EXHIBIT 10(xx)
 
Amended Employment Agreement

This Amended Employment Agreement (this “Agreement”) is entered into effective
as of this24 day of October, 2007, by and among W. Keith Betts (the
“Executive”), Crescent Financial Corporation, a North Carolina corporation (the
“Corporation”), and Crescent State Bank, a North Carolina-chartered bank and
wholly owned subsidiary of the Corporation (the “Bank”). The Corporation and the
Bank are hereinafter sometimes referred to together or individually as
“Employer.”

Whereas, the Executive possesses unique skills, knowledge, and experience
relating to the banking business and is expected to make significant
contributions to the profitability, growth, and financial strength of the
Corporation and affiliates,

Whereas, Employer desires to assure itself of the continuity of management and
desires to establish minimum severance benefits for certain of its officers and
other key employees,

Whereas, Employer desires to provide additional inducement for the Executive to
remain in the employ of the Employer,

Whereas, the Executive, the Corporation, and Port City Capital Bank, a wholly
owned subsidiary of the Corporation that has merged into the Bank, are parties
to an Employment Agreement dated as of September 1, 2006, but the Executive and
the Employer intend that this Agreement restate the previous employment
agreement in its entirety, incorporating into this Agreement the terms of the
September 1, 2006 Employment Agreement as amended hereby, and

Whereas, none of the conditions or events included in the definition of the term
“golden parachute payment” that is set forth in Section 18(k)(4)(A)(ii) of the
Federal Deposit Insurance Act [12 U.S.C. 1828(k)(4)(A)(ii)] and in Federal
Deposit Insurance Corporation Rule 359.1(f)(1)(ii) [12 CFR 359.1(f)(1)(ii)]
exists or, to the best knowledge of Employer, is contemplated insofar as
Employer or any affiliates are concerned.

Now Therefore, in consideration of these premises, the mutual covenants
contained herein, and other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows.

Article 1
Employment

1.1 Employment. The Executive shall serve as Executive Vice President of the
Bank according to the terms and conditions of this Agreement. The Executive
hereby accepts employment according to the terms and conditions of this
Agreement and for the period stated in section 1.3.

1.2 Duties. As Executive Vice President of the Bank, the Executive shall serve
the Bank faithfully, diligently, competently, and to the best of the Executive’s
ability. The Executive shall also serve as a non-voting member of the loan
committee of the Bank’s board of directors. The Executive shall exclusively
devote full time, energy, and attention to the promotion of the Bank’s interests
throughout the term of this Agreement. During the two-year period commencing
when Port City Capital Bank merges into the Bank, the Executive shall report to
the President and Chief Executive Officer of the Bank or any successor thereto.
Without the written consent of the Corporation’s board of directors, during the
term of this Agreement the Executive shall not render services to or for any
person, firm, corporation, or other entity or organization in exchange for
compensation, regardless of the form in which such compensation is paid and
regardless of whether it is paid directly or indirectly to the Executive.
However, the Executive may serve with or without compensation as an officer or
director of any charitable or civic organization. Nothing in this section 1.2
shall prevent the Executive from managing personal investments and affairs,
however, provided that doing so does not interfere with the proper performance
of the Executive’s duties.

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1.3 Term. The initial term of this Agreement shall be for a period of three
years, commencing September 1, 2006. On the first anniversary of September 1,
2006 and on each anniversary thereafter this Agreement shall be extended
automatically for one additional year unless the Bank’s board of directors
determines that the term shall not be extended. If the board of directors
determines not to extend the term, it shall promptly notify the Executive in
writing. If the board of directors decides not to extend the term of this
Agreement, this Agreement shall nevertheless remain in force until its term
expires. The board of directors’ decision not to extend the term of this
Agreement shall not – by itself – give the Executive any rights under this
Agreement to claim an adverse change in his position, compensation, or
circumstances or otherwise to claim entitlement to severance benefits under
Article 4 of this Agreement. References herein to the term of this Agreement
shall refer to the initial term, as the same may be extended. Unless sooner
terminated, the Executive’s employment shall terminate when the Executive
attains age 65.

