Exhibit 10.1
 
DEFERRED COMPENSATION PLAN
 
THIS DEFERRED COMPENSATION PLAN (this “Plan”), adopted this 19th day of
December, 2012, by Park Sterling Bank located in Charlotte, North Carolina
(hereinafter referred to as the “Bank”).
 
WITNESSETH:
 
WHEREAS, the Bank recognizes the valuable services the Participants have
performed for the Bank and wishes to encourage the Participants’ continued
service and to provide the Participants with additional incentive to achieve
corporate objectives;
 
WHEREAS, the Bank wishes to provide the terms and conditions upon which the Bank
shall pay additional retirement benefits to the Participants;
 
WHEREAS, the Bank and the Participants intend this Plan shall at all times be
administered and interpreted in compliance with Code Section 409A; and
 
WHEREAS, the Bank intends this Plan shall at all times be administered and
interpreted in such a manner as to constitute an unfunded nonqualified deferred
compensation arrangement, maintained primarily to provide supplemental
retirement benefits for the Participants, members of select group of management
or highly compensated employee of the Bank;
 
NOW THEREFORE, in consideration of the premises forgoing the Bank hereby creates
the following:
 
ARTICLE 1
DEFINITIONS
 
For the purpose of this Plan, the following phrases or terms shall have the
indicated meanings:
 
1.1           “Administrator” means the Board or its designee.
 
1.2           “Affiliate” means any business entity with whom the Bank would be
considered a single employer under Section 414(b) and 414(c) of the Code.  Such
term shall be interpreted in a manner consistent with the definition of “service
recipient” contained in Code Section 409A.
 
1.3           “Base Salary” means the cash compensation relating to services
performed during any calendar year, excluding bonuses, commissions,
distributions from nonqualified deferred compensation plans, fringe benefits,
incentive payments, non-monetary awards, overtime, relocation expenses, stock
options and other fees, and automobile and other allowances paid to the
Participant for services rendered (whether or not such allowances are included
in the Participant’s gross income).  Base Salary shall be calculated before
reduction for amounts voluntarily deferred or contributed by the Participant
pursuant to qualified or non-qualified plans and shall be calculated to include
amounts not otherwise included in the Participant’s  gross income under Code
Sections 125, 402(e)(3), 402(h), or 403(b) pursuant to plans established by the
Bank; provided, however, that all such amounts will be included in compensation
only to the extent that had there been no such plan, the amount would have been
payable in cash to the Participant.
 
1.4           “Beneficiary” means the person or persons designated in writing by
the Participant to receive benefits hereunder in the event of the Participant’s
death.
 
 
 

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1.5           “Beneficiary Designation Form” means the form established from
time to time by the Administrator that the Participant completes signs and
returns to the Administrator to designate one or more Beneficiaries.
 
1.6           “Board” means the Board of Directors of the Bank.
 
1.7           “Bonus” means the cash bonus, if any, awarded to the Participant
for services performed for the Bank during the Plan Year.
 
1.8           “Cause” means any of the following acts or circumstances: gross
negligence or gross neglect of duties to the Bank; conviction of a felony or of
a gross misdemeanor involving moral turpitude in connection with the
Participant’s employment with the Bank; or fraud, disloyalty, dishonesty or
willful violation of any law or significant Bank policy committed in connection
with the Participant’s employment and resulting in a material adverse effect on
the Bank.
 
1.9           “Change in Control” means a change in the ownership or effective
control of the Bank, or in the ownership of a substantial portion of the assets
of the Bank, as such change is defined in Code Section 409A and regulations
thereunder.
 
1.10          “Contribution” means the amount the Bank contributes to the
Deferral Account, calculated according to the provisions of Article 2.
 
1.11          “Crediting Rate” means the Wall Street Journal prime rate as of
the first day of each calendar quarter, provided however that at no point shall
the Crediting Rate be less than fifty (50) basis points.
 
1.12          “Claimant” means a person who believes that he or she is being
denied a benefit to which he or she is entitled hereunder.
 
1.13          “Code” means the Internal Revenue Code of 1986, as amended.
 
1.14          “Deferral Account” means the Bank’s accounting of the accumulated
Deferrals and Contributions plus accrued interest.
 
1.15          “Deferral Election Form” means each form established from time to
time by the Administrator that the Participant completes, signs and returns to
the Administrator to designate the amount of Deferrals.
 
1.16          “Deferrals” means the amount of Base Salary, Bonus and/or Fees the
Participant elects to defer according to this Plan.
 
