Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (the “Agreement”) is made as of the 24th day of March,
2016 (the “Effective Date”), by and between PARK STERLING CORPORATION, a North
Carolina corporation (the “Company”), PARK STERLING BANK, a state bank organized
and existing under the laws of the State of North Carolina (the “Bank”), and
JAMES C. CHERRY (the “Executive”).

 

BACKGROUND:

 

The Company and the Bank (collectively, “Park Sterling”) desire to retain the
services of the Executive and have agreed to provide Executive the terms in this
Agreement.

 

In exchange for the terms in this Agreement, the Executive has agreed to be
bound by the restrictive covenants herein and agrees that such covenants are
supported by good and valid consideration.

 

This Agreement amends and restates in its entirety the prior employment
agreement between the Company and/or the Bank and the Executive dated July 29,
2010.

 

AGREEMENT:

 

In consideration of the above premises and the mutual agreements hereinafter set
forth, the parties hereby agree as follows:

 

1.     Duties.

 

1.1     Positions. The Executive shall be employed as the Chief Executive
Officer of the Company and the Bank and, subject to the direction of the Board
of Directors, shall perform and discharge faithfully the duties and
responsibilities which may be assigned to the Executive from time to time in
connection with the conduct of its business. The duties and responsibilities of
the Executive shall be commensurate with the position of chief executive officer
of a bank and a bank holding company.

 

1.2     Full-Time Status. In addition to the duties and responsibilities
specifically assigned to the Executive pursuant to Section 1.1 hereof, the
Executive shall:

 

(a)     subject to Section 1.3, devote all of the Executive’s time, energy and
skill during regular business hours to the performance of the duties of the
Executive’s employment (reasonable vacations and reasonable absences due to
illness excepted) and faithfully and industriously perform such duties;

 

(b)     diligently follow and implement all reasonable and lawful management
policies and decisions communicated to the Executive by the Board of Directors;
and

 

(c)     timely prepare and forward to the Board of Directors all reports and
accountings as may be requested of the Executive.

 

 
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1.3     Permitted Activities. The Executive shall devote the Executive’s entire
business time, attention and energies to the business of Park Sterling and shall
not during the Term be engaged (whether or not during normal business hours) in
any other business or professional activity, whether or not such activity is
pursued for gain, profit or other pecuniary advantage, but as long as the
following activities do not interfere with the Executive’s obligations to Park
Sterling, this shall not be construed as preventing the Executive from:

 

(a)     investing the Executive’s personal assets in any manner which will not
require any services on the part of the Executive in the operation or affairs of
the entity and in which the Executive’s participation is solely that of an
investor; provided, that such investment activity following the Effective Date
shall not result in the Executive owning beneficially at any time one percent
(1%) or more of the equity securities of any Competing Business;

 

(b)     investing the Executive’s personal assets in any manner which will not
require any substantial services on the part of the Executive in the operation
or affairs of an entity that is not a Competing Business and in which the
Executive’s participation is principally that of an investor;

 

(c)     participating in civic and professional affairs and organizations and
conferences, preparing or publishing papers or books, teaching or serving on the
board of directors of an entity so long as any such participation does not
interfere with the ability of the Executive to effectively discharge the
Executive’s duties hereunder; provided, however, that the Board of Directors may
direct the Executive in writing to resign from any such organization and/or
cease such activities should the Board of Directors reasonably conclude that
continued membership and/or activities of the type identified would not be in
the best interests of Park Sterling; or

 

(d)     participating in the activities approved by Board of Directors of the
Company and set forth on Exhibit A to this Agreement, as may be updated from
time to time.

 

2.     Term. This Agreement shall remain in effect for the Term. If the
Agreement is in effect at the end of the Initial Term, the Term shall be renewed
automatically for successive twelve-month periods unless and until one party
gives written notice to the other of the intent not to extend this Agreement
with such written notice to be given not less than one hundred eighty (180) days
prior to the end of the Initial Term or any such twelve-month period. In the
event such notice of non-extension is properly given, this Agreement shall
terminate at the end of the remaining Term then in effect, subject to earlier
termination in connection with the termination of the Executive’s employment
pursuant to Section 4 hereof.

 

3.     Compensation. Park Sterling shall pay the Executive the following during
the Term, except as otherwise provided below:

 

3.1     Annual Base Salary. From January 1, 2016 through March 31, 2016, the
Executive shall be compensated at an annual base rate of $450,000 and from April
1, 2016 through December 31, 2016 the Executive shall be compensated at an
annual base rate of $465,000 (the “Annual Base Salary”). The Executive’s Annual
Base Salary shall be reviewed by the Compensation and Development Committee of
Board of Directors of the Company (the “Committee”) at least annually for
adjustments, as determined by the Committee based on its evaluation of the
Executive’s performance. The Executive’s Annual Base Salary shall be payable in
accordance with Park Sterling’s normal payroll practices.

 

 
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3.2     Annual Incentive Compensation. The Executive shall be eligible to
receive annual bonus compensation, if any, as may be determined by the Committee
based on performance measures established by the Committee consistent with Park
Sterling’s strategic planning process and in consultation with the Chief
Executive Officer of the Company, pursuant to any incentive compensation program
as may be adopted from time to time by the Committee. Any annual bonus earned
shall be payable, in cash or in securities of Park Sterling, or any combination
thereof, in the year following the year to which the bonus relates in accordance
with Park Sterling’s normal practices for the payment of short-term incentives.
To be entitled to any payment of incentive compensation from Park Sterling, the
Executive must be employed by Park Sterling on the date such payment is made.