Article 2
Compensation and Other Benefits

2.1 Base Salary. In consideration of the Executive’s performance of the
obligations under this Agreement, Employer shall pay or cause to be paid to the
Executive a salary at the annual rate of not less than $175,000, payable in
monthly installments. The Executive’s salary shall be reviewed annually by the
Compensation Committee of the Bank’s board of directors or by the board
committee having jurisdiction over executive compensation. The Executive’s
salary shall be increased no less frequently than annually to account for cost
of living increases. The Executive’s salary also may be increased beyond the
amount necessary to account for cost of living increases at the discretion of
the committee having jurisdiction over executive compensation. However, the
Executive’s salary shall not be reduced. The Executive’s salary, as the same may
be increased from time to time, is referred to in this Agreement as the “Base
Salary.”

2.2 Benefit Plans and Perquisites. The Executive shall be entitled throughout
the term of this Agreement to participate in any and all officer or employee
compensation, bonus, incentive, and benefit plans in effect from time to time,
including without limitation stock option plans and other stock-based
compensation, incentive, bonus, or purchase plans, or plans providing pension,
medical, dental, disability, and group life benefits, including Employer’s
401(k) Plan, and to receive any and all other fringe benefits provided from time
to time, provided that the Executive satisfies the eligibility requirements for
any such plans or benefits.

(a) Club dues. During the term of this Agreement, the Employer shall pay or
cause to be paid the Executive’s continued membership dues in civic and/or
country clubs in an amount up to $750 per month.

(b) Reimbursement of business expenses. The Executive shall be entitled to
reimbursement for all reasonable business expenses incurred performing the
Executive’s obligations under this Agreement, including but not limited to all
reasonable business travel and entertainment expenses incurred while acting at
the request of or in the service of Employer and reasonable expenses for
attendance at annual and other periodic meetings of trade associations.

2.3 Vacation. The Executive shall be entitled to paid annual vacation and sick
leave in accordance with the policies established from time to time by Employer,
but in no event fewer than four weeks of vacation per year. The Executive shall
schedule at least five consecutive days of vacation per year. The timing of
vacations shall be scheduled in a reasonable manner by the Executive. The
Executive shall not be entitled to any additional compensation for failure to
use allotted vacation or sick leave nor shall the Executive be entitled to
accumulate unused sick leave from one year to the next, unless authorized by the
Bank’s board of directors to do so.

2.4 Supplemental Retirement Plan. The Bank and the Executive have entered into a
Salary Continuation Agreement dated as of October 24, 2007. Unless the Salary
Continuation Agreement explicitly provides otherwise, whether benefits are
properly payable to the Executive under the Salary Continuation Agreement shall
be determined solely by reference to that agreement, as the same may be amended.

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Article 3
Employment Termination

3.1 Termination because of Death or Disability. (a) Death. The Executive’s
employment shall terminate automatically on the date of the Executive’s death.
If the Executive dies in active service to Employer, for 12 months after the
Executive’s death Employer shall assist the Executive’s family with continuing
health care coverage under COBRA substantially identical to that provided before
the Executive’s death. In addition, if the Executive’s employment terminates
because of death the Executive’s estate shall be entitled to any payments owing
under section 6.2, as provided in section 6.2.

(b) Disability. By delivery of written notice 30 days in advance to the
Executive, Employer may terminate the Executive’s employment if the Executive is
disabled. For purposes of this Agreement, the Executive shall be considered
“disabled” if an independent physician selected by Employer and reasonably
acceptable to the Executive or the Executive’s legal representative determines
that, because of illness or accident, the Executive is unable to perform the
Executive’s duties for a period of 90 consecutive days. The Executive shall not
be considered disabled, however, if the Executive returns to work on a full-time
basis within 30 days after Employer gives notice of termination due to
disability. If the Executive’s employment terminates because of disability, the
Executive shall receive the salary earned through the date on which termination
became effective, any unpaid bonus or incentive compensation due to the
Executive for the calendar year preceding the calendar year in which the
termination became effective, any payments the Executive is eligible to receive
under any disability insurance program in which the Executive participates, such
other benefits to which the Executive may be entitled under Employer’s benefit
plans, policies, and agreements, and any benefits provided for elsewhere in this
Agreement. In addition, if the Executive’s employment terminates because of
disability the Executive shall be entitled to any payments owing under section
6.2, as provided in section 6.2.

