewith)

99.2		2000 Incentive Stock Option Plan (filed herewith)

99.3		2000 Nonstatutory Stock Option Plan (filed herewith)

99.4		Description of Registrant’s Capital Stock (filed herewith)

*	Incorporated by reference to Registrant’s Annual Report on 10-KSB for the year ended December 31, 2003 as filed with the SEC on March 30, 2004.

GAETA & ASSOCIATES, P.A.

Attorneys at Law

8305 Falls of Neuse Road, Suite 203

Raleigh, North Carolina 27615

(919) 845-2558 Telephone

(919) 518-2146 Facsimile

July 19, 2004

Board of Directors

New Century Bancorp, Inc.

700 W. Cumberland Street

Dunn, NC 28335

Re:

Registration of Securities Underlying New Century Bancorp, Inc.

2000 Incentive Stock Option Plan, New Century Bancorp, Inc.

2000 Nonstatutory Stock Option Plan and New Century Bancorp, Inc.

2004 Incentive Stock Option Plan

Ladies and Gentlemen:

As counsel for New Century Bancorp, Inc. (the “Company”), we are furnishing the following opinion in connection with the proposed issuance by the Company of up to 466,894 shares of the Company’s common stock, $1.00 par value per share (the “Common Stock”), pursuant to the New Century Bancorp, Inc. 2000 Incentive Stock Option Plan, the New Century Bancorp, Inc. 2000 Nonstatutory Stock Option Plan and the New Century Bancorp, Inc. 2004 Incentive Stock Option Plan (collectively, the “Plans”). These securities are the subject of a registration statement to be filed by the Company with the Securities and Exchange Commission on Form S-8 (the “Registration Statement”) under the Securities Act of 1933, as amended (the “Securities Act”), to which this opinion is to be attached as an exhibit.

We have examined the Articles of Incorporation and Bylaws of the Company, the minutes of meetings of its Board of Directors and shareholders and such other corporate records of the Company and other documents and have made such examinations of law as we have deemed relevant for the purposes of this opinion. Based upon such examination, it is our opinion that the 466,894 shares of Common Stock of the Company which are being registered pursuant to the Registration Statement, may be legally issued in accordance with the Company’s Articles of Incorporation and Bylaws, and when so issued and duly delivered against payment therefor pursuant to the Plans as described in the Registration Statement, such shares of Common Stock will be legally issued, fully paid and nonassessable.

The opinion expressed herein does not extend to compliance with state and federal securities laws relating to the sale of these securities.

We hereby consent to the filing of this opinion as an exhibit to the Registration Statement that you are about to file with the Securities and Exchange Commission. In giving this consent we do not hereby admit that this firm is within the category of persons whose consent is required under Section 7 of the Securities Act or the regulations promulgated pursuant to the Securities Act.

Yours very truly,

GAETA & ASSOCIATES, P.A.

/s/ GAETA & ASSOCIATES, P.A.

EXHIBIT 23.1

LOGO

CONSENT OF INDEPENDENT AUDITORS

To the Board of Directors

New Century Bancorp, Inc.

Dunn, North Carolina

We consent to the incorporation by reference in this registration statement of New Century Bancorp, Inc. on Form S-8 of our report, dated January 16, 2004 for the years ended December 31, 2003 and 2002.

/s/ Dixon Hughes PLLC

Sanford, North Carolina

July 19, 2004

Exhibit 24.1

POWER OF ATTORNEY

Know all by these presents, that each of New Century Bancorp, Inc. and the several undersigned Officers and Directors thereof whose signatures below hereby makes, constitutes, and appoints John Q. Shaw, Jr. and Lisa F. Campbell and his or her true and lawful attorneys, with full power of substitution to execute, deliver, and file in its or his or her name and on its or his or her behalf, and in each of the undersigned Officer’s and Director’s capacity or capacities shown below, (a) one or more Registration Statements on Form S-8 with respect to the registration under the Securities Act of 1933, as amended, of the shares of common stock of New Century Bancorp, Inc., $1.00 par value per share, to be issued in connection with the New Century Bancorp, Inc. 2004 Incentive Stock Option Plan, the New Century Bancorp, Inc. 2000 Incentive Stock Option Plan, the New Century Bancorp, Inc. 2000 Nonstatutory Stock Option Plan and the New Century Bank Directors’ Deferral Plan, all documents in support thereof or supplemental thereto and any and all amendments, including any and all post-effective amendments, to the foregoing (hereinafter referred to as the “Registration Statements”), and (b) such registration statements, petitions, applications, consents to service of process or other instruments, any and all documents in support thereof or supplemental thereto, and any and all amendments or supplements to the foregoing, as may be necessary or advisable to qualify or register the securities covered by the Registration Statements; and each of New Century Bancorp, Inc., and the aforementioned Officers and Directors hereby grants to said attorneys full power and authority to do and perform each and every act and thing whatsoever as said attorneys may deem necessary or advisable to carry out fully the intent of this power of attorney to the same extent and with the same effect as New Century Bancorp, Inc. might or could do, and as each of said Officers and Directors might or could do personally in his or her capacity or capacities as aforesaid, and each of New Century Bancorp, Inc. and said Officers and Directors hereby ratifies and confirms all acts and things which said attorneys might do or cause to be done by virtue of this power of attorney and its or his or her signatures as the same may be signed by said attorneys to any or all of the following (and/or any and all amendments and supplements to any or all thereof); such Registration Statements filed under the Securities Act of 1933, as amended, and all such registration statements, petitions, applications, consents to service of process and other instruments, and all documents in support thereof or supplemental thereto, filed under securities laws, regulations and requirements as may be applicable.

In witness whereof, New Century Bancorp, Inc. has caused this power of attorney to be signed on its behalf, and each of the undersigned Officers and Directors in the capacity or capacities noted has hereunto set his or her hand on the date indicated below.


NEW CENTURY BANCORP, INC.
(Registrant)

By:		/ S / J OHN Q. S HAW , J R .
		John Q. Shaw, Jr.
		President and Chief Executive Officer

Dated: June 7, 2004


SIGNATURE		CAPACITY

/ S / J OHN Q. S HAW , J R .		Director, President, and Chief Executive Officer
John Q. Shaw, Jr.

/ S / L ISA F. C AMPBELL		Senior Vice President, Chief Financial Officer, and Secretary
Lisa F. Campbell

/ S / C. L. T ART , J R .		Chairman of the Board
C. L. Tart, Jr.

/ S / O SCAR N. H ARRIS		Vice Chairman of the Board
Oscar N. Harris

/ S / J. G ARY C ICCONE		Director
J. Gary Ciccone

/ S / T. C. G ODWIN , J R .		Director
T. C. Godwin, Jr.

/ S / G ERALD W. H AYES		Director
Gerald W. Hayes

/ S / J OHN W. M C C AULEY		Director
John W. McCauley

/ S / C ARLIE C. M C L AMB		Director
Carlie C. McLamb

/ S / A NTHONY E. R AND		Director
Anthony E. Rand

Exhibit 99.1

NEW CENTURY BANCORP, INC.

2004 INCENTIVE STOCK OPTION PLAN

New Century Bancorp, Inc., a North Carolina corporation (hereinafter referred to as the “Corporation”), does herein set forth the terms of the New Century Bancorp, Inc. 2004 Incentive Stock Option Plan (hereinafter referred to as this “Plan”) which was adopted by the Corporation’s Board of Directors (hereinafter referred to as the “Board”) and which was approved by the shareholders of the Corporation .

1. Purpose of the Plan . The purpose of this Plan is to provide for the grant of Incentive Stock Options (hereinafter referred to as “Option” or “Options”) qualifying for the tax treatment afforded by Section 422 of the Internal Revenue Code of 1986, as amended, to eligible officers and employees of the Corporation and its subsidiaries (hereinafter referred to as “Eligible Employees”) who wish to invest in the Corporation’s common stock (hereinafter referred to as “Common Stock”). The Corporation believes that participation in the ownership of the Corporation by Eligible Employees will be to the mutual benefit of the Corporation and Eligible Employees. The existence of this Plan will enhance the Corporation’s ability to attract capable individuals to employment in key employee positions.

2. Administration of the Plan .

(a) This Plan shall be administered by the Option Committee of the Board (hereinafter referred to as the “Committee”). The Committee shall consist of at least three (3) members of the Board all of whom shall qualify as disinterested persons as provided in Section 16(b) and the rules and regulations thereunder of the Securities Exchange Act of 1934, as amended. The members of the Committee shall be appointed by the Board and shall serve at the pleasure of the Board, which may remove members from, add members to, or fill vacancies in the Committee.

(b) The Committee shall decide to whom Options shall be granted under this Plan, the number of shares as to which Options shall be granted subject to the limitations set forth in Paragraph 11 of this Plan, the Option Price (as hereinafter defined) for such shares and such additional terms and conditions for such Options as the Committee deems appropriate.

(c) A majority of the Committee shall constitute a quorum and the acts of a majority of the members present at any meeting at which a quorum is present, or acts approved unanimously in writing by the Committee, shall be considered as valid actions by the Committee.

(d) The Board may designate any officers or employees of the Corporation or any of its subsidiaries to assist in the administration of this Plan. The Board may authorize such individuals to execute documents on its behalf and may delegate to them such other ministerial and limited discretionary duties as the Board may deem fit.

3. Shares of Common Stock Subject to the Plan . The maximum number of shares of Common Stock that shall be available initially for Options under this Plan is Fifty-Six Thousand Four Hundred Eighteen (56,418) shares, subject to adjustment as provided in Paragraph 15 hereof. Shares subject to Options which expire or terminate prior to the issuance of the shares of Common Stock shall again be available for future grants of Options under this Plan.

4. Eligibility . Options under this Plan may be granted to any Eligible Employee as determined by the Committee. An individual may hold more than one Option under this or other plans adopted by the Corporation.

5. Grant of Options .

(a) The Committee shall authorize that Options for shares of Common Stock shall be granted to certain Eligible Employees which Options shall be granted based upon the past service and the continued participation of those individuals. The allocation of said Options shall be as determined by a majority vote of the Committee at one or more meetings called for such purpose.

(b) Upon the forfeiture of an Option for whatever reason prior to the expiration of the Option Period (as defined in Paragraph 10 hereof) the shares of Common Stock covered by a forfeited Option shall be available for the granting of additional Options to Eligible Employees during the remaining term of this Plan upon such terms and conditions as may be determined by the Committee. The number of additional Options to be granted to specific Eligible Employees during the term of this Plan shall be determined by the Committee as provided in Subparagraph 2(b) hereof.

6. Vesting of Options .

(a) Options granted under this Plan shall vest and the right of an Optionee to exercise an Option shall be nonforfeitable in accordance with the following schedule:


Date When Such Options Become Vested	Percentage of Such Options Vested
Date of grant	0	%
First Anniversary of the date of grant	20	%
Second Anniversary of the date of grant	20	%
Third Anniversary of the date of grant	20	%
Fourth Anniversary of the date of grant	20	%
Fifth Anniversary of the date of grant	20	%

(b) In determining the number of shares of Common Stock under each Option vested under the above vesting schedule, an Optionee shall not be entitled to exercise an Option to purchase a fractional number of shares of the Common Stock. If the product resulting from multiplying the vested percentage times the Option results in a fractional number of shares of Common Stock, then an Optionee’s vested right shall be to the whole number of shares of Common Stock disregarding any fractional shares of Common Stock.

(c) In the event that the employment of an Optionee terminates for any reason, other than the Optionee’s disability, death, retirement, or following a change in control of the Corporation, the Optionee’s Options under this Plan shall be forfeited and shall be available again for grant to Eligible Employees as may be determined by the Committee. Such forfeiture shall apply whether or not any such Options have been vested.