 

3.3     Equity Compensation. The Executive shall be entitled to long-term equity
incentive awards at the discretion of the Committee (or any committee thereof)
based upon and/or subject to any performance measures as may be established by
the granting entity; provided, however, that, in general, awards shall be made
at such times and shall be subject to such terms and conditions that are no less
favorable than awards granted to similarly situated executives. The granting of
any and all forms of long-term equity compensation to the Executive is subject
to applicable restrictions imposed by federal and state banking laws.

 

3.4     Business and Professional Education Expenses; Memberships. Park Sterling
specifically agrees to reimburse the Executive, in accordance with Park
Sterling’s applicable reimbursement policies, for reasonable and necessary
business expenses incurred by the Executive in the performance of the
Executive’s duties hereunder; provided, however, that the Executive shall, as a
condition of any such reimbursement, submit verification of the nature and
amount of such expenses in accordance with such reimbursement policies and in
sufficient detail to comply with rules and regulations promulgated by the United
States Treasury Department and other applicable laws. In addition, Park Sterling
shall reimburse the Executive for educational expenses related to the
Executive’s professional development and for membership in professional and
civic organizations to the extent such activities are consistent with Park
Sterling’s strategic objectives, subject in each instance to advance approval by
the Committee. The Executive acknowledges that Park Sterling makes no
representation with respect to the taxability or nontaxability of the benefits
provided under this Section 3.4.

 

3.5     Paid Leave. The Executive shall be entitled to thirty (30) days of paid
leave per calendar year, prorated for partial calendar years. A maximum of ten
(10) days of accrued paid leave may be carried over to an immediately succeeding
calendar year. The provisions of this Section 3.5 shall apply unless a more
generous paid leave policy is maintained by Park Sterling, in which case, such
Park Sterling policy shall apply.

 

3.6     Benefits. In addition to the benefits specifically described in this
Agreement, the Executive shall be entitled to such benefits as may be available
from time to time to similarly situated employees. All such benefits shall be
awarded and administered in accordance with Park Sterling’s standard policies
and practices.

 

 
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3.7     Withholding. Park Sterling may deduct from each payment of compensation
hereunder all amounts required to be deducted and withheld in accordance with
applicable federal and state income, FICA and other withholding requirements.

 

3.8     Apportionment of Obligations. The obligations for the payment of the
amounts otherwise payable pursuant to this Section 3 and in Section 4 shall be
apportioned between the Company and the Bank as they may agree from time to time
in their sole discretion. The satisfaction of the obligations in this Section 3
and Section 4 shall be subject to any approvals or non-objections from, and any
conditions or restrictions imposed by, any regulator of Park Sterling.

 

3.9     Reimbursement of Expenses; In-Kind Benefits. All expenses eligible for
reimbursements described in this Agreement must be incurred by the Executive
during the Term of this Agreement to be eligible for reimbursement. All in-kind
benefits described in this Section 3 must be provided by Park Sterling during
the Term of this Agreement. The amount of reimbursable expenses incurred, and
the amount of in-kind benefits provided, in one taxable year shall not affect
the expenses eligible for reimbursement, or in-kind benefits provided, in any
other taxable year. Each category of reimbursement shall be paid as soon as
administratively practicable, but in no event shall any such reimbursement be
paid after the last day of the calendar year following the calendar year in
which the expense was incurred. Neither rights to reimbursement nor in-kind
benefits are subject to liquidation or exchanges for other benefits.

 

3.10     Clawback of Compensation. The Executive agrees to repay any
compensation previously paid or otherwise made available to the Executive that
is subject to recovery under any (a) applicable law (including any rule of any
exchange or service through which the securities of Park Sterling are then
traded), or (b) compensation recoupment, clawback or recovery policy adopted by
Park Sterling. The Executive agrees to return promptly any such compensation
identified by Park Sterling. If the Executive fails to return such incentive
compensation promptly, the Executive agrees that the amount of such compensation
may be deducted from any and all other compensation owed to the Executive. The
Executive acknowledges that Park Sterling may take appropriate disciplinary
action (up to, and including, Termination of Employment) if the Executive fails
to return such incentive compensation. The provisions of this Section 3.10 shall
remain in effect for the period required by applicable law.

 

4.     Termination; Suspension or Reduction of Benefits.

 

4.1     Termination of Employment. During the Term, the Executive’s Termination
of Employment under this Agreement may only occur as follows:

 

(a)     By Park Sterling:

 

(1)     for Cause;

 

(2)     without Cause (other than pursuant to Section 4.1(a)(3) below) at any
time, provided, that the Board of Directors of either the Company or the Bank
must have given the Executive thirty (30) days’ prior written notice of its
intent to effect the Executive’s Termination of Employment; or

 

 
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(3)     in the event that a regulator for Park Sterling requires the Executive’s
removal from service as the Chief Executive Officer of the Bank and/or the
Company.

 

(b)     By the Executive:

 

(1)     for any reason (other than pursuant to Section 4.1(b)(2)), provided,
that the Executive must have given Park Sterling thirty (30) days’ prior written
notice of the Executive’s intent to effect the Executive’s Termination of
Employment; or

 

(2)     for Good Reason, provided, that the Executive must have given Park
Sterling the prior written notice described in Section 23(m).

 

(c)     Upon the Executive becoming subject to a Disability.

 

(d)     At any time upon mutual, written agreement of the parties.

 

(e)     Upon expiration of the Term.

 

(f)     Notwithstanding anything in this Agreement to the contrary, the Term
shall end automatically upon the Executive’s death.