3.2 Involuntary Termination with Cause. Employer may terminate the Executive’s
employment with Cause. If the Executive’s employment terminates with Cause, the
Executive shall receive the salary to which the Executive was entitled through
the date on which termination became effective and any other benefits to which
the Executive may be entitled under Employer’s benefit plans and policies in
effect on the termination date. For purposes of this Agreement “Cause” means any
of the following –

(1) an intentional act of fraud, embezzlement, or theft by the Executive in the
course of employment. An act or failure to act on the Executive’s part shall be
considered intentional if it is not in good faith and if it is without a
reasonable belief that the action or failure to act is in the Employer’s best
interests. No act or failure to act on the part of the Executive shall be deemed
to have been intentional if it was due primarily to an error in judgment or
negligence, or

(2) intentional violation by the Executive of any applicable law or significant
policy of Employer that, in Employer’s reasonable judgement, results in an
adverse effect on Employer, regardless of whether the violation leads to
criminal prosecution or conviction. For purposes of this Agreement applicable
laws include any statute, rule, regulatory order, statement of policy, or final
cease-and-desist order of any governmental agency or body having regulatory
authority over Employer, or

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(3) the Executive’s gross negligence or gross neglect of duties in the
performance of duties, or

(4) intentional wrongful damage by the Executive to the business or property of
Employer, including without limitation the reputation of Employer, which in
Employer’s reasonable judgment causes material harm to Employer, or

(5) a breach by the Executive of fiduciary duties or misconduct involving
dishonesty, in either case whether in the Executive’s capacity as an officer or
as a director, or

(6) a breach by the Executive of this Agreement that, in the Employer’s
reasonable judgment, is a material breach, which breach is not corrected by the
Executive within 10 days after receiving written notice of the breach, or

(7) removal of the Executive from office or permanent prohibition of the
Executive from participating in the Bank’s affairs by an order issued under
section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act, 12 U.S.C.
1818(e)(4) or (g)(1), or

(8) conviction of the Executive for or plea of no contest to a felony or
conviction of or plea of no contest to a misdemeanor involving moral turpitude,
or the actual incarceration of the Executive for five consecutive days or more,
or

(9) the occurrence of any event that results in the Executive being excluded
from coverage, or having coverage limited for the Executive as compared to other
executives of the Bank, under the Bank’s blanket bond or other fidelity or
insurance policy covering its directors, officers, or employees.

3.3 Voluntary Termination by the Executive Without Good Reason. If the Executive
terminates employment without Good Reason, the Executive shall receive the Base
Salary and expense reimbursement to which the Executive is entitled through the
date on which termination becomes effective, and any payments owing under
section 6.2, as provided in section 6.2.

3.4 Involuntary Termination Without Cause and Voluntary Termination with Good
Reason. With written notice to the Executive 90 days in advance, the Employer
may terminate the Executive’s employment without Cause. Termination shall take
effect at the end of the 90-day period. With advance written notice to the
Employer as provided in clause (y), the Executive may terminate employment for
Good Reason. If the Executive’s employment terminates involuntarily without
Cause or voluntarily but with Good Reason, the Executive shall be entitled to
the benefits specified in Article 4 of this Agreement, except as may be provided
in Article 4, and any payments owing under section 6.2, as provided in section
6.2. For purposes of this Agreement a voluntary termination by the Executive
shall be considered a voluntary termination with Good Reason if the conditions
stated in both clauses (x) and (y) are satisfied –

(x) a voluntary termination by the Executive shall be considered a voluntary
termination with Good Reason if any of the following occur without the
Executive’s advance written consent, and the term Good Reason shall mean the
occurrence of any of the following without the Executive’s advance written
consent –

(1) a material diminution of the Executive’s Base Salary,

(2) a material diminution of the Executive’s authority, duties, or
responsibilities,

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(3) a material diminution in the authority, duties, or responsibilities of the
supervisor to whom the Executive is required to report,

(4) a material diminution in the budget over which the Executive retains
authority,

(5) a material change in the geographic location at which the Executive must
perform services for the Employer, or

(6) any other action or inaction that constitutes a material breach by the
Employer of this Agreement.

(y) the Executive must give notice to the Employer of the existence of one or
more of the conditions described in clause (x) within 90 days after the initial
existence of the condition, and the Employer shall have 30 days thereafter to
remedy the condition. In addition, the Executive’s voluntary termination because
of the existence of one or more of the conditions described in clause (x) must
occur within 12 months after the initial existence of the condition.

