Exhibit 10.18
WAIVER AND SETTLEMENT AGREEMENT

THIS WAIVER AND SETTLEMENT AGREEMENT (the “Agreement”) is entered into as of May
13, 2012, by and between Park Sterling Corporation, a North Carolina corporation
(“Park Sterling”), Citizens South Banking Corporation (“Citizens South”), a
Delaware corporation, Citizens South Bank, (the “Bank”), a wholly-owned
subsidiary of Citizens South, and Kim S. Price (the “Executive”).

WHEREAS, the Executive is a party to a Salary Continuation Agreement with the
Bank dated as of January 1, 2004, and as subsequently amended (the “Salary
Continuation Agreement”); and

WHEREAS, Park Sterling and Citizens South have entered into an Agreement and
Plan of Merger dated as of May 13, 2012 (the “Merger Agreement”), pursuant to
which Citizens South will be merged into Park Sterling (the “Merger”); and

WHEREAS, the parties wish to enter to an agreement relating to Executive’s
waiver of rights under and termination of the Salary Continuation Agreement as
of the closing date of the Merger (the “Closing Date”), and to provide that, in
lieu of any payment or benefits due under the Salary Continuation Agreement in
connection with the Executive’s termination of employment, the Executive shall
be entitled to the payment set forth in this Agreement; and

NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained in this Agreement, Park Sterling, Citizens South, the Bank and the
Executive hereby agree as follows:

Section 1.            Waiver of Rights Under and Termination of the Salary
Continuation Agreement.

The Executive, Park Sterling, Citizens South, and the Bank hereby agree that the
Salary Continuation Agreement shall be terminated without any further action of
any parties hereto, and that the Executive hereby irrevocably waives all rights
to any payments or benefits under the Salary Continuation Agreement, effective
as of the Closing Date.  The Executive shall, in lieu of any payment or benefits
under the Salary Continuation Agreement, be entitled to the payment set forth in
Section 2 of this Agreement.
 
Section 2.            Waiver and Settlement Payment.

(a)            Cash Payment.  Park Sterling, or if directed by Park Sterling,
Citizens South, hereby agrees (unless prohibited from doing so by applicable
regulatory authority) to pay Executive a single lump sum cash payment equal to
the benefit that would be payable to the Executive under the Salary Continuation
Agreement assuming that he terminated employment on the Closing Date, without
regard to any benefit enhancement relating to a Change in Control (as that term
is defined in the Salary Continuation Agreement) and using the same assumptions
for calculating present value as specified in the Salary Continuation Agreement
(the “Cash Payment”); and the parties agree that the amount of the Cash Payment
is $624,081 if the Closing Date occurs in December 2012.  The Cash Payment shall
be paid in exchange for the Executive’s waiver of all rights to any payments or
benefits under the Salary Continuation Agreement.  The Cash Payment shall be
payable to the Executive on the Closing Date, subject to applicable withholding
taxes.  In addition, the Executive agrees that the cash severance payable to the
Executive on the Closing Date pursuant to Section 7.1(a) of the Amended and
Restated Employment Agreement entered into by and among Citizens South, the Bank
and the Executive, dated as of November 17, 2008, and as subsequently amended,
(the “Employment Agreement”) shall be reduced by $50,000.

(b)            Payment Exempt from Section 409A.  The Cash Payment is intended
to be exempt from Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”), as a “short-term deferral” within the meaning of Treasury
Regulation Section 1.409A-1(b)(4), and shall be interpreted in accordance with
that intent.
 
Section 3.            Acknowledgement.

The Executive hereby acknowledges and agrees that the Cash Payment, when paid on
the Closing Date, is in full satisfaction of any and all obligations of Park
Sterling, Citizens South, and the Bank to the Executive under the Salary
Continuation Agreement and this Agreement.
  
Section 4.            Miscellaneous.
  
(a)               Successors.  The terms of this Agreement shall be binding upon
all parties hereto and their respective heirs, successors, and assigns.
 
 
 

--------------------------------------------------------------------------------

 

(b)            Final Agreement.  This Agreement represents the entire
understanding of the parties with respect to the subject matter hereof and
supersedes all prior understandings, written or oral.  The terms of this
Agreement may be changed, modified or discharged only by an instrument in
writing signed by the parties hereto.  The Executive acknowledges that the
Executive has carefully read the foregoing, has had sufficient opportunity to
review the Agreement with legal counsel of the Executive’s own choosing, knows
and understands this Agreement contents, and freely and independently signs this
Agreement.  No inducements, representations, or agreements have been made or
relied upon to make this Agreement except as stated in this Agreement.

(c)            Governing Law.  The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of North Carolina
without regard to principles of conflicts of laws thereof.

(d)           Statutory Changes.  All references to sections of the Code shall
be deemed also to refer to any successor provisions to such sections.

(e)            Validity.  The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.

(f)             No Assignment of Benefits.  Except as otherwise provided herein
or by law, no right or interest of the Executive under the Agreement shall be
assignable or transferable, in whole or in part, either directly or by operation
of law or otherwise.

(g)            Counterparts. This Agreement may be signed in counterparts, and
all of the counterpart copies shall be treated as a single agreement. 

(h)            Tax Withholding and Tax Matters.  Park Sterling or Citizens
South, as applicable, shall withhold from the Cash Payment such amounts as they
determine are required to be withheld under applicable federal, state and local
tax laws.  Executive acknowledges and agrees that Executive is not entitled to
indemnification for or “gross-up” of any tax liability of any kind from Park
Sterling, Citizens South, the Bank or any of their subsidiaries or affiliates,
either under this Agreement or under any other agreement with Park Sterling,
Citizens South, the Bank or any of their subsidiaries or affiliates to which
Executive is now a party.

Section 5.            Effectiveness.

This Agreement shall be effective as of the date first written above.  In the
event the Merger Agreement is terminated for any reason, this Agreement shall be
deemed null and void.  

[Signature page follows]
 
 
 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first written above.
 

PARK STERLING CORPORATION

/s/ JAMES C. CHERRY                                                      
James C. Cherry,
Chief Executive Officer 

CITIZENS SOUTH BAKING CORPORATION

By: /s/ Paul L. Teem, Jr.

Name: Paul L. Teem, Jr.

Title: Executive Vice President and Secretary

CITIZENS SOUTH BANK

By: /s/ Paul L. Teem, Jr.

Name: Paul L. Teem, Jr.

Title: Executive Vice President and Secretary

/s/ Kim S. Price
Kim S. Price