 

4.2     Severance. If, during the Term, the Executive experiences a Termination
of Employment, either by Park Sterling without Cause pursuant to Section
4.1(a)(2) or by the Executive for Good Reason pursuant to Section 4.1(b)(2),
then, upon the Executive’s Termination of Employment, Park Sterling will pay (a)
severance to the Executive in an amount equal to two (2) times the Executive’s
Annual Base Salary at the highest rate in effect in the twelve-month period
immediately preceding the Termination of Employment, with such amount payable in
substantially equal cash installments not less frequently than monthly over a
period of twenty-four (24) months, commencing on the date determined by Park
Sterling but in no event later than sixty (60) days following the date of the
Executive’s Termination of Employment, (b) an amount equal to two (2) times the
highest annual bonus the Executive received or earned (if the Executive’s
termination occurs prior to the payment of a particular annual bonus) during the
three years immediately preceding the year in which the Executive experienced a
Termination of Employment, payable in a lump sum payment within 60 days
following the Executive’s Termination of Employment, and (c) a monthly amount
payable for 18 months following the Executive’s Termination of Employment equal
to the monthly COBRA premium amount the Executive would have to pay for
continuation coverage under Park Sterling’s group health plan.

 

 
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4.3     Change of Control. If, within the period beginning with the signing of a
letter of intent or similar agreement contemplating a transaction that, if
consummated, would constitute a Change of Control or within twelve (12) months
following a Change of Control, the Executive experiences a Termination of
Employment, either (a) by Park Sterling without Cause pursuant to Section
4.1(a)(2), (b) by the Executive for Good Reason pursuant to Section 4.1(b)(2) or
(c) the Executive experiences a Termination of Employment as a result of the
buyer’s failure to renew this Agreement in accordance with Section 2, then, upon
the Executive’s Termination of Employment, Park Sterling will pay severance to
the Executive in an amount equal to (i) two (2) times the Executive’s Annual
Base Salary at the highest rate in effect in the twelve-month period immediately
preceding the Termination of Employment, with such amount payable in
substantially equal cash installments not less frequently than monthly over a
period of twenty-four (24) months, commencing on the date determined by Park
Sterling but in no event later than sixty (60) days following the date of the
Executive’s Termination of Employment, plus (ii) an amount equal to two (2)
times the highest annual bonus the Executive received or earned (if the
Executive’s termination occurs prior to the payment of a particular annual
bonus) during the three (3) years immediately preceding the year in which the
Executive experienced a Termination of Employment, payable in a lump sum payment
within sixty (60) days following the Executive’s Termination of Employment, plus
(iii) a monthly amount payable for eighteen (18) months following the
Executive’s Termination of Employment equal to the monthly COBRA premium amount
the Executive would have to pay for continuation coverage under Park Sterling’s
group health plan, plus (iv) an additional amount equal to one (1) times the
Executive’s Annual Base Salary at the highest rate in effect in the twelve-month
period immediately preceding the Termination of Employment, plus one (1) times
the highest annual bonus the Executive received or earned (if the Executive’s
termination occurs prior to the payment of a particular annual bonus) during the
three (3) years immediately preceding the year in which the Executive
experienced a Termination of Employment payable in a lump sum payment within
sixty (60) days following the Executive’s Termination of Employment.

 

4.4     Parachute Payment Reduction. Tax Penalty Protection.  Notwithstanding
any other provision in this Agreement to the contrary, any payment or benefit
received or to be received by the Executive in connection with a “change in
ownership or control” (as such term is defined under Section 280G of the Code —
a “Corporate Transaction”) or the termination of employment (whether payable
under the terms of this Agreement or any other plan, arrangement or agreement
with the Company or its subsidiaries and affiliates (collectively, the
“Payments”) that would constitute a “parachute payment” within the meaning of
Section 280G of the Code, shall be reduced to the extent necessary so that no
portion thereof shall be subject to the excise tax imposed by Section 4999 of
the Code (the “Excise Tax”), but only if, by reason of such reduction, the net
after-tax benefit received by the Executive shall exceed the net after-tax
benefit that would be received by the Executive if no such reduction was made. 
Whether and how the provisions of this Section 4.4 are applicable shall be
determined as set forth below.

 

(a)     The “net after-tax benefit” shall mean (i) the Payments (as defined in
this Section 4.4) which the Executive receives or is then entitled to receive
from the Company or a subsidiary or affiliate that would constitute “parachute
payments” within the meaning of Code Section 280G, less (ii) the amount of all
federal, state and local income and employment taxes payable by the Executive
with respect to the foregoing calculated at the highest marginal income tax rate
for each year in which the foregoing shall be paid to the Executive (based on
the rate in effect for such year as set forth in the Code as in effect at the
time of the first payment of the foregoing), less (iii) the amount of Excise Tax
imposed with respect to the payments and benefits described in (i) above.

 

 
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(b)     All determinations under this Section 4.4 will be made by an accounting
firm or law firm that is selected for this purpose by the Company prior to a
Corporate Transaction (the “280G Firm”).  All fees and expenses of the 280G Firm
shall be borne by the Company.  The Company will direct the 280G Firm to submit
any determination it makes under this Section 4.4 and detailed supporting
calculations to both the Executive and the Company as soon as reasonably
practicable.

 

(c)     If the 280G Firm determines that one or more reductions are required
under this Section 4.4, the 280G Firm shall also determine which Payments shall
be reduced (first from non-cash benefits and then from cash payments) to the
extent necessary so that no portion thereof shall be subject to the excise tax
imposed by Section 4999 of the Code, and the Company shall pay such reduced
amount to the Executive.  The 280G Firm shall make reductions required under
this Section 4.4 in a manner that maximizes the net after-tax amount payable to
the Executive.