Article 4
Severance Compensation

4.1 Severance. If the Employer terminates the Executive’s employment without
Cause or if the Executive voluntarily terminates employment for Good Reason, the
Executive shall be entitled to –

(a) Cash severance. A lump-sum severance payment in cash in the amount of two
and one half times his Base Salary, payable within 30 days after the Executive’s
employment termination. Cash severance compensation shall not be payable,
however, if the Executive’s employment terminates after a Change in Control of
the Corporation. For purposes of this Agreement a Change in Control means 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 –

(1) Change in ownership: a change in ownership of the Corporation occurs on the
date any one person or group accumulates ownership of Corporation stock
constituting more than 50% of the total fair market value or total voting power
of Corporation stock,

(2) Change in effective control: (x) any one person or more than one person
acting as a group acquires within a 12-month period ownership of Corporation
stock possessing 30% or more of the total voting power of Corporation stock, or
(y) a majority of the Corporation’s board of directors is replaced during any
12-month period by directors whose appointment or election is not endorsed in
advance by a majority of the Corporation’s board of directors, or

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

(b) Cash-out of the value of unvested stock options. The Executive shall be
entitled to receive from Employer an amount equal to the intrinsic value of any
unvested stock options and the value of any unvested restricted stock or other
equity-based compensation as of the effective date of termination. Amounts
payable under this paragraph (b) shall be paid in a single lump sum in cash by
the earlier of (x) 90 days after the Executive’s employment termination or (y)
March 15 of the year after the year in which the Executive’s employment
terminates. The intrinsic value of unvested stock options means the per share
closing price of Corporation common stock on the date of the Executive’s
employment termination less the per share exercise price of the unvested stock
options, multiplied by the number of unvested options.

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(c) Outplacement and support. Employer shall pay or cause to be paid to the
Executive reasonable outplacement expenses in an amount up to $25,000, and for
one year after termination Employer shall provide the Executive with the use of
office space and reasonable office support facilities, including secretarial
assistance.

Article 5
Confidentiality and Creative Work

5.1 Non-disclosure. The Executive covenants and agrees not to reveal to any
person, firm, or corporation any confidential information of any nature
concerning Employer or its business, or anything connected therewith. As used in
this Article 5, the term “confidential information” means all of the
Corporation’s and its affiliates’ confidential and proprietary information and
trade secrets in existence on the date hereof or existing at any time during the
term of this Agreement, including but not limited to –

(a) the whole or any portion or phase of any business plans, financial
information, purchasing data, supplier data, accounting data, or other financial
information,

(b) the whole or any portion or phase of any research and development
information, design procedures, algorithms or processes, or other technical
information,

(c) the whole or any portion or phase of any marketing or sales information,
sales records, customer lists, prices, sales projections, or other sales
information, and

(d) trade secrets, as defined from time to time by the laws of the State of
North Carolina.

Despite anything to the contrary in this Agreement, confidential information
excludes information that – as of the date hereof or at any time after the date
hereof – is published or disseminated without obligation of confidence or that
becomes a part of the public domain by or through action of Employer or
otherwise than by or at the direction of the Executive. This section 5.1 does
not prohibit disclosure required by an order of a court having jurisdiction or a
subpoena from an appropriate governmental agency or disclosure made by the
Executive in the ordinary course of business and within the scope of the
Executive’s authority.

5.2 Return of Materials. The Executive agrees to deliver or return to Employer
upon employment termination or as soon thereafter as possible all written
information and any other similar items furnished by Employer or prepared by the
Executive in connection with the Executive’s services hereunder. The Executive
will retain no copies thereof after termination of this Agreement or termination
of the Executive’s employment.

5.3 Injunctive Relief. The Executive acknowledges that it is impossible to
measure in money the damages that will accrue to Employer if the Executive fails
to observe the obligations imposed by this Article 5. Accordingly, if Employer
institutes an action to enforce the provisions hereof, the Executive hereby
waives the claim or defense that an adequate remedy at law is available to
Employer, and the Executive agrees not to urge in any such action the claim or
defense that an adequate remedy at law exists.

