Document:

CYPRESS
ENERGY PARTNERS, L.P.

2013 LONG-TERM INCENTIVE PLAN

 

SECTION
1.Purpose of the Plan.

 

This Cypress
Energy Partners, L.P. 2013 Long-Term Incentive Plan (the “Plan”) has been adopted by Cypress Energy Partners
GP, LLC, a Delaware limited liability company (the “Company”), the general partner of Cypress Energy Partners,
L.P., a Delaware limited partnership (the “Partnership”). The Plan is intended to promote the interests of
the Partnership and the Company by providing incentive compensation awards denominated in or based on Units to Employees, Consultants
and Directors to encourage superior performance. The Plan is also intended to enhance the ability of the Partnership, the Company
and their Affiliates to attract and retain the services of individuals who are essential for the growth and profitability of the
Partnership, the Company and their Affiliates and to encourage them to devote their best efforts to advancing the business of
the Partnership, the Company and their Affiliates.

 

SECTION
2.Definitions.

 

As used in the
Plan, the following terms shall have the meanings set forth below:

 

“Affiliate”
means, with respect to any Person, any other Person that directly or indirectly through one or more intermediaries controls, is
controlled by or is under common control with, the Person in question. As used herein, the term “control” means the
possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether
through ownership of voting securities, by contract or otherwise.

 

“ASC
Topic 718” means Accounting Standards Codification Topic 718, Compensation – Stock Compensation, or any
successor accounting standard.

 

“Award”
means an Option, Restricted Unit, Phantom Unit, DER, Substitute Award, Unit Appreciation Right, Unit Award or Profits Interest
Unit granted under the Plan.

 

“Award
Agreement” means the written or electronic agreement by which an Award shall be evidenced and which agreement may include
a separate plan, policy, agreement or other written document.

 

“Board”
means the board of directors or board of managers, as the case may be, of the Company.

 

“Cause”
means, unless otherwise set forth in an Award Agreement or other written agreement between the Company and the applicable Participant,
a finding by the Committee, before or after the Participant’s termination of Service, of: (i) any material failure by the
Participant to perform the Participant’s duties and responsibilities under any written agreement between the Participant
and the Company or its Affiliate(s); (ii) any act of fraud, embezzlement, theft or misappropriation by the Participant relating
to the Company, the Partnership or any of their Affiliates; (iii) the Participant’s commission of a felony or a crime involving
moral turpitude; (iv) any gross negligence or intentional misconduct on the part of the Participant in the conduct of the Participant’s
duties and responsibilities with the Company or any Affiliate(s) of the Company or which adversely affects the image, reputation
or business of the Company, the Partnership or their Affiliates; or (v) any material breach by the Participant of any agreement
between the Company or any of its Affiliates, on the one hand, and the Participant on the other. The findings and decision of
the Committee with respect to such matter, including those regarding the acts of the Participant and the impact thereof, will
be final for all purposes.

 

    	 

    	 

    

 

“Change
in Control” means, and shall be deemed to have occurred upon one or more of the following events:

 

(i)any
“person” or “group” within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act, other than
the Company or an Affiliate of the Company (as determined immediately prior to such event), shall become the beneficial owner,
by way of merger, acquisition, consolidation, recapitalization, reorganization or otherwise, of 50% or more of the combined voting
power of the equity interests in the Company or the Partnership;

 

(ii)the
limited partners of the Partnership approve, in one or a series of transactions, a plan of complete liquidation of the Partnership;

 

(iii)the
sale or other disposition by either the Company or the Partnership of all or substantially all of the Company’s or the Partnership’s
assets, respectively, in one or more transactions to any Person other than the Company, the Partnership or an Affiliate of the
Company or of the Partnership; or

 

(iv)a
transaction resulting in a Person other than the Company or an Affiliate of the Company (as determined immediately prior to such
event) being the sole general partner of the Partnership.

 

Notwithstanding
the foregoing, if a Change in Control constitutes a payment event with respect to any Award which provides for the deferral of
compensation subject to Section 409A or such compensation would otherwise would be subject to Section 409A, the transaction or
event described in subsection (i), (ii), (iii) or (iv) above with respect to such Award must also constitute a “change in
control event,” as defined in Treasury Regulation §1.409A-3(i)(5), and as relates to the holder of such Award, to the
extent required to comply with Section 409A.

 

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

 

“Committee”
means the Board, except that it shall mean such committee of the Board as may be appointed by the Board to administer the Plan,
or as necessary to comply with applicable legal requirements or listing standards.

 

“Consultant”
means an individual who renders consulting services to the Company, the Partnership or any of their Affiliates.

 

“DER”
means a distribution equivalent right, representing a contingent right to receive an amount in cash, Units, Restricted Units and/or
Phantom Units equal in value to the distributions made by the Partnership with respect to a Unit during the period such Award
is outstanding.

 

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“Director”
means a member of the board of directors or board of managers, as the case may be, of the Company, the Partnership or any of their
Affiliates who is not an Employee or a Consultant (other than in that individual’s capacity as a Director).

 

“Disability”
means, unless otherwise set forth in an Award Agreement or other written agreement between the Company, the Partnership or one
of their Affiliates and the applicable Participant, as determined by the Committee in its discretion exercised in good faith,
a physical or mental condition of a Participant that would entitle him or her to payment of disability income payments under the
Company’s, the Partnership’s or one of their Affiliates’ long-term disability insurance policy or plan, as applicable,
for employees as then in effect; or in the event that a Participant is not covered, for whatever reason, under any such long-term
disability insurance policy or plan for employees of the Company, the Partnership or one of their Affiliates or the Company, the
Partnership or one of their Affiliates does not maintain such a long-term disability insurance policy, “Disability”
means a total and permanent disability within the meaning of Section 22(e)(3) of the Code; provided, however, that if a
Disability constitutes a payment event with respect to any Award which provides for the deferral of compensation subject to Section
409A or such compensation would otherwise would be subject to Section 409A, then, to the extent required to comply with Section
409A, the Participant must also be considered “disabled” within the meaning of Section 409A(a)(2)(C) of the Code.
A determination of Disability may be made by a physician selected or approved by the Committee and, in this respect, Participants
shall submit to an examination by such physician upon request by the Committee.

 

“Employee”
means an employee of the Company, the Partnership or any of their Affiliates.

 

“Exchange
Act” means the Securities Exchange Act of 1934, as amended.

 

“Fair
Market Value” means, as of any given date, the closing sales price on such date during normal trading hours (or, if
there are no reported sales on such date, on the last date prior to such date on which there were sales) of the Units on
the New York Stock Exchange or, if not listed on such exchange, on any other national securities exchange on which the Units are
listed or on an inter-dealer quotation system, in any case, as reported in such source as the Committee shall select. If there
is no regular public trading market for the Units, the Fair Market Value of the Units shall be determined by the Committee in
good faith and, to the extent applicable, in compliance with the requirements of Section 409A.

 

“Option”
means an option to purchase Units granted pursuant to Section 6(a) of the Plan.

 

“Other
Unit-Based Award” means an award granted pursuant to Section 6(f) of the Plan.

 

“Participant”
means an Employee, Consultant or Director granted an Award under the Plan and any authorized transferee of such individual.

 

“Partnership
Agreement” means the Agreement of Limited Partnership of the Partnership, as it may be amended or amended and
restated from time to time.

 

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“Person”
shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and
14(d) thereof, including a “group” as defined in Section 13(d) thereof.

 

“Phantom
Unit” means a notional interest granted under the Plan that, to the extent vested, entitles the Participant to receive
a Unit or an amount of cash equal to the Fair Market Value of a Unit, as determined by the Committee in its discretion.