 

(d)     As a result of the uncertainty in the application of Section 280G of the
Code at the time that the 280G Firm makes its determinations under this
provision, it is possible that amounts will have been paid or distributed to the
Executive that should not have been paid or distributed (collectively, the
“Overpayments”), or that additional amounts should be paid or distributed to the
Executive (collectively, the “Underpayments”).  If the 280G Firm determines,
based on either the assertion of a deficiency by the Internal Revenue Service
against the Company or the Executive, which assertion the 280G Firm believes has
a high probability of success or controlling precedent or substantial authority,
that an Overpayment has been made, the Executive must repay the Overpayment
amount promptly to the Company, without interest; provided, however, that no
loan will be deemed to have been made and no amount will be payable by the
Executive to the Company unless, and then only to the extent that, the deemed
loan and payment would either reduce the amount on which the Executive is
subject to tax under Section 4999 of the Code or generate a refund of tax
imposed under Section 4999 of the Code.  If the 280G Firm determines, based upon
controlling precedent or substantial authority, that an Underpayment has
occurred, the 280G Firm will notify the Executive and the Company of that
determination, and the Underpayment amount will be paid to the Executive
promptly by the Company.

 

(e)     The Executive will provide the 280G Firm access to, and copies of, any
books, records and documents in the Executive’s possession as reasonably
requested by the 280G Firm, and otherwise cooperate with the 280G Firm in
connection with the preparation and issuance of the determinations and
calculations contemplated by this Section 4.4.

 

4.5     Effect of Termination of Employment.

 

(a)     Upon Executive’s Termination of Employment hereunder for any reason,
Park Sterling shall have no further obligations to the Executive or the
Executive’s estate with respect to this Agreement, except for the payment of any
amount earned and owing under this Agreement and payment set forth in Section
4.2 or Section 4.3, if applicable.

 

 
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(b)     Notwithstanding any other provision of this Agreement to the contrary,
as a condition of Park Sterling’s payment of any amount in connection with the
Executive’s Termination of Employment, the Executive must execute within such
period of time following Termination of Employment as is permitted by Park
Sterling (and not timely revoke during any revocation period provided pursuant
to such release) a release and non-disparagement agreement in the form provided
by Park Sterling. All payments of severance shall accrue from the date of the
Executive’s Termination of Employment and, notwithstanding the timing provisions
under Section 4.2 and Section 4.3, shall be made or commence on the sixtieth
(60th) day following the Executive’s Termination of Employment, with any accrued
but unpaid severance being paid on the date of the first payment.

 

(c)     Notwithstanding any provision in the Agreement to the contrary, to the
extent necessary to avoid the imposition of tax on the Executive under Code
Section 409A, any payments that are otherwise payable to the Executive within
the first six (6) months following the effective date of Termination of
Employment, shall be suspended and paid as soon as practicable following the end
of the six-month period following such effective date if, immediately prior to
the Executive’s Termination of Employment, the Executive is determined to be a
“specified employee” (within the meaning of Code Section 409A(a)(2)(B)(i)) of
Park Sterling (or any related “service recipient” within the meaning of Code
Section 409A and the regulations thereunder). Any payments suspended by
operation of the foregoing sentence shall be paid as a lump sum within thirty
(30) days following the end of such six-month period. Payments (or portions
thereof) that would be paid latest in time during the six-month period will be
suspended first.

 

(d)     Any purported termination of the Executive’s employment which does not
rise to the level of a Termination of Employment shall not entitle the Executive
to any of the payments or benefits described in Section 4.

 

(e)     If the Executive is a member of the Board of Directors of either the
Company or the Bank and the Executive’s employment is terminated by Park
Sterling or by the Executive pursuant to Section 4.1, the Executive shall
immediately resign from Executive’s position(s) on the Board(s) of Directors,
effective as of the date Executive’s employment is terminated.

 

(f)     Notwithstanding anything contained in this Agreement to the contrary, no
payments shall be made pursuant to Section 4 or any other provision herein in
contravention of the requirements of Section 2[18(k)] of the Federal Deposit
Insurance Act (12 U.S.C. 1828(k)).

 

4.6     Regulatory Action.

 

(a)     If the Executive is removed and/or permanently prohibited from
participating in the conduct of Park Sterling’s affairs by an order issued under
Section 8(e)(4) or 8(g)(1) of the Federal Deposit Insurance Act (“FDIA”) (12
U.S.C. 1818(e)(4) and (g)(1)), all obligations of Park Sterling under this
Agreement shall terminate, as of the effective date of such order, except for
the payment of Annual Base Salary due and owing under Section 3.1 on the
effective date of said order, and reimbursement under Section 3.4 of expenses
incurred as of the effective date of termination.

 

 
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(b)     If the Executive is suspended and/or temporarily prohibited from
participating in the conduct of Park Sterling’s affairs by a notice served under
Section 8(e)(3) or 8(g)(1) of the FDIA (12 U.S.C. 1818(e)(3) and (g)(1)), all
obligations of Park Sterling under this Agreement shall be suspended as of the
date of service, unless stayed by appropriate proceedings. If the charges in the
notice are dismissed, Park Sterling shall reinstate (in whole or in part) any of
its obligations which were suspended.

 

(c)     If Park Sterling is in default (as defined in Section 3(x)(1) of the
FDIA), all obligations under this Agreement shall terminate as of the date of
default, but the vested rights of the parties shall not be affected.

 

(d)     All obligations under this Agreement shall be terminated, except to the
extent a determination is made that continuation of the contract is necessary
for the continued operation of Park Sterling (1) by the director of the Federal
Deposit Insurance Corporation (the “FDIC”) or his or her designee (the
“Director”), at the time the FDIC enters into an agreement to provide assistance
to or on behalf of Park Sterling under the authority contained in 13(c) of the
FDIA; or (2) by the Director, at the time the Director approves a supervisory
merger to resolve problems related to operation of Park Sterling when Park
Sterling is determined by the Director to be in an unsafe and unsound condition.
Any rights of the Executive that have already vested, however, shall not be
affected by such action.