5.4 Affiliates’ Confidential Information is Covered; Confidentiality Obligation
Survives Termination. For purposes of this Agreement, the term “affiliate” of
the Corporation includes but is not limited to the Bank, any bank successor to
the Bank, and any entity that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with the
Bank. The rights and obligations set forth in this Article 5 shall survive
termination of this Agreement.

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5.5 Creative Work. The Executive agrees that all creative work and work product,
including but not limited to all technology, business management tools,
processes, software, patents, trademarks, and copyrights developed by the
Executive during the term of this Agreement, regardless of when or where such
work or work product was produced, constitutes work made for hire, all rights of
which are owned by Employer. The Executive hereby assigns to the Corporation and
to the Bank all rights, title, and interest, whether by way of copyrights, trade
secret, trademark, patent, or otherwise, in all such work or work product,
regardless of whether the same is subject to protection by patent, trademark, or
copyright laws.

Article 6
Competition After Employment Termination
 
6.1 Covenant Not to Solicit Employees. The Executive agrees not to solicit the
services of any officer or employee of the Employer for one year after the
Executive’s employment termination.

6.2 Covenant Not to Compete. (a) For and in consideration of the “payments” (as
defined below), without advance written consent of the Employer the Executive
covenants and agrees not to compete directly or indirectly with the Employer for
the “non-compete term” (as defined below) after employment termination, plus any
period during which the Executive is in violation of this covenant not to
compete and any period during which the Employer seeks by litigation to enforce
this covenant not to compete. For purposes of this section –

(1) the term “compete” means

(a) providing financial products or services on behalf of any financial
institution for any person residing in the territory,

(b) assisting (other than through the performance of ministerial or clerical
duties) any financial institution in providing financial products or services to
any person residing in the territory, or

(c) inducing or attempting to induce any person who was a customer of the
Employer at the date of the Executive’s employment termination to seek financial
products or services from another financial institution.

(2) the words “directly or indirectly” means –

(a) acting as a consultant, officer, director, independent contractor, or
employee of any financial institution, de novo institution in organization, or
organizational group in competition or intending to be in competition with the
Employer in the territory, or

(b) communicating to such financial institution the names or addresses or any
financial information concerning any person who was a customer of the Employer
at the Executive’s employment termination.

(3) the term “customer” means any person to whom the Employer is providing
financial products or services on the date of the Executive’s employment
termination.

(4) the term “financial institution” means any bank, savings association, or
bank or savings association holding company, or any other institution, the
business of which is engaging in activities that are financial in nature or
incidental to such financial activities as described in section 4(k) of the Bank
Holding Company Act of 1956, other than the Employer or one of its affiliated
corporations.

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(5) “financial product or service” means any product or service that a financial
institution or a financial holding company could offer by engaging in any
activity that is financial in nature or incidental to such a financial activity
under section 4(k) of the Bank Holding Company Act of 1956 and that is offered
by the Employer or an affiliate on the date of the Executive’s employment
termination, including but not limited to banking activities and activities that
are closely related and a proper incident to banking.

(6) the term “person” means any individual or individuals, corporation,
partnership, fiduciary, or association.

(7) the term “territory” means New Hanover County and any counties contiguous
thereto.

(8) the term “non-compete term” shall be a period of two years if the
Executive’s employment terminates before September 1, 2011; shall be a period of
one year if the Executive’s employment terminates after September 1, 2011, but
before September 1, 2013; and after September 1, 2013, there shall be no period
of time in which Executive is not permitted to “compete” as defined herein.

(9) the term “payments” shall mean the payment by the Employer of $78,333 to the
Executive on September 1, 2006, and the payment of an equivalent amount on each
of the first two anniversaries of that date.

(b) If any provision of this section or any word, phrase, clause, sentence, or
other portion thereof (including, without limitation, the geographical and
temporal restrictions contained therein) is held to be unenforceable or invalid
for any reason, the unenforceable or invalid provision or portion shall be
modified or deleted so that the provisions hereof, as modified, are legal and
enforceable to the fullest extent permitted under applicable law.

