Crescent State Bank
Amended Salary Continuation Agreement

This Amended Salary Continuation Agreement (this “Agreement”) is entered into as
of this 29 day of December, 2008 by and between Crescent State Bank, a North
Carolina chartered commercial bank (the “Bank”), and W. Keith Betts, an
executive of the Bank (the “Executive”).

Whereas, the Executive has contributed substantially to the success of the Bank
and the Bank desires that the Executive continue in its employ,

Whereas, to encourage the Executive to remain an employee, the Bank is willing
to provide salary continuation benefits to the Executive, payable from the
Bank’s general assets,

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 the Bank, is contemplated insofar as the
Bank is concerned,

Whereas, the parties hereto intend that this Agreement shall be considered an
unfunded arrangement maintained primarily to provide supplemental retirement
benefits for the Executive, and to be considered a non-qualified benefit plan
for purposes of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”).  The Executive is fully advised of the Bank’s financial status, and

Whereas, the Bank and the Executive intend that this Agreement shall amend and
restate in its entirety the October 24, 2007 Salary Continuation Agreement
between the Bank and the Executive.

Now Therefore, in consideration of these premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Executive and the Bank hereby agree as follows.

Article 1
Definitions

1.1           “Accrual Balance” means the liability that should be accrued by
the Bank under generally accepted accounting principles (“GAAP”) for the Bank’s
obligation to the Executive under this Agreement, applying Accounting Principles
Board Opinion No. 12, as amended by Financial Accounting Standard No. 106, and
the calculation method and discount rate specified hereinafter.  The Accrual
Balance shall be calculated such that when it is credited with interest each
month the Accrual Balance at Normal Retirement Age (or such later date as the
Executive is entitled under section 2.1 to receive the normal retirement
benefits) equals the present value of the normal retirement benefits.  The
discount rate means the rate used by the Plan Administrator for determining the
Accrual Balance.  The rate is based on the yield on a 20-year corporate bond
rated Aa by Moody’s, rounded to the nearest ¼%.  In its sole discretion the Plan
Administrator may adjust the discount rate to maintain the rate within
reasonable standards according to GAAP.
 

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1.2           “Beneficiary” means each designated person, or the estate of the
deceased Executive, entitled to benefits, if any, upon the death of the
Executive, determined according to Article 4.

1.3           “Beneficiary Designation Form” means the form established from
time to time by the Plan Administrator that the Executive completes, signs, and
returns to the Plan Administrator to designate one or more Beneficiaries.

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

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

(b)           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 Crescent
Financial Corporation stock possessing 30% or more of the total voting power of
Crescent Financial Corporation stock, or (y) a majority of Crescent Financial
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 Crescent Financial Corporation’s board of directors, or

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

1.5           “Code” means the Internal Revenue Code of 1986, as amended, and
rules, regulations, and guidance of general application issued thereunder by the
Department of the Treasury.

1.6           “Disability” means, because of a medically determinable physical
or mental impairment that can be expected to result in death or that can be
expected to last for a continuous period of at least 12 months, (x) the
Executive is unable to engage in any substantial gainful activity, or (y) the
Executive is receiving income replacement benefits for a period of at least
three months under an accident and health plan of the employer.  Medical
determination of disability may be made either by the Social Security
Administration or by the provider of an accident or health plan covering
employees of the Bank.  Upon request of the Plan Administrator, the Executive
must submit proof to the Plan Administrator of the Social Security
Administration’s or provider’s determination.

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1.7           “Early Termination” means Separation from Service before Normal
Retirement Age for reasons other than death, Disability, or Termination with
Cause.

1.8           “Effective Date” means January 1, 2007.

1.9           “Intentional,” for purposes of this Agreement, no act or failure
to act on the Executive’s part shall be deemed to have been intentional if it
was due primarily to an error in judgment or negligence.  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 Bank’s best interests.

1.10         “Normal Retirement Age” means the Executive’s 65th birthday.