 

(e)     All obligations under this Agreement are further subject to such
conditions, restrictions, limitations and forfeiture provisions as may
separately apply pursuant to any applicable state banking laws.

 

4.7     Reimbursement of Legal Fees. Park Sterling shall reimburse the
Executive, on a current basis, for all reasonable legal fees and related
expenses incurred by the Executive in contesting or disputing any termination of
the Executive’s employment after the date of this Agreement, or the Executive’s
seeking to obtain or enforce any right or benefit provided by this Agreement or
any employment agreement between Employee and Park Sterling; provided, however,
the Executive shall be required to repay to Park Sterling any such amounts plus
the reasonable legal fees and related expenses incurred by Park Sterling and its
affiliates, as applicable, to the extent that an arbitral panel or a court
issues a final and non-appealable order, judgment, decree or award in favor of
Park Sterling (or its affiliates, as applicable). Any such payments to the
Executive shall be made within five (5) business days after delivery of the
Executive’s, respective written requests for payment accompanied with such
evidence of fees and expenses incurred as Park Sterling reasonably may require,
but in any event no later than December 31 of the year after the year in which
the expense was incurred. Any payments the Executive may be required to make to
Park Sterling shall be made within five (5) business days after the date on
which an arbitral panel or a court issues a final and non-appealable order,
judgment, decree or award in favor of Park Sterling (or its affiliates, as
applicable).

 

 
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4.8     D&O Insurance. During the Term, Park Sterling shall maintain
commercially reasonable and appropriate directors and officers insurance
policies under which the Executive shall be a covered person.

 

5.     Employer Information.

 

5.1     Ownership of Employer Information. All Employer Information received or
developed by the Executive or by Park Sterling while the Executive is employed
by Park Sterling will remain the sole and exclusive property of Park Sterling.

 

5.2     Obligations of the Executive. The Executive agrees:

 

(a)     to hold Employer Information in strictest confidence;

 

(b)     not to use, duplicate, reproduce, distribute, disclose or otherwise
disseminate Employer Information or any physical embodiments of Employer
Information to any unauthorized recipient; and

 

(c)     in any event, not to take any action causing or fail to take any action
necessary in order to prevent any Employer Information from losing its character
or ceasing to qualify as Confidential Information or a Trade Secret.

 

In the event that the Executive is required by law to disclose any Employer
Information, the Executive will not make such disclosure unless (and then only
to the extent that) the Executive has been advised by independent legal counsel
(whose reasonable fees and expenses shall be paid by Park Sterling) that such
disclosure is required by law. This Section 5 shall survive for a period of two
(2) years following termination of this Agreement for any reason with respect to
Confidential Information, and shall survive termination of this Agreement for
any reason for so long as is permitted by applicable law, with respect to Trade
Secrets. Notwithstanding this Section 5, this Agreement does not prohibit
communications directly with the Securities and Exchange Commission about a
possible securities law violation.

 

5.3     Delivery upon Request or Termination. Upon request by Park Sterling, and
in any event upon the Executive’s Termination of Employment with Park Sterling,
the Executive will promptly deliver to Park Sterling all property belonging to
Park Sterling and its Affiliates, including, without limitation, all Employer
Information then in the Executive’s possession or control.

 

6.     Non-Competition. The Executive agrees that during the Executive’s
employment by Park Sterling hereunder, and in the event of the Executive’s
Termination of Employment, regardless of the reason, for a period of one (1)
year thereafter, the Executive will not (except on behalf of or with the prior
written consent of Park Sterling), within the Area, either directly or
indirectly, on the Executive’s own behalf or in the service or on behalf of
others, perform for any Competing Business any services which are the same as or
essentially the same as the services the Executive provided for Park Sterling.

 

 
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7.     Non-Solicitation of Customers. The Executive agrees that during the
Executive’s employment by Park Sterling hereunder, and in the event of the
Executive’s Termination of Employment, regardless of the reason, for a period of
one (1) year thereafter, the Executive will not (except on behalf of or with the
prior written consent of Park Sterling) on the Executive’s own behalf or in the
service or on behalf of others, solicit, divert or appropriate or attempt to
solicit, divert or appropriate, any business from any of Park Sterling’s
customers, including prospective customers actively sought by Park Sterling,
with whom the Executive has or had material contact during the last two (2)
years of the Executive’s employment with Park Sterling, for purposes of
providing products or services that are competitive with those provided by Park
Sterling.

 

8.     Non-Solicitation of Employees. The Executive agrees that during the
Executive’s employment by Park Sterling hereunder, and in the event of the
Executive’s Termination of Employment, regardless of the reason, for a period of
one (1) year thereafter, the Executive will not (except on behalf of or with the
prior written consent of Park Sterling) on the Executive’s own behalf or in the
service or on behalf of others, solicit, recruit or hire away or attempt to
solicit, recruit or hire away, any employee of Park Sterling with whom the
Executive had material contact during the last two (2) years of the Executive’s
employment, whether or not such employee is a full-time employee or a temporary
employee of Park Sterling, such employment is pursuant to written agreement, for
a determined period, or at will.