6.3 Specific Performance. The Executive’s covenants contained in Article 6 shall
survive termination of the Executive’s employment for any reason, and shall be
enforceable after such termination. Without intending to limit the remedies
available to the Corporation and the Bank, the Executive agrees that damages at
law are an insufficient remedy for violation by the Executive of the covenants
contained in this Agreement. Accordingly, the Executive hereby agrees that
either of the Corporation or the Bank may apply for and is entitled to
injunctive relief in any court of competent jurisdiction to restrain the breach
or threatened breach of, or otherwise to specifically enforce, any of the
covenants of this Article 6, in each case without proof of actual damages, in
addition to any other remedies that may be available under applicable law. The
Executive hereby waives the claim or defense that an adequate remedy at law is
available to the Corporation or the Bank, and the Executive agrees not to urge
in any action or proceeding the claim or defense that an adequate remedy at law
exists.

Without limiting the generality of the foregoing, without limiting the remedies
available to the Corporation or the Bank for violation of this Agreement, and
without constituting an election of remedies, if the Executive violates any of
the terms of Article 6 he shall forfeit on the Executive’s own behalf and that
of beneficiary(ies) any rights to and interest in any severance or other
benefits under this Agreement and this Agreement shall thereafter be null, void,
and of no further force or effect.

6.4 Article 6 Survives Termination. The rights and obligations set forth in this
Article 6 shall survive termination of this Agreement.

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Article 7
Miscellaneous

7.1 Successors and Assigns. (a) This Agreement is binding on successors. This
Agreement shall be binding upon Employer and any successor to Employer,
including any persons acquiring directly or indirectly all or substantially all
of the business or assets of Employer by purchase, merger, consolidation,
reorganization, or otherwise. But this Agreement and Employer’s obligations
under this Agreement are not otherwise assignable, transferable, or delegable by
Employer. By agreement in form and substance satisfactory to the Executive,
Employer shall require any successor to all or substantially all of the business
or assets of Employer expressly to assume and agree to perform this Agreement in
the same manner and to the same extent Employer would be required to perform had
no succession occurred.

(b) This Agreement is enforceable by the Executive’s heirs. This Agreement shall
inure to the benefit of and be enforceable by the Executive’s personal or legal
representatives, executors, administrators, successors, heirs, distributees, and
legatees.

(c) This Agreement is personal and is not assignable. This Agreement is personal
in nature. Without written consent of the other parties, no party shall assign,
transfer, or delegate this Agreement or any rights or obligations under this
Agreement, except as expressly provided herein. Without limiting the generality
or effect of the foregoing, the Executive’s right to receive payments hereunder
is not assignable or transferable, whether by pledge, creation of a security
interest, or otherwise, except for a transfer by the Executive’s will or by the
laws of descent and distribution. If the Executive attempts an assignment or
transfer that is contrary to this section 7.1, Employer shall have no liability
to pay any amount to the assignee or transferee.

7.2 Governing Law, Jurisdiction and Forum. This Agreement shall be construed
under and governed by the internal laws of the State of North Carolina, without
giving effect to any conflict of laws provision or rule (whether of the State of
North Carolina or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of North Carolina. By entering
into this Agreement, the Executive acknowledges that the Executive is subject to
the jurisdiction of both the federal and state courts in the State of North
Carolina. Any actions or proceedings instituted under this Agreement shall be
brought and tried solely in courts located in Wake County, North Carolina, or in
the federal court having jurisdiction in Cary, North Carolina. The Executive
expressly waives the right to have any such actions or proceedings brought or
tried elsewhere.

7.3 Entire Agreement. This Agreement sets forth the entire agreement of the
parties concerning the employment of the Executive by Employer, and any oral or
written statements, representations, agreements, or understandings made or
entered into prior to or contemporaneously with the execution of this Agreement
are hereby rescinded, revoked, and rendered null and void. This Agreement amends
and restates in its entirety the Employment Agreement dated as of September 1,
2006 between the Executive and the Employer.

7.4 Notices. Any notice under this Agreement shall be deemed to have been
effectively made or given if in writing and personally delivered, delivered by
mail properly addressed in a sealed envelope, postage prepaid by certified or
registered mail, delivered by a reputable overnight delivery service, or sent by
facsimile. Unless otherwise changed by notice, notice shall be properly
addressed to the Executive if addressed to the address of the Executive on the
books and records of the Employer at the time of the delivery of such notice,
and properly addressed to Employer if addressed to Crescent Financial
Corporation, 1005 High House Road, Cary, North Carolina 27513, Attention:
Corporate Secretary.