1.11         “Plan Administrator” means the plan administrator described in
Article 8.

1.12         “Plan Year” means a twelve-month period commencing on January 1 and
ending on December 31 of each year.  The initial Plan Year shall commence on the
Effective Date.

1.13         “Separation from Service” shall mean a separation from service as
defined in Code section 409A, including termination of the Executive’s service
as an executive and independent contractor to the Bank and any member of a
controlled group, as defined in Code section 414, for any reason other than
because of a leave of absence approved by the Bank or the Executive’s
death.  For purposes of this Agreement, if there is a dispute about the
employment status of the Executive or the date of the Executive’s Separation
from Service, the Bank shall have the sole and absolute right to decide the
dispute unless a Change in Control shall have occurred.

1.14         “Termination with Cause” and “Cause” shall have the same meaning
specified in any effective severance or employment agreement existing on the
date hereof or hereafter entered into between the Executive and the Bank.  If
the Executive is not a party to a severance or employment agreement containing a
definition of termination with cause, Termination with Cause means the Bank
terminates the Executive’s employment for any of the following reasons –

(a)            an intentional act of fraud, embezzlement, or theft by the
Executive in the course of employment, or

 
(b)            intentional violation by the Executive of any applicable law or
significant policy of the Bank that, in the Bank’s reasonable judgement, results
in an adverse effect on the Bank, 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 the Bank, or

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

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

(e)            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

(f)             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

(g)            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

(h)            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 liability insurance policy covering its directors, officers, or employees.

Article 2
Lifetime Benefits

2.1           Normal Retirement.  Unless the benefit is payable or shall have
been paid under section 2.4 after a Change in Control, for Separation from
Service on or after Normal Retirement Age for reasons other than death or
Termination with Cause the Bank shall pay to the Executive the benefit described
in this section 2.1 instead of any other benefit under this Agreement.

2.1.1        Amount of benefit.  The annual benefit under this section 2.1 is
$75,000.

2.1.2        Payment of benefit.  Beginning with the seventh month after the
month in which the Executive’s Separation from Service occurs, the Bank shall
pay the annual benefit to the Executive in equal monthly installments on the
first day of each month.  The annual benefit shall be paid to the Executive for
the Executive’s lifetime.

2.2           Early Termination.  Unless the benefit is payable or shall have
been paid under section 2.4 after a Change in Control, if Early Termination
occurs on or after the date the Executive attains age 55 the Bank shall pay to
the Executive the benefit described in this section 2.2 instead of any other
benefit under this Agreement.  If Early Termination occurs before the Executive
attains age 55, no benefit shall be payable under this section 2.2.  No benefits
shall be payable under this Agreement if the Executive’s employment is
terminated under circumstances described in Article 5 of this Agreement.

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2.2.1        Amount of benefit.  The annual benefit under this section 2.2 is
calculated as the amount that fully amortizes the Accrual Balance existing at
the end of the month immediately before the month in which Separation from
Service occurs, amortizing that Accrual Balance over the period beginning with
the Executive’s Normal Retirement Age and taking into account interest at the
discount rate or rates established by the Plan Administrator.

2.2.2        Payment of benefit.  Beginning with the later of (x) the seventh
month after the month in which the Executive’s Separation from Service occurs,
or (y) the month immediately after the month in which the Executive attains
Normal Retirement Age, the Bank shall pay the benefit under this section 2.2 to
the Executive in equal monthly installments on the first day of each month.  The
annual benefit shall be paid to the Executive for the Executive’s lifetime.

2.3           Disability.  Unless the benefit is payable or shall have been paid
under section 2.4 after a Change in Control, if Separation from Service occurs
because of Disability before Normal Retirement Age the Bank shall pay to the
Executive the benefit described in this section 2.3 instead of any other benefit
under this Agreement.