(d) In the event that the employment of an Optionee with the Corporation should terminate because of such Optionee’s disability, death, or retirement, or following a change in control of the Corporation prior to the date when all Options allocated to the Optionee would be 100% vested in accordance with the applicable schedule in subparagraph 6(a) above, then, notwithstanding the foregoing schedule in subparagraph 6(a) above, all Options allocated to such Optionee shall immediately become fully vested and nonforfeitable. For purposes of this Plan, the term disability shall be defined in the same manner as such term is defined in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended. When used in this Plan, the phrase “change in control” refers to (i) the acquisition by any person, group of persons or entity of the beneficial ownership or power to vote more than twenty-five (25%) percent of the Corporation’s outstanding stock, (ii) during any period of two (2) consecutive years, a change in the majority of the Board unless the election of each new Director was approved by at least two-thirds of the Directors then still in office who were Directors at the beginning of such two (2) year period, or (iii) a reorganization, merger, or consolidation of the Corporation with one or more other entities in which the Corporation is not the surviving entity, or the transfer of all or substantially all of the assets or shares of the Corporation to another person or entity. Notwithstanding anything else herein, 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 Optionee and the Corporation agree in writing that the same shall not be treated as a change in control for purposes of this Plan.

7. Option Price .

(a) The price per share of each Option granted under this Plan (hereinafter called the “Option Price”) shall be determined by the Committee as of the effective date of grant of such Option, but in no event shall the Option Price be less than 100% of the fair market value of Common Stock on the date of grant. If an Optionee (as hereinafter defined) at the time that an Option is granted owns stock possessing more than ten (10%) percent of the total combined voting power of all classes of stock of the Corporation, then the Option Price per share of each Option granted under this Plan shall be no less than 110% of the fair market value of Common Stock on the date of grant and such Option shall not be exercisable more than five (5) years from the date of grant. An Option shall be considered as granted on the date that the

Committee acts to grant such Option or such later date as the Committee shall specify in an Option Agreement (as hereinafter defined).

(b) The fair market value of a share of Common Stock shall be determined as follows: (i) if on the date as of which such determination is being made, Common Stock being valued is admitted to trading on a securities exchange or exchanges for which actual sale prices are regularly reported, or actual sale prices are otherwise regularly published, the fair market value of a share of Common Stock shall be deemed to be equal to the mean of the closing sale price as reported on each of the five (5) trading days immediately preceding the date as of which such determination is made; provided , however , that, if a closing sale price is not reported for each of the five (5) trading days immediately preceding the date as of which such determination is made, then the fair market value shall be equal to the mean of the closing sale prices on those trading days for which such price is available, or (ii) if on the date as of which such determination is made, no such closing sale prices are reported, but quotations for Common Stock being valued are regularly listed on the National Association of Securities Dealers Automated Quotation System or another comparable system, the fair market value of a share of Common Stock shall be deemed to be equal to the mean of the average of the closing bid and asked prices for such Common Stock quoted on such system on each of the five (5) trading days preceding the date as of which such determination is made, but if a closing bid and asked price is not available for each of the five (5) trading days, then the fair market value shall be equal to the mean of the average of the closing bid and asked prices on those trading days during the five-day period for which such prices are available, or (iii) if no such quotations are available, the fair market value of a share of Common Stock shall be deemed to be the average of the closing bid and asked prices furnished by a professional securities dealer making a market in such shares, as selected by the Committee, for the trading date first preceding the date as of which such determination is made. If the Committee determines that the price as determined above does not represent the fair market value of a share of Common Stock, the Committee may then consider such other factors as it deems appropriate and then fix the fair market value for the purposes of this Plan.

8. Payment of Option Price . Payment for shares subject to an Option may be made in cash or in issued and outstanding shares of the Corporation’s Common Stock.

9. Terms and Conditions of Grant of Options . Each Option granted pursuant to this Plan shall be evidenced by a written Incentive Stock Option Agreement (hereinafter referred to as “Option Agreement”) with each Eligible Employee (hereinafter referred to as “Optionee”) to whom an Option is granted; such agreement shall be substantially in the form attached hereto as “Exhibit A,” unless the Committee shall adopt a different form and, in each case, may contain such other, different, or additional terms and conditions as the Committee may determine. The Option shall terminate as provided in paragraph 13 hereof. In addition to any further conditions provided herein and in the Option Agreement, the right of an Optionee to exercise the Option to purchase the Option Shares, either in whole or in part, shall be conditioned upon the completion by the Optionee of one (1) full year of service in the employment of the Corporation following the date of grant of the Option.

10. Option Period . Each Option Agreement shall set forth a period during which such Option may be exercised (hereinafter referred to as the “Option Period”); provided , however , that the Option Period shall not exceed ten (10) years after the date of grant of such Option as specified in an Option Agreement.

11. Limitation on Grant of Incentive Stock Options . Notwithstanding any other provision of this Plan, no person shall be granted an Option under this Plan which would cause such person’s “annual vesting amount” to exceed $100,000.00. With respect to any calendar year, a person’s “annual vesting amount” is the aggregate fair market value of stock subject to incentive stock options with respect to which such options are first exercisable during such calendar year. For purposes of the foregoing, the aggregate fair market value of stock with respect to which incentive stock options are first exercisable during any calendar year shall be determined by taking into account all such options granted to such person under all incentive stock option plans of the Corporation or of any of its parent or subsidiary corporations.

12. Exercise of Incentive Stock Options . An Option shall be exercised by written notice to the Committee signed by an Optionee or by such other person as may be entitled to exercise such Option. In the exercise of an Option, the aggregate Option Price for the shares being purchased may be paid in cash or in issued and outstanding shares of Common Stock of the Corporation and must be accompanied by a notice of exercise. The written notice shall state the number of shares with respect to which an Option is being exercised and, shall either be accompanied by the payment of the aggregate Option Price for such shares or shall fix a date (not more than ten (10) business days from the date of such notice) by which the payment of the aggregate Option Price will be made. An Optionee shall not exercise an Option to purchase less than 100 shares, unless the Committee otherwise approves or unless the partial exercise is for the remaining shares available under such Option. A certificate or certificates for the shares of Common Stock purchased by the exercise of an Option shall be issued in the regular course of business subsequent to the exercise of such Option and the payment therefor. During the Option Period, no person entitled to exercise any Option granted under this Plan shall have any of the rights or privileges of a shareholder with respect to any shares of Common Stock issuable upon exercise of such Option, until certificates representing such shares shall have been issued and delivered and the individual’s name entered as a shareholder of record on the books of the Corporation for such shares.

13. Effect of Termination of Employment, Retirement, Disability or Death .

(a) In the event of the termination of employment of an Optionee either by reason of (i) being discharged for cause or (ii) termination of employment for a reason other than the Optionee’s death, retirement, disability, or following a “change in control” of the Corporation (as defined in Paragraph 6(d)), any Option or Options granted to the Optionee under this Plan, to the extent not previously exercised or expired, and regardless of any vesting pursuant to Paragraph 6 hereof, shall immediately terminate. The phrase “discharged for cause” shall include termination at the sole discretion of the Board because of such Optionee’s personal

dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any law, rule or regulation (other than traffic violations or similar offenses), a final cease and desist order, or material breach of any provision of any employment agreement that such Optionee may have with the Corporation.

(b) In the event of the termination of employment of an Optionee as a result of such Optionee’s retirement, all Options granted such Optionee shall vest and such Optionee shall have the right to exercise an Option granted under this Plan, to the extent that it has not previously been exercised or expired, for a period of three (3) months after the date of retirement, but in no event may any Option be exercised later than the end of the Option Period provided in such Option Agreement in accordance with Paragraph 10 hereof. For purposes of this Plan, the term “retirement” shall mean, subject to Board approval in each instance, (i) termination of an Optionee’s employment under conditions which would constitute retirement under any tax qualified retirement plan maintained by the Corporation or any of its subsidiaries or (ii) attaining age 65.

(c) In the event of the termination of employment of an Optionee by reason of such Optionee’s disability, all Options granted such Optionee shall vest and such Optionee shall have the right to exercise an Option granted under this Plan, to the extent that it has not previously been exercised or expired, at any time within twelve (12) months after the last date on which such Optionee provides services as an officer or an employee of the Corporation before being disabled, but in no event may any Option be exercised later than the end of the Option Period provided in such Option Agreement in accordance with Paragraph 10 hereof. For purposes of this Plan, the term “disability” shall be defined in the same manner as such term is defined in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended.

(d) Notwithstanding anything else herein, in the event that an Optionee should die (i) while employed by the Corporation or any of its subsidiaries, (ii) within three (3) months after retirement, (iii) within three (3) months after Optionee’s termination following a change in control, or (iv) within twelve (12) months after Optionee’s termination by reason of Optionee’s disability, any Option or Options granted to the Optionee under this Plan and not previously exercised or expired shall vest and shall be exercisable, according to their respective terms, by the personal representative of such Optionee or by any person or persons who acquired such Options by bequest or inheritance from such Optionee, notwithstanding any limitations placed on the exercise of such Options by this Plan or an Option Agreement, immediately in full and at any time within twelve (12) months after the date of death of such Optionee, but in no event may any Option be exercised later than the end of the Option Period provided in such Option Agreement in accordance with Paragraph 10 hereof. Any references herein to an Optionee shall be deemed to include any person entitled to exercise an Option under the terms of this Plan after the death of such Optionee under the terms of this Plan.

(e) In the event of the termination of employment of an Optionee following a “change in control” of the Corporation (as defined in Paragraph 6(d)), all Options granted such Optionee shall vest and such Optionee shall have the right to exercise any Option or Options granted to the Optionee under this Plan, to the extent they have not previously been

exercised or expired, for a period of three (3) months after the date of termination, but in no event may any Option be exercised later than the end of the Option period provided in such Option Agreement in accordance with Paragraph 10 hereof.

14. Effect of Plan on Employment Status . The fact that the Committee has granted an Option to an Optionee under this Plan shall not confer on such Optionee any right to employment with the Corporation or any of its subsidiaries or to a position as an officer or an employee of the Corporation or any of its subsidiaries, nor shall it limit the right of the Corporation to remove such Optionee from any position held by the Optionee or to terminate the Optionee’s employment at any time.

15. Adjustment Upon Changes in Capitalization; Dissolution or Liquidation .

(a) In the event of a change in the number of shares of Common Stock outstanding by reason of a stock dividend, stock split, recapitalization, reorganization, merger, exchange of shares, or other similar capital adjustment, prior to the termination of an Optionee’s rights under this Plan, equitable proportionate adjustments shall be made by the Committee in (i) the number and kind of shares which remain available under this Plan and (ii) the number, kind, and the Option Price of shares subject to unexercised Options under this Plan. The adjustments to be made shall be determined by the Committee and shall be consistent with such change or changes in the Corporation’s total number of outstanding shares; provided , however , that no adjustment shall change the aggregate Option Price for the exercise of Options granted under this Plan.

(b) The grant of Options under this Plan shall not affect in any way the right or power of the Corporation or its shareholders to make or authorize any adjustment, recapitalization, reorganization, or other change in the Corporation’s capital structure or its business, or any merger or consolidation of the Corporation, or to issue bonds, debentures, preferred or other preference stock ahead of or affecting Common Stock or the rights thereof, or the dissolution or liquidation of the Corporation, or any sale or transfer of all or any part of the Corporation’s assets or business.

(c) Except upon a “change in control” as defined in Paragraph 6(d) hereof, upon the effective date of the dissolution or liquidation of the Corporation, this Plan and any Options granted hereunder, shall terminate.

16. Non-Transferability . Any Option granted under this Plan shall not be assignable or transferable except, in the case of the death of an Optionee, by will or by the laws of descent and distribution. In the event of the death of an Optionee, the personal representative, the executor or the administrator of such Optionee’s estate, or the person or persons who acquired by bequest or inheritance the rights to exercise such Option, may exercise any Option or portion thereof to the extent not previously exercised by an Optionee or expired, in accordance with its terms and Subparagraph 13(d) hereof.

17. Tax Withholding . The employer of a person granted an Option under this Plan shall have the right to deduct or otherwise effect a withholding of any amount required by federal or state laws to be withheld with respect to the grant, exercise or the sale of stock acquired upon the exercise of an Option in order for the employer to obtain a tax deduction otherwise available as a consequence of such grant, exercise or sale, as the case may be.

