Exhibit 10.6

ASB BANCORP, INC.

STOCK-BASED DEFERRAL PLAN

 

1. Purpose.

This ASB Bancorp, Inc. Stock-Based Deferral Plan (the “Plan”) provides Directors
and certain Eligible Officers of ASB Bancorp, Inc. and its affiliates with the
opportunity to elect to defer compensation received for their service and,
thereby, accumulate additional shares of ASB Bancorp, Inc. common stock. The
Plan is intended to constitute a deferred compensation plan that satisfies the
requirements of Section 409A of the Code.

 

2. Definitions.

As used in the Plan, the following terms have the meanings indicated:

Board means the Board of Directors of the Company.

Change in Control shall mean a change in control as defined in Internal Revenue
Code Section 409A and rules, regulations, and guidance of general application
thereunder issued by the Department of the Treasury, including –

 

  (a) Change in ownership: a change in ownership of the Company, a corporation
of which the Bank is a wholly owned subsidiary, occurs on the date any one
person or group accumulates ownership of the Company stock constituting more
than 50% of the total fair market value or total voting power of the Company
stock,

 

  (b) Change in effective control: (i) any one person or more than one person
acting as a group acquires within a 12-month period ownership of the Company
stock possessing 30% or more of the total voting power of the Company stock, or
(ii) a majority of the Board is replaced during any 12-month period by Directors
whose appointment or election is not endorsed in advance by a majority of the
Board, or

 

  (c) Change in ownership of a substantial portion of assets: a change in
ownership of a substantial portion of the Company’s assets occurs if in a
12-month period any one person or more than one person acting as a group
acquires from the Company assets having a total gross fair market value equal to
or exceeding 40% of the total gross fair market value of all of the Company’s
assets immediately before the acquisition or acquisitions. For this purpose,
gross fair market value means the value of the Company’s assets, or the value of
the assets being disposed of, determined without regard to any liabilities
associated with the assets.

Code means the Internal Revenue Code of 1986, as amended.

Committee means the Compensation Committee of the Board or any other committee
of the Board designated as the administrator of the Plan.

Company means ASB Bancorp, Inc. and its successors.

Company Stock means the common stock of the Company.

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Compensation means (i) in the case of a Participant who is a Director, the cash
retainer fees, meeting (board and committee) fees and other cash compensation
payable to the Participant in connection with his or her service on the Board or
the board of directors of any affiliate of the Company for any Plan Year and
(ii) in the case of a Participant who is an Eligible Officer, base salary and
any cash incentive compensation.

Deferred Stock Account means a bookkeeping account reflecting the investment of
a Participant’s deferred Compensation in Company Stock Units and any adjustments
thereto.

Director means a member of the Board of the Company or Asheville Savings Bank.

Effective Date means August 1, 2011.

Eligible Officer means an officer of the Company or an affiliate of the Company
who is designated by the Board as eligible to defer Compensation through the
Plan.

Participant means a Director or Eligible Officer who elects to defer
Compensation through the Plan.

Plan Year means the Company’s fiscal year ending December 31st of each year.

Separation from Service is intended to have the same meaning as under Code
Section 409A and any regulations or guidance issued under such provision.

Stock Unit means a hypothetical share of Company Stock. Each Stock Unit held in
a Deferred Stock Account shall be deemed to have the same value, from time to
time, as a share of Company Stock.

Trust means a trust created for the purposes specified in Section 10.

 

3. Participation in the Plan.

A Director serving on the Board of the Company shall be eligible to participate
in the Plan as of the Effective Date. A Director who joins the Board following
the Effective Date shall be eligible to participate in the Plan upon his or her
first day of service as a Director. An officer of the Company or an affiliate
shall participate in the Plan only upon designation as an Eligible Officer by
the Board. Participation in the Plan by a Director or Eligible Officer shall
commence upon the submission of a timely deferral election form to the Committee
in the manner prescribed below.

