SETTLEMENT AND NONCOMPETITION AGREEMENT

Exhibit 10(af)

SETTLEMENT AND NONCOMPETITION

AGREEMENT

THIS SETTLEMENT AND NONCOMPETITION AGREEMENT (the “Agreement”) made and entered into this 1st day of July 1997, by and between BB&T CORPORATION , a North Carolina corporation with its principal office at Winston-Salem, North Carolina (“BB&T”), and E. RHONE SASSER , an individual residing in Whiteville, North Carolina (“Sasser”).

R E C I T A L S :

Sasser has been employed by United Carolina Bancshares Corporation (“UCB”) as its Chairman of the Board of Directors and Chief Executive Officer pursuant to an Employment Agreement entered into by Sasser and UCB dated as of January 18,1995 (the “UCB Employment Agreement”). As of November 1, 1996, BB&T and UCB entered into an Agreement and Plan of Reorganization (later modified as of the same date in an Amended and Restated Agreement and Plan of Reorganization, and referred to herein as the “Reorganization Agreement”), pursuant to which UCB has been merged with and into BB&T (the “Merger”). The parties hereto acknowledge that the UCB Employment Agreement constitutes a legally enforceable agreement by Sasser, that Sasser has complied with his obligations thereunder in all material respects, and that Sasser is willing and able to continue to perform his obligations thereunder. BB&T, as successor to UCB, desires to terminate the UCB Employment Agreement and Sasser’s employment by BB&T and to enter into this Agreement in full settlement of the UCB Employment Agreement. BB&T and Sasser acknowledge that this Agreement has been negotiated at arms-length, that both parties hold equal bargaining positions, and that each has relied on the advice of experienced counsel in negotiating the terms and provisions of this Agreement.

BB&T also recognizes that Sasser has broad experience in the banking business and close relations with many of UCB’s major customers, has close relations with key employees of UCB, and has extensive knowledge of UCB trade secrets and other proprietary information, and BB&T thus believes that Sasser could substantially damage the business of BB&T were he to compete with BB&T or attempt to solicit away customers or employees of BB&T.

Sasser, in consideration of the payments in Article I and the benefits provided in Article II, agrees that the UCB Employment Agreement shall be and hereby is terminated in its entirety effective on the date hereof, and acknowledges and agrees that he has no further rights or entitlements thereunder.

NOW, THEREFORE, for and in consideration of the premises and the mutual promises and agreements hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, BB&T and Sasser covenant and agree as follows:

ARTICLE I

COMPENSATION

Commencing on the date hereof and continuing through the earlier of (i) attainment by Sasser of his sixty-fifth birthday, or (ii) Sasser’s death, BB&T shall pay to Sasser $769,392 per annum, as adjusted as provided in Section 1.01(d) (such amount as adjusted is referred to herein as the “Base Amount”). The payments made pursuant to this Section 1.01 are in addition to the benefits provided in Article II. One-twelfth of the Base Amount shall be paid for each calendar month in accordance with the normal payroll practices of BB&T on the date set from time to time for payment of monthly salary to BB&T senior executives (the “Payment Date”). If Sasser shall survive to tie date of his sixty-fifth birthday (the “Determination Date”), he shall receive for the remainder of his lifetime monthly amounts (payable on the Payment Date each month) of seventy percent of the highest monthly Base Amount paid to him during the twelve calendar months preceding the Determination Date, reduced as provided in Section 1.02.

If Sasser’s death occurs before the Determination Date, BB&T shall pay through and including the Determination Date, to Sasser’s current spouse, Dorothy F. Sasser (“Current Spouse”), if she survives him and was married to Sasser at the date of his death, or if not, in equal portions to Sasser’s two sons, Edward Craig Sasser and Douglas Bryon Sasser, if they both survive him, or if they do not both survive him, to Sasser’s estate (the foregoing to be referred to hereinafter, as appropriate, as “Sasser’s Beneficiary”) a monthly death benefit equal to one-twelfth of the Base Amount, including continuing adjustments as provided in Section 1.01 (d). The monthly payment for each calendar month shall be made on the Payment Date for the month. Upon the occurrence of the Determination Date (if Sasser’s death occurs before the Determination Date), or upon Sasser’s death if he dies following the Determination Date, BB&T shall pay to his Current Spouse, if she is then living and was married to Sasser at the date of his death, a monthly death benefit for her life, payable on the Payment Date each month, equal to thirty-five percent of the highest monthly Base Amount paid by BB&T to Sasser or Sasser’s Beneficiary during the twelve-month period immediately preceding the Determination Date, reduced as provided in Section 1.02. No payments shall be made under this Section 1.01(b) following the Determination Date if Sasser dies prior to the Determination Date and his Current Spouse either is not married to him on the date of his death or does not survive beyond the Determination Date, or following Sasser’s death if Sasser dies following the Determination Date and his Current Spouse is not married to him on the date of his death.