18. Listing and Registration of Option Shares . Any Option granted under the Plan shall be subject to the requirement that if at any time the Committee shall determine, in its discretion, that the listing, registration, or qualification of the shares covered thereby upon any securities exchange or under any state or federal law or the consent or approval of any governmental regulatory body is necessary or desirable as a condition of, or in connection with, the granting of such Option or the issuance or purchase of shares thereunder, such Option may not be exercised in whole or in part unless and until such listing, registration, qualification, consent, or approval shall have been effected or obtained free of any conditions not acceptable to the Committee.

19. Exculpation and Indemnification . In connection with this Plan, no member of the Committee shall be personally liable for any act or omission to act in such person’s capacity as a member of the Committee, nor for any mistake in judgment made in good faith, unless arising out of, or resulting from, such person’s own bad faith, gross negligence, willful misconduct, or criminal acts. To the extent permitted by applicable law and regulation, the Corporation shall indemnify and hold harmless the members of the Committee, and each other officer or employee of the Corporation or of any subsidiary thereof to whom any duty or power relating to the administration or interpretation of this Plan may be assigned or delegated, from and against any and all liabilities (including any amount paid in settlement of a claim with the approval of the Board) and any costs or expenses (including counsel fees) incurred by such persons arising out of, or as a result of, any act or omission to act in connection with the performance of such person’s duties, responsibilities, and obligations under this Plan, other than such liabilities, costs, and expenses as may arise out of, or result from, the bad faith, gross negligence, willful misconduct, or criminal acts of such persons.

20. Amendment and Modification of the Plan . The Board may at any time and from time to time amend or modify this Plan (including the form of Option Agreement) in any respect consistent with applicable regulations; provided , however , that no amendment or modification shall be made that increases the total number of shares of Common Stock covered by this Plan or effects any change in the categories of persons who may receive Options under this Plan or materially increases the benefits accruing to Optionees under this Plan unless such change is approved by the holders of a majority of the issued and outstanding shares of Common Stock. Any amendment or modification of this Plan shall not materially reduce the benefits under any Option theretofore granted to an Optionee under this Plan without the consent of such Optionee or the transferee thereof in the event of the death of such Optionee.

Plan. No Option shall be granted pursuant to this Plan after ten (10) years from the effective date of this Plan as provided in Paragraph 22 hereof.

22. Effective Date; Shareholder Approval; Regulatory Approval . This Plan was effective upon its approval by the shareholders of Corporation at the Corporation’s 2004 Annual Meeting of Shareholders on May 26, 2004 (the “Effective Date”).

23. Captions and Headings; Gender and Number . Captions and paragraph headings used herein are for convenience only, do not modify or affect the meaning of any provision herein, are not a part hereof, and shall not serve as a basis for interpretation or in construction of this Plan. As used herein, the masculine gender shall include the feminine and neuter, the singular number the plural, and vice versa, whenever such meanings are appropriate.

24. Expenses of Administration of Plan . All costs and expenses incurred in the operation and administration of this Plan shall be borne by the Corporation or one or more of its subsidiaries.

25. Governing Law . Without regard to the principles of conflicts of laws, the laws of the State of North Carolina shall govern and control the validity, interpretation, performance, and enforcement of this Plan.

26. Inspection of Plan . A copy of this Plan, and any amendments thereto or modification thereof, shall be maintained by the Secretary of the Corporation and shall be shown to any proper person making inquiry about it.

STATE OF NORTH CAROLINA

COUNTY OF HARNETT

INCENTIVE STOCK OPTION AGREEMENT

THIS INCENTIVE STOCK OPTION AGREEMENT (hereinafter referred to as this “Agreement”) is made and entered into as of this day of , 20 , between NEW CENTURY BANCORP, INC., a North Carolina corporation (hereinafter referred to as the “Corporation”), and a resident of County, North Carolina (hereinafter referred to as the “Optionee”).

WHEREAS, the Board of Directors of the Corporation (hereinafter referred to as the “Board”) has adopted the New Century Bancorp, Inc. 2004 Incentive Stock Option Plan (hereinafter referred to as the “Plan”); and

WHEREAS, the shareholders of New Century Bancorp, Inc. at an annual meeting duly called and held on May 26, 2004, approved the Plan (the “Effective Date”); and

WHEREAS, the Plan provides that the Compensation Committee (hereinafter referred to as the “Committee”) of the Board will make available to certain officers and employees of the Corporation and its subsidiaries (the “Employer”) the right to purchase shares of the Corporation’s common stock (hereinafter referred to as “Common Stock”); and

WHEREAS, the Committee has determined that the Optionee should be granted an option to purchase shares of Common Stock under the Plan;

NOW, THEREFORE, the Corporation and the Optionee agree as follows:

1. Date of Grant of Option . The date of grant of the option granted under this Agreement is the day of , 20 .

2. Grant of Option . Pursuant to the Plan, the Corporation grants to the Optionee the right (hereinafter referred to as the “Option”) to purchase from the Corporation all or any part of an aggregate of shares of Common Stock (hereinafter referred to as the “Option Shares”) which shall be authorized but unissued shares.

3. Vesting of Options.

(a) Periodic Vesting . Subject to subparagraphs 3(b) and 3(c) below, the Option shall vest and become exercisable in accordance with the following schedule:


Date of grant		0%
First Anniversary of the date of grant		20 %
Second Anniversary of the date of grant		20 %
Third Anniversary of the date of grant		20 %
Fourth Anniversary of the date of grant		20 %
Fifth Anniversary of the date of grant		20 %

(b) Fractional Option Shares . In determining the number of Option Shares vested under the above vesting schedule, an Optionee shall not be entitled to exercise an Option for a fractional number of Option Shares. If the product resulting from multiplying the vested percentage times the allocated Option results in a fractional number of Option Shares, then the Optionee’s vested right shall be to the whole number of Option Shares, disregarding any fractional number.

(c) Accelerated Vesting . Notwithstanding paragraph 3(a) above, all Options previously not vested and subject to forfeiture shall become 100% vested and the right of the Optionee to exercise such Options shall become nonforfeitable upon the death, disability or retirement of the Optionee, or upon a change in control of the Corporation. For purposes of this Agreement, the term “disability” shall be defined in the same manner as such term is defined in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the “Code”).

(d) Other Terminations of Employment . In the event any Optionee’s employment with the Employer terminates for any reason, other than the Optionee’s death, disability, retirement, or following a change in control of the Corporation, then the Optionee’s Options, to the extent unexercised, shall be forfeited and shall be available again for grant to other officers and employees as may be determined by the Committee. Such forfeiture shall apply whether or not any such options have vested.

4. Option Price . The price to be paid for the Option Shares shall be Dollars ($ ) per share (hereinafter referred to as the “Option Price”) which is the fair market value of the Option Shares as determined by the Committee as of the date of grant of this Option.

5. When and Extent to which Options may be Exercised . Subject to any further restrictions in this Agreement, the right of the Optionee to exercise the Option to purchase the Option Shares, either in whole or in part, shall be conditioned upon the completion by the Optionee of one (1) full year of service in the employment of the Employer following the date of grant of the Option set forth in paragraph 1 hereof. At such time as the Option shall become exercisable in accordance with this Agreement, the Optionee, in his discretion, may exercise all or any portion of the Option, subject to paragraphs 3 and 7 hereof. The Option shall terminate as provided in paragraph 8 hereof.

6. Change in Control . When used herein, the phrase “change in control” refers to (i) the acquisition by any person, group of persons or entity of the beneficial ownership or power to vote more than twenty-five (25%) percent of the Corporation’s outstanding stock, (ii) during any period of two (2) consecutive years, a change in the majority of the Board unless the election of each new Director was approved by at least two-thirds of the Directors then still in office who were Directors at the beginning of such two (2) year period or (iii) a reorganization,

merger, or consolidation of the Corporation with one or more other entities in which the Corporation is not the surviving entity, or the transfer of all or substantially all of the assets or shares of the Corporation to another person or entity. Notwithstanding anything else herein, 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 Optionee and the Corporation agree in writing that the same shall not be treated as a change in control for purposes of this Agreement.

7. Method of Exercise . The Option shall be exercised by written notice to the Committee signed by the Optionee or by such other person as may be entitled to exercise the Option. In the exercise of the Option, the aggregate Option Price for the shares being purchased may only be paid in cash and must be accompanied by a notice of exercise. The written notice shall state the number of shares with respect to which the Option is being exercised and, shall either be accompanied by the payment of the aggregate Option Price for such shares or shall fix a date (not more than ten (10) business days from the date of such notice) by which the payment of the aggregate Option Price will be made. The Optionee shall not exercise the Option to purchase less than one hundred (100) shares, unless the Committee otherwise approves or unless the partial exercise is for the remaining shares available under the Option. A certificate or certificates for the shares of Common Stock purchased by the exercise of the Option shall be issued in the regular course of business subsequent to the exercise of the Option and the payment therefor. During the Option Period, no person entitled to exercise the Option granted under this Agreement shall have any of the rights or privileges of a shareholder with respect to any shares of Common Stock issuable upon exercise of the Option, until certificates representing such shares shall have been issued and delivered and the individual’s name entered as a shareholder of record on the books of the Corporation for such shares.

8. Termination of Option . The Option shall terminate as follows:

(a) Except as provided in subparagraphs (b), (c), (d) and (e) below, the Option granted under this Agreement, to the extent that it has not been exercised or expired, and regardless of any vesting pursuant to paragraph 3 hereof, shall terminate on the earlier of (i) the date that the Optionee is discharged for cause, (ii) the date the Optionee gives notice that the Optionee terminates his or her employment with the Employer for a reason other than retirement or disability or following a change in control of the Corporation or (iii) the date which is ten (10) years from the date of grant of the Option set forth in paragraph 1 hereof. Options which terminate within ten (10) years from the date of grant set forth in paragraph 1 shall be available again for grant to certain officers and employees as may be determined by the Committee. The phrase “discharged for cause” shall include termination at the sole discretion of the Board of Directors of the Employer of the Optionee because of the Optionee’s personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any law, rule or regulation (other than traffic violations or similar offenses) or a final cease and desist order, or material breach of any provision of any employment agreement that the Optionee may have with the Employer.

(b) In the event the Optionee retires prior to the date which is ten (10) years after the date of grant of the Option, the Optionee shall have the right to exercise the

Option, to the extent that it has not been exercised by the Optionee or expired, immediately in full and at any time within three (3) months after the date of retirement, but in no event may the Option be exercised later than ten (10) years after the date of grant of the Option set forth in paragraph 1 hereof. For purposes of this Agreement, the term “retirement” shall mean, subject to Board approval in each instance, (i) termination of the Optionee’s employment under conditions which would constitute retirement under any tax qualified retirement plan maintained by the Employer or (ii) attaining age 65.

(c) In the event the Optionee becomes disabled prior to the date which is ten (10) years after the date of grant of the Option, the Optionee shall have the right to exercise the Option, to the extent that it has not been exercised by the Optionee or expired, notwithstanding any limitation placed on the exercise of the Option by the Plan or by this Agreement, immediately in full and at any time within twelve (12) months after the last date on which the Optionee provided services as an officer or an employee of the Employer before being disabled, but in no event may the Option be exercised later than ten (10) years after the date of grant of the Option set forth in paragraph 1 hereof. For purposes of this Agreement, the term “disability” shall be defined in the same manner as such term is defined in Section 22(e)(3) of the Code.

(d) Notwithstanding anything else herein, in the event that an Optionee should die (i) while employed by the Employer, (ii) within three (3) months after retirement, (iii) within three (3) months after Optionee’s termination following a change in control, or (iv) within twelve (12) months after Optionee’s termination by reason of Optionee’s disability, the Option, to the extent it has not been exercised by the Optionee or expired, shall be exercisable, according to its terms, by the personal representative, the executor or administrator of the Optionee’s estate, or any person or persons who acquired the Option by bequest or inheritance from the Optionee, notwithstanding any limitation placed on the exercise of the Option by the Plan or by this Agreement, immediately in full and at any time within twelve (12) months after the date of death of the Optionee, but in no event may the Option be exercised later than ten (10) years from the date of grant of the Option as set forth in paragraph 1 hereof.