 

4. Deferrals.

 

  (a) A Participant may elect to defer the payment of Compensation (in
increments of 1% up to 100% or in a specified dollar amount) that would
otherwise be payable in cash during the Plan Year by completing a deferral
election. A deferral election must specify the applicable percentage or fixed
dollar amount of Compensation that the Participant wishes to defer. A deferral
election shall pertain to all Compensation payable during a Plan Year.

 

  (b)

A deferral election must be in writing and be delivered to the Company prior to
the start of the Plan Year (or, in the case of an Eligible Officer who elects to
defer performance-based incentive compensation, not later than March 31 of the
year to which the compensation relates) to which it pertains. A deferral
election shall be irrevocable and

 

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  may not be amended with respect to the Plan Year to which it pertains. A
deferral election may be made only for a single Plan Year.

 

  (c) All amounts deferred under the Plan shall be held as Stock Units. With
respect to all amounts for which a deferral election is made, the Company shall
transfer such amounts to the Trust as soon as is reasonably practicable after
the time when the Compensation otherwise would have been payable in cash to the
Participant (or pursuant to a Participant’s election under Section 17) or at
such other times as the Committee, in its sole discretion, shall determine.
Thereafter, the trustee of the Trust shall determine the number of Stock Units
to be credited to an individual Participant’s Deferred Stock Account by
reference to the total number of shares of Company Stock acquired by the Trust
with the proceeds of each transfer and the proportion that the Participant’s
Compensation included in such transfer bears to the total of all Compensation
transferred.

 

5. Stock Unit Accounting.

 

  (a) All Stock Units credited to a Participant’s Deferred Stock Account shall
be credited with hypothetical cash dividends equal to the cash dividends that
are declared and paid on Company Stock if any. On each record date, the Company
shall determine the amount of cash dividends to be paid per share of Company
Stock. On the payment date of such dividend, the Company shall credit an equal
amount of hypothetical cash dividends to each Stock Unit. The hypothetical cash
dividends shall be converted into Stock Units by reference to the reinvestment
of such dividends by the trustee of the Trust as set forth in Section 7.

 

  (b) Stock Units may not be sold, assigned, transferred, disposed of, pledged,
hypothecated or otherwise encumbered.

 

6. Distribution of Accounts.

 

  (a) A Participant may elect the timing of distributions from the Participant’s
Deferred Stock Account. Distributions from a Participant’s Deferred Stock
Account shall commence at one of the following specified events elected by the
Participant:

 

  (i) the Participant’s Separation from Service for any reason (including
resignation or death);

 

  (ii) a specified number of years between one year and five years after the
Participant’s Separation from Service; or

 

  (iii) a fixed date or age as specified in a Participant’s deferral election.
An amount is payable as of a fixed date or age if the dates are nondiscretionary
and objectively determinable at the time of the deferral election.

In addition, a Participant may make a separate election for distributions to
commence at a Change in Control or, if eligible, may request a hardship
distribution as noted in Section 19 of his Plan.

 

  (b)

If a Participant does not make an election under subsection (a)(ii),
distribution of the Participant’s Deferred Stock Account shall commence at
Separation from Service. Prior to Separation from Service, a Participant who has
previously elected commencement at Separation from Service (or made no previous
election) may make one subsequent

 

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  election. The subsequent election must be submitted at least twelve months
prior to Separation from Service and shall take effect twelve months after the
date on which it is submitted. The subsequent distribution election must elect
the specified time under subsection (a)(ii) as five years after Separation from
Service. The Committee may establish additional procedures, conditions, and
limitations relating to the submission of a subsequent election.

 

  (c) A Participant’s Accounts shall be distributed in a single lump sum
payment, unless the Participant elects to receive a distribution in equal annual
installments over at least two and not more than 10 years.

 

  (d) Payment of Stock Units shall be made only in whole shares of Company Stock
equal to the number of whole Stock Units. Fractional shares shall be disregarded
for distribution purposes.