 

“Profits
Interest Unit” means to the extent authorized by the Partnership Agreement, an interest in the Partnership that is intended
to constitute a “profits interest” within the meaning of the Code, Treasury Regulations promulgated thereunder, and
any published guidance by the Internal Revenue Service with respect thereto.

 

“Restricted
Period” means the period established by the Committee with respect to an Award during which the Award remains subject
to forfeiture and is either not exercisable by or payable to the Participant, as the case may be.

 

“Restricted
Unit” means a Unit granted pursuant to Section 6(b) of the Plan that is subject to a Restricted Period.

 

“Securities
Act” means the Securities Act of 1933, as amended.

 

“SEC”
means the Securities and Exchange Commission, or any successor thereto.

 

“Section
409A” means Section 409A of the Code and the Treasury Regulations and other interpretive guidance issued thereunder,
including without limitation any such regulations or other guidance that may be amended or issued after the Effective Date (as
defined in Section 9 below).

 

“Service”
means service as an Employee, Consultant or Director. The Committee, in its sole discretion, shall determine the effect of all
matters and questions relating to terminations of Service, including, without limitation, the questions of whether and when a
termination of Service occurred and/or resulted from a discharge for Cause, and all questions of whether particular changes in
status or leaves of absence constitute a termination of Service. The Committee, in its sole discretion, subject to the terms of
any applicable Award Agreement, may determine that a termination of Service has not occurred in the event of (a) a termination
where there is simultaneous commencement by the Participant of a relationship with the Partnership, the Company or any of their
Affiliates as an Employee, Director or Consultant or (b) a termination which results in a temporary severance of the service relationship.

 

“Substitute
Award” means an award granted pursuant to Section 6(g) of the Plan.

 

“Unit”
means a Common Unit of the Partnership.

 

“Unit
Appreciation Right” or “UAR” means a contingent right that entitles the holder to receive the excess
of the Fair Market Value of a Unit on the exercise date of the UAR over the exercise price of the UAR.

 

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“Unit
Award” means an award granted pursuant to Section 6(d) of the Plan.

 

SECTION
3.Administration.

 

(a)The Plan
shall be administered by the Committee, subject to subsection (b) below; provided, however, that in the event that the
Board is not also serving as the Committee, the Board, in its sole discretion, may at any time and from time to time exercise
any and all rights and duties of the Committee under the Plan. The governance of the Committee shall be subject to the charter,
if any, of the Committee as approved by the Board. Subject to the terms of the Plan and applicable law, and in addition to other
express powers and authorizations conferred on the Committee by the Plan, the Committee shall have full power and authority to:
(i) designate Participants; (ii) determine the type or types of Awards to be granted to a Participant; (iii) determine the number
of Units to be covered by Awards; (iv) determine the terms and conditions of any Award; (v) determine whether, to what extent,
and under what circumstances Awards may be settled, exercised, canceled, or forfeited; (vi) interpret and administer the Plan
and any instrument or agreement relating to an Award made under the Plan; (vii) establish, amend, suspend, or waive such rules
and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan; and (viii) make
any other determination and take any other action that the Committee deems necessary or desirable for the administration of the
Plan. The Committee may correct any defect or supply any omission or reconcile any inconsistency in the Plan or an Award Agreement
in such manner and to such extent as the Committee deems necessary or appropriate. Unless otherwise expressly provided in the
Plan, all designations, determinations, interpretations, and other decisions under or with respect to the Plan or any Award shall
be within the sole discretion of the Committee, may be made at any time and shall be final, conclusive, and binding upon all Persons,
including the Company, the Partnership, any of their Affiliates, any Participant and any beneficiary of any Participant.

 

(b)To the
extent permitted by applicable law and the rules of any securities exchange on which the Units are listed, quoted or traded, the
Board or Committee may from time to time delegate to a committee of one or more members of the Board or one or more officers of
the Company the authority to grant or amend Awards or to take other administrative actions pursuant to Section 3(a); provided,
however, that in no event shall an officer of the Company be delegated the authority to grant awards to, or amend awards held
by, the following individuals: (i) individuals who are subject to Section 16 of the Exchange Act, or (ii) officers of the
Company (or Directors) to whom authority to grant or amend Awards has been delegated hereunder; provided, further, that
any delegation of administrative authority shall only be permitted to the extent that it is permissible under applicable provisions
of the Code and applicable securities laws and the rules of any securities exchange on which the Units are listed, quoted or traded.
Any delegation hereunder shall be subject to such restrictions and limitations as the Board or Committee, as applicable, specifies
at the time of such delegation, and the Board or Committee, as applicable, may at any time rescind the authority so delegated
or appoint a new delegatee. At all times, the delegatee appointed under this Section 3(b) shall serve in such capacity at the
pleasure of the Board and the Committee.

 

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SECTION
4.Units.

 

(a)Limits
on Units Deliverable. Subject to adjustment as provided in Section 4(c), the number of Units that may be delivered with respect
to Awards under the Plan is One Million One Hundred Eighty Two Thousand Six Hundred (1,182,600). If any Award is forfeited, cancelled,
exercised, paid, or otherwise terminates or expires without the actual delivery of Units pursuant to such Award (for the avoidance
of doubt, the grant of Restricted Units is not a delivery of Units for this purpose unless and until such Restricted Units vest
and any restrictions placed upon them under the Plan lapse), the Units subject to such Award that are not actually delivered pursuant
to such Award shall again be available for Awards under the Plan. To the extent permitted by applicable law and securities exchange
rules, Substitute Awards and Units issued in assumption of, or in substitution for, any outstanding awards of any entity (including
an existing Affiliate of the Partnership) that is (or whose securities are) acquired in any form by the Partnership or any Affiliate
thereof shall not be counted against the Units available for issuance pursuant to the Plan. There shall not be any limitation
on the number of Awards that may be paid in cash.

 

(b)Sources
of Units Deliverable Under Awards. Any Units delivered pursuant to an Award shall consist, in whole or in part, of Units acquired
in the open market, from the Partnership, any Affiliate thereof or any other Person, or Units otherwise issuable by the Partnership,
or any combination of the foregoing, as determined by the Committee in its discretion.

 

(c)Anti-dilution
Adjustments.

 

(i)Equity
Restructuring. With respect to any “equity restructuring” event (within the meaning of ASC Topic 718) that could
result in an additional compensation expense to the Company or the Partnership pursuant to the provisions of ASC Topic 718 if
adjustments to Awards with respect to such event were discretionary, the Committee shall equitably adjust the number and type
of Units covered by each outstanding Award and the terms and conditions, including the exercise price and performance criteria
(if any), of such Award to equitably reflect such event and shall adjust the number and type of Units (or other securities or
property) with respect to which Awards may be granted under the Plan after such event. With respect to any other similar event
that would not result in an ASC Topic 718 accounting charge if the adjustment to Awards with respect to such event were subject
to discretionary action, the Committee shall have complete discretion to adjust Awards and the number and type of Units (or other
securities or property) with respect to which Awards may be granted under the Plan in such manner as it deems appropriate with
respect to such other event.

 

(ii)Other
Changes in Capitalization. In the event of any non-cash distribution, Unit split, combination or exchange of Units, merger,
consolidation or distribution (other than normal cash distributions) of Partnership assets to unitholders, or any other change
affecting the Units of the Partnership, other than an “equity restructuring,” the Committee may make equitable adjustments,
if any, to reflect such change with respect to (A) the aggregate number and kind of Units that may be issued under the Plan; (B)
the number and kind of Units (or other securities or property) subject to outstanding Awards; (C) the terms and conditions of
any outstanding Awards (including, without limitation, any applicable performance targets or criteria with respect thereto); and
(D) the grant or exercise price per Unit for any outstanding Awards under the Plan.