(e) In the event the Optionee’s employment with the Employer is terminated following a change in control of the Corporation, the Optionee shall have the right to exercise the Option, to the extent that it has not been exercised by the Optionee or expired, immediately in full and at any time within three (3) months after the date of termination, but in no event may the Option be exercised later than ten (10) years after the date of grant of the Options set forth in paragraph 1 hereof.

9. Effect of Agreement on Employment Status of Optionee . The fact that the Committee has granted the Option to the Optionee under this Agreement shall not confer on the Optionee any right to employment with the Employer or to a position as an officer or an employee of the Employer, nor shall it limit the right of the Employer to remove the Optionee from any position held by the Optionee or to terminate his or her employment at any time.

10. Listing and Registration of Option Shares .

(a) The Corporation’s obligation to issue shares of Common Stock upon exercise of the Option is expressly conditioned upon (i) the completion by the Corporation of any registration or other qualification of such shares under any state or federal law or regulations or rulings of any government regulatory body or (ii) the making of such investment representations or other representations and agreements by the Optionee or any person entitled to exercise the Option in order to comply with the requirements of any exemption from any such registration or other qualification of the Option Shares which the Committee shall, in its sole discretion, deem necessary or advisable. Notwithstanding the foregoing, the Corporation shall be under no obligation to register or qualify the Option Shares under any state or federal law. The required representations and agreements referenced above may include representations and agreements that the Optionee, or any other person entitled to exercise the Option, (i) is purchasing such shares on his or her own behalf as an investment and not with a present intention of distribution or re-sale and (ii) agrees to have placed upon any certificates representing the Option Shares a legend setting forth any representations and agreements which have been given to the Committee or a reference thereto and stating that such shares may not be transferred except in accordance with all applicable state and federal securities laws and regulations, and further representing that, prior to making any sale or other disposition of the Option Shares, the Optionee, or any other person entitled to exercise the Option, will give the Corporation notice of the intention to sell or dispose of such shares not less than five (5) days prior to such sale or disposition.

11. Adjustment Upon Change in Capitalization; Dissolution or Liquidation .

(a) In the event of a change in the number of shares of Common Stock outstanding by reason of a stock dividend, stock split, recapitalization, reorganization, merger, exchange of shares, or other similar capital adjustment, prior to the termination of the Optionee’s rights under this Agreement, equitable proportionate adjustments shall be made by the Committee in the number, kind, and the Option Price of shares subject to the unexercised portion of the Option granted under this Agreement. The adjustments to be made shall be determined by the Committee and shall be consistent with such change or changes in the Corporation’s total number of outstanding shares; provided , however , that no adjustment shall change the aggregate Option Price for the exercise of the Option granted under this Agreement.

(b) The grant of the Option under this Agreement shall not affect in any way the right or power of the Corporation or its shareholders to make or authorize any adjustment, recapitalization, reorganization, or other change in the Corporation’s capital structure or its business, or any merger or consolidation of the Corporation, or to issue bonds, debentures, preferred or other preference stock ahead of or affecting Common Stock or the rights thereof, or the dissolution or liquidation of the Corporation, or any sale or transfer of all or any part of the Corporation’s assets or business.

(c) Except upon a change in control as set forth in paragraph 6 hereof, upon the effective date of the dissolution or liquidation of the Corporation, the Option granted under this Agreement shall terminate.

12. Nontransferability . The Option granted under this Agreement shall not be assignable or transferable except, in the event of the death of the Optionee, by will or by the laws of descent and distribution. In the event of the death of the Optionee, the personal representative, the executor or the administrator of the Optionee’s estate, or the person or persons who acquired by bequest or inheritance the right to exercise the Option may exercise the unexercised Option or a portion thereof, in accordance with the terms of this Agreement, prior to the date which is ten (10) years after the date of grant of Option as set forth in paragraph 1 hereof.

13. Notices . Any notice or other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been sufficiently given when delivered personally or when deposited in the United States mail as Certified Mail, return receipt requested, properly addressed with postage prepaid, if to the Corporation at its principal office at 700 West Cumberland Street, Dunn, North Carolina 28334; and, if to the Optionee to his or her last address appearing on the books of the Employer. The Employer and the Optionee may change their address or addresses by giving written notice of such change as provided herein. Any notice or other communication hereunder shall be deemed to have been given on the date actually delivered or as of the third (3rd) business day following the date mailed, as the case may be.

14. Construction Controlled by Plan . This Agreement shall be construed so as to be consistent with the Plan; and the provisions of the Plan shall be deemed to be controlling in the event that any provision hereof should appear to be inconsistent therewith. The Optionee hereby acknowledges receipt of a copy of the Plan from the Corporation.

15. Severability . Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be valid and enforceable under applicable law, but if any provision of this Agreement is determined to be unenforceable, invalid or illegal, the validity of any other provisions or part thereof, shall not be affected thereby and this Agreement shall continue to be binding on the parties hereto as if such unenforceable, invalid or illegal provision or part thereof had not been included herein.

16. Modification of Agreement; Waiver . This Agreement may be modified, amended, suspended, or terminated, and any terms, representations or conditions may be waived, but only by written instrument signed by each of the parties hereto. No waiver hereunder shall constitute a waiver with respect to any subsequent occurrence or other transaction hereunder or of any other provision hereof.

17. Captions and Headings; Gender and Number . Captions and paragraph headings used herein are for convenience only, do not modify or affect the meaning of any provision herein, are not a part hereof, and shall not serve as a basis for interpretation or in

construction of this Agreement. As used herein, the masculine gender shall include the feminine and neuter, the singular number the plural, and vice versa, whenever such meanings are appropriate.

18. Governing Law; Venue and Jurisdiction . Without regard to the principles of conflicts of laws, the laws of the State of North Carolina shall govern and control the validity, interpretation, performance, and enforcement of this Agreement. The parties hereto agree that any suit or action relating to this Agreement shall be instituted and prosecuted in the courts of the County of Harnett, State of North Carolina, and each party hereby does waive any right or defense relating to such jurisdiction and venue.

19. Binding Effect . This Agreement shall be binding upon and shall inure to the benefit of the Corporation, its successors and assigns, and shall be binding upon and inure to the benefit of the Optionee, his heirs, legatees, personal representatives, executors, and administrators.

20. Entire Agreement . This Agreement constitutes and embodies the entire understanding and agreement of the parties hereto and, except as otherwise provided hereunder, there are no other agreements or understandings, written or oral, in effect between the parties hereto relating to the matters addressed herein.

21. Counterparts . This Agreement may be executed in any number of counterparts, each of which when executed and delivered shall be deemed an original, but all of which taken together shall constitute one and the same instrument.

IN WITNESS WHEREOF , the Corporation, has caused this instrument to be executed in its corporate name by its President and CEO and attested by its Secretary or one of its Assistant Secretaries, and its corporate seal to be hereto affixed, all by authority of its Board of Directors first duly given, and the Optionee has hereunto set his or her hand and adopted as his or her seal the typewritten word “SEAL” appearing beside his or her name, all done this the day and year first above written.


NEW CENTURY BANCORP, INC.

By:
		John Q. Shaw, Jr. President and CEO

ATTEST:

_______________________, Corporate Secretary

[CORPORATE SEAL]


OPTIONEE

By:				(SEAL)

EXHIBIT A

NOTICE OF EXERCISE OF

INCENTIVE STOCK OPTION

To:

The Compensation Committee of the Board of Directors of New Century Bancorp, Inc.

The undersigned hereby elects to purchase whole shares of Common Stock of New Century Bancorp, Inc. (the “Corporation”) pursuant to the Incentive Stock Option granted to the undersigned in that certain Incentive Stock Option Agreement between the Corporation and the undersigned dated the day of , . The aggregate purchase price for such Shares is $ , which amount is (i) being tendered herewith, (ii) will be tendered on or before , (cross out provision which does not apply) in cash. The effective date of this election shall be , , or the date of receipt of this Notice by the Corporation if later.

Executed this day of , , at .

(Social Security Number)

Exhibit 99.2

NEW CENTURY BANCORP, INC.

2000 INCENTIVE STOCK OPTION PLAN

New Century Bancorp, Inc., a North Carolina corporation (hereinafter referred to as the “Corporation”), does herein set forth the terms of the New Century Bancorp, Inc. 2000 Incentive Stock Option Plan (hereinafter referred to as this “Plan”) which was adopted by the Corporation’s Board of Directors (hereinafter referred to as the “Board”) and which was originally adopted by the Board of Directors of New Century Bank and its shareholders prior to creation of the Corporation and the reorganization of New Century Bank as a wholly-owned subsidiary of the Corporation.

2. Administration of the Plan .

(d) The Board may designate any officers or employees of the Corporation or any of its subsidiaries to assist in the administration of this Plan. The Board may

authorize such individuals to execute documents on its behalf and may delegate to them such other ministerial and limited discretionary duties as the Board may deem fit.

3. Shares of Common Stock Subject to the Plan . The maximum number of shares of Common Stock that shall be available initially for Options under this Plan is One Hundred Seventy-Three Thousand Six Hundred Twenty-Two (173,622) shares, subject to adjustment as provided in Paragraph 15 hereof. Shares subject to Options which expire or terminate prior to the issuance of the shares of Common Stock shall again be available for future grants of Options under this Plan.

5. Grant of Options .

6. Vesting of Options .

(a) Options granted under this Plan shall vest and the right of an Optionee to exercise an Option shall be nonforfeitable in accordance with the following schedule:


Date When Such Options Become Vested		Percentage of Such Options Vested
Date of grant		0%
First Anniversary of the date of grant		33 1/3 %
Second Anniversary of the date of grant		33 1/3 %
Third Anniversary of the date of grant		33 1/3 %

(c) In the event that the employment of an Optionee terminates for any reason, other than the Optionee’s disability, death, retirement, or following a “change in control” of the Corporation, the Optionee’s Options under this Plan shall be forfeited and shall be available again for grant to Eligible Employees as may be determined by the Committee. Such forfeiture shall apply whether or not any such Options have been vested.

(d) In the event that the employment of an Optionee with the Corporation should terminate because of such Optionee’s disability, death, or retirement, or following a “change in control” of the Corporation prior to the date when all Options allocated to the Optionee would be 100% vested in accordance with the applicable schedule in subparagraph 6(a) above, then, notwithstanding the foregoing schedule in subparagraph 6(a) above, all Options allocated to such Optionee shall immediately become fully vested and nonforfeitable. For purposes of this Plan, the term disability shall be defined in the same manner as such term is defined in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended. When used in this Plan, the phrase “change in control” refers to (i) the acquisition by any person, group of persons or entity of the beneficial ownership or power to vote more than twenty-five (25%) percent of the Corporation’s outstanding stock, (ii) during any period of two (2) consecutive years, a change in the majority of the Board unless the election of each new Director was approved by at least two-thirds of the Directors then still in office who were Directors at the beginning of such two (2) year period, or (iii) a reorganization, merger, or consolidation of the Corporation with one or more other entities in which the Corporation is not the surviving entity, or the transfer of all or substantially all of the assets or shares of the Corporation to another person or entity. Notwithstanding anything else herein, 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 Optionee and the Corporation agree in writing that the same shall not be treated as a change in control for purposes of this Plan.

7. Option Price .

Common Stock on the date of grant and such Option shall not be exercisable more than five (5) years from the date of grant. An Option shall be considered as granted on the date that the Committee acts to grant such Option or such later date as the Committee shall specify in an Option Agreement (as hereinafter defined).

8. Payment of Option Price . Payment for shares subject to an Option may be made in cash or in issued and outstanding shares of the Corporation’s Common Stock.

conditioned upon the completion by the Optionee of one (1) full year of service in the employment of the Corporation following the date of grant of the Option.