1.17          “Disability” means a condition of the Participant whereby the
Participant either: (i) is unable to engage in any substantial gainful activity
by reason of any medically determinable physical or mental impairment that can
be expected to result in death or can be expected to last for a continuous
period of not less than 12 months, or (ii) is, by reason of any medically
determinable physical or mental impairment that can be expected to result in
death or can be expected to last for a continuous period of not less than 12
months, receiving income replacement benefits for a period of not less than
three months under an accident and health plan covering employees of the
Bank.  The Administrator will determine whether the Participant has incurred a
Disability based on its own good faith determination and may require the
Participant to submit to reasonable physical and mental examinations for this
purpose.  The Participant will also be deemed to have incurred a Disability if
determined to be totally disabled by the Social Security Administration or in
accordance with a disability insurance program, provided that the definition of
disability applied under such disability insurance program complies with the
initial sentence of this Section.
 
 
 

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1.18           “Distribution Date” means the date, if any, selected by the
Participant on the Deferral Election Form to receive an In Service Distribution.
 
1.19           “Early Termination” means Separation from Service before Normal
Retirement Age except when such Separation from Service occurs following a
Change in Control or due to termination for Cause.
 
1.20           “Effective Date” means January 1, 2013.
 
1.21           “ERISA” means the Employee Retirement Income Security Act of
1974, as amended.
 
1.22           “Fees” means the total amount of fees payable to a member of the
Board.
 
1.23           “In Service Distribution” means a distribution from the Deferral
Account made at the election of the Participant and prior to Separation from
Service, Disability, Change in Control and the Participant’s death.  The
election to receive an In Service Distribution shall be made by the Participant
on a Deferral Election Form.
 
1.24           “Normal Retirement Age” means the Participant attaining age
sixty-five (65).
 
1.25           “Participant” means an employee or director of the Bank (i) who
is selected to participate in the Plan, (ii) who elects to participate in the
Plan, (iii) who signs a Participation Agreement, (iv) whose Participation
Agreement, Beneficiary Designation Form and Deferral Election Form are accepted
by the Administrator, (v) who commences participation in the Plan, and (vi)
whose participation has not terminated.
 
1.26           “Participation Agreement” means the form established by the
Administrator that the Participant completes, signs and returns to the
Administrator to acknowledge participation in the Plan.
 
1.27           “Plan Year” means each twelve (12) month period commencing on
January 1 and ending on December 31 of each year.  The initial Plan Year shall
commence on the Effective Date and end on the following December 31.
 
1.28           “Separation from Service” means, with respect to any Participant,
a termination of the Participant’s service with the Bank and its Affiliates for
reasons other than death or Disability.  A Separation from Service may occur as
of a specified date for purposes of the Plan even if the Participant continues
to provide some services for the Bank or its Affiliates after that date,
provided that the facts and circumstances indicate that the Bank and the
Participant reasonably anticipated at that date that either no further services
would be performed after that date, or that the level of bona fide services the
Participant would perform after such date (whether as an employee or as an
independent contractor) would permanently decrease to no more than twenty
percent (20%) of the average level of bona fide services performed over the
immediately preceding thirty-six (36) month period (or the full period during
which the Participant performed services for the Bank, if that is less than
thirty-six (36) months).  A Separation from Service will not be deemed to have
occurred while the Participant is on military leave, sick leave, or other bona
fide leave of absence if the period of such leave does not exceed six (6) months
or, if longer, the period for which a statute or contract provides the
Participant with the right to reemployment with the Bank.  If the Participant’s
leave exceeds six (6) months but the Participant is not entitled to reemployment
under a statute or contract, the Participant incurs a Separation of Service on
the next day following the expiration of such six (6) month period.  In
determining whether a Separation of Service occurs the Administrator shall take
into account, among other things, the definition of “service recipient” and
“employer” set forth in Treasury regulation §1.409A-1(h)(3).  The Administrator
shall have full and final authority, to determine conclusively whether a
Separation from Service occurs, and the date of such Separation from Service.
 
1.29           “Specified Employee” means an individual that satisfies the
definition of a “key employee” of the Bank as such term is defined in Code
§416(i) (without regard to Code §416(i)(5)), provided that the stock of the Bank
is publicly traded on an established securities market or otherwise, as defined
in Code §1.897-1(m).  If a Participant is a key employee at any time during the
twelve (12) months ending on December 31, the Participant is a Specified
Employee for the twelve (12) month period commencing on the first day of the
following April.
 
 
 

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1.30           “Unforeseeable Emergency” means a severe financial hardship to a
Participant resulting from an illness or accident of the Participant, the
Participant’s spouse, the Beneficiary, or the Participant’s dependent (as
defined in Section 152(a) of the Code), loss of the Participant’s property due
to casualty, or other similar extraordinary and unforeseeable circumstances
arising as a result of events beyond the control of the Participant.
 