 

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SECTION
5.Eligibility.

 

Any Employee,
Consultant or Director shall be eligible to be designated a Participant and receive an Award under the Plan.

 

SECTION
6.Awards.

 

(a)Options
and UARs. The Committee shall have the authority to determine the Employees, Consultants and Directors to whom Options and/or
UARs shall be granted, the number of Units to be covered by each Option or UAR, the exercise price therefor, the Restricted Period
and other conditions and limitations applicable to the exercise of the Option or UAR, including the following terms and conditions
and such additional terms and conditions, as the Committee shall determine, that are not inconsistent with the provisions of the
Plan. Options which are intended to comply with Treasury Regulation Section 1.409A-1(b)(5)(i)(A) and UARs which are intended to
comply with Treasury Regulation Section 1.409A-1(b)(5)(i)(B) or, in each case, any successor regulation, may be granted only if
the requirements of Treasury Regulation Section 1.409A-1(b)(5)(iii), or any successor regulation, are satisfied. Options and UARs
that are otherwise exempt from or compliant with Section 409A may be granted to any eligible Employee, Consultant or Director.

 

(i)Exercise
Price. The exercise price per Unit purchasable under an Option or subject to a UAR shall be determined by the Committee at
the time the Option or UAR is granted but, except with respect to a Substitute Award, may not be less than the Fair Market Value
of a Unit as of the date of grant of the Option or UAR.

 

(ii)Time
and Method of Exercise. The Committee shall determine the exercise terms and any applicable Restricted Period with respect
to an Option or UAR, which may include, without limitation, provisions for accelerated vesting upon the achievement of specified
performance goals and/or other events, and the method or methods by which payment of the exercise price with respect to an Option
or UAR may be made or deemed to have been made, which may include, without limitation, cash, check acceptable to the Company,
withholding Units having a Fair Market Value on the exercise date equal to the relevant exercise price from the Award, a “cashless”
exercise through procedures approved by the Company, or any combination of the foregoing methods.

 

(iii)Exercise
of Options and UARs on Termination of Service. Each Option and UAR Award Agreement shall set forth the extent to which the
Participant shall have the right to exercise the Option or UAR following a termination of the Participant’s Service. Unless
otherwise determined by the Committee, if the Participant’s Service is terminated for Cause, the Participant’s right
to exercise the Option or UAR shall terminate as of the start of business on the effective date of the Participant’s termination.
Unless otherwise determined by the Committee, to the extent the Option or UAR is not vested and exercisable as of the termination
of Service, the Option or UAR shall terminate when the Participant’s Service terminates.

 

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(iv)Term
of Options and UARs. The term of each Option and UAR shall be stated in the Award Agreement, provided, that the term
shall be no more than ten (10) years from the date of grant thereof.

 

(b)Restricted
Units and Phantom Units. The Committee shall have the authority to determine the Employees, Consultants and Directors to whom
Restricted Units and/or Phantom Units shall be granted, the number of Restricted Units or Phantom Units to be granted to each
such Participant, the applicable Restricted Period, the conditions under which the Restricted Units or Phantom Units may become
vested or forfeited and such other terms and conditions, including, without limitation, restrictions on transferability, as the
Committee may establish with respect to such Awards.

 

(i)Payment
of Phantom Units. The Committee shall specify, or permit the Participant to elect in accordance with the requirements of Section
409A, the conditions and dates or events upon which the cash or Units underlying an award of Phantom Units shall be issued, which
dates or events shall not be earlier than the date on which the Phantom Units vest and become nonforfeitable and which conditions
and dates or events shall be subject to compliance with Section 409A (unless the Phantom Units are exempt therefrom).

 

(ii)Vesting
of Restricted Units. Upon or as soon as reasonably practicable following the vesting of each Restricted Unit, subject to satisfying
the tax withholding obligations of Section 8(b), the Participant shall be entitled to have the restrictions removed from his or
her Unit certificate (or book-entry account, as applicable) so that the Participant then holds an unrestricted Unit.

 

(c)DERs.
The Committee shall have the authority to determine the Employees, Consultants and/or Directors to whom DERs are granted, whether
such DERs are tandem or separate Awards, whether the DERs shall be paid directly to the Participant, be credited to a bookkeeping
account (with or without interest in the discretion of the Committee), any vesting restrictions and payment provisions applicable
to the DERs, and such other provisions or restrictions as determined by the Committee in its discretion, all of which shall be
specified in the applicable Award Agreements. Distributions in respect of DERs shall be credited as of the distribution dates
during the period between the date an Award is granted to a Participant and the date such Award vests, is exercised, is distributed
or expires, as determined by the Committee. Such DERs shall be converted to cash, Units, Restricted Units and/or Phantom Units
by such formula and at such time and subject to such limitations as may be determined by the Committee. Tandem DERs may be subject
to the same or different vesting restrictions as the tandem Award, or be subject to such other provisions or restrictions as determined
by the Committee in its discretion. Notwithstanding the foregoing, DERs shall only be paid in a manner that is either exempt from
or in compliance with Section 409A. 

 

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(d)Unit
Awards. Awards of Units may be granted under the Plan (i) to such Employees, Consultants and/or Directors and in such amounts
as the Committee, in its discretion, may select, and (ii) subject to such other terms and conditions, including, without limitation,
restrictions on transferability, as the Committee may establish with respect to such Awards.

 

(e)Profits
Interest Units. Any Award consisting of Profits Interest Units may be granted to an Employee, Consultant or Director for the
performance of services to or for the benefit of the Partnership (i) in the Participant’s capacity as a partner of
the Partnership, (ii) in anticipation of the Participant becoming a partner of the Partnership, or (iii) as otherwise determined
by the Committee. At the time of grant, the Committee shall specify the date or dates on which the Profits Interest Units shall
vest and become nonforfeitable, and may specify such conditions to vesting as it deems appropriate. Profits Interest Units shall
be subject to such restrictions on transferability and other restrictions as the Committee may impose.

 

(f)Other
Unit-Based Awards. Other Unit-Based Awards may be granted under the Plan to such Employees, Consultants and/or Directors as
the Committee, in its discretion, may select. An Other Unit-Based Award shall be an award denominated or payable in, valued in
or otherwise based on or related to Units, in whole or in part. The Committee shall determine the terms and conditions of any
Other Unit-Based Award. Upon vesting, an Other Unit-Based Award may be paid in cash, Units (including Restricted Units) or any
combination thereof as provided in the Award Agreement.

 

(g)Substitute
Awards. Awards may be granted under the Plan in substitution of similar awards held by individuals who are or who become Employees,
Consultants or Directors in connection with a merger, consolidation or acquisition by the Partnership or an Affiliate of another
entity or the securities or assets of another entity (including in connection with the acquisition by the Partnership or one of
its Affiliates of additional securities of an entity that is an existing Affiliate of the Partnership). Such Substitute Awards
that are Options or UARs may have exercise prices less than the Fair Market Value of a Unit on the date of the substitution if
such substitution complies with Section 409A and other applicable laws and securities exchange rules.

 

(h)General.

 

(i)Award
Agreements. Each Award shall be evidenced in writing in an Award Agreement that shall reflect any vesting conditions or restrictions
imposed by the Committee covering a period of time specified by the Committee and shall also contain such other terms, conditions
and limitations as shall be determined by the Committee in its sole discretion. Where signature or electronic acceptance of the
Award Agreement by the Participant is required, any such Awards for which the Award Agreement is not signed or electronically
accepted shall be forfeited.

