EMPLOYMENT CONTINUITY AGREEMENT
THIS EMPLOYMENT CONTINUITY AGREEMENT (this “Agreement”) is between LSB
BANCSHARES, INC., a North Carolina Corporation (referred to in this Agreement as the “Company,” which
term includes any subsidiary of the Company where the context so requires), and Monroe Jackson Smith, Jr., a
resident of Forsyth, North Carolina (“Executive”), and is effective as of October 15, 2001 (the “Effective Date”).
The Company’s Board of Directors (the “Board”) acknowledges that Executive’s contributions to the growth
and success of the Company will be substantial. As a publicly held corporation, the Board recognizes that there
exists a possibility of a change in control of the Company. The Board also recognizes that the possibility of such a
change in control may contribute to uncertainty on the part of the Executive and may result in the departure or
distraction of the Executive from his responsibilities to the Company.
The Board believes that outstanding management is essential to advancing the best interests of the Company
and its shareholders. In the event of a threat or occurrence of a bid to acquire or change control of the Company
or to effect a business combination, it is particularly important that the Company’s business be continued with a
minimum of disruption. The Board believes that the objective of securing and retaining the Executive will be
achieved if the Executive is given assurances of employment security so that he will not be distracted by personal
uncertainties and risks created by such circumstances.
The Board believes that such assurances will secure the continued services of the Executive in the
performance of his regular duties and such extra duties as may be required of him during such periods of
uncertainty and enable the Company to rely on such Executive to manage its affairs during any such period with
less concern for his personal risks.
The Stock Option and Compensation Committee of the Board (the “Com