ARTICLE 2
ELIGIBILITY AND PARTICIPATION
 
2.1           Selection by Administrator.  Participation in the Plan shall be
limited to those employees and directors of the Bank selected by the
Administrator, in its sole discretion, to participate in the
Plan.  Participation in the Plan shall be limited to a select group of
management or highly compensated individuals employed by or providing services
to the Bank.
 
2.2           Enrollment Requirements.  As a condition to participation, and in
addition to the requirements in Section 2.1, each selected individual shall
complete, execute and return to the Administrator (i) a Participation Agreement
Form, (ii) a Beneficiary Designation Form and (iii) a Deferral Election
Form.  In addition, the Administrator may establish from time to time such other
enrollment requirements as it determines in its sole discretion are necessary.
 
2.3           Eligibility; Commencement of Participation.  Provided an
individual selected to participate in the Plan has met all enrollment
requirements set forth in this Plan and required by the Administrator, that
individual will become a Participant, be covered by the Plan and will be
eligible to receive benefits at the time and in the manner provided hereunder,
subject to the provisions of the Plan.
 
2.4          Termination of Participation.  If the Administrator determines that
a Participant no longer qualifies as a member of a select group of management or
highly compensated employees as such group is determined according to ERISA, the
Administrator shall have the right to prevent the Participant from accruing
additional benefits hereunder.
 
ARTICLE 3
DEFERRALS
 
3.1           Elections Generally.  Each Participant may annually file a
Deferral Election Form with the Administrator no later than the end of the Plan
Year preceding the Plan Year in which services leading to the compensation to be
deferred will be performed.
 
3.2           Initial Election.  After being notified by the Administrator of
becoming eligible to participate in this Plan, each Participant may make an
initial deferral election by delivering to the Administrator a signed Deferral
Election Form within thirty (30) days of becoming eligible.  The Deferral
Election Form shall set forth the amount of Base Salary, Bonus and/or Fees to be
deferred.  However, if the Participant was eligible to participate in any other
account balance plans (as referenced in Code Section 409A) sponsored by the Bank
prior to becoming eligible to participate in this Plan, the initial election to
defer under this Plan shall not be effective until the Plan Year following the
Plan Year in which the Participant became eligible to participate in this Plan.
 
3.3           Election Changes.  The Participant may modify the amount of
Deferrals annually by filing a new Deferral Election Form with the Bank.  The
modified deferral shall not be effective until the calendar year following the
year in which the subsequent Deferral Election Form is received by the
Bank.  Any changes to an In Service Distribution election must comply with the
restrictions described in Section 5.16.
 
 
 

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3.4           Hardship.  If an Unforeseeable Emergency occurs, a Participant, by
written instructions to the Bank, may discontinue deferrals hereunder.  Any
subsequent Deferral Elections may be made only in accordance with Section 3.1
hereof.
 
3.5           Bank Contributions.  In addition to any Deferrals, the Bank may,
at any time, make a Contribution to the Deferral Account.  Such Contributions,
at the election of the Bank, be subject a vesting schedule or such other
provisions as the Bank may provide.
 

ARTICLE 4
DEFFERAL ACCOUNT
 
4.1           Establishing and Crediting.  The Bank shall establish a Deferral
Account on its books for the Participant and shall credit to the Deferral
Account the following amounts:
 

 
(a) 
Any Deferrals or Contributions hereunder; and

 
(b) 
Interest as follows:

(i)            On the last day of each month during and immediately prior to the
distribution of any benefits, but only until commencement of benefit
distributions under this Plan, interest shall be credited on the Deferral
Account balance at an annual rate equal to the Crediting Rate; and
(ii)             On the last day of each month during any installment period,
interest shall be credited on the unpaid Deferral Account balance at an annual
rate equal to the Crediting Rate less fifty (50) basis points, compounded
monthly.
 
4.2           Recordkeeping Device Only.  The Deferral Account is solely a
device for measuring amounts to be paid under this Plan and is not a trust fund
of any kind.
 
ARTICLE 5
PAYMENT OF BENEFITS
 
5.1           In Service Distributions.  If the Participant has properly elected
an In Service Distribution on the Deferral Election Form, and the Distribution
Date occurs prior to Separation from Service, Disability, Change in Control and
the Participant’s  death, the Bank shall pay the Participant the In Service
Distribution Amount on the Distribution Date.  Any In Service Distribution will
reduce the Deferral Account balance.
 
5.2           Normal Retirement Benefit.  Upon Separation from Service on or
after Normal Retirement Age, the Bank shall pay the Participant the Deferral
Account balance calculated at Separation from Service.  This benefit shall be
paid as elected by the Participant on the Participant’s Participation Agreement.
 
5.3           Early Termination Benefit.  If Early Termination occurs, the Bank
shall pay the Participant the Deferral Account balance calculated at Separation
from Service in lieu of any other benefit hereunder.  This benefit shall be paid
as elected by the Participant on the Participant’s Participation Agreement.
 