7.5 Severability. In the case of conflict between any provision of this
Agreement and any statute, regulation, or judicial precedent, the latter shall
prevail, but the affected provisions of this Agreement shall be curtailed and
limited solely to the extent necessary to bring them within the requirements of
law. If any provision of this Agreement is held by a court of competent
jurisdiction to be indefinite, invalid, void or voidable, or otherwise
unenforceable, the remainder of this Agreement shall continue in full force and
effect unless that would clearly be contrary to the intentions of the parties or
would result in an injustice.

7.6 Captions and Counterparts. The captions in this Agreement are solely for
convenience. The captions in no way define, limit, or describe the scope or
intent of this Agreement. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.

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7.7 No Duty to Mitigate. Employer hereby acknowledges that it will be difficult
and could be impossible (x) for the Executive to find reasonably comparable
employment after employment termination, and (y) to measure the amount of
damages the Executive may suffer as a result of termination. Additionally,
Employer acknowledges that its general severance pay plans do not provide for
mitigation, offset, or reduction of any severance payment received thereunder.
The Employer further acknowledges that the payment of severance benefits under
this Agreement is reasonable and shall be liquidated damages. The Executive
shall not be required to mitigate the amount of any payment provided for in this
Agreement by seeking other employment. Moreover, the amount of any payment
provided for in this Agreement shall not be reduced by any compensation earned
or benefits provided as the result of employment of the Executive or as a result
of the Executive being self-employed after employment termination.

7.8 Amendment and Waiver. This Agreement may not be amended, released,
discharged, abandoned, changed, or modified except by an instrument in writing
signed by each of the parties hereto. The failure of any party hereto to enforce
at any time any of the provisions of this Agreement shall not be construed to be
a waiver of any such provision or affect the validity of this Agreement or any
part thereof or the right of any party thereafter to enforce each and every such
provision. No waiver or any breach of this Agreement shall be held to be a
waiver of any other or subsequent breach.

7.9 Consultation with Counsel and Interpretation of this Agreement. The
Executive acknowledges and agrees that the Executive has had the assistance of
counsel of the Executive’s choosing in the negotiation of this Agreement, or the
Executive has chosen not to have the assistance of counsel. Both parties hereto
having participated in the negotiation and drafting of this Agreement, they
hereby agree that there shall not be strict interpretation against either party
in connection with any review of this Agreement in which interpretation thereof
is an issue.

7.10 Compliance with Internal Revenue Code Section 409A. Employer and the
Executive intend that their exercise of authority or discretion under this
Agreement shall comply with section 409A of the Internal Revenue Code of 1986.
If when the Executive’s employment terminates the Executive is a specified
employee, as defined in section 409A of the Internal Revenue Code of 1986, and
if any payments under this Agreement will result in additional tax or interest
to the Executive because of section 409A, then despite any contrary provision of
this Agreement the Executive shall not be entitled to the payments until the
earliest of (x) the date that is at least six months after termination of the
Executive’s employment for reasons other than the Executive’s death, (y) the
date of the Executive’s death, or (z) any earlier date that does not result in
additional tax or interest to the Executive under section 409A. As promptly as
possible after the end of the period during which payments are delayed under
this provision, the entire amount of the delayed payments shall be paid to the
Executive in a single lump sum. If any provision of this Agreement does not
satisfy the requirements of section 409A, such provision shall nevertheless be
applied in a manner consistent with those requirements. If any provision of this
Agreement would subject the Executive to additional tax or interest under
section 409A, Employer shall reform the provision. However, Employer shall
maintain to the maximum extent practicable the original intent of the applicable
provision without subjecting the Executive to additional tax or interest, and
Employer shall not be required to incur any additional compensation expense as a
result of the reformed provision. References in this Agreement to section 409A
of the Internal Revenue Code of 1986 include rules, regulations, and guidance of
general application issued by the Department of the Treasury under Internal
Revenue Code section 409A.

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In Witness Whereof, the parties have executed this Employment Agreement as of
the date first written above.

 
Executive
Crescent Financial Corporation
   
   /s/ W. Keith Betts
By:
W. Keith Betts
   
Its:
     
Crescent State Bank
 
By:
     
Its:

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