 

(ii)Forfeitures.
Except as otherwise provided in the terms of an Award Agreement, upon termination of a Participant’s Service for any reason
during an applicable Restricted Period, all outstanding, unvested Awards held by such Participant shall be automatically forfeited
by the Participant. Notwithstanding the immediately preceding sentence, the Committee may, in its discretion, waive in whole or
in part such forfeiture with respect to any such Award; provided, that any such waiver shall be effective only to the extent
that such waiver will not cause (i) any Award intended to satisfy the requirements of Section 409A to fail to satisfy such requirements
or (ii) any Award intended to be exempt from Section 409A to become subject to and to fail to satisfy such requirements.

 

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(iii)
Awards May Be Granted Separately or Together. Awards may, in the discretion of the Committee, be granted either alone
or in addition to, in tandem with, or in substitution for any other Award granted under the Plan or any award granted under any
other plan of the Company or any Affiliate. Awards granted in addition to or in tandem with other Awards or awards granted under
any other plan of the Company or any Affiliate may be granted either at the same time as or at a different time from the grant
of such other Awards or awards.

 

(iv)Limits
on Transfer of Awards.

 

(A)Except
as provided in paragraph (C) below, each Option and UAR shall be exercisable only by the Participant (or the Participant’s
legal representative in the case of Participant’s Disability or incapacitation) during the Participant’s lifetime,
or by the person to whom the Participant’s rights shall pass by will or the laws of descent and distribution.

 

(B)Except
as provided in paragraph (C) below, no Award and no right under any such Award may be assigned, alienated, pledged, attached,
sold or otherwise transferred or encumbered by a Participant other than by will or the laws of descent and distribution and any
such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against
the Company, the Partnership or any Affiliate.

 

(C)The
Committee may provide in an Award Agreement or in its discretion that an Award may, on such terms and conditions as the Committee
may from time to time establish, be transferred by a Participant without consideration to any “family member” of the
Participant, as defined in the instructions to use of the Form S-8 Registration Statement under the Securities Act, as applicable,
or any other transferee specifically approved by the Committee after taking into account any state, federal, local or foreign
tax and securities laws applicable to transferable Awards. In addition, vested Units may be transferred to the extent permitted
by the Partnership Agreement and not otherwise prohibited by the Award Agreement or any other agreement or policy restricting
the transfer of such Units.

 

(v)Term
of Awards. Subject to Section 6(a)(iv) above, the term of each Award, if any, shall be for such period as may be determined
by the Committee.

 

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(vi)Unit
Certificates. Unless otherwise determined by the Committee or required by any applicable law, rule or regulation, neither
the Company nor the Partnership shall deliver to any Participant certificates evidencing Units issued in connection with any Award
and instead such Units shall be recorded in the books of the Partnership (or, as applicable, its transfer agent or equity plan
administrator). All certificates for Units or other securities of the Partnership delivered under the Plan and all Units issued
pursuant to book entry procedures pursuant to any Award or the exercise thereof shall be subject to such stop-transfer orders
and other restrictions as the Committee may deem advisable under the Plan or the rules, regulations, and/or other requirements
of the SEC, any securities exchange upon which such Units or other securities are then listed, and any applicable federal or state
laws, and the Committee may cause a legend or legends to be inscribed on any such certificates or book entry to make appropriate
reference to such restrictions.

 

(vii)Consideration
for Grants. To the extent permitted by applicable law, Awards may be granted for such consideration, including services, as
the Committee shall determine.

 

(viii)Delivery
of Units or other Securities and Payment by Participant of Consideration. Notwithstanding anything in the Plan or any Award
Agreement to the contrary, subject to compliance with Section 409A, the Company shall not be required to issue or deliver any
certificates or make any book entries evidencing Units pursuant to the exercise or vesting of any Award, unless and until the
Board or the Committee has determined, with advice of counsel, that the issuance of such Units is in compliance with all applicable
laws, regulations of governmental authorities and, if applicable, the requirements of any securities exchange on which the Units
are listed or traded, and the Units are covered by an effective registration statement or applicable exemption from registration.
In addition to the terms and conditions provided herein, the Board or the Committee may require that a Participant make such reasonable
covenants, agreements, and representations as the Board or the Committee, in its discretion, deems advisable in order to comply
with any such laws, regulations, or requirements. Without limiting the generality of the foregoing, the delivery of Units pursuant
to the exercise or vesting of an Award may be deferred for any period during which, in the good faith determination of the Committee,
the Company is not reasonably able to obtain or deliver Units pursuant to such Award without violating applicable law or the applicable
rules or regulations of any governmental agency or authority or securities exchange. No Units or other securities shall be delivered
pursuant to any Award until payment in full of any amount required to be paid pursuant to the Plan or the applicable Award Agreement
(including, without limitation, any exercise price or tax withholding) is received by the Company.

 

SECTION 7.Amendment
and Termination; Certain Transactions.

 

Except to the
extent prohibited by applicable law:

 

(a)Amendments
to the Plan. Except as required by applicable law or the rules of the principal securities exchange, if any, on which the
Units are traded and subject to Section 7(b) below, the Board or the Committee may amend, alter, suspend, discontinue, or terminate
the Plan in any manner at any time for any reason or for no reason without the consent of any partner, Participant, other holder
or beneficiary of an Award, or any other Person. The Board shall obtain securityholder approval of any Plan amendment to the extent
necessary to comply with applicable law or securities exchange listing standards or rules.

 

    	-11-

    	 

    

 

(b)Amendments
to Awards. Subject to Section 7(a) above, the Committee may waive any conditions or rights under, amend any terms of, or alter
any Award theretofore granted, provided that no change, other than pursuant to Section 7(c) below, in any Award shall materially
reduce the rights or benefits of a Participant with respect to an Award without the consent of such Participant.

 

(c)Actions
Upon the Occurrence of Certain Events. Upon the occurrence of a Change in Control, any transaction or event described in Section
4(c) above, any change in applicable laws or regulations affecting the Plan or Awards hereunder, or any change in accounting principles
affecting the financial statements of the Company or the Partnership, the Committee, in its sole discretion, without the consent
of any Participant or holder of an Award, and on such terms and conditions as it deems appropriate, which need not be uniform
with respect to all Participants or all Awards, may take any one or more of the following actions:

 

(i)provide
for either (A) the termination of any Award in exchange for a payment in an amount, if any, equal to the amount that would have
been attained upon the exercise of such Award or realization of the Participant’s rights under such Award (and, for the
avoidance of doubt, if as of the date of the occurrence of such transaction or event, the Committee determines in good faith that
no amount would have been payable upon the exercise of such Award or realization of the Participant’s rights, then such
Award may be terminated by the Company without payment) or (B) the replacement of such Award with other rights or property selected
by the Committee in its sole discretion having an aggregate value not exceeding the amount that could have been attained upon
the exercise of such Award or realization of the Participant’s rights had such Award been currently exercisable or payable
or fully vested;

 

(ii)provide
that such Award be assumed by the successor or survivor entity, or a parent or subsidiary thereof, or be exchanged for similar
options, rights or awards covering the equity of the successor or survivor, or a parent or subsidiary thereof, with appropriate
adjustments as to the number and kind of equity interests and prices;

 

(iii)make
adjustments in the number and type of Units (or other securities or property) subject to outstanding Awards, the number and kind
of outstanding Awards, the terms and conditions of (including the exercise price), and/or the vesting and performance criteria
included in, outstanding Awards;

 

(iv)provide
that such Award shall vest or become exercisable or payable, notwithstanding anything to the contrary in the Plan or the applicable
Award Agreement; and

 

    	-12-

    	 

    

 

(v)provide
that the Award cannot be exercised or become payable after such event and shall terminate upon such event.