5.4           Disability Benefit.  If the Participant experiences a Disability
prior to Normal Retirement Age, the Bank shall pay the Participant the Deferral
Account balance calculated as of the date of Disability in lieu of any other
benefit hereunder.  This benefit shall be paid as elected by the Participant on
the Participant’s Participation Agreement.
 
5.5           Change in Control Benefit.  If a Change in Control occurs, the
Bank shall pay the Participant the Deferral Account balance calculated as of the
date of Change in Control in lieu of any other benefit hereunder. This benefit
shall be paid as elected by the Participant on the Participant’s Participation
Agreement.
 
 
 

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5.6           Death Prior to Commencement of Benefit Payments.  In the event the
Participant dies prior to Separation from Service, Disability and Change in
Control, the Bank shall pay the Beneficiary the Deferral Account balance
calculated as of the date of the date of the Participant’s  death.  This benefit
will be paid in a lump sum within sixty (60) days following the
Participant’s  death, with the actual date of payment determined by the Bank in
its sole discretion.
 
5.7           Death Subsequent to Commencement of Benefit Payments.  In the
event the Participant dies while receiving payments, but prior to receiving all
payments due and owing hereunder, the Bank shall pay the Beneficiary the
remaining Deferral Account balance in a lump sum within sixty (60) days
following the Participant’s  death, with the actual date of payment determined
by the Bank in its sole discretion.
 
5.8           Hardship Distribution.  If an Unforeseeable Emergency occurs, the
Participant may petition the Board to receive a distribution from the Plan (a
“Hardship Distribution”).  The Board in its sole discretion may grant such
petition.  If granted, the Participant shall receive, within sixty (60) days, a
distribution from the Plan only to the extent deemed necessary by the Board to
remedy the Unforeseeable Emergency, plus an amount necessary to pay taxes
reasonably anticipated as a result of the distribution.  In any event, the
maximum amount which may be paid out as a Hardship Distribution is the Deferral
Account balance as of the day the Participant petitioned the Board to receive a
Hardship Distribution.  A Hardship Distribution shall reduce the Deferral
Account balance.
 
5.9           Termination for Cause.  If the Bank terminates a Participant’s
service for Cause, then the Participant shall forfeit all amounts credited to
the Deferral Account except the Deferrals.
 
5.10           Restriction on Commencement of Distributions.  Notwithstanding
any provision of this Plan to the contrary, if the Participant is considered a
Specified Employee at the time of Separation from Service, the provisions of
this Section shall govern all distributions hereunder.  Distributions which
would otherwise be made to the Participant due to Separation from Service shall
not be made during the first six (6) months following Separation from
Service.  Rather, any distribution which would otherwise be paid to the
Participant during such period shall be accumulated and paid to the Participant
in a lump sum on the first day of the seventh month following Separation from
Service, or if earlier, upon the Participant’s death.  All subsequent
distributions shall be paid as they would have had this Section not applied.
 
5.11           Acceleration of Payments.  Except as specifically permitted
herein, no acceleration of the time or schedule of any payment may be made
hereunder.  Notwithstanding the foregoing, payments may be accelerated, in
accordance with the provisions of Treasury Regulation §1.409A-3(j)(4) in the
following circumstances: (i) as a result of certain domestic relations orders;
(ii) in compliance with ethics agreements with the federal government; (iii) in
compliance with the ethics laws or conflicts of interest laws; (iv) in limited
cash outs (but not in excess of the limit under Code §402(g)(1)(B)); (v) to pay
employment-related taxes; or (vi) to pay any taxes that may become due at any
time that the Plan fails to meet the requirements of Code Section 409A.
 
5.12           Delays in Payment by Bank.  A payment may be delayed to a date
after the designated payment date under any of the circumstances described
below, and the provision will not fail to meet the requirements of establishing
a permissible payment event.  The delay in the payment will not constitute a
subsequent deferral election, so long as the Bank treats all payments to
similarly situated Participants on a reasonably consistent basis.
 
(a)           Payments subject to Code Section 162(m).  If the Bank reasonably
anticipates that the Bank’s deduction with respect to any distribution under
this Plan would be limited or eliminated by application of Code Section 162(m),
then to the extent deemed necessary by the Bank to ensure that the entire amount
of any distribution from this Plan is deductible, the Bank may delay payment of
any amount that would otherwise be distributed under this Plan.  The delayed
amounts shall be distributed to the Participant (or the Beneficiary in the event
of the Participant’s death) at the earliest date the Bank reasonably anticipates
that the deduction of the payment of the amount will not be limited or
eliminated by application of Code Section 162(m).
 