2.3.1        Amount of benefit.  The annual benefit under this section 2.3 is
calculated as the amount that fully amortizes the Accrual Balance existing at
the end of the month immediately before the month in which Separation from
Service occurs, amortizing that Accrual Balance over the period beginning with
the Executive’s Normal Retirement Age and taking into account interest at the
discount rate or rates established by the Plan Administrator.

2.3.2        Payment of benefit.  Beginning with the later of (x) the seventh
month after the month in which the Executive’s Separation from Service occurs,
or (y) the month immediately after the month in which the Executive attains
Normal Retirement Age, the Bank shall pay the benefit under this section 2.3 to
the Executive in equal monthly installments on the first day of each month.  The
annual benefit shall be paid to the Executive for the Executive’s lifetime.

2.4           Change in Control.  If a Change in Control occurs before
Separation from Service, the Bank shall pay to the Executive the benefit
described in this section 2.4 instead of any other benefit under this Agreement.

2.4.1        Amount of benefit.  The benefit under this section 2.4 is the
greater of (x) $525,487 or (y) the Accrual Balance when the Change in Control
occurs, in either case without reduction for the time value of money or other
discount.

2.4.2        Payment of benefit.  The Bank shall pay the benefit under this
section 2.4 to the Executive in a single lump sum within three days after the
Change in Control.  If the Executive receives the benefit under this section 2.4
because of the occurrence of a Change in Control, the Executive shall not be
entitled to claim additional benefits under section 2.4 if an additional Change
in Control occurs thereafter.
 
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2.5           Change-in-Control Payout of Normal Retirement Benefit, Early
Termination Benefit, or Disability Benefit Being Paid to the Executive at the
Time of a Change in Control.  If when a Change in Control occurs the Executive
is receiving the benefit under section 2.1, the Bank shall pay the remaining
salary continuation benefits to the Executive in a single lump sum on the date
of the Change in Control.  If when a Change in Control occurs the Executive is
receiving or is entitled at Normal Retirement Age to receive the benefit under
sections 2.2 or 2.3, the Bank shall pay the remaining salary continuation
benefits to the Executive in a single lump sum on the later of (x) the date of
the Change in Control or (y) the first day of the seventh month after the month
in which the Executive’s Separation from Service occurs.  The lump-sum payment
due to the Executive as a result of a Change in Control shall be an amount equal
to the Accrual Balance amount corresponding to the particular benefit when the
Change in Control occurs.

2.6           Contradiction Between the Agreement and Schedule A.  If there is a
contradiction between this Agreement and Schedule A attached hereto concerning
the amount of a particular benefit due the Executive under section 2.2, 2.3, or
2.4 hereof, the amount of the benefit determined under this Agreement shall
control.

2.7           Savings Clause Relating to Compliance with Code Section
409A.  Despite any contrary provision of this Agreement, if when the Executive’s
employment terminates the Executive is a specified employee, as defined in Code
section 409A, and if any payments under Article 2 of this Agreement will result
in additional tax or interest to the Executive because of section 409A, the
Executive shall not be entitled to the payments under Article 2 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.  If any
provision of this Agreement would subject the Executive to additional tax or
interest under section 409A, the Bank shall reform the provision.  However, the
Bank shall maintain to the maximum extent practicable the original intent of the
applicable provision without subjecting the Executive to additional tax or
interest, and the Bank shall not be required to incur any additional
compensation expense as a result of the reformed provision.

2.8           One Benefit Only.  Despite anything to the contrary in this
Agreement, the Executive and Beneficiary are entitled to one benefit only under
this Agreement, which shall be determined by the first event to occur that is
dealt with by this Agreement.  Except as provided in section 2.5 or Article 3,
subsequent occurrence of events dealt with by this Agreement shall not entitle
the Executive or Beneficiary to other or additional benefits under this
Agreement.