 

Notwithstanding
the foregoing, (i) with respect to an above event that constitutes an “equity restructuring” that would be subject
to a compensation expense pursuant to ASC Topic 718, the provisions in Section 4(c) above shall control to the extent they are
in conflict with the discretionary provisions of this Section 7, provided, however, that nothing in this Section 7(c)
or Section 4(c) above shall be construed as providing any Participant or any beneficiary of an Award any rights with respect
to the “time value,” “economic opportunity” or “intrinsic value” of an Award or limiting in
any manner the Committee’s actions that may be taken with respect to an Award as set forth in this Section 7 or in Section 4(c)
above; and (ii) no action shall be taken under this Section 7 which shall cause an Award to result in taxation under Section 409A,
to the extent applicable to such Award.

 

SECTION
8.General Provisions.

 

(a)No
Rights to Award. No Person shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity
of treatment of Participants, including the treatment upon termination of Service or pursuant to Section 7(c). The terms and conditions
of Awards need not be the same with respect to each recipient.

 

(b)Tax
Withholding. Unless other arrangements have been made that are acceptable to the Company, the Company or any Affiliate thereof
is authorized to deduct or withhold, or cause to be deducted or withheld, from any Award, from any payment due or transfer made
under any Award, or from any compensation or other amount owing to a Participant the amount (in cash or Units, including Units
that would otherwise be issued pursuant to such Award or other property) of any applicable taxes payable in respect of an Award,
including its grant, its exercise, the lapse of restrictions thereon, or any payment or transfer thereunder or under the Plan,
and to take such other action as may be necessary in the opinion of the Company to satisfy its withholding obligations for the
payment of such taxes. In the event that Units that would otherwise be issued pursuant to an Award are used to satisfy such withholding
obligations, the number of Units which may be so withheld or surrendered shall be limited to the number of Units which have a
Fair Market Value on the date of withholding equal to the aggregate amount of such liabilities based on the minimum statutory
withholding rates for federal, state, local and foreign income tax and payroll tax purposes that are applicable to such supplemental
taxable income.

 

(c)No
Right to Employment or Services. The grant of an Award shall not be construed as giving a Participant the right to be retained
in the employ of the Company, the Partnership or any of their Affiliates, or to continue to serve as a Consultant or a Director,
as applicable. Furthermore, the Company, the Partnership and/or an Affiliate thereof may at any time dismiss a Participant from
employment or consulting free from any liability or any claim under the Plan, unless otherwise expressly provided in the Plan,
any Award Agreement or other written agreement between any such entity and the Participant.

 

    	-13-

    	 

    

 

(d)No
Rights as Unitholder. Except as otherwise provided herein, a Participant shall have none of the rights of a unitholder with
respect to Units covered by any Award unless and until the Participant becomes the record owner of such Units.

 

(e)Section
409A. To the extent that the Committee determines that any Award granted under the Plan is subject to Section 409A, the Award
Agreement evidencing such Award shall be drafted with the intention to include the terms and conditions required by Section 409A.
To the extent applicable, the Plan and Award Agreements shall be interpreted in accordance with Section 409A. Notwithstanding
any provision of the Plan to the contrary, in the event that following the Effective Date (as defined in Section 9 below), the
Committee determines that any Award may be subject to Section 409A, the Committee may adopt such amendments to the Plan and the
applicable Award Agreement, adopt other policies and procedures (including amendments, policies and procedures with retroactive
effect), and/or take any other actions that the Committee determines are necessary or appropriate to preserve the intended tax
treatment of the Award, including without limitation, actions intended to (i) exempt the Award from Section 409A, or (ii) comply
with the requirements of Section 409A; provided, however, that nothing herein shall create any obligation on the part of
the Committee, the Partnership, the Company or any of their Affiliates to adopt any such amendment, policy or procedure or take
any such other action, nor shall the Committee, the Partnership, the Company or any of their Affiliates have any liability for
failing to do so. If any termination of Service constitutes a payment event with respect to any Award which provides for the deferral
of compensation and is subject to Section 409A, such termination of Service must also constitute a “separation from service”
within the meaning of Section 409A. Notwithstanding any provision in the Plan to the contrary, the time of payment with respect
to any Award that is subject to Section 409A shall not be accelerated, except as permitted under Treasury Regulation Section 1.409A-3(j)(4).
Notwithstanding any provision of this Plan to the contrary, if a Participant is a “specified employee” within the
meaning of Section 409A as of the date of such Participant’s termination of Service and the Company determines that immediate
payment of any amounts or benefits under this Plan would cause a violation of Section 409A, then any amounts or benefits which
are payable under this Plan upon the Participant’s “separation from service” within the meaning of Section 409A
that: (i) are subject to the provisions of Section 409A; (ii) are not otherwise exempt under Section 409A; and (iii) would otherwise
be payable during the first six-month period following such separation from service, shall be paid, without interest, on the first
business day next following the earlier of: (1) the date that is six months and one day following the date of termination; or
(2) the date of the Participant’s death. Each payment or amount due to a Participant under this Plan shall be considered
a separate payment, and a Participant’s entitlement to a series of payments under this Plan is to be treated as an entitlement
to a series of separate payments.

 

(f)Lock-Up
Agreement. Each Participant shall agree, if so requested by the Company or the Partnership and any underwriter in connection
with any public offering of securities of the Partnership or any Affiliate, not to directly or indirectly offer, sell, contract
to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant
for the sale of or otherwise dispose of or transfer any Units held by it for such period, not to exceed one hundred eighty (180)
days following the effective date of the relevant registration statement filed under the Securities Act in connection with such
public offering, as such underwriter shall specify reasonably and in good faith. The Company or the Partnership may impose stop-transfer
instructions with respect to securities subject to the foregoing restrictions until the end of such 180-day period. Notwithstanding
the foregoing, the 180-day period may be extended for up to such number of additional days as is deemed necessary by such underwriter
or the Company or Partnership to continue coverage by research analysts in accordance with FINRA Rule 2711 or any successor rule.

 

    	-14-

    	 

    

 

(g)Compliance
with Laws. The Plan, the granting and vesting of Awards under the Plan and the issuance and delivery of Units and the payment
of money under the Plan or under Awards granted or awarded hereunder are subject to compliance with all applicable federal, state,
local and foreign laws, rules and regulations (including but not limited to state, federal and foreign securities law and margin
requirements), the rules of any securities exchange or automated quotation system on which the Units are listed, quoted or traded,
and to such approvals by any listing, regulatory or governmental authority as may, in the opinion of counsel for the Company or
the Partnership, be necessary or advisable in connection therewith. Any securities delivered under the Plan shall be subject to
such restrictions, and the Person acquiring such securities shall, if requested by the Company or the Partnership, provide such
assurances and representations to the Company or the Partnership as the Company or the Partnership may deem necessary or desirable
to assure compliance with all applicable legal requirements. To the extent permitted by applicable law, the Plan and Awards granted
or awarded hereunder shall be deemed amended to the extent necessary to conform to such laws, rules and regulations. In the event
an Award is granted to or held by a Participant who is employed or providing services outside the United States, the Committee
may, in its sole discretion, modify the provisions of the Plan or of such Award as they pertain to such Participant to comply
with applicable foreign law or to recognize differences in local law, currency or tax policy. The Committee may also impose conditions
on the grant, issuance, exercise, vesting, settlement or retention of Awards in order to comply with such foreign law and/or to
minimize the Company’s or the Partnership’s obligations with respect to tax equalization for Participants employed
outside their home country.