 

  (e) Despite any contrary provision of this Plan, if, when the Participant’s
service terminates, the Participant is a “specified employee,” as defined in
Code Section 409A, and if any payments under Article 6 of this Agreement will
result in additional tax or interest to the Participant because of Section 409A,
the Participant shall not be entitled to the payment under Article 6 until the
earliest of (i) the date that is at least six months after termination of the
Participant’s employment for reasons other than the Participant’s death,
(ii) the date of the Participant’s death, or (iii) any earlier date that does
not result in additional tax or interest to the Participant under Section 409A.
If any provision of this Agreement would subject the Participant to additional
tax or interest under Section 409A, the Company shall reform the provision.
However, the Company shall maintain to the maximum extent practicable the
original intent of the applicable provision without subjecting the Participant
to additional tax or interest.

 

7. Trust.

 

  (a) As soon as practicable after the Effective Date, the Company shall
establish a trust for the purposes set forth in this Plan. The Company shall
from time to time transfer to the Trust cash in an amount equal to Participants’
deferred Compensation (including amounts transferred pursuant to a Participant’s
election under Section 17) for the purpose of acquiring shares of Company Stock.
In no event shall the Company issue or contribute shares of Company Stock
directly to the Trust.

 

  (b) The Trust and its assets shall remain subject to the claims of the
Company’s creditors. All benefit obligations under this Plan shall be paid from
the general assets of the Company, which shall include the assets of the Trust
in the event of the Company’s insolvency. Any interest that the Participant may
be deemed to have under this Plan may not be sold, hypothecated or transferred
(including, without limitation, transfer by gift), except by will or the laws of
descent and distribution. Shares issued to the Trust shall be issued in the name
of the trustee. The trustee shall invest all cash dividends on Company Stock in
additional shares of Company Stock. Unless otherwise determined by the
Committee, a Participant shall have the right to direct the trustee as to the
voting of the number of shares of Company Stock equal to the aggregate number of
Stock Units in the Participant’s Deferred Stock Account.

 

  (c) The Company shall bear all expenses associated with the acquisition of
Company Stock by the Trust and the maintenance of the Trust.

 

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8. No Acceleration of Benefits.

Notwithstanding any other provision in this Plan to the contrary, the time or
schedule for any payment of a Participant’s Deferred Stock Account under this
Plan shall not be accelerated under any circumstances.

 

9. Effect of Stock Dividends and Other Changes to Company Stock.

In the event of a stock dividend, stock split or combination of shares,
recapitalization or merger in which the Company is the surviving corporation or
other change in the Company’s capital stock, the number and kind of shares of
Company Stock to be subject to the Plan and the maximum number of shares which
are authorized for distribution under the Plan shall be appropriately adjusted
by the Board, whose determination shall be binding on all persons.

 

10. Interpretation and Administration of the Plan.

The Committee shall administer, construe and interpret the Plan. Any decision of
the Committee with respect to the Plan shall be final, conclusive and binding
upon all Participants. The Committee may act by a majority of its members. The
Committee may authorize any member of the Committee or any officer of the
Company to execute and deliver documents on behalf of the Committee. The
Committee may consult with counsel, who may be counsel to the Company, and shall
not incur any liability for action taken in good faith in reliance upon the
advice of counsel. The Committee may designate an officer of the Company to be
authorized to take or cause to be taken such actions of a ministerial nature as
necessary to effectuate the intent and purposes of the Plan, including issuing
Company Stock for the Plan, maintaining records of the Plan, and arranging for
distributions in accordance with this Plan document. The Committee shall
interpret this Plan for all purposes in accordance with Code Section 409A and
the regulations thereunder and any provision of the Plan shall be deemed
modified to the extent necessary to comply with Code Section 409A and the
regulations thereunder.

 

11. Term of the Plan.

The Plan shall become effective as of the Effective Date and continue in effect
unless terminated by action of the Board. Any termination of the Plan by the
Board shall not alter or impair any of the rights or obligations for any benefit
previously deferred under the Plan.