Article 3
Death Benefits

3.1           Death Before Separation from Service.  Except as provided in
section 5.2, if the Executive dies before Separation from Service, at the
Executive’s death the Executive’s Beneficiary shall be entitled to (x) an amount
in cash equal to the Accrual Balance existing at the Executive’s death, unless
the Change-in-Control benefit shall have been paid to the Executive under
section 2.4 or unless a Change-in-Control payout shall have occurred under
section 2.5, and (y) the benefit, if any, payable under the Endorsement Split
Dollar Agreement attached to this Agreement as Addendum A.  No benefit shall be
paid under clause (x) if the Change-in-Control benefit shall have been paid to
the Executive under section 2.4 or if a Change-in-Control payout shall have
occurred under section 2.5.  If a benefit is payable to the Executive’s
Beneficiary under clause (x), the benefit shall be paid in a single lump sum 90
days after the Executive’s death.  However, no benefits under this Agreement or
under the Endorsement Split Dollar Agreement shall be paid or payable to the
Executive or the Executive’s Beneficiary if this Agreement is terminated under
Article 5.
 
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3.2           Death after Separation from Service.  If the Executive dies after
Separation from Service and if Separation from Service was not a Termination
with Cause, at the Executive’s death the Executive’s Beneficiary shall be
entitled to an amount in cash equal to the Accrual Balance existing at the
Executive’s death, unless the Change-in-Control benefit shall have been paid to
the Executive under section 2.4 or unless a Change-in-Control payout shall have
occurred under section 2.5.  No benefit shall be paid under this section 3.2 if
the Change-in-Control benefit shall have been paid to the Executive under
section 2.4 or if a Change-in-Control payout shall have occurred under section
2.5.  If a benefit is payable to the Executive’s Beneficiary under this section
3.2, the benefit shall be paid in a single lump sum 90 days after the
Executive’s death.  However, no benefits under this Agreement shall be paid or
payable to the Executive or the Executive’s Beneficiary if this Agreement is
terminated under Article 5.

Article 4
Beneficiaries

4.1           Beneficiary Designations.  The Executive shall have the right to
designate at any time a Beneficiary to receive any benefits payable under this
Agreement at the Executive’s death.  The Beneficiary designated under this
Agreement may be the same as or different from the beneficiary designation under
any other benefit plan of the Bank in which the Executive participates.

4.2           Beneficiary Designation: Change.  The Executive shall designate a
Beneficiary by completing and signing the Beneficiary Designation Form and
delivering it to the Plan Administrator or its designated agent.  The
Executive’s Beneficiary designation shall be deemed automatically revoked if the
Beneficiary predeceases the Executive or if the Executive names a spouse as
Beneficiary and the marriage is subsequently dissolved.  The Executive shall
have the right to change a Beneficiary by completing, signing, and otherwise
complying with the terms of the Beneficiary Designation Form and the Plan
Administrator’s rules and procedures, as in effect from time to time.  Upon the
acceptance by the Plan Administrator of a new Beneficiary Designation Form, all
Beneficiary designations previously filed shall be cancelled.  The Plan
Administrator shall be entitled to rely on the last Beneficiary Designation Form
filed by the Executive and accepted by the Plan Administrator before the
Executive’s death.

4.3           Acknowledgment.  No designation or change in designation of a
Beneficiary shall be effective until received, accepted, and acknowledged in
writing by the Plan Administrator or its designated agent.
 
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4.4           No Beneficiary Designation.  If the Executive dies without a valid
beneficiary designation, or if all designated Beneficiaries predecease the
Executive, then the Executive’s spouse shall be the designated Beneficiary.  If
the Executive has no surviving spouse, the benefits shall be made to the
personal representative of the Executive’s estate.

4.5           Facility of Payment.  If a benefit is payable to a minor, to a
person declared incapacitated, or to a person incapable of handling the
disposition of his or her property, the Bank may pay the benefit to the
guardian, legal representative, or person having the care or custody of the
minor, incapacitated person, or incapable person.  The Bank may require proof of
incapacity, minority, or guardianship as it may deem appropriate before
distribution of the benefit.  Distribution shall completely discharge the Bank
from all liability for the benefit.