 

(h)Governing
Law. The validity, construction, and effect of the Plan and any rules and regulations relating to the Plan shall be determined
in accordance with the laws of the State of Delaware without regard to its conflicts of laws principles.

 

(i)Severability.
If any provision of the Plan or any Award is or becomes, or is deemed to be, invalid, illegal, or unenforceable in any jurisdiction
or as to any Person or Award, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such
provision shall be construed or deemed amended to conform to the applicable law or, if it cannot be construed or deemed amended
without, in the determination of the Committee, materially altering the intent of the Plan or the Award, such provision shall
be stricken as to such jurisdiction, Person or Award and the remainder of the Plan and any such Award shall remain in full force
and effect.

 

(j)Other
Laws. The Committee may refuse to issue or transfer any Units or other consideration under an Award if, in its sole discretion,
it determines that the issuance or transfer of such Units or such other consideration might violate any applicable law or regulation,
the rules of the principal securities exchange on which the Units are then traded, or entitle the Partnership or an Affiliate
to recover the same under Section 16(b) of the Exchange Act, and any payment tendered to the Company by a Participant, other holder
or beneficiary in connection with the exercise of such Award shall be promptly refunded to the relevant Participant, holder or
beneficiary.

 

    	-15-

    	 

    

 

(k)No
Trust or Fund Created. Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any
kind or a fiduciary relationship between the Company, the Partnership or any of their Affiliates, on the one hand, and a Participant
or any other Person, on the other hand. To the extent that any Person acquires a right to receive payments pursuant to an Award,
such right shall be no greater than the right of any general unsecured creditor of the Partnership or any participating Affiliate
of the Partnership.

 

(l)No
Fractional Units. No fractional Units shall be issued or delivered pursuant to the Plan or any Award, and the Committee shall
determine whether cash, other securities, or other property shall be paid or transferred in lieu of any fractional Units or whether
such fractional Units or any rights thereto shall be canceled, terminated, or otherwise eliminated.

 

(m)Headings.
Headings are given to the Sections and subsections of the Plan solely as a convenience to facilitate reference. Such headings
shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision hereof.

 

(n)No
Guarantee of Tax Consequences. None of the Board, the Committee, the Company or the Partnership provides or has provided any
tax advice to any Participant or any other Person or makes or has made any assurance, commitment or guarantee that any federal,
state, local or other tax treatment will (or will not) apply or be available to any Participant or other Person and assumes no
liability with respect to any tax or associated liabilities to which any Participant or other Person may be subject.

 

(o)Clawback.
To the extent required by applicable law or any applicable securities exchange listing standards, or as otherwise determined by
the Committee, Awards and amounts paid or payable pursuant to or with respect to Awards shall be subject to the provisions of
any clawback policy implemented by the Company or the Partnership, which clawback policy may provide for forfeiture, repurchase
and/or recoupment of Awards and amounts paid or payable pursuant to or with respect to Awards. Notwithstanding any provision of
this Plan or any Award Agreement to the contrary, the Company and the Partnership reserve the right, without the consent of any
Participant, to adopt any such clawback policies and procedures, including such policies and procedures applicable to this Plan
or any Award Agreement with retroactive effect.

 

(p) Unit
Retention Policy. The Committee may provide in its sole and absolute discretion, subject to applicable law, that any Units
received by a Participant in connection with an Award granted hereunder shall be subject to a unit ownership, unit retention or
other policy restricting the sale or transfer of units, as the Committee may determine to adopt, amend or terminate in its sole
discretion from time to time.

 

(q)Limitation
of Liability. No member of the Board or the Committee or Employee to whom the Board or the Committee has delegated authority
in accordance with the provisions of Section 3 of this Plan shall be liable for anything done or omitted to be done by him or
her by any member of the Board or the Committee or by any Employee in connection with the performance of any duties under this
Plan, except for his or her own willful misconduct or as expressly provided by statute.

 

    	-16-

    	 

    

 

(r)Facility
Payment. Any amounts payable hereunder to any Person under legal disability or who, in the judgment of the Committee, is unable
to manage properly his or her financial affairs, may be paid to the legal representative of such Person, or may be applied for
the benefit of such Person in any manner that the Committee may select, and the Partnership, the Company and all of their Affiliates
shall be relieved of any further liability for payment of such amounts.

 

SECTION 9.Term
of the Plan.

 

The Plan shall
be effective on the date on which the Plan is adopted by the Board (the “Effective Date”) and shall continue
until the date terminated by the Board. However, any Award granted prior to such termination, and the authority of the Board or
the Committee to amend, alter, adjust, suspend, discontinue, or terminate any such Award or to waive any conditions or rights
under such Award, shall extend beyond such termination date. The Plan shall, within twelve (12) months after the date of the Board’s
initial adoption of the Plan, be submitted for approval by a majority of the outstanding Units of the Partnership entitled to
vote.

 

    	-17-BNC Bancorp, Inc.

Executive Incentive Program

 

 

 

 

Document Date: July 25, 2013

 

 

 

 

 

 

 

 

 

 

 

 

 

This document is a summary of the Executive
Incentive Program and is not a formal legal document.

 

 

 

 

    	1

    	 

    

 

BNC
Bancorp Executive Incentive Program

 

Introduction

BNC Bancorp, Inc., Bank of North Carolina
(collectively, the (“Company”) are committed to rewarding key executives for their contributions to the Company’s
success and BNC Bank, a division of Bank of North Carolina. Through the BNC Bancorp Executive Incentive Program (the “Program”),
participants may earn cash and equity awards based on meeting or exceeding Company goals. The Program is part of a total compensation
package which includes base salary, annual incentives, long-term incentives and benefits. The Program is designed to:

 

		§	Focus executives on building a strong
foundation for success and long-term sustainability.

 

		§	Recognize and reward achievement of the
Company’s business goals.

 

		§	Focus executives’ attention on key
business metrics.

 

		§	Motivate and reward superior performance.

 

		§	Attract and retain talent needed for the
Company’s success.

 

		§	Be competitive with the market.

 

		§	Encourage teamwork and collaboration.

 

		§	Ensure incentives are appropriately risk-balanced.

 

		§	Be straightforward and easy to communicate.

 

Effective Date, Plan and Administrator

 

The Program is effective January 1, 2013.
Awards of cash (through performance units) and equity under the Program are issued pursuant to the BNC Bancorp 2013 Omnibus Stock
Incentive Plan. The Program Administrator is the Compensation Committee (the “Committee”) of the Board of Directors.

 

Performance Period / Program Year

 

The performance period is January 1st
through December 31st (the “Program Year”).

 

Participation and Eligibility

 

The Committee determines the participation
of the top tier named executive officer positions (CEO, President, and CFO). Other named executive officers are recommended by
the CEO and approved by the Committee. Other executives may participate upon the approval of the CEO.

 

New employees must be employed by October
1st of the Program Year to be a participant and eligible for the year’s incentive.

 

Incentive Award Opportunities

 

Each participant is assigned an incentive
award target, calculated as a percentage of base earnings. Base earnings refers to the average base salary as of January 1st
through December 31st, excluding referral fees, commissions and any other previously paid performance compensation (“Base
Earnings”). Award opportunities vary based on participant roles and are approved by the Committee at the beginning of the
Program Year.

 

 

 

    	2

    	 

    

 

Establishment of Performance Measures,
Goals, Weightings and Definitions

 

Performance measures, goals, weightings
and definitions are established at the beginning of the Program Year and approved by the Committee. For purposes of this Program,
these terms have the following meanings:

 

Performance Measures – The
criteria for which awards may be paid. Performance measures may be financial or non-financial. A non-exclusive listing of performance
measures that may be considered by the Committee can be found in Section 1 (bb) of the BNC Bancorp 2013 Omnibus Stock Incentive
Plan.