 

9.     Remedies. The Executive agrees that the covenants contained in Section 5
through Section 8 of this Agreement are of the essence of this Agreement; that
each of the covenants is reasonable and necessary to protect the business,
interests and properties of Park Sterling, and that irreparable loss and damage
will be suffered by Park Sterling should the Executive breach any of the
covenants. Therefore, the Executive agrees and consents that, in addition to all
the remedies provided by law or in equity, Park Sterling shall be entitled to a
temporary restraining order and temporary and permanent injunctions to prevent a
breach or contemplated breach of any of the covenants. Furthermore, in addition
to any other remedies, the Executive agrees that any violation of the covenants
in Section 5 through Section 8 will result in the immediate forfeiture of any
remaining payment that otherwise is or may become due under Section 4.2 or
Section 4.3, if applicable. The Executive further agrees that should the
Executive breach any of the covenants contained in Section 5 through Section 8
of this Agreement, the Executive shall repay to Park Sterling a portion of any
amounts previously received by the Executive pursuant to Section 4. The amount
to be repaid shall be equal to the aggregate amount payable (whether or not
paid) multiplied by a fraction the numerator of which shall be twenty-four (24)
minus the number of consecutive, full calendar months immediately following the
Executive’s termination of employment during which the Executive was not in
breach of Section 5 through Section 8 of this Agreement and the denominator of
which is twenty-four (24). Park Sterling and the Executive agree that all
remedies available to Park Sterling or the Executive, as applicable, shall be
cumulative.

 

10.     Severability. The parties agree that each of the provisions included in
this Agreement is separate, distinct and severable from the other provisions of
this Agreement and that the invalidity or unenforceability of any Agreement
provision shall not affect the validity or enforceability of any other provision
of this Agreement. Further, if any provision of this Agreement is ruled invalid
or unenforceable by a court of competent jurisdiction because of a conflict
between the provision and any applicable law or public policy, the provision
shall be redrawn to make the provision consistent with, and valid and
enforceable under, the law or public policy.

 

 
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11.     No Set-Off by the Executive. The existence of any claim, demand, action
or cause of action by the Executive against Park Sterling whether predicated
upon this Agreement or otherwise, shall not constitute a defense to the
enforcement by Park Sterling of any of its rights hereunder.

 

12.     Notice. All notices, requests, waivers and other communications required
or permitted hereunder shall be in writing and shall be either personally
delivered, sent by reputable overnight courier service or mailed by first class
mail, return receipt requested, to the recipient at the address below indicated:

 

If to Park Sterling:      Park Sterling Bank

                                     Attn: Chairman

                                     1043 E. Morehead Street, Suite 201

                                     Charlotte, North Carolina 28204

 

If to the Executive:     James C. Cherry

                                      2020 Queens Road W

                                      Charlotte, North Carolina 28207

 

or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. All
such notices, requests, waivers and other communications shall be deemed to have
been effectively given: (a) when personally delivered to the party to be
notified; (b) when sent by confirmed facsimile to the party to be notified; (c)
five (5) business days after deposit in the United States Mail postage prepaid
by certified or registered mail with return receipt requested at any time other
than during a general discontinuance of postal service due to strike, lockout,
or otherwise (in which case such notice, request, waiver or other communication
shall be effectively given upon receipt) and addressed to the party to be
notified as set forth above; or (d) two (2) business days after deposit with a
national overnight delivery service, postage prepaid, addressed to the party to
be notified as set forth above with next-business-day delivery guaranteed. A
party may change its or his/her notice address given above by giving the other
party ten (10) days’ written notice of the new address in the manner set forth
above.

 

13.     Assignment. The rights and obligations of Park Sterling under this
Agreement shall inure to the benefit of and shall be binding upon the successors
and assigns of Park Sterling, as applicable, including without limitation, a
purchaser of all or substantially all the assets of Park Sterling. If the
Agreement is assigned pursuant to the foregoing sentence, the assignment shall
be by novation and Park Sterling shall have no further liability hereunder, and
the successor or assign, as applicable, shall become “Park Sterling” hereunder,
but the Executive will not be deemed to have experienced a Termination of
Employment by virtue of such assignment. The Agreement is a personal contract
and the rights and interest of the Executive may not be assigned by the
Executive. This Agreement shall inure to the benefit of and be enforceable by
the Executive and the Executive’s personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.

 

 
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14.     Waiver. A waiver by one party to this Agreement of any breach of this
Agreement by any other party to this Agreement shall not be effective unless in
writing, and no waiver shall operate or be construed as a waiver of the same or
another breach on a subsequent occasion.

 

15.     Mediation. Except as provided in Section 16 hereof, if any dispute
arises out of or relates to this Agreement, or a breach thereof, and if the
dispute can not be settled through direct discussions between the parties, the
parties agree to first endeavor to settle the dispute in an amicable manner by
mediation under the Commercial Mediation Rules of the American Arbitration
Association before resorting to any other process for resolving the dispute.

 

16.     Applicable Law and Choice of Forum. This Agreement shall be construed
and enforced under and in accordance with the laws of the State of North
Carolina. The parties agree that any appropriate state court located in
Mecklenburg County, North Carolina or federal court for the Western District of
North Carolina shall have exclusive jurisdiction of any case or controversy
arising under or in connection with this Agreement shall be a proper forum in
which to adjudicate such case or controversy. The parties consent and waive any
objection to the jurisdiction or venue of such courts.

 

17.     Interpretation. Words importing any gender include all genders. Words
importing the singular form shall include the plural and vice versa. The terms
“herein,” “hereunder,” “hereby,” “hereto,” “hereof” and any similar terms refer
to this Agreement. Any captions, titles or headings preceding the text of any
article, section or subsection herein are solely for convenience of reference
and shall not constitute part of this Agreement or affect its meaning,
construction or effect.

 

18.     Entire Agreement. This Agreement embodies the entire and final agreement
of the parties on the subject matter stated in this Agreement. No amendment or
modification of this Agreement shall be valid or binding upon Park Sterling or
the Executive unless made in writing and signed by all parties. All prior
understandings and agreements relating to the subject matter of this Agreement
are hereby expressly terminated.

 

19.     Mutual Non-disparagement. Park Sterling agrees that during the Term and
for a period of two (2) years thereafter, each will not make any statement
(written or oral) that could reasonably be perceived as disparaging to the
Executive. The Executive agrees that during the Term and for a period of two (2)
years thereafter, the Executive will not make any statement (written or oral)
that could reasonably be perceived as disparaging to Park Sterling or any person
or entity that he reasonably should know is an affiliate of Park Sterling.