 
 

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(b)           Payments that would violate Federal securities laws or other
applicable law.  A payment may be delayed where the Bank reasonably anticipates
that the making of the payment will violate Federal securities laws or other
applicable law provided that the payment is made at the earliest date at which
the Bank reasonably anticipates that the making of the payment will not cause
such violation.  The making of a payment that would cause inclusion in gross
income or the application of any penalty provision of the Internal Revenue Code
is not treated as a violation of law.
(c)           Solvency.  Notwithstanding the above, a payment may be delayed
where the payment would jeopardize the ability of the Bank to continue as a
going concern.
 
5.13           Treatment of Payment as Made on Designated Payment Date.  Solely
for purposes of determining compliance with Code Section 409A, any payment under
this Plan made after the required payment date shall be deemed made on the
required payment date provided that such payment is made by the latest of: (i)
the end of the calendar year in which the payment is due; (ii) the 15th day of
the third calendar month following the payment due date; (iii) if Bank cannot
calculate the payment amount on account of administrative impracticality which
is beyond the Participant’s  control, the end of the first calendar year which
payment calculation is practicable; and (iv) if Bank does not have sufficient
funds to make the payment without jeopardizing the Bank’s solvency, in the first
calendar year in which the Bank’s funds are sufficient to make the payment.
 
5.14           Facility of Payment.  If a distribution is to be made to a minor,
or to a person who is otherwise incompetent, then the Administrator may make
such distribution: (i) to the legal guardian, or if none, to a parent of a minor
payee with whom the payee maintains his or her residence; or (ii) to the
conservator or administrator or, if none, to the person having custody of an
incompetent payee.  Any such distribution shall fully discharge the Bank and the
Administrator from further liability on account thereof.
 
5.15           Excise Tax Limitation.  Notwithstanding any provision of this
Plan to the contrary, if any benefit payment hereunder would be treated as an
“excess parachute payment” under Code Section 280G, the Bank shall reduce such
benefit payment to the extent necessary to avoid treating such benefit payment
as an excess parachute payment.  The Participant shall be entitled to only the
reduced benefit and shall forfeit any amount over and above the reduced amount.
 
5.16           Changes in Form of Timing of Benefit Payments.  The Bank and the
Participant may, subject to the terms hereof, amend this Plan to delay the
timing or change the form of payments.  Any such amendment:
 
(a)           must take effect not less than twelve (12) months after the
amendment is made;
(b)           must, for benefits distributable due solely to the arrival of a
specified date, or on account of Separation from Service or Change in Control,
delay the commencement of distributions for a minimum of five (5) years from the
date the first distribution was originally scheduled to be made;
(c)           must, for benefits distributable due solely to the arrival of a
specified date, be made not less than twelve (12) months before distribution is
scheduled to begin; and
(d)           may not accelerate the time or schedule of any distribution.
 
ARTICLE 6
BENEFICIARIES
 
6.1           Designation of Beneficiaries.  The Participant may designate any
person to receive any benefits payable under the Plan upon the Participant’s
death, and the designation may be changed from time to time by the Participant
by filing a new designation.  Each designation will revoke all prior
designations by the Participant, shall be in the form prescribed by the
Administrator and shall be effective only when filed in writing with the
Administrator during the Participant’s  lifetime.  If the Participant names
someone other than the Participant’s spouse as a Beneficiary, the Administrator
may, in its sole discretion, determine that spousal consent is required to be
provided in a form designated by the Administrator, executed by the
Participant’s spouse and returned to the Administrator.  The Participant’s
beneficiary designation shall be deemed automatically revoked if the Beneficiary
predeceases the Participant or if the Participant names a spouse as Beneficiary
and the marriage is subsequently dissolved.
 
 
 

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6.2           Absence of Beneficiary Designation.  In the absence of a valid
Beneficiary designation, or if, at the time any benefit payment is due to a
Beneficiary, there is no living Beneficiary validly named by the Participant,
the Bank shall pay the benefit payment to the Participant’s spouse.  If the
spouse is not living then the Bank shall pay the benefit payment to the
Participant’s living descendants per stirpes, and if there no living
descendants, to the Participant’s  estate.  In determining the existence or
identity of anyone entitled to a benefit payment, the Bank may rely conclusively
upon information supplied by the Participant’s personal representative,
executor, or administrator.
 
ARTICLE 7
ADMINISTRATION
 
7.1           Administrator Duties.  The Administrator shall be responsible for
the management, operation, and administration of the Plan.  When making a
determination or calculation, the Administrator shall be entitled to rely on
information furnished by the Bank, Participant or Beneficiary.  No provision of
this Plan shall be construed as imposing on the Administrator any fiduciary duty
under ERISA or other law, or any duty similar to any fiduciary duty under ERISA
or other law.
 