 

Goals – Identifies the specific
results required to achieve a certain level of performance. Goals may be quantitative or qualitative. A threshold, target and superior
goal is established for each performance measure as follows:

 

		§	Threshold – is the minimum
level of performance for which an award is paid. If performance is below threshold, the payout is zero. Performance at threshold
results in a payment equal to 50% of the targeted incentive opportunity. 

 

		§	Target – is the expected
level of performance. Performance at target results in a payment equal to 100% of the targeted incentive opportunity. 

 

		§	Superior – is considered
outstanding performance. Performance at superior results in a payment equal to 150% of the participant’s targeted incentive
opportunity, which is the highest amount to be paid under the Program. 

 

Weightings – Weightings are
used to differentiate the relative importance/priority of the performance measures. Each performance measure is weighted a minimum
of 10%, and the total of all performance measures for a Program Year equals 100%.

 

Definitions – Each performance
measure is described at the beginning of the Program Year. Qualitative measures should carry, at a minimum, a general description
of the criteria which will be reviewed in order to make an assessment regarding performance.

 

The following schedules are attached to
this Program document. Schedules A and B are approved by the Committee prior to the beginning of each performance period:

 

		·	Schedule A: Participants and Incentive
Award Opportunities 

		·	Schedule B: Company Performance Measures,
Goals, Weightings and Definitions

		·	Schedule C: Example Payout Calculation

 

Award Funding

 

A funding trigger is established for purposes
of Section 162m of the Internal Revenue Code of 1986, as amended, and as may be amended from time to time in the future. The Program
is funded at the Superior level if the Company has positive operating earnings for the Program Year. The incentive awards paid
are then determined by the Committee using the performance measures selected for the Program Year. In other words, the funded amount
is adjusted downwards to reflect actual performance.

 

 

    	3

    	 

    

 

Award Payouts

 

An allocation between cash and the value
for equity awards is determined at the beginning of the Program Year. The actual grant of equity occurs at the time of award payout.
The type of equity award and award terms are also established by the Committee at the beginning of the Program Year.

 

At the end of the Program Year, actual
performance is compared to the established goals. Performance between threshold and target and target and superior are interpolated
for purposes of determining award payouts. Once amounts are determined for each Program participant, the allocation between cash
and equity is applied, and a determination regarding the cash award and number of shares to be granted is approved by the Committee.

 

Awards will be paid within two and one
half months following the end of the Program Year. Awards will be paid out as a percentage of a participant’s Base Earnings.

 

Awards paid in cash are considered taxable
income to participants in the year paid and will be subject to withholding for required income and other applicable taxes. Equity
awards are taxed according to the withholding rules for the award type granted.

 

The employee must be employed on a full
or part-time basis at the date of payment, unless retired, deceased or disabled. Participants on a performance improvement plan
or who have an unsatisfactory performance rating at the time of payment are not eligible to receive an award.

 

New Hires, Reduced Work Schedules, Promotions
and Transfers

 

New hires that meet the eligibility criteria
and are hired prior to October 1st of the Program Year will receive a pro-rated award based on the number of full months
worked during the Program Year. New hires employed by the Company on or after October 1st are not eligible to receive
an award for the current Program Year.

 

Participants that are promoted or change
roles that result in the participant becoming eligible or ineligible for an award, or participants who experience a change in incentive
opportunity, will be paid out on a pro-rated basis using their status and the effective date of the promotion or role change. Award
amounts will be calculated using the participant’s base earnings and the incentive target for the applicable period.

 

Participants that have an approved leave
of absence are eligible to receive a pro-rated award calculated using their time in active status as permitted by the Family Medical
Leave Act or other applicable state and federal laws and regulations.

 

Termination of Employment

 

To encourage retention, a participant must
be an active employee of the Company on the date the incentive award is paid to receive an award (please see exceptions for death,
disability and retirement below.) Except as may be provided in any severance, change in control and/or employment agreement, participants
who terminate employment during the Program Year, or who have given notice of resignation during the Program Year but before payout,
are not eligible to receive an award payout.

 

    	4

    	 

    

 

Death, Disability or Retirement

 

If a participant ceases to be employed
by the Company due to disability, his/her incentive award for the Program Year will be pro-rated to the date of termination and
paid in cash.

 

In the event of death, the Company will
pay to the participant’s estate the pro rata portion of the incentive award that had been earned by the participant during
his/her period of employment.  Amounts will be paid in cash.

 

Individuals who retire are eligible to
receive an incentive paid in cash if they are actively employed through October 1st of the Program Year.

 

Administration

 

The Program is authorized by the Company’s
Board of Directors and administered by the Committee. To ensure proper alignment with the BNC Bancorp’s business objectives,
the Program will be reviewed annually by the Committee with any modifications to be approved by the Board of Directors. The Committee
has the sole authority to interpret the Program and to make or nullify any rules and procedures, as necessary, for proper administration
of the Program. Any determination by the Committee will be final and binding on all participants. The Committee retains the rights
as described below to amend or modify the Program at any time.

 

Program Changes or Discontinuance

 

The Company has developed the Program on
the basis of existing business, market and economic conditions; current services; and staff assignments. If substantial changes
occur that affect these conditions, services, assignments, or forecasts, the Committee may add to, amend, modify or discontinue
any of the terms or conditions of the Program at any time. Examples of substantial changes may include mergers, dispositions or
other corporate transactions, changes in laws or accounting principles or other events that would in the absence of some adjustment,
frustrate the intended operation of this Program.

 

The Committee may, at its sole discretion,
waive, change or amend the Program as it deems appropriate. 

 

No Entitlement to Incentive Compensation

 

Each Program participant is eligible for
a distribution under the Program only upon attainment of certain performance objectives defined under the Program and after the
approval of the award by the Committee.

 

Participants Rights not Assignable

 

Any participant awards shall not be subject
to assignment, pledge or other disposition, nor shall such amounts be subject to garnishment, attachment, transfer by operation
of law, or any legal process. Nothing contained in this Program shall confer upon any employee any right to continued employment,
nor does the Program affect the right of the Company to terminate a Program participant’s employment. Participation in the
Program does not confer rights to participation in other Company programs or plans, including annual or long-term incentive plans,
non-qualified retirement or deferred compensation plans or other executive perquisite programs.

 

    	5

    	 

    

 

Accounting Restatements

 

In the event that the Company is required
to prepare an accounting restatement due to error, omission or fraud (as determined by the members of the Board of Directors),
each participant shall reimburse the Company for part or the entire incentive award made to such participant on the basis of having
met or exceeded specific targets for performance periods. For purposes of this policy, (i) the term “incentive awards”
means awards under this BNC Bancorp Executive Incentive Program, the amount of which is determined in whole or in part upon specific
performance targets relating to the financial results of the Company; and (ii) the term participant means employees who are eligible
to participate in the BNC Bancorp Executive Incentive Program. The Company may seek to reclaim incentives within a three-year period
of the incentive payout.

 

Risk Mitigation

 

The Company seeks to appropriately balance
risk with financial rewards in the Program design and implementation. The compensation arrangements in this Program are designed
to be sufficient to incent participants to achieve approved strategic and tactical goals while at the same time not be excessive
or lead to material financial loss to the Company.