 

20.     Rights of Third Parties. Nothing herein expressed is intended to or
shall be construed to confer upon or give to any person, firm or other entity,
other than the parties hereto and their permitted assigns, any rights or
remedies under or by reason of this Agreement.

 

21.     Survival. The obligations of the parties pursuant to Section 3.10,
Section 5 through Section 9, Section 15, Section 16 and Section 19, as
applicable, shall survive the Executive’s Termination of Employment hereunder
for the period designated under each of those respective sections.

 

 
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22.     Representation Regarding Restrictive Covenants. The Executive represents
that the Executive is not and will not become a party to any non-competition or
non-solicitation agreement or any other agreement which would prohibit the
Executive from entering into this Agreement or providing the services for Park
Sterling contemplated by this Agreement on or after the Effective Date. In the
event the Executive is subject to any such agreement, this Agreement shall be
rendered null and void and Park Sterling shall have no obligations to the
Executive under this Agreement.

 

23.     Definitions. Whenever used in this Agreement, the following terms and
their variant forms shall have the meanings set forth below:

 

(a)     “Affiliate” shall mean any entity which controls, is controlled by, or
is under common control with another entity. For this purpose, “control” means
ownership of more than fifty percent (50%) of the ordinary voting power of the
outstanding equity securities of an entity.

 

(b)     “Agreement” shall mean this Agreement and any exhibits incorporated
herein together with any amendments hereto made in the manner described in this
Agreement.

 

(c)     “Area” shall mean a radius of twenty-five (25) miles or, at the election
of Park Sterling upon written notice to the Executive, a radius of fifteen (15)
miles, from each office maintained by Park Sterling at the time a breach of
Section 6 of the Agreement is alleged by Park Sterling, provided, that the
preceding shall not apply to an office first established by Park Sterling after
the end of the Term. It is the express intent of the parties that the Area as
defined herein is the area where the Executive performs services, or for which
the Executive has work responsibilities, on behalf of Park Sterling under this
Agreement.

 

(d)     “Board of Directors” shall mean the board of directors of the Bank or
the Company or both, as the context indicates, and includes any committee
thereof or other designee.

 

(e)     “Business” shall mean the business conducted by Park Sterling, which is
the business of commercial and consumer banking and wealth management.

 

(f)     “Cause” shall mean:

 

(1)     A material breach of the terms of this Agreement by the Executive not
cured by the Executive within thirty (30) days after the Executive’s receipt of
Park Sterling’s written notice thereof, including, without limitation, failure
by the Executive to perform the Executive’s duties and responsibilities in the
manner and to the extent required under this Agreement;

 

(2)     Any act by the Executive of fraud against, material misappropriation
from, or material dishonesty to either the Company or the Bank;

 

 
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(3)     Conviction of the Executive of a crime involving breach of trust or
moral turpitude or any felony;

 

(4)     Conduct by the Executive that amounts to willful misconduct, gross and
willful insubordination, gross neglect or inattention to or material failure to
perform the Executive’s duties and responsibilities hereunder, including
prolonged absences without the written consent of the Board of Directors;
provided, that the nature of such conduct shall be set forth with reasonable
particularity in a written notice to the Executive who shall have ten (10) days
following delivery of such notice to cure such alleged conduct, provided, that
such conduct is, in the reasonable discretion of the Board of Directors,
susceptible to a cure;

 

(5)     the exhibition of a standard of behavior within the scope of or related
to the Executive’s employment that is materially disruptive to the orderly
conduct of Park Sterling’s business operations (including, without limitation,
substance abuse, sexual harassment or sexual misconduct) in the reasonable
opinion of the Board of Directors (with the Executive abstaining from
participating in the consideration of, and vote on, such matter);

 

(6)     Receipt of any form of notice, written or otherwise, that any regulatory
agency having jurisdiction over Park Sterling has made a final determination
that the Executive has violated a particular law or regulation; or

 

(7)     Executive’s removal and/or permanent prohibition from participating in
the conduct of Park Sterling’s affairs by an order issued under Section 8(e)(4)
or 8(g)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1818(e)(4) and
(g)(1)).

 

(g)     “Change of Control” means a “change in the ownership or effective
control of a corporation, or a change in the ownership of a substantial portion
of the assets of a corporation” within the meaning of Code Section 409A,
provided, however, that for purposes of determining an “effective change of
control,” “50 percent” shall be used instead of “30 percent” and for purposes of
determining a “substantial portion of the assets of a corporation,” “85 percent”
shall be used instead of “40 percent.”  For purposes of the preceding sentence,
a “corporation” refers to the Company and the Bank.  Notwithstanding the
foregoing, in the event of a merger, consolidation, reorganization, share
exchange or other transaction as to which the holders of the capital stock of
the Bank or the Company before the transaction continue after the transaction to
hold, directly or indirectly through a holding company or otherwise, shares of
capital stock of the Bank or the Company (or other surviving company)
representing more than fifty percent (50%) of the value or ordinary voting power
to elect directors of the capital stock of the Bank or the Company (or other
surviving company), such transaction shall not constitute a Change of Control;
provided, however, that, in the event that the transaction at issue involves a
change in the ownership of the Company and if the holders of the capital stock
of the Company before the transaction that continue to represent more than fifty
percent (50%) of the value or ordinary voting power to elect directors of the
capital stock of the Company (or other surviving company) at the time of the
consummation of such transaction also hold 50% or more of the value or ordinary
voting power to elect directors of the capital stock of the other entity
involved in the acquisition or similar transaction, then such transaction shall
be considered a Change of Control.