13. Effect of Termination of Employment, Retirement, Disability or Death .

pursuant to Paragraph 6 hereof, shall immediately terminate. The phrase “discharged for cause” shall include termination at the sole discretion of the Board because of such Optionee’s personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any law, rule or regulation (other than traffic violations or similar offenses), a final cease and desist order, or material breach of any provision of any employment agreement that such Optionee may have with the Corporation.

(e) In the event of the termination of employment of an Optionee following a “change in control” of the Corporation (as defined in Paragraph 6(d)), all Options

granted such Optionee shall vest and such Optionee shall have the right to exercise any Option or Options granted to the Optionee under this Plan, to the extent they have not previously been exercised or expired, for a period of three (3) months after the date of termination, but in no event may any Option be exercised later than the end of the Option period provided in such Option Agreement in accordance with Paragraph 10 hereof.

15. Adjustment Upon Changes in Capitalization; Dissolution or Liquidation .

thereof to the extent not previously exercised by an Optionee or expired, in accordance with its terms and Subparagraph 13(d) hereof.

20. Amendment and Modification of the Plan . The Board may at any time and from time to time amend or modify this Plan (including the form of Option Agreement) in any respect consistent with applicable regulations; provided , however , that no amendment or modification shall be made that increases the total number of shares of Common Stock covered by this Plan or effects any change in the categories of persons who may receive Options under this Plan or materially increases the benefits accruing to Optionees under this Plan unless such change is approved by the holders of two-thirds (2/3) of the issued and outstanding shares of Common Stock. Any amendment or modification of this Plan shall not materially reduce the benefits under any Option theretofore granted to an Optionee under this Plan without the consent of such Optionee or the transferee thereof in the event of the death of such Optionee.

21. Termination and Expiration of the Plan . This Plan may be abandoned, suspended, or terminated at any time by the Board; provided , however , that abandonment, suspension, or termination of this Plan shall not affect any Options then outstanding under this Plan. No Option shall be granted pursuant to this Plan after ten (10) years from the effective date of this Plan as provided in Paragraph 22 hereof.

22. Effective Date; Shareholder Approval; Regulatory Approval . This Plan was effective upon its approval as the New Century Bank 2000 Incentive Stock option Plan by the requisite number of shareholders of New Century Bank on June 29, 2000 (the “Effective Date”).

24. Expenses of Administration of Plan . All costs and expenses incurred in the operation and administration of this Plan shall be borne by the Corporation or one or more of its subsidiaries.

STATE OF NORTH CAROLINA

COUNTY OF HARNETT

INCENTIVE STOCK OPTION AGREEMENT

WHEREAS, the Board of Directors of the Corporation (hereinafter referred to as the “Board”) has adopted the New Century Bancorp, Inc. 2000 Incentive Stock Option Plan (hereinafter referred to as the “Plan”); and

WHEREAS, the shareholders of New Century Bank at an annual meeting duly called and held on June 29, 2000, approved the Plan (the “Effective Date”); and

WHEREAS, the Committee has determined that the Optionee should be granted an option to purchase shares of Common Stock under the Plan;

NOW, THEREFORE, the Corporation and the Optionee agree as follows:

1. Date of Grant of Option . The date of grant of the option granted under this Agreement is the 10th day of March, 2004.

2. Grant of Option . Pursuant to the Plan, the Corporation grants to the Optionee the right (hereinafter referred to as the “Option”) to purchase from the Corporation all or any part of an aggregate of Two Thousand (2,000) shares of Common Stock (hereinafter referred to as the “Option Shares”) which shall be authorized but unissued shares.

3. Vesting of Options .

(a) Periodic Vesting . Subject to subparagraphs 3(b) and 3(c) below, the Option shall vest and become exercisable in accordance with the following schedule:


Date of grant	0	%
First Anniversary of the date of grant	33 ¹ / 3	%
Second Anniversary of the date of grant	33 ¹ / 3	%
Third Anniversary of the date of grant	33 ¹ / 3	%

(c) Accelerated Vesting . Notwithstanding paragraph 3(a) above, all Options previously not vested and subject to forfeiture shall become 100% vested and the right of the Optionee to exercise such Options shall become nonforfeitable upon the death, disability or retirement of the Optionee, or upon a “change in control” of the Corporation. For purposes of this Agreement, the term “disability” shall be defined in the same manner as such term is defined in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the “Code”).

4. Option Price . The price to be paid for the Option Shares shall be Dollars ($ ) per share (hereinafter referred to as the “Option Price”) which is the fair market value of the Option Shares as determined by the Committee as of the date of grant of this Option.

7. Method of Exercise . The Option shall be exercised by written notice to the Committee signed by the Optionee or by such other person as may be entitled to exercise the Option. In the exercise of the Option, the aggregate Option Price for the shares being purchased may only be paid in cash and must be accompanied by a notice of exercise. The written notice shall state the number of shares with respect to which the Option is being exercised and, shall either be accompanied by the payment of the aggregate Option Price for such shares or shall fix a date (not more than ten (10) business days from the date of such notice) by which the payment of the aggregate Option Price will be made. The Optionee shall not exercise the Option to purchase less than one hundred (100) shares, unless the Committee otherwise approves or unless the partial exercise is for the remaining shares available under the Option. A certificate or certificates for the shares of Common Stock purchased by the exercise of the Option shall be issued in the regular course of business subsequent to the exercise of the Option and the payment therefor. During the Option Period, no person entitled to exercise the Option granted under this Agreement shall have any of the rights or privileges of a shareholder with respect to any shares of Common Stock issuable upon exercise of the Option, until certificates representing such shares shall have been issued and delivered and the individual’s name entered as a shareholder of record on the books of the Corporation for such shares.

8. Termination of Option . The Option shall terminate as follows:

(a) Except as provided in subparagraphs (b), (c), (d) and (e) below, the Option granted under this Agreement, to the extent that it has not been exercised or expired, and regardless of any vesting pursuant to paragraph 3 hereof, shall terminate on the earlier of (i) the date that the Optionee is discharged for cause, (ii) the date the Optionee gives notice that the Optionee terminates his or her employment with the Employer for a reason other than retirement or disability or following a “change in control” of the Corporation or (iii) the date which is ten (10) years from the date of grant of the Option set forth in paragraph 1 hereof. Options which terminate within ten (10) years from the date of grant set forth in paragraph 1 shall be available again for grant to certain officers and employees as may be determined by the Committee. The phrase “discharged for cause” shall include termination at the sole discretion of the Board of Directors of the Employer of the Optionee because of the Optionee’s personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any law, rule or regulation (other than traffic violations or similar offenses) or a final cease and desist order, or material breach of any provision of any employment agreement that the Optionee may have with the Employer.

(b) In the event the Optionee retires prior to the date which is ten (10) years after the date of grant of the Option, the Optionee shall have the right to exercise the

(e) In the event the Optionee’s employment with the Employer is terminated following a “change in control” of the Corporation, the Optionee shall have the right to exercise the Option, to the extent that it has not been exercised by the Optionee or expired, immediately in full and at any time within three (3) months after the date of termination, but in no event may the Option be exercised later than ten (10) years after the date of grant of the Options set forth in paragraph 1 hereof.

9. Effect of Agreement on Employment Status of Optionee . The fact that the Committee has granted the Option to the Optionee under this Agreement shall not confer on the Optionee any right to employment with the Employer or to a position as an officer or an employee of the Employer, nor shall it limit the right of the Employer to remove the Optionee from any position held by the Optionee or to terminate his or her employment at any time.

10. Listing and Registration of Option Shares .

11. Adjustment Upon Change in Capitalization; Dissolution or Liquidation .

(a) In the event of a change in the number of shares of Common Stock outstanding by reason of a stock dividend, stock split, recapitalization, reorganization, merger, exchange of shares, or other similar capital adjustment, prior to the termination of the Optionee’s rights under this Agreement, equitable proportionate adjustments shall be made by the Committee in the number, kind, and the Option Price of shares subject to the unexercised portion of the Option granted under this Agreement. The adjustments to be made shall be determined by the Committee and shall be consistent with such change or changes in the Corporation’s total number of outstanding shares; provided, however, that no adjustment shall change the aggregate Option Price for the exercise of the Option granted under this Agreement.

12. Nontransferability . The Option granted under this Agreement shall not be assignable or transferable except, in the event of the death of the Optionee, by will or by the laws of descent and distribution. In the event of the death of the Optionee, the personal representative, the executor or the administrator of the Optionee’s estate, or the person or persons who acquired by bequest or inheritance the right to exercise the Option may exercise the unexercised Option or a portion thereof, in accordance with the terms of this Agreement, prior to the date which is ten (10) years after the date of grant of Option as set forth in paragraph 1 hereof.

13. Notices . Any notice or other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been sufficiently given when delivered personally or when deposited in the United States mail as Certified Mail, return receipt requested, properly addressed with postage prepaid, if to the Corporation at its principal office at 700 West Cumberland Street, Dunn, North Carolina 28334; and, if to the Optionee to his or her last address appearing on the books of the Employer. The Employer and the Optionee may change their address or addresses by giving written notice of such change as provided herein. Any notice or other communication hereunder shall be deemed to have been given on the date actually delivered or as of the third (3rd) business day following the date mailed, as the case may be.

14. Construction Controlled by Plan . This Agreement shall be construed so as to be consistent with the Plan; and the provisions of the Plan shall be deemed to be controlling in the event that any provision hereof should appear to be inconsistent therewith. The Optionee hereby acknowledges receipt of a copy of the Plan from the Corporation.

15. Severability . Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be valid and enforceable under applicable law, but if any provision of this Agreement is determined to be unenforceable, invalid or illegal, the validity of any other provisions or part thereof, shall not be affected thereby and this Agreement shall continue to be binding on the parties hereto as if such unenforceable, invalid or illegal provision or part thereof had not been included herein.

16. Modification of Agreement; Waiver . This Agreement may be modified, amended, suspended, or terminated, and any terms, representations or conditions may be waived, but only by written instrument signed by each of the parties hereto. No waiver hereunder shall constitute a waiver with respect to any subsequent occurrence or other transaction hereunder or of any other provision hereof.

17. Captions and Headings; Gender and Number . Captions and paragraph headings used herein are for convenience only, do not modify or affect the meaning of any provision herein, are not a part hereof, and shall not serve as a basis for interpretation or in

construction of this Agreement. As used herein, the masculine gender shall include the feminine and neuter, the singular number the plural, and vice versa, whenever such meanings are appropriate.

18. Governing Law; Venue and Jurisdiction . Without regard to the principles of conflicts of laws, the laws of the State of North Carolina shall govern and control the validity, interpretation, performance, and enforcement of this Agreement. The parties hereto agree that any suit or action relating to this Agreement shall be instituted and prosecuted in the courts of the County of Harnett, State of North Carolina, and each party hereby does waive any right or defense relating to such jurisdiction and venue.

19. Binding Effect . This Agreement shall be binding upon and shall inure to the benefit of the Corporation, its successors and assigns, and shall be binding upon and inure to the benefit of the Optionee, his heirs, legatees, personal representatives, executors, and administrators.

20. Entire Agreement . This Agreement constitutes and embodies the entire understanding and agreement of the parties hereto and, except as otherwise provided hereunder, there are no other agreements or understandings, written or oral, in effect between the parties hereto relating to the matters addressed herein.

21. Counterparts . This Agreement may be executed in any number of counterparts, each of which when executed and delivered shall be deemed an original, but all of which taken together shall constitute one and the same instrument.


NEW CENTURY BANCORP, INC.

By:
		John Q. Shaw, Jr. President and CEO

ATTEST:

, Corporate Secretary

[Corporate Seal]


OPTIONEE

By:		(SEAL)

EXHIBIT A

NOTICE OF EXERCISE OF

INCENTIVE STOCK OPTION

To:	The Compensation Committee of the Board of Directors of Dew Century Bancorp, Inc.

Executed this day of , , at .