7.2           Administrator Authority.  The Administrator shall enforce this
Plan in accordance with its terms, shall be charged with the general
administration of this Plan, and shall have all powers necessary to accomplish
its purposes.
 
7.3           Binding Effect of Decision.  The decision or action of the
Administrator with respect to any question arising out of or in connection with
the administration, interpretation or application of this Plan and the rules and
regulations promulgated hereunder shall be final, conclusive and binding upon
all persons having any interest in this Plan.
 
7.4           Compensation, Expenses and Indemnity.  The Administrator shall
serve without compensation for services rendered hereunder.  The Administrator
is authorized at the expense of the Bank to employ such legal counsel and
recordkeeper as it may deem advisable to assist in the performance of its duties
hereunder.  Expense and fees in connection with the administration of this Plan
shall be paid by the Bank.
 
7.5           Bank Information.  The Bank shall supply full and timely
information to the Administrator on all matters relating to the
Participant’s  compensation, death, Disability or Separation from Service, and
such other information as the Administrator reasonably requires.
 
7.6           Termination of Participation.  If the Administrator determines in
good faith that the Participant no longer qualifies as a member of a select
group of management or highly compensated employees, as determined in accordance
with ERISA, the Administrator shall have the right, in its sole discretion, to
prohibit the Participant from making any additional Deferrals hereunder.
 
7.7           Compliance with Code Section 409A.  The Bank and the Participants
intend that the Plan comply with the provisions of Code Section 409A to prevent
the inclusion in gross income of any amounts deferred hereunder in a taxable
year prior to the year in which amounts are actually paid to the Participant or
Beneficiary.  This Plan shall be construed, administered and governed in a
manner that affects such intent, and the Administrator shall not take any action
that would be inconsistent therewith.
 
 
 

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ARTICLE 8
CLAIMS AND REVIEW PROCEDURES
 
8.1           Claims Procedure.  A Claimant who has not received benefits under
this Plan that he or she believes should be distributed shall make a claim for
such benefits as follows.
 
(a)           Initiation – Written Claim.  The Claimant initiates a claim by
submitting to the Administrator a written claim for the benefits.  If such a
claim relates to the contents of a notice received by the Claimant, the claim
must be made within sixty (60) days after such notice was received by the
Claimant.  All other claims must be made within one hundred eighty (180) days of
the date on which the event that caused the claim to arise occurred.  The claim
must state with particularity the determination desired by the Claimant.
 
(b)           Timing of Administrator Response.  The Administrator shall respond
to such Claimant within ninety (90) days after receiving the claim.  If the
Administrator determines that special circumstances require additional time for
processing the claim, the Administrator can extend the response period by an
additional ninety (90) days by notifying the Claimant in writing, prior to the
end of the initial ninety (90) day period, that an additional period is
required.  The notice of extension must set forth the special circumstances and
the date by which the Administrator expects to render its decision.
(c)           Notice of Decision.  If the Administrator denies part or all of
the claim, the Administrator shall notify the Claimant in writing of such
denial.  The Administrator shall write the notification in a manner calculated
to be understood by the Claimant.  The notification shall set forth:  (i) the
specific reasons for the denial; (ii) a reference to the specific provisions of
this Plan on which the denial is based; (iii) a description of any additional
information or material necessary for the Claimant to perfect the claim and an
explanation of why it is needed; (iv) an explanation of this Plan’s review
procedures and the time limits applicable to such procedures; and (v) a
statement of the Claimant’s right to bring a civil action under ERISA Section
502(a) following an adverse benefit determination on review.
 
8.2           Review Procedure.  If the Administrator denies part or all of the
claim, the Claimant shall have the opportunity for a full and fair review by the
Administrator of the denial as follows.
 
(a)           Initiation – Written Request.  To initiate the review, the
Claimant, within sixty (60) days after receiving the Administrator’s notice of
denial, must file with the Administrator a written request for review.
(b)           Additional Submissions – Information Access.  The Claimant shall
then have the opportunity to submit written comments, documents, records and
other information relating to the claim.  The Administrator shall also provide
the Claimant, upon request and free of charge, reasonable access to, and copies
of, all documents, records and other information relevant (as defined in
applicable ERISA regulations) to the Claimant’s claim for benefits.
(c)           Considerations on Review.  In considering the review, the
Administrator shall take into account all materials and information the Claimant
submits relating to the claim, without regard to whether such information was
submitted or considered in the initial benefit determination.
(d)           Timing of Administrator Response.  The Administrator shall respond
in writing to such Claimant within sixty (60) days after receiving the request
for review.  If the Administrator determines that special circumstances require
additional time for processing the claim, the Administrator can extend the
response period by an additional sixty (60) days by notifying the Claimant in
writing, prior to the end of the initial sixty (60) day period, that an
additional period is required.  The notice of extension must set forth the
special circumstances and the date by which the Administrator expects to render
its decision.
(e)           Notice of Decision.  The Administrator shall notify the Claimant
in writing of its decision on review.  The Administrator shall write the
notification in a manner calculated to be understood by the Claimant.  The
notification shall set forth:  (a) the specific reasons for the denial; (b) a
reference to the specific provisions of this Plan on which the denial is based;
(c) a statement that the Claimant is entitled to receive, upon request and free
of charge, reasonable access to, and copies of, all documents, records and other
information relevant (as defined in applicable ERISA regulations) to the
Claimant’s claim for benefits; and (d) a statement of the Claimant’s right to
bring a civil action under ERISA Section 502(a).
 