 

12. Termination or Amendment of the Plan.

The Board, or a Committee of the Board, may suspend or terminate the Plan or
revise or amend the Plan in any respect; provided, any amendment or termination
of the Plan shall not adversely affect a Participant with respect to any benefit
previously deferred under the Plan; provided, however, that approval of an
amendment to the Plan by the stockholders of the Company shall be required to
the extent, if any, that stockholder approval of such amendment is required by
applicable law, rule or regulation.

 

13. Rights Under the Plan.

The Plan shall not constitute or be evidence of any agreement or understanding,
express or implied, that the Company will retain any person as a Director or
employee for any period of time.

 

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14. Beneficiary.

A Participant may designate in writing delivered to the Committee, one or more
beneficiaries (which may include a trust) to receive any distributions under the
Plan after the death of the Participant. If a Participant fails to designate a
beneficiary, or no designated beneficiary survives the Participant, any payments
to be made with respect to the Participant after death shall be made to the
personal representative of the Participant’s estate.

 

15. Notice.

All notices and other communications required or permitted to be given under
this Plan shall be in writing and shall be deemed to have been duly given if
delivered personally or mailed first class, postage prepaid, as follows: (i) if
to the Company—at its principal business address to the attention of the
Chairman of the Committee; (ii) if to any Participant—at the last address of the
Participant known to the sender at the time the notice or other communication is
sent.

 

16. Construction.

The Plan shall be construed and enforced according to the laws of the State of
North Carolina, unless federal law applies. All transactions under this Plan
shall also be subject to compliance with applicable securities laws. Reference
to one gender includes the other, and references to the singular and plural
include each other.

 

17. Special Transfer Rule.

A Participant who, as of the Effective Date, is a participant in the Asheville
Savings Bank Second Amended and Restated Directors and Officers Deferral Plan
(collectively referred to herein as the “Prior Plan”) may elect not later than
30 days after the Effective Date to effect a one-time transfer to this Plan of
all or any portion of the amounts accrued on their behalf under the Prior Plan
as of the Effective Date. All transferred amounts shall be treated in the same
manner as any other compensation deferred under this Plan and shall be subject
to the provisions of this Plan, except for vesting and distribution elections
(if any). All distribution elections made under the Prior Plan will be in effect
for this Plan with respect to transferred amounts.

 

18. Prior Plan

All funds transferred into this Plan from the Prior Plan by operation of
Section 17 shall be subject to the benefit and distribution provisions and/or
elections and the vesting provisions in the Prior Plan.

 

19. Unforeseeable Emergency

The Company shall permit financial hardship distributions upon an “unforeseeable
emergency” (as defined in Section 409A of the Internal Revenue Code and the
rules promulgated thereunder) involving the Participant or his or her family.
The Participant may submit a written application for an in-service hardship
distribution to the Company. The application must specify the nature of the
financial hardship, the total amount requested to be distributed from the
Participant’s Account and the total amount of the actual expense incurred or to
be incurred due to the financial hardship. If, in the discretion of the Company,
the Participant has suffered an unforeseeable emergency that results in severe
financial hardship to Participant, the Company shall cause the Plan to pay an
in-service distribution to the Participant from the Participant’s Account. A
distribution because of an unforeseeable emergency shall

 

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not exceed the amount required to meet the immediate financial need created by
the unforeseeable emergency and not otherwise reasonably available from other
resources of Participant. Such distribution shall be made in a lump sum as soon
as administratively feasible, after the Committee determines that the
Participant has incurred an unforeseeable emergency that will result in severe
financial hardship to the Participant.

THIS PLAN WAS APPROVED BY THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
OF THE COMPANY ON JUNE 21, 2011, TO BE EFFECTIVE AS OF AUGUST 1, 2011, AND IS
HEREBY EXECUTED BY A DULY AUTHORIZED OFFICER OF THE COMPANY ON JUNE 21, 2011.

ASB BANCORP, INC.

/s/ Suzanne S. DeFerie                            

Duly Authorized Officer

 

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