(Social Security Number)

Exhibit 99.3

NEW CENTURY BANCORP, INC.

2000 NONSTATUTORY STOCK OPTION PLAN

New Century Bancorp, Inc., a North Carolina corporation (hereinafter referred to as the “Corporation”), does herein set forth the terms of the New Century Bancorp, Inc. 2000 Nonstatutory Stock Option Plan (hereinafter referred to as this “Plan”), which was adopted by the Board of Directors (hereinafter referred to as the “Board”) and which was originally adopted by the Board of Directors of New Century Bank and its shareholders prior to creation of the Corporation and the reorganization of New Century Bank as a wholly-owned subsidiary of the Corporation.

1. Purpose of this Plan . The purpose of this Plan is to provide for the grant of Nonstatutory Stock Options (hereinafter referred to as “Options” or singularly, “Option”) to Eligible Directors (as hereinafter defined) of the Corporation and its subsidiaries who wish to invest in the Corporation’s common stock (hereinafter referred to as “Common Stock”). The Board believes that participation in the ownership of the Corporation by the Eligible Directors will be to the mutual benefit of the Corporation and the Eligible Directors. In addition, the existence of this Plan will make it possible for the Corporation to attract capable individuals to serve on the Board. As used herein, the term “Eligible Directors” or singularly, “Eligible Director,” shall mean members of the Board of Directors of the Corporation or the Board of Directors of any of its subsidiaries serving at the time of adoption of this Plan or who may serve thereon from time to time.

2. Administration of this Pla n.

(a) This Plan shall be administered by the Board. The Board shall have full power and authority to construe, interpret and administer this Plan. All actions, decisions, determinations, or interpretations of the Board shall be final, conclusive, and binding upon all parties.

(b) The Board may designate any officers or employees of the Corporation or of any of its subsidiaries to assist in the administration of this Plan. The Board may authorize such individuals to execute documents on its behalf and may delegate to them such other ministerial and limited discretionary duties as the Board may see fit.

3. Shares of Common Stock Subject to this Plan . The maximum number of shares of Common Stock that shall be offered under this Plan is Two Hundred Thirty-Six Thousand Eight Hundred Fifty-Four (236,854)shares, subject to adjustment as provided in paragraph 14. Shares subject to Options which expire or terminate prior to the issuance of the shares of Common Stock shall lapse and the shares of Common Stock originally subject to such Options shall again be available for future grants of Options under this Plan.

4. Eligibility; Grant of Options . Each Eligible Director shall receive an Option to purchase shares of Common Stock in the amount as shall be determined by the Board by a majority vote. Any Options not granted hereby may be reserved for future issuance by a majority vote of the entire Board.

5. Vesting of Options . Options granted under this Plan shall be fully vested upon grant.

6. Option Price .

(a) The price per share of each Option granted under this Plan (hereinafter called the “Option Price”) shall be determined by the Board as of the effective date of grant of such Option, but in no event shall such Option Price be less than 100% of the fair market value of Common Stock on the date of grant. An Option shall be considered as granted on the later of (i) the date that the Board acts to grant such Option, or (ii) such later date as the Board shall specify in an Option Agreement (as hereinafter defined).

(b) The fair market value of a share of Common Stock shall be determined as follows: (i) if on the date as of which such determination is being made, Common Stock being valued is admitted to trading on a securities exchange or exchanges for which actual sale prices are regularly reported, or actual sale prices are otherwise regularly published, the fair market value of a share of Common Stock shall be deemed to be equal to the mean of the closing sale price as reported for each of the five (5) trading days immediately preceding the date as of which such determination is made; provided , however , that, if a closing sale price is not reported for each of the five (5) trading days immediately preceding the date as of which such determination is made, then the fair market value shall be equal to the mean of the closing sale prices on those trading days for which such price is available, or (ii) if on the date as of which such determination is made, no such closing sale prices are reported, but quotations for Common Stock being valued are regularly listed on the National Association of Securities Dealers Automated Quotation System or another comparable system, the fair market value of a share of Common Stock shall be deemed to be equal to the mean of the average of the closing bid and asked prices for such Common Stock quoted on such system on each of the five (5) trading days preceding the date as of which such determination is made, but if a closing bid and asked price is not available for each of the five (5) trading days, then the fair market value shall be equal to the mean of the average of the closing bid and asked prices on those trading days during the five-day period for which such prices are available, or (iii) if no such quotations are available, the fair market value of a share of Common Stock shall be deemed to be the average of the closing bid and asked prices furnished by a professional securities dealer making a market in such shares, as selected by the Board, for the trading date first preceding the date as of which such determination is made. If the Board determines that the price as determined above does not represent the fair market value of a share of Common Stock, the Board may then consider such other factors as it deems appropriate and then fix the fair market value for the purposes of this Plan.

7. Payment of Option Price . Payment for shares subject to an Option may be made in cash or in issued and outstanding shares of Common Stock of the Corporation.

8. Terms and Conditions of Grant of Options . Each Option granted pursuant to this Plan shall be evidenced by a written Nonstatutory Stock Option Agreement (hereinafter referred to as “Option Agreement”) with each Eligible Director (hereinafter referred to as “Optionee”) to whom an Option is granted; such agreement shall be substantially in the form attached hereto as “Exhibit A,” unless the Board shall adopt a different form and, in each case, may contain such other, different, or additional terms and conditions as the Board may determine. The Option shall terminate as provided in paragraph 12 hereof.

9. Option Period . Each Option Agreement shall set forth a period during which such Option may be exercised (hereinafter referred to as the “Option Period”); provided , however , that the Option Period shall not exceed ten (10) years after the date of grant of such Option as specified in an Option Agreement.

10. [ Reserved ]

11. Exercise of Options . An Option shall be exercised by written notice to the Board signed by an Optionee or by such other person as may be entitled to exercise such Option. In the case of the exercise of an Option, the aggregate Option Price for the shares being purchased may be paid in cash or in issued and outstanding shares of Common Stock of the and must be accompanied by a notice of exercise. The written notice shall state the number of shares with respect to which an Option is being exercised and shall either be accompanied by the payment of the aggregate Option Price for such shares or shall fix a date (not more than ten (10) business days after the date of such notice) by which the payment of the aggregate Option Price will be made. An Optionee shall not exercise an Option to purchase less than 100 shares, unless the Board otherwise approves or unless the partial exercise is for the remaining shares available under such Option. A certificate or certificates for the shares of Common Stock purchased by the exercise of an Option shall be issued in the regular course of business subsequent to the exercise of such Option and the payment therefor. During the Option Period, no person entitled to exercise any Option granted under this Plan shall have any of the rights or privileges of a shareholder with respect to any shares of Common Stock issuable upon exercise of such Option, until certificates representing such shares shall have been issued and delivered and the individual’s name entered as a shareholder of record on the books of the Corporation for such shares.

12. Effect of Leaving the Board .

(a) In the event that an Optionee leaves the board for any reason other than retirement, disability, death, or following a “change in control” of the Corporation (as defined in paragraph 12(e)) any Option granted to the Optionee under this Plan, to the extent not previously exercised by the Optionee or expired, shall immediately terminate and shall be available again for the granting of additional options to Eligible Directors during the remaining term of this Plan upon such terms and conditions as may be determined by the Board.

(b) In the event that an Optionee should leave the board of directors as a result of such Optionee’s retirement, such Optionee shall have the right to exercise an Option granted under this Plan, to the extent that it has not previously been exercised by the Optionee or expired, for such period of time as may be determined by the Board and specified in an Option Agreement, but in no event may any Option be exercised later than the end of the Option Period provided in the Option Agreement in accordance with paragraph 9 hereof. For purposes of this Plan, the term “retirement” shall mean termination of an Eligible Director’s membership on the board of directors (i) at any time after attaining age 65 with the approval of the Board; or (ii) at the election of the Eligible Director, at any time after not less than five (5) years service as a member of the board of directors, such service shall be computed cumulatively for purposes of this clause (ii).

(c) In the event that an Optionee should leave the board of directors by reason of such Optionee’s disability, such Optionee shall have the right to exercise an Option granted under this Plan, to the extent that it has not previously been exercised or expired, for such period of time as may be determined by the Board and specified in an Option Agreement, but in no event may any Option be exercised later than the end of the Option Period provided in the Option

Agreement in accordance with paragraph 9 hereof. For purposes of this Plan, the term “disability” shall be defined as may be determined by the Board, from time to time, or as determined at any time with respect to any individual Optionee.

(d) In the event that an Optionee should die while serving on the board of directors or after leaving by reason of disability or retirement or following a “change in control” during the Option Period provided in an Option Agreement in accordance with paragraph 9 hereof, an Option granted under this Plan, to the extent that it has not previously been exercised or expired, shall be exercisable, in accordance with its terms, by the personal representative of such Optionee, the executor or administrator of such Optionee’s estate, or by any person or persons who acquired such Option by bequest or inheritance from such Optionee, notwithstanding any limitations placed on the exercise of such Option by this Plan or an Option Agreement, at any time within twelve (12) months after the date of death of such Optionee, but in no event may an Option be exercised later than the end of the Option Period provided in an Option Agreement in accordance with paragraph 9 hereof. Any references herein to an Optionee shall be deemed to include any person entitled to exercise an Option after the death of such Optionee under the terms of this Plan.

(e) In the event an Optionee shall leave the board of directors as a result of a “change in control” of the Corporation, such Optionee shall have the right to exercise the Option granted under this Plan, to the extent that it has not previously been exercised by the Optionee or expired, for such period of time as may be determined by the Board as specified in an Option Agreement, but in no event may any Option be exercised later than the end of the Option Period provided in the Option Agreement in accordance with paragraph 9 hereof. For purposes of this Plan, the phrase “change in control” refers to (i) the acquisition by any person, group of persons or entity of the beneficial ownership or power to vote more than twenty-five percent (25%) of the Corporation’s outstanding stock, (ii) during any period of two (2) consecutive years, a change in the majority of the Board unless the election of each new Director was approved by at least two-thirds of the Directors then still in office who were Directors at the beginning of such two (2) year period, or (iii) a reorganization, merger, or consolidation of the Corporation with one or more other entities in which the Corporation is not the surviving entity, or the transfer of all or substantially all of the assets or shares of the Corporation to another person or entity. Notwithstanding anything else herein, 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 Optionee and the Corporation agree in writing that the same shall not be treated as a change in control for purposes of this Plan.

13. Effect of Plan on Status as Member of a Board . The fact that an Eligible Director has been granted an Option under this Plan shall not confer on such Eligible Director any right to continued service on the board of directors, nor shall it limit the right of the Corporation to remove such Eligible Director from the board of directors at any time.

14. Adjustment Upon Changes in Capitalization; Dissolution or Liquidation .

(a) In the event of a change in the number of shares of Common Stock outstanding by reason of a stock dividend, stock split, recapitalization, reorganization, merger, exchange of shares, or other similar capital adjustment prior to the termination of an Optionee’s rights under this Plan, equitable proportionate adjustments shall be made by the Board in (i) the number and kind of shares which remain available under this Plan, and (ii) the number, kind, and the Option Price of shares subject to the unexercised portion of an Option under this Plan. The adjustments to be made shall be determined by the Board and shall be consistent with such change or changes in the Corporation’s total number of outstanding shares; provided , however , that no adjustment shall change the aggregate Option Price for the exercise of Options granted under this Plan.

(c) Except upon a “change in control”, upon the effective date of the dissolution or liquidation of the Corporation, this Plan and any Options granted hereunder, shall terminate.

15. Non-Transferability . An Option granted under this Plan shall not be assignable or transferable except, in the event of the death of an Optionee, by will or by the laws of descent and distribution. In the event of the death of an Optionee, his personal representative, the executor or the administrator of such Optionee’s estate, or the person or persons who acquired by bequest or inheritance the rights to exercise such Options, may exercise any Option or portion thereof to the extent not previously exercisable or surrendered by an Optionee or expired, in accordance with its terms, prior to the expiration of the exercise period as specified in subparagraph 12(d) hereof.