 
 

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ARTICLE 9
AMENDMENT AND TERMINATION
 
9.1           Plan Amendment Generally.  This Plan may be amended only by a
written agreement signed by the Bank, provided that such amendment does not
reduce or eliminate any vested benefit hereunder.
 
9.2           Amendment to Insure Proper Characterization of
Plan.  Notwithstanding anything in this Plan to the contrary, the Plan may be
amended by the Bank at any time, if found necessary in the opinion of the Bank,
i) to ensure that the Plan is characterized as plan of deferred compensation
maintained for a select group of management or highly compensated employees as
described under ERISA, ii) to conform the Plan to the requirements of any
applicable law or iii) to comply with the written instructions of the Bank’s
auditors or banking regulators.
 
9.3           Plan Termination Generally.  This Plan may be terminated only by a
written document signed by the Bank.  In case of such termination, the benefit
to be paid to each Participant hereunder shall be the Participant’s Deferral
Account balance.  However, except as provided in Section 9.4, Plan termination
shall not cause a distribution of benefits hereunder.  Rather, upon termination
benefit distributions will be made at the earliest distribution event permitted
under Article 4.
 
9.4           Effect of Complete Termination.  Notwithstanding anything to the
contrary in Section 9.3, and subject to the requirements of Code Section 409A
and Treasury Regulations §1.409A-3(j)(4)(ix), at certain times the Bank may
completely terminate and liquidate the Plan.  In the event of such a complete
termination, the Bank shall pay the Deferral Account balance to the
Participant.  Such complete termination of the Plan shall occur only under the
following circumstances and conditions.
 
(a)           Corporate Dissolution or Bankruptcy.  The Bank may terminate and
liquidate this Plan within twelve (12) months of a corporate dissolution taxed
under Code Section 331, or with the approval of a bankruptcy court pursuant to
11 U.S.C. §503(b)(1)(A), provided that all benefits paid under the Plan are
included in the Participant’s  gross income in the latest of: (i) the calendar
year which the termination occurs; (ii) the calendar year in which the amount is
no longer subject to a substantial risk of forfeiture; or (iii) the first
calendar year in which the payment is administratively practicable.
(b)           Discretionary Termination.  The Bank may terminate and liquidate
this Plan provided that: (i) the termination does not occur proximate to a
downturn in the financial health of the Bank; (ii) all arrangements sponsored by
the Bank and Affiliates that would be aggregated with any terminated
arrangements under Treasury Regulations §1.409A-1(c) are terminated; (iii) no
payments, other than payments that would be payable under the terms of this Plan
if the termination had not occurred, are made within twelve (12) months of the
date the Bank takes the irrevocable action to terminate this Plan; (iv) all
payments are made within twenty-four (24) months following the date the Bank
takes the irrevocable action to terminate and liquidate this Plan; and (v)
neither the Bank nor any of its Affiliates adopt a new arrangement that would be
aggregated with any terminated arrangement under Treasury Regulations
§1.409A-1(c) if the Participant participated in both arrangements, at any time
within three (3) years following the date the Bank takes the irrevocable action
to terminate this Plan.
 
 
 

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ARTICLE 10
MISCELLANEOUS
 
10.1           No Effect on Other Rights.  This Plan, and each Participant’s
Participation Agreement constitute the entire agreement between the Bank and the
Participant as to the subject matter hereof.  No rights are granted to the
Participants by virtue of this Plan other than those specifically set forth
herein.  Nothing contained herein will confer upon any Participant the right to
be retained in the service of the Bank nor limit the right of the Bank to
discharge or otherwise deal with the Participant without regard to the existence
hereof.
 
10.2           State Law.  To the extent not governed by ERISA, the provisions
of this Plan shall be construed and interpreted according to the internal law of
the State of North Carolina without regard to its conflicts of laws principles.
 
10.3           Validity.  In case any provision of this Plan shall be illegal or
invalid for any reason, said illegality or invalidity shall not affect the
remaining parts hereof, but this Plan shall be construed and enforced as if such
illegal or invalid provision had never been inserted herein.
 