 

 
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(h)     “Code” shall mean the Internal Revenue Code of 1986, as amended.

 

(i)     “Competing Business” shall mean any entity (other than Park Sterling and
its Affiliates) that is conducting business that is the same or substantially
the same as the Business of Park Sterling.

 

(j)     “Confidential Information” means data and information relating to the
business of Park Sterling and its Affiliates (which does not rise to the status
of a Trade Secret) which is or has been disclosed to the Executive or of which
the Executive became aware as a consequence of or through the Executive’s
relationship to Park Sterling and its Affiliates and which has value to Park
Sterling and its Affiliates and is not generally known to its competitors.
Confidential Information shall not include any data or information that has been
voluntarily disclosed to the public by Park Sterling or its Affiliates,
provided, that such public disclosure shall not be deemed to be voluntary when
made without authorization by the Executive or any other employee of Park
Sterling, or that has been independently developed and disclosed by others, or
that otherwise enters the public domain through lawful means.

 

(k)     “Disability” shall mean that the Executive suffers from a physical or
mental disability or infirmity that qualifies him for disability benefits under
any accident and health plan maintained by Park Sterling that provides income
replacement benefits due to disability or, if Park Sterling does not maintain
such a plan, the Executive’s inability to perform the essential functions of the
Executive’s job for a period of ninety (90) or more days, with or without
reasonable accommodation, as a result of a physical or mental disability or
infirmity, as reasonably determined by Park Sterling.

 

(l)     “Employer Information” means Confidential Information and Trade Secrets.

 

(m)     “Good Reason” shall mean any of the following which occurs on or after
the Effective Date:

 

(1)     a material reduction of the Executive’s Annual Base Salary from its
then-current rate without the Executive’s consent, other than, prior to a Change
of Control, a reduction that also is applied to substantially all other
executive officers of Park Sterling if Executive’s reduction is substantially
proportionate to, or no greater than, the reduction applied to substantially all
other executive officers;

 

(2)     a material diminution in the authority, responsibilities or duties of
the Executive hereunder without the Executive’s consent, including and without
limitation, the Executive serving in the same or a similar role as prior to a
Change of Control, but for a subsidiary or division of the ultimate parent
company of the resulting entity; or

 

 
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(3)     a requirement that the Executive relocate the Executive’s principal work
location to a location that is more than twenty-five (25) miles from Park
Sterling’s current headquarters.

 

provided, however, that for a Termination of Employment by the Executive to be
for Good Reason, the Executive must notify Park Sterling in writing of the event
giving rise to Good Reason within thirty (30) days following the occurrence of
the event (or, if later, thirty (30) days following the Executive’s knowledge of
occurrence of the event), the event must remain uncured after the expiration of
sixty (60) days following the delivery of written notice of such event to Park
Sterling by the Executive, and the Executive must resign effective no later than
sixty (60) days following Park Sterling’s failure to cure the event and must
give at least thirty (30) days’ advance written notice prior to the Executive’s
effective date of resignation.

 

(n)     “Initial Term” shall mean that period of time commencing on the
Effective Date and running until the earlier of (1) the close of business on the
last business day immediately preceding the third anniversary of the Effective
Date, or (2) any earlier termination of employment of the Executive under this
Agreement as provided for in Section 4.

 

(o)     “Term” shall mean the Initial Term and all subsequent extension periods.

 

(p)     “Termination of Employment” shall mean a termination of the Executive’s
employment where either (1) the Executive has ceased to perform any services for
Park Sterling and all affiliated companies that, together with Park Sterling,
constitute the “service recipient” within the meaning of Code Section 409A and
the regulations thereunder (collectively, the “Service Recipient”) or (2) the
level of bona fide services the Executive performs for the Service Recipient
after a given date (whether as an employee or as an independent contractor)
permanently decreases (excluding a decrease as a result of military leave, sick
leave, or other bona fide leave of absence if the period of such leave does not
exceed six months, or if longer, so long as the Executive retains a right to
reemployment with the Service Recipient under an applicable statute or by
contract) to no more than twenty percent (20%) of the average level of bona fide
services performed for the Service Recipient (whether as an employee or an
independent contractor) over the immediately preceding 36-month period (or the
full period of service if the Executive has been providing services to the
Service Recipient for less than 36 months).

 

(q)     “Trade Secrets” means Park Sterling or Affiliate information including,
but not limited to, technical or nontechnical data, formulas, patterns,
compilations, programs, devices, methods, techniques, drawings, processes,
financial data, financial plans, product plans or lists of actual or potential
customers or suppliers which:

 

 
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(1)     derives economic value, actual or potential, from not being generally
known to, and not being readily ascertainable by proper means by, other persons
who can obtain economic value from its disclosure or use; and

 

(2)     is the subject of efforts that are reasonable under the circumstances to
maintain its secrecy.

 

[Signatures on Next Page]

 

 

 
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IN WITNESS WHEREOF, the Company, the Bank and the Executive have executed and
delivered this Agreement as of the 24th day of March, 2016.

 

 

 

Park Sterling Corporation

 

By:/s/ Susan D. Sabo                                         

Signature

 

Susan D. Sabo                                             

Print Name

 

SVP / Chief Accounting Officer                

Title

 

 

 

Park Sterling Bank

 

By:/s/ Susan D. Sabo                                         

Signature

 

Susan D. Sabo                                             

Print Name

 

SVP / Chief Accounting Officer                

Title

 

 

 

/s/ James C. Cherry                                             

James C. Cherry

 

 

 

 

 

 

 
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Exhibit A

 

Approved Outside Activities

 

 

●

Member of the Armada Hoffler Properties, Inc. Board of Directors

 

 

 

 

 

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