Article 5
General Limitations

5.1           Termination with Cause.  Despite any contrary provision of this
Agreement, the Bank shall not pay any benefit under this Agreement and this
Agreement shall terminate if Separation from Service is a Termination with
Cause.  Likewise, the Beneficiary shall be entitled to no benefits under the
Endorsement Split Dollar Agreement attached to this Agreement as Addendum A and
the Endorsement Split Dollar Agreement also shall terminate if Separation from
Service is a Termination with Cause.

5.2           Suicide or Misstatement.  No benefits shall be paid under this
Agreement or the Endorsement Split Dollar Agreement if the Executive commits
suicide within two years after the Effective Date or if the Executive makes any
material misstatement of fact on any application or resume provided to the Bank
or on any application for benefits provided by the Bank.

5.3           Removal.  If the Executive is removed from office or permanently
prohibited 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), all obligations of the Bank under this Agreement shall
terminate as of the effective date of the order and the Endorsement Split Dollar
Agreement also shall terminate as of the effective date of the order.

5.4           Default.  Despite any contrary provision of this Agreement, if the
Bank is in “default” or “in danger of default,” as those terms are defined in
section 3(x) of the Federal Deposit Insurance Act, 12 U.S.C. 1813(x), all
obligations under this Agreement shall terminate.

5.5           FDIC Open-Bank Assistance.  All obligations under this Agreement
shall terminate, except to the extent determined that continuation of the
contract is necessary for the continued operation of the Bank, when the Federal
Deposit Insurance Corporation enters into an agreement to provide assistance to
or on behalf of the Bank under the authority contained in Federal Deposit
Insurance Act section 13(c).  12 U.S.C. 1823(c).  Rights of the parties that
have already vested shall not be affected by such action, however.

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Article 6
Claims and Review Procedures

6.1           Claims Procedure.  A person or beneficiary (“claimant”) who has
not received benefits under the Agreement that he or she believes should be paid
shall make a claim for such benefits as follows –

6.1.1        Initiation – written claim.  The claimant initiates a claim by
submitting to the Administrator a written claim for the benefits.  If the claim
relates to the contents of a notice received by the claimant, the claim must be
made within 60 days after the notice was received by the claimant.  All other
claims must be made within 180 days after the date of the event that caused the
claim to arise.  The claim must state with particularity the determination
desired by the claimant.

6.1.2        Timing of Bank response.  The Bank shall respond to the claimant
within 90 days after receiving the claim.  If the Bank determines that special
circumstances require additional time for processing the claim, the Bank may
extend the response period by an additional 90 days by notifying the claimant in
writing before the end of the initial 90-day period that an additional period is
required.  The notice of extension must state the special circumstances and the
date by which the Bank expects to render its decision.

6.1.3        Notice of decision.  If the Bank denies part or all of the claim,
the Bank shall notify the claimant in writing of the denial.  The Bank shall
write the notification in a manner calculated to be understood by the
claimant.  The notification shall set forth –

 
6.1.3.1
the specific reasons for the denial,

 
6.1.3.2
a reference to the specific provisions of the Agreement on which the denial is
based,

 
6.1.3.3
a description of any additional information or material necessary for the
claimant to perfect the claim and an explanation of why it is needed,

 
6.1.3.4
an explanation of the Agreement’s review procedures and the time limits
applicable to such procedures, and

 
6.1.3.5
a statement of the claimant’s right to bring a civil action under ERISA section
502(a) following an adverse benefit determination on review.

6.2           Review Procedure.  If the Bank denies part or all of the claim,
the claimant shall have the opportunity for a full and fair review by the Bank
of the denial, as follows –

6.2.1        Initiation – written request.  To initiate the review, within 60
days after receiving the Bank’s notice of denial the claimant must file with the
Bank a written request for review.