 

Awards may be reduced or eliminated for
credit quality and/or regulatory action. Unless the Committee deems otherwise, awards will not be paid, regardless of corporate
or team/individual performance, if: 1) any regulatory agency issues a formal, written enforcement action, memorandum of understanding
or other negative directive action where the Committee considers it imprudent to provide awards under this Program, and/or 2) after
a review of the Company’s credit quality measures the Committee considers it imprudent to provide awards under this Program.

 

Ethics and Interpretation

 

If there is any ambiguity as to the meaning
of any terms or provisions of this Program or any questions as to the correct interpretation of any information contained therein,
the Company's interpretation expressed by the Board of Directors will be final and binding.

 

The altering, inflating, and/or inappropriate
manipulation of performance/financial results or any other infraction of recognized ethical business standards, will subject the
employee to disciplinary action up to and including termination of employment.  In addition, any incentive compensation as
provided by this Program to which the participant would otherwise be entitled will be revoked or if paid, the participant will
be obligated to repay any incentive award earned during the award period in which the wrongful conduct occurred regardless of employment
status.

 

Severability

 

Each provision in this Program is severable,
and if any provision is held to be invalid, illegal, or unenforceable, the validity, legality and enforceability of the remaining
provisions shall not, in any way, be affected or impaired thereby.

 

The Program and the awards and payments
hereunder shall, in all respects, be governed by, and construed and enforced in accordance with the laws of the State of North
Carolina.

 

    	6

    	 

    

 

Program Approval

 

IN WITNESS WHEREOF, the parties have executed
and approved the Program effective as of XXXXX, 2013.

 

 

 

 

__________________________

Chairman of the Board

 

 

 

__________________________

Chairman, Compensation Committee

 

 

 

This
Program is proprietary and confidential to BNC Bancorp and its employees and should not be shared outside the organization other
than as required by executive compensation reporting and disclosure requirements.

 

 

    	7

    	 

    

 

Schedule A: Participants and Incentive Award Opportunities

 

 

 

 

	Cash:	Paid no later than March 15, 2014
	Equity:	Stock Award vested upon approval by the Compensation Committee for payment.

 

 

	 	 	 	 	 Target Incentive Opportunity as a % of Base Salary
	Name 	Position 	Base Earnings*	 	Cash %	Cash $	RS %	RS $	 	TDC
	Rick Callicutt	CEO	$475,000 	 	40.0%	$190,000 	20.0%	$95,000 	 	$760,000 
	David Spencer 	CFO	$400,000 	 	35.0%	$140,000 	17.5%	$70,000 	 	$610,000 

 

 

 

 

* For purposes of the 2013 Program Year, their year-end base
salary will be used to calculate awards regardless of promotions for Messrs. Callicutt and Spencer.

 

 

 

 

 

 

    	8

    	 

    

 

Schedule B: Bank Performance Measures, Goals, Weightings
and Definitions

 

 

 

 

Funding Trigger:

 

 

A funding trigger is established for purposes of Section
162m of the Internal Revenue Code of 1986, as amended, and as may be amended from time to time in the future. The Program is funded
at the Superior level if the Company has positive operating earnings for the Program Year. The incentive awards paid are then determined
by the Committee using the performance measures selected for the Program Year. In other words, the funded amount is adjusted downwards
to reflect actual performance.

 

 

 

 

	 	 	 Goals	 	Percentage of Target Incentive Paid
	Performance Measures	Weight	Threshold	Target 	Superior	 	Threshold	Target 	Superior
	 	 	 	 	 	 	 	 	 
	Operating EPS	30%	$0.52 	$0.65 	$0.78 	 	15.0%	30.0%	45.0%
	Asset Growth 	15%	4.69%	5.86%	7.03%	 	7.5%	15.0%	22.5%
	Non-Performing Asset Ratio	15%	1.70%	1.50%	1.30%	 	7.5%	15.0%	22.5%
	Qualitative Assessment	40%	Discretionary	 	20.0%	40.0%	60.0%
	 	 	 	 	 	 	 	 	 
	Grand Total	100%	 	 	 	 	50.0%	100.0%	150.0%

 

 

Definitions:

 

	Operating EPS:	Net income available to common per GAAP plus fully tax effected expenses for one-time acquisition and/or capital raise expenses plus or minus fully tax effected gains or losses from securities not held in trading accounts or acquisitions divided by the weighted average of common shares outstanding for the period.  Other fully tax effected one-time expenses or income will be added or deducted based on a mutual agreement of the compensation committee and the CEO and CFO.
	 	 	 	 	 	 	 	 	 	 	 
	Asset Growth:	Year end total assets less previous period total assets divided by previous year end total assets.
	 	 
	Non-Performing Asset Ratio:	Year end non-performing assets ("NPAs") from the legacy loan portfolio, excluding all covered assets, divided by total assets.  NPAs from acquired entities that have not been in the IT converted system for at least 12 months are excluded from the calculation.
	 	 
	 	 
	
	Qualitative Assessment:	A qualitative assessment of actions and results by the senior management team that support value creation for our shareholders, an enhanced customer experience, employee satisfaction and greater safety and soundness.  Primary components of this assessment include:  1) quality of earnings, 2) performance against forecast 3) implementation of our strategic plan, 4) acquisitions made during the year, the integration and accretive results of past acquisitions, the actions by executives to bring quality M&A opportunities to the Board and results from organic growth initiatives, 5) reduction in total criticized/classified assets (including real estate owned) prior to accounting discounts, and 6)  regulatory compliance and risk management results of the Bank.   The assessment may consider but is not limited to the following:  satisfactory exam ratings; resolution of key exam findings; actions and results taken by management to strengthen enterprise risk management such as information system integration, improved controls and processes.

 

 

    	9

    	 

    

 

Schedule C: Example Payout Calculation

 

 

The following is an example of an award payout and the allocation
between cash and equity. Assume that the funding trigger has been achieved.

 

 

	Name	Example 	 
	 	 	 
	Base Salary	 $      200,000 	 
	STI Opportunity	 $        50,000 	25%
	 	 	 

 

 

	 	Incentive	 	Performance
    Goals	Actual	 	 
	Performance
    Measures	at
    Target	Weight	Threshold	Target
    	Superior	Performance	 	Payout
	 	 	 	 	 	 	 	 	 
	Operating EPS	 $ 15,000 	30%	$0.52 	$0.65 	$0.78 	Target	$ 15,000	$15,000 x 100% = $15,000
	Asset Growth 	 $   7,500 	15%	4.69%	5.86%	7.03%	Halfway between Threshold and Target (5.28%)	 $   5,625 	 $7,500 x 75% = $5,625
    
	Non-Performing Assets	 $   7,500 	15%	1.70%	1.50%	1.30%	Halfway between Target and Superior (1.40%)	 $   9,375 	 $7,500 x 125% = $9,375
    
	Qualitative Assessment	 $ 20,000 	40%	Based on Compensation Committee Assessment
    	$22,500 	 $ 22,500 	$22,500 
	 	 	 	 	 	 	 	 	 
	Grand Total	 $ 50,000 	100%	 	 	 	 	 $ 52,500 	 

 

 

	 	 	$ Earned	 	 	Allocation	 
	Total Earned	 	$	52,500	 	 	 	 	 
	Cash	 	$	35,000	 	 	 	67%	 
	Restricted Stock	 	$	17,500	 	 	 	33%	 
	 	 	 	 	 	 	 	 	 
	Stock Price:	 	$	12.00	 	 	 	 	 
	Number of Shares (unadjusted)	 	 	1,458.33	 	 	 	 	 
	Number of Shares (adjusted)	 	 	1,458.00	 	 	 	 	 
	Residual	 	$	4.00	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	Adjusted Cash	 	$	35,004	 	 	 	 	 

 

 

    	10

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