If any payment pursuant to 1.01 (a) or (b) commences on a day other than the first day of a calendar month, or ceases on a day other than the last day of a calendar month, the monthly amount payable for such partial month shall equal the amount payable for a full month multiplied by a fraction, the numerator of which is the number of days in the month during the period for which the payment is to be made, and the denominator of which is the number of days in the month.

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The Base Amount shall be automatically increased as of each year (commencing on July 1,1998 and ending with July 1 next preceding the Determination Date) to reflect increases in the cost of living (as hereinafter described). The amount of any annual automatic cost of living increase in the Base Amount shall be determined by multiplying the most recent Base Amount by a fraction, the numerator of which shall be the Consumer Price Index (the “CPI”) [All Urban Consumers, South Region Average (1982-84 = 100); All Items, Bureau of Labor Statistics of The United States Department of Labor], for the month of May preceding the July 1 of the current calendar year, and the denominator of which shall be the CPI for May of the calendar year preceding the current year. If the quotient obtained in the foregoing fraction shall be less than one, the Base Amount shall not be adjusted for the current year (and, for the purpose of determining the CPI adjustment, if any, for future years, the denominator of the above fraction shall be the CPI for May of the calendar year in which a CPI adjustment was last made to the Base Amount) In the event (i) the CPI ceases to use the 1982-84 average of 100 as the base of calculation, or (ii) a substantial change is made in the quality or quantity of the items utilized in determining the CPI, or (iii) the publishing of the CPI shall be discontinued for any reason, the parties hereto shall thereafter accept and use such other index or comparable statistics to measure the cost of living as shall be mutually agreeable to BB&T and Sasser or Sasser’s Beneficiary.

In the event that any amount required to be paid or distributed to Sasser pursuant to this Agreement shall constitute a parachute payment within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended, and the rules and regulations thereunder (the “Code”), and the aggregate of such parachute payments and any other amounts otherwise required to be paid or distributed to Sasser by BB&T shall cause Sasser to be subject to the excise tax on excess parachute payments under Section 4999 of the Code (the “Excise Tax”), BB&T shall pay to Sasser an additional amount (the “Gross-Up Payment”) such that the net amount Sasser shall receive after the payment of any Excise Tax shall equal the amount which he would have received if the Excise Tax had not been imposed. The Gross-Up Payment shall be determined by BB&T’s regular independent auditors and shall equal the sum of the following:

(i) The rate of the Excise Tax multiplied by the amount of the excess parachute payments;

(ii) Any federal income tax, social security tax, unemployment tax or Excise Tax imposed upon Sasser as a result of the Gross-Up Payment required to be made under this paragraph (e); and

(iii) Any state income or other tax imposed upon Sasser as a result of the Gross-Up Payment required to be made under this paragraph (e).

For purposes of determining the amount of the Gross-Up Payment, Sasser shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation for individuals in the calendar year in which the Excise Tax is required to be paid. In addition, Sasser shall be deemed to pay state income taxes at a rate determined in accordance with the following formula:

( 1 - (highest marginal rate of federal income taxation for individuals)) x (highest marginal rate of North Carolina income taxes for individuals in the calendar year in which the Excise Tax is required to be paid).

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The Gross-Up Payment shall be made on or before the date that Sasser is required to pay the Excise Tax; provided, that if the amount of such Payment cannot be finally determined on or before such date, BB&T shall pay to Sasser on such date an estimate, as determined in good faith by BB&T’s regular independent auditors, of the minimum amount of such payment and shall pay the remainder of such payment (together with interest at the rate provided under Section 1274(b)(2)(B) of the Code) as soon as the amount can be determined but no later than the thirtieth day after the date Sasser becomes subject to the payment of the Excise Tax. In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time the Gross-Up Payment is made, Sasser shall repay to BB&T at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus the portion of the Gross-Up Payment attributable to the Excise Tax, federal and state taxes imposed on the Gross-Up Payment being repaid by Sasser, if such repayment results in a reduction in Excise Tax and/or a federal or state tax deduction) plus interest on the amount of such repayment at the rate provided in Section 1274(b)(2)(B) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time the Gross-Up Payment is made (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), BB&T shall make an additional Gross-Up Payment in respect of such excess (plus any interest payable with respect to such excess) at the time that the amount of such excess is finally determined.

The payments due after the Determination Date to Sasser or his Current Spouse under Section 1.01 shall be reduced by the sum of the following amounts:

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