16. Tax Withholding . The Corporation or any of its subsidiaries shall have the right to deduct or otherwise effect a withholding of any amount required by federal or state laws to be withheld with respect to the grant, exercise or the sale of stock acquired upon the exercise of an Option in order for the Corporation or any of its subsidiaries to obtain a tax deduction otherwise available as a consequence of such grant, exercise or sale, as the case may be.

17. Listing and Registration of Option Shares . Any Option granted under this Plan shall be subject to the requirement that if at any time the Board shall determine, in its discretion, that the listing, registration, or qualification of the shares covered thereby upon any securities exchange or under any state or federal law or the consent or approval of any governmental regulatory body is necessary or desirable as a condition of, or in connection with, the granting of

such Option or the issuance or purchase of shares thereunder, such Option may not be exercised in whole or in part unless and until such listing, registration, qualification, consent, or approval shall have been effected or obtained free of any conditions not acceptable to the Board.

18. Exculpation and Indemnification . In connection with this Plan, no member of the Board shall be personally liable for any act or omission to act in such person’s capacity as a member of the Board, nor for any mistake in judgment made in good faith, unless arising out of, or resulting from, such person’s own bad faith, gross negligence, willful misconduct, or criminal acts. To the extent permitted by applicable law and regulation, the Corporation shall indemnify and hold harmless the members of the Board, and each other officer or employee of the Corporation or of any of its subsidiaries to whom any duty or power relating to the administration or interpretation of this Plan may be assigned or delegated, from and against any and all liabilities (including any amount paid in settlement of a claim with the approval of the Board) and any costs or expenses (including counsel fees) incurred by such persons arising out of or as a result of, any act or omission to act in connection with the performance of such person’s duties, responsibilities, and obligations under this Plan, other than such liabilities, costs, and expenses as may arise out of, or result from, the bad faith, gross negligence, willful misconduct, or criminal acts of such persons.

19. Amendment and Modification of this Plan . The Board may at any time, and from time to time, amend or modify this Plan (including the form of Option Agreement) in any respect consistent with applicable regulations; provided , however , that no amendment or modification shall be made that increases the total number of shares covered by this Plan or effects any change in the category of persons who may receive Options under this Plan or materially increases the benefits accruing to Optionees under this Plan unless such change is approved by the holders of a majority of the issued and outstanding shares of Common Stock. Any amendment or modification of this Plan shall not materially reduce the benefits under any Option theretofore granted to an Optionee under this Plan without the consent of such Optionee or the transferee in the event of the death of such Optionee.

20. Termination and Expiration of this Plan . This Plan may be abandoned, suspended, or terminated at any time by the Board; provided , however , that abandonment, suspension, or termination of this Plan shall not affect any Options then outstanding under this Plan. No Option shall be granted pursuant to this Plan after ten (10) years from the effective date of this Plan as provided in paragraph 21 hereof.

21. Effective Date; Shareholder Approval; Regulatory Approval . This Plan was effective upon its approval as the New Century Bank 2000 Nonstatutory Stock options Plan by the requisite number of shareholders of New Century Bank on June 29, 2000 (the “Effective Date”).

22. Captions and Headings; Gender and Number . Captions and paragraph headings used herein are for convenience only, do not modify or affect the meaning of any provision herein, are not a part hereof, and shall not serve as a basis for interpretation or in

construction of this Plan. As used herein, the masculine gender shall include the feminine and neuter, the singular number, the plural, and vice versa, whenever such meanings are appropriate.

23. Expenses of Administration of Plan . All costs and expenses incurred in the operation and administration of this Plan shall be borne by the Corporation or by one of its subsidiaries.

24. Governing Law . Without regard to the principles of conflicts of laws, the laws of the State of North Carolina shall govern and control the validity, interpretation, performance, and enforcement of this Plan.

25. Inspection of Plan . A copy of this Plan, and any amendments thereto or modifications thereof, shall be maintained by the Secretary of the Corporation and shall be shown to any proper person making inquiry about it.


STATE OF NORTH CAROLINA		EXHIBIT A
COUNTY OF HARNETT

NONSTATUTORY STOCK OPTION AGREEMENT

THIS NONSTATUTORY STOCK OPTION AGREEMENT (hereinafter referred to as this “Agreement”) is made and entered into as of this day of , , between NEW CENTURY BANCORP, INC., a North Carolina corporation (hereinafter referred to as the “Corporation”), and , a resident of County, North Carolina (hereinafter referred to as the “Optionee”).

WHEREAS, the Board of Directors of the Corporation (hereinafter referred to as the “Board”) has adopted the New Century Bancorp, Inc. 2000 Nonstatutory Stock Option Plan (hereinafter referred to as the “Plan”); and

WHEREAS, the shareholders of New Century Bank at an annual meeting duly called and held on June 29, 2000, approved the Plan (the “Effective Date”); and

WHEREAS, the Plan provides that the Board will make available to the Directors (as defined in the Plan) of the Corporation and its subsidiaries, the right to purchase shares of the Corporation’s common stock (hereinafter referred to as “Common Stock”); and

WHEREAS, the Board has determined that the Optionee is entitled to purchase shares of Common Stock under the Plan;

NOW, THEREFORE, the Corporation and the Optionee agree as follows:

1. Date of Grant of Option . The date of grant of the option granted under this Agreement is the day of , .

2. Grant of Option . Pursuant to the Plan, the Corporation grants to the Optionee the right (hereinafter referred to as the “Option”) to purchase from the Corporation all or a portion of an aggregate number of ( ) shares of Common Stock (hereinafter referred to as the “Option Shares”) which shall be authorized but unissued shares.

3. Vesting of Options .

(a) Periodic Vesting . Subject to subparagraphs 3(b) and 3(c) below, the Option shall vest and become exercisable in accordance with the following schedule:


Date of grant		100 %

(c) Accelerated Vesting . In the event that an Optionee completes his or her term without reelection and Nonstatutory Options previously granted to such Optionee are not fully vested, then 50% of any such unvested Nonstatutory Options shall become immediately vested.

5. When and Extent to Which Options may be Exercised . At such time as the Option shall become exercisable in accordance with this Agreement, the Optionee, in his discretion, may exercise all or any portion of the Option, subject to paragraph 7 hereof. The Option shall terminate as provided in paragraph 8 hereof.

6. Change in Control . When used herein, the phrase “change in control” refers to (i) the acquisition by any person, group of persons or entity of the beneficial ownership or power to vote more than twenty-five (25%) percent of the Corporation’s outstanding stock, (ii) during any period of two (2) consecutive years, a change in the majority of the Board unless the election of each new Director was approved by at least two-thirds of the Directors then still in office who were Directors at the beginning of such two (2) year period, or (iii) a reorganization, merger, or consolidation of the Corporation with one or more other entities in which the Corporation is not the surviving entity, or the transfer of all or substantially all of the assets or shares of the Corporation to another person or entity. Notwithstanding anything else herein, 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 Optionee and the Corporation agree in writing that the same shall not be treated as a change in control for purposes of this Plan.

7. Method of Exercise . The Option shall be exercised by written notice to the Board signed by the Optionee or by such other person as may be entitled to exercise the Option. In the exercise of the Option, the aggregate Option Price for the shares being purchased may be paid in cash or in issued and outstanding shares of Common Stock and must be accompanied by a notice of exercise. The written notice shall state the number of shares with respect to which the Option is being exercised and, shall either be accompanied by the payment of the aggregate Option Price for such shares or shall fix a date (not more than ten (10) business

days after the date of such notice) by which the payment of the aggregate Option Price will be made. The Optionee shall not exercise the Option to purchase less than 100 shares, unless the Board otherwise approves or unless the partial exercise is for the remaining shares available under the Option. A certificate or certificates for the shares of Common Stock purchased by the exercise of the Option shall be issued in the regular course of business subsequent to the exercise of the Option and the payment therefor. Neither the Optionee, nor any other person who may be entitled to exercise the Option, shall have any of the rights or privileges of a shareholder with respect to any shares of Common Stock issuable upon exercise of the Option, until certificates representing such shares shall have been issued and delivered and the individual’s name entered as a shareholder of record on the books of the Corporation for such shares.

8. Termination of Option . The Option shall terminate, and shall thereupon be available again for grant to Eligible Directors as may be determined by the Board, as follows:

(a) Except as provided in subparagraphs (b), (c), (d) and (e) below, the Option, to the extent that it has not been exercised or expired, shall terminate on the earlier of (i) the date the Optionee leaves the board of directors for any reason other than the Optionee’s retirement, disability, death, or following a change in control of the Corporation or (ii) the date which is ten (10) years after the date of grant of the Option as set forth in paragraph 1 hereof.

(b) In the event the Optionee retires prior to the date which is ten (10) years after the date of grant of the Option as set forth in paragraph 1 hereof, the Optionee shall have the right to exercise all Options, to the extent not exercised or expired, for the remainder of such ten (10) year period. For purposes of the plan, the term “retirement” shall mean any termination of an Optionee’s membership on the board of directors (i) at any time after attaining age 65 with the approval of the Board, or (ii) at the election of the Optionee, at any time after not less than five years service as a member of the board of directors, computed on a cumulative basis.

(c) In the event the Optionee leaves the board of directors by reason of such Optionee’s disability prior to the date which is ten (10) years after the date of grant of the Option as set forth in paragraph 1 hereof, the Optionee shall have the right to exercise all Options, to the extent not exercised by him or expired, for the remainder of such ten (10) year period. For purposes of the Plan, the term “disability” shall be defined as may be determined by the Board, from time to time, or as determined at any time with respect to any individual Optionee.

(d) In the event the Optionee dies while serving on the board of directors or after his or her retirement or after his or her leaving by reason of disability or following a change in control and prior to the date which is ten (10) years after the date of grant of the Option as set forth in paragraph 1 hereof, all Options, to the extent not exercised by the Optionee or expired, shall be exercisable, according to their terms, by the personal representative, the executor or the administrator of the Optionee’s estate, or the person or persons who acquired the Option by bequest or inheritance from the Optionee, at any time within twelve (12) months

after the date of death of the Optionee, but in no event may the Option be exercised later than ten (10) years after the date of grant of the Option as set forth in paragraph 1 hereof.

(e) In the event the Optionee leaves the board of directors following a change in control of the Corporation, prior to the date which is ten (10) years after the date of grant of Options as set forth in paragraph 1 hereof, the Optionee shall have the right to exercise the Option, to the extent that it has not been exercised by him or her or expired, for the remainder of such ten (10) year period.

9. Effect of Agreement on Status of Optionee . The fact that the Optionee has been granted the Option under the Plan shall not confer on the Optionee any right to continued service on the board of directors, nor shall it limit the right of the Corporation to remove the Optionee from the board of directors at any time.

10. Listing and Registration of Option Shares . The Corporation’s obligation to issue shares of Common Stock upon exercise of the Option is expressly conditioned upon the completion by the Corporation of any registration or other qualification of such shares under any state or federal law or regulations or rulings of any governmental regulatory body or the making of such investment representations or other representations and agreements by the Optionee or any person entitled to exercise the Option in order to comply with the requirements of any exemption from any such registration or other qualification of the Option Shares which the Board shall, in its discretion, deem necessary or advisable. Notwithstanding the foregoing, the Corporation shall be under no obligation to register or qualify the Option Shares under any state or federal law. The required representations and agreements referenced above may include representations and agreements that the Optionee, or any other person entitled to exercise the Option, (i) is purchasing such shares on his or her own behalf as an investment and not with a present intention of distribution or re-sale and (ii) agrees to have placed upon any certificates representing the Option Shares a legend setting forth any representations and agreements which have been given to the Board or a reference thereto and stating that such shares may not be transferred except in accordance with all applicable state and federal securities laws and regulations, and further representing that, prior to making any sale or other disposition of the Option Shares, the Optionee, or any other person entitled to exercise the Option, will give the Corporation notice of the intention to sell or dispose of such shares not less than five (5) days prior to such sale or disposition.