10.4           Nonassignability.  Benefits under this Plan cannot be sold,
transferred, assigned, pledged, attached or encumbered in any manner.
 
10.5           Unsecured General Creditor Status.  Payment to the Participant or
any Beneficiary hereunder shall be made from assets which shall continue, for
all purposes, to be part of the general, unrestricted assets of the Bank and no
person shall have any interest in any such asset by virtue of any provision of
this Plan.  The Bank’s obligation hereunder shall be an unfunded and unsecured
promise to pay money in the future.  In the event that the Bank purchases an
insurance policy insuring the life of the Participant to recover the cost of
providing benefits hereunder, neither the Participant nor the Beneficiary shall
have any rights whatsoever in said policy or the proceeds therefrom.
 
10.6           Unclaimed Benefits.  The Participant shall keep the Bank informed
of the Participant’s current address and the current address of the
Beneficiary.  If the location of the Participant is not made known to the Bank
within three years after the date upon which any payment of any benefits may
first be made, the Bank shall delay payment of the Participant’s benefit
payment(s) until the location of the Participant is made known to the Bank;
however, the Bank shall only be obligated to hold such benefit payment(s) for
the Participant until the expiration of three (3) years.  Upon expiration of the
three (3) year period, the Bank may discharge its obligation by payment to the
Beneficiary.  If the location of the Beneficiary is not made known to the Bank
by the end of an additional two (2) month period following expiration of the
three (3) year period, the Bank may discharge its obligation by payment to the
Participant’s estate.  If there is no estate in existence at such time or if
such fact cannot be determined by the Bank, the Participant and Beneficiary
shall thereupon forfeit all rights to any benefits provided under this Plan.
 
10.7           Removal. Notwithstanding anything in this Plan to the contrary,
the Bank shall not distribute any benefit under this Plan if the Participant is
subject to a final removal or prohibition order issued pursuant to Section 8(e)
of the Federal Deposit Insurance Act.  Furthermore, any payments made to the
Participant pursuant to this Plan shall, if required, comply with 12 U.S.C.
1828, FDIC Regulation 12 CFR Part 359 and any other regulations or guidance
promulgated thereunder.
 
10.8           Notice.  Any notice, consent or demand required or permitted to
be given to the Bank or Administrator under this Plan shall be sufficient if in
writing and hand-delivered or sent by registered or certified mail to the Bank’s
principal business office.  Any notice or filing required or permitted to be
given to the Participant or Beneficiary under this Plan shall be sufficient if
in writing and hand-delivered or sent by mail to the last known address of the
Participant or Beneficiary, as appropriate.  Any notice shall be deemed given as
of the date of delivery or, if delivery is made by mail, as of the date shown on
the postmark or on the receipt for registration or certification.
 
 
 

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10.9           Headings and Interpretation.  Headings and sub-headings in this
Plan are inserted for reference and convenience only and shall not be deemed
part of this Plan.  Wherever the fulfillment of the intent and purpose of this
Plan requires and the context will permit, the use of the masculine gender
includes the feminine and use of the singular includes the plural.
 
10.10         Alternative Action.  In the event it becomes impossible for the
Bank or the Administrator to perform any act required by this Plan due to
regulatory or other constraints, the Bank or Administrator may perform such
alternative act as most nearly carries out the intent and purpose of this Plan
and is in the best interests of the Bank, provided that such alternative act
does not violate Code Section 409A.
 
10.11         Coordination with Other Benefits.  The benefits provided for the
Participant or the Beneficiary under this Plan are in addition to any other
benefits available to the Participant under any other plan or program for
employees of the Bank.  This Plan shall supplement and shall not supersede,
modify, or amend any other such plan or program except as may otherwise be
expressly provided herein.
 
10.12         Inurement.  This Plan shall be binding upon and shall inure to the
benefit of the Bank, its successor and assigns, and the Participant, the
Participant’s successors, heirs, executors, administrators, and the Beneficiary.
 
10.13        Tax Withholding.  The Bank may make such provisions and take such
action as it deems necessary or appropriate for the withholding of any taxes
which the Bank is required by any law or regulation to withhold in connection
with any benefits under the Plan.  The Participant shall be responsible for the
payment of all individual tax liabilities relating to any benefits paid
hereunder.
 
10.14        Aggregation of Plan.  If the Bank offers other account balance
deferred compensation arrangements in addition to this Plan, this Plan and those
arrangements shall be treated as a single plan to the extent required under Code
Section 409A.
 

 
IN WITNESS WHEREOF, a representative of the Bank has executed this Plan as
indicated below:
 
Bank: Park Sterling Bank
 
By:

 
/s/ James C. Cherry
 
James C. Cherry
 
Its:   Chief Executive Officer
 
Date: December 19, 2012