11. Adjustment Upon Changes in Capitalization; Dissolution or Liquidation .

changes or changes in the Corporation’s total number of outstanding shares; provided , however , that no adjustment shall change the aggregate Option Price for the exercise of the Option granted.

12. Non-Transferability . The Option granted under this Agreement shall not be assignable or transferable except, in the event of the death of the Optionee, by will or by the laws of descent and distribution. In the event of the death of the Optionee, the personal representative, the executor or the administrator of the Optionee’s estate, or the person or persons who acquired by bequest or inheritance the right to exercise the Option may exercise the unexercised Option or portion thereof, in accordance with its terms and paragraph 8(d) hereof, prior to the date which is ten (10) years after the date of grant of the Option as set forth in paragraph 1 hereof.

13. Tax Withholding . The grant of the Option and Option Shares delivered pursuant to this Agreement, and any amounts distributed with respect thereto, may be subject to applicable federal, state and local withholding for taxes. The Optionee expressly acknowledges and agrees to such withholding, where applicable, without regard to whether the Option Shares may then be sold or otherwise transferred by the Optionee.

14. Notices . Any notices or other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been sufficiently given if delivered personally or when deposited in the United States mail as Certified Mail, return receipt requested, properly addressed and postage prepaid, if to the Corporation, at its principal office at 700 West Cumberland Street, Dunn, North Carolina 28334; and, if to the Optionee, at his or her last address appearing on the books of the Corporation. The Corporation and the Optionee may change their address or addresses by giving written notice of such change as provided herein. Any notice or other communication hereunder shall be deemed to have been given on the date actually delivered or as of the third (3rd) business day following the date mailed, as the case may be.

15. Construction Controlled by Plan . This Agreement shall be construed so as to be consistent with the Plan; and the provisions of the Plan shall be deemed to be controlling in the event that any provision hereof should appear to be inconsistent therewith. The Optionee hereby acknowledges receipt of a copy of the Plan from the Corporation.

16. Severability . Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be valid and enforceable under applicable law, but if any provision of this Agreement is determined to be unenforceable, invalid or illegal, the validity of any other provision or part thereof, shall not be affected thereby and this Agreement shall continue to be binding on the parties hereto as if such unenforceable, invalid or illegal provision or part thereof had not been included herein.

17. Modification of Agreement; Waiver . This Agreement may be modified, amended, suspended or terminated, and any terms, representations or conditions may be waived, but only by a written instrument signed by each of the parties hereto. No waiver hereunder shall constitute a waiver with respect to any subsequent occurrence or other transaction hereunder or of any other provision hereof.

18. Captions and Hearings; Gender and Number . Captions and paragraph headings used herein are for convenience only, do not modify or affect the meaning of any provision herein, are not a part hereof, and shall not serve as a basis for interpretation or in construction of this Agreement. As used herein, the masculine gender shall include the feminine and neuter, the singular number, the plural, and vice versa, whenever such meanings are appropriate.

19. Governing Law; Venue and Jurisdiction . Without regard to the principles of conflicts of laws, the laws of the State of North Carolina shall govern and control the validity, interpretation, performance, and enforcement of this Agreement. The parties hereto agree that any suit or action relating to this Agreement shall be instituted and prosecuted in the courts of the County of Harnett, State of North Carolina, and each party hereby does waive any right or defense relating to such jurisdiction and venue.

20. Binding Effect . This Agreement shall be binding upon and shall inure to the benefit of the Corporation, its successors and assigns, and shall be binding upon and inure to the benefit of the Optionee, his heirs, legatees, personal representatives, executors, and administrators.

21. Entire Agreement . This Agreement constitutes and embodies the entire understanding and agreement of the parties hereto and, except as otherwise provided hereunder, there are no other agreements or understandings, written or oral, in effect between the parties hereto relating to the matters addressed herein.

22. Counterparts . This Agreement may be executed in any number of counterparts, each of which when executed and delivered shall be deemed an original, but all of which taken together shall constitute but one and the same instrument.

IN WITNESS WHEREOF , the Corporation has caused this instrument to be executed in its corporate name by its Chairman of the Board, President, or one of its Vice Presidents, and attested by its Secretary or one of its Assistant Secretaries, and its corporate seal to be hereto affixed, all by authority of its Board of Directors first duly given, and the Optionee has hereunto set his or her hand and adopted as his or her seal the typewritten word “SEAL” appearing beside his or her name, all done this the day and year first above written.


NEW CENTURY BANCORP, INC.

By:
		C. L. Tart, Jr., Chairman


ATTEST:


_____________________________, Corporate Secretary

[CORPORATE SEAL]

(SEAL)

, Optionee

EXHIBIT A

NOTICE OF EXERCISE OF

NONSTATUTORY STOCK OPTION

To:	The Board of Directors of New Century Bancorp, Inc.

The undersigned hereby elects to purchase whole shares of Common Stock of New Century Bancorp, Inc. (the “Corporation”) pursuant to the Nonstatutory Stock Option granted to the undersigned in that certain Nonstatutory Stock Option Agreement between the Corporation and the undersigned dated the day of , . The aggregate purchase price for such shares is $ , which amount is (i) being tendered herewith, (ii) will be tendered on or before , , (cross out provision which does not apply) in cash. The effective date of this election shall be , , or the date of receipt of this Notice by the Corporation if later.

Executed this day of , , at .

(Social Security Number)

Exhibit 99.4

DESCRIPTION OF NEW CENTURY BANCORP, INC.’S CAPITAL STOCK

General

The Articles of Incorporation of New Century Bancorp, Inc. authorize the issuance of up to 10,000,000 shares of capital stock, consisting entirely of common stock, par value $1.00 per share.

In the future, the authorized but unissued and unreserved shares of New Century Bancorp, Inc.’s common stock will be available for issuance for general purposes, including, but not limited to, possible issuance as stock dividends or stock splits, future mergers or acquisitions, or future private placements or public offerings. Except as otherwise may be required to approve a merger or other transaction in which the additional authorized shares of New Century Bancorp, Inc.’s common stock would be issued, no shareholder approval will be required for the issuance of those shares.

Common Stock

General . Each share of New Century Bancorp, Inc.’s common stock has the same relative rights as, and is identical in all respects to, each other share of New Century Bancorp, Inc.’s common stock.

Dividend Rights . As a North Carolina corporation, New Century Bancorp, Inc. is directly subject to restrictions on the payment of dividends applicable to its subsidiary banks. Holders of shares of New Century Bancorp, Inc.’s common stock are entitled to receive such cash dividends as the Board of Directors of New Century Bancorp, Inc. may declare out of funds legally available therefor. However, the payment of dividends by New Century Bancorp, Inc. is subject to the restrictions of North Carolina law applicable to the declaration of dividends by a business corporation. Under such provisions, cash dividends may not be paid if a corporation will not be able to pay its debts as they become due in the usual course of business after making such cash dividend distribution or the corporation’s total assets would be less than the sum of its total liabilities plus the amount that would be needed to satisfy certain liquidation preferential rights. The ability of New Century Bancorp, Inc. to pay dividends to the holders of shares of its common stock is dependent upon the amount of dividends that it receives from its subsidiary banks. New Century Bank of Fayetteville will not be able to pay any dividends to New Century Bancorp, Inc. until January, 2007 without the prior approval of the North Carolina Commissioner of Banks. Furthermore, there is no assurance that it will be able to pay dividends to New Century Bancorp, Inc. following this date.

Voting Rights . Each share of New Century Bancorp, Inc.’s common stock entitles the holder thereof to one vote on all matters upon which shareholders have the right to vote. The Board of Directors of New Century Bancorp, Inc. has nine (9) members, and is classified so that one-third of the directors will be elected each year. Shareholders of New Century Bancorp, Inc. are not entitled to cumulate their votes for the election of directors.

Liquidation Rights . In the event of any liquidation, dissolution or winding up of New Century Bancorp, Inc., the holders of shares of New Century Bancorp, Inc.’s common stock will be entitled to receive, after payment of all debts and liabilities of New Century Bancorp, Inc., all remaining assets of New Century Bancorp, Inc. available for distribution in cash or in kind. In the event of any liquidation, dissolution or winding up of New Century Bank or New Century Bank of Fayetteville, New Century Bancorp, Inc., as the holder of all shares of their common stock would be entitled to receive payment of all debts and liabilities of New Century Bank or New Century Bank of Fayetteville (including all deposits and accrued interest thereon) and all remaining assets of New Century Bank or New Century Bank of Fayetteville available for distribution in cash or in kind.

Preemptive Rights; Redemption . Holders of shares of New Century Bancorp, Inc.’s common stock are not entitled to preemptive rights with respect to any shares that may be issued. New Century Bancorp, Inc.’s common stock is not subject to call or redemption.

Certain Articles and Bylaw Provisions Having Potential Anti-Takeover Effects

General . The following is a summary of the material provisions of New Century Bancorp, Inc.’s Articles of Incorporation and Bylaws, which address matters of corporate governance and the rights of shareholders. Certain of these provisions may delay or prevent takeover attempts not first approved by the Board of Directors of New Century Bancorp, Inc. (including takeovers which certain shareholders may deem to be in their best interests). These provisions also could delay or frustrate the removal of incumbent directors or the assumption of control by shareholders. All references to the Articles of Incorporation and Bylaws are to New Century Bancorp, Inc.’s Articles of Incorporation and Bylaws as currently in effect.

Classification of the Board of Directors . The Bylaws provide that if the number of directors is nine (9) or more (the number of directors is currently nine (9)), the Board of Directors of New Century Bancorp, Inc. shall be divided into three classes, Class I, Class II and Class III, which shall be as nearly equal in number as possible. Each director shall serve for a term ending on the date of the third annual meeting of shareholders following the annual meeting at which the director was elected (i.e. “staggered terms”). A director elected to fill a vacancy shall serve only until the next meeting of shareholders at which directors are elected. If the Board of Directors of New Century Bancorp, Inc. is “staggered” due to having nine or more directors, approximately one-third of the members of the Board of Directors of New Century Bancorp, Inc. will be elected each year, and two annual or special meetings would be required for New Century Bancorp, Inc.’s shareholders to change a majority of the members constituting the Board of Directors of New Century Bancorp, Inc.

Removal of Directors; Filling Vacancies . New Century Bancorp, Inc.’s Articles of Incorporation provide that shareholders may remove one or more of the directors with cause which includes (i) criminal prosecution and conviction during the course of a director’s service as a director of New Century Bancorp, Inc. of an act of fraud, embezzlement, theft, or personal dishonesty, (ii) the prosecution and conviction of any criminal offense involving dishonesty or breach of trust, or (iii) the occurrence of any event resulting in a director being excluded from coverage, or having coverage limited as to the director when compared to other covered directors under any fidelity bonds or insurance policies covering its directors, officers or employees. Vacancies occurring in the Board of Directors of New Century Bancorp, Inc. may be filled by the shareholders or a majority of the remaining directors, even though less than a quorum, or by the sole remaining director.

Amendment of Bylaws . Subject to certain restrictions described below, either a majority of the Board of Directors or the shareholders of New Century Bancorp, Inc. may amend or repeal the Bylaws. A bylaw adopted, amended or repealed by the shareholders may not be readopted, amended or repealed by the Board of Directors of New Century Bancorp, Inc. Generally, the shareholders of New Century Bancorp, Inc. may adopt, amend, or repeal the Bylaws in accordance with the North Carolina Business Corporations Act.

The Board of Directors is permitted by New Century Bancorp, Inc.’s Articles of Incorporation to consider other constituents besides the shareholders if faced with a proposal that could cause a change in control. Such constituents are employees, depositors, customers, creditors and the communities in which New Century Bancorp, Inc. and its subsidiaries conduct business. Further, the Board is permitted to evaluate the competence, experience and integrity of any proposed acquiror as well as the prospects of success of such a takeover proposal from a regulatory perspective.

Special Meetings of Shareholders . New Century Bancorp, Inc.’s Bylaws provide that only the President or Board of Directors of New Century Bancorp, Inc. may call a special meeting of shareholders.