6.2.2        Additional submissions – information access.  The claimant shall
then have the opportunity to submit written comments, documents, records, and
other information relating to the claim.  Upon request and free of charge, the
Bank shall also provide the claimant reasonable access to and copies of all
documents, records, and other information relevant (as defined in applicable
ERISA regulations) to the claimant’s claim for benefits.
 
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6.2.3        Considerations on review.  In considering the review, the Bank
shall take into account all materials and information the claimant submits
relating to the claim, without regard to whether the information was submitted
or considered in the initial benefit determination.

6.2.4        Timing of Bank response.  The Bank shall respond in writing to the
claimant within 60 days after receiving the request for review.  If the Bank
determines that special circumstances require additional time for processing the
claim, the Bank may extend the response period by an additional 60 days by
notifying the claimant in writing before the end of the initial 60-day period
that an additional period is required.  The notice of extension must state the
special circumstances and the date by which the Bank expects to render its
decision.

6.2.5        Notice of decision.  The Bank shall notify the claimant in writing
of its decision on review.  The Bank shall write the notification in a manner
calculated to be understood by the claimant.  The notification shall set forth –

 
6.2.5.1
the specific reason for the denial,

 
6.2.5.2
a reference to the specific provisions of the Agreement on which the denial is
based,

 
6.2.5.3
a statement that the claimant is entitled to receive, upon request and free of
charge, reasonable access to and copies of all documents, records, and other
information relevant (as defined in applicable ERISA regulations) to the
claimant’s claim for benefits, and

 
6.2.5.4
a statement of the claimant’s right to bring a civil action under ERISA section
502(a).

Article 7
Miscellaneous

7.1           Amendments and Termination.  Subject to section 7.14 of this
Agreement, this Agreement may be amended solely by a written agreement signed by
the Bank and by the Executive and, except for termination occurring under
Article 5, this Agreement may be terminated solely by a written agreement signed
by the Bank and by the Executive.

7.2           Binding Effect.  This Agreement shall bind the Executive, the
Bank, and their beneficiaries, survivors, executors, successors, administrators,
and transferees.

7.3           No Guarantee of Employment.  This Agreement is not an employment
policy or contract.  It does not give the Executive the right to remain an
employee of the Bank nor does it interfere with the Bank’s right to discharge
the Executive.  It also does not require the Executive to remain an employee or
interfere with the Executive’s right to terminate employment at any time.

7.4           Non-Transferability.  Benefits under this Agreement may not be
sold, transferred, assigned, pledged, attached, or encumbered.
 
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7.5           Successors; Binding Agreement.  By an assumption agreement in form
and substance satisfactory to the Executive, the Bank shall require any
successor (whether direct or indirect, by purchase, merger, consolidation, or
otherwise) to all or substantially all of the business or assets of the Bank to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Bank would be required to perform this Agreement had no
succession occurred.

7.6           Tax Withholding.  The Bank shall withhold any taxes that are
required to be withheld from the benefits provided under this Agreement.

7.7           Applicable Law.  This Agreement and all rights hereunder shall be
governed by the laws of the State of North Carolina, except to the extent
preempted by the laws of the United States of America.

7.8           Unfunded Arrangement.  The Executive and Beneficiary are general
unsecured creditors of the Bank for the payment of benefits under this
Agreement.  The benefits represent the mere promise by the Bank to pay
benefits.  Rights to benefits are not subject to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, attachment, or garnishment by
creditors.  Any insurance on the Executive’s life is a general asset of the Bank
to which the Executive and Beneficiary have no preferred or secured claim.

7.9           Entire Agreement.  This Agreement and the Endorsement Split Dollar
Agreement attached as Addendum A constitute the entire agreement between the
Bank and the Executive concerning the subject matter.  No rights are granted to
the Executive under this Agreement other than those specifically set
forth.  This Agreement amends and restates in its entirety the October 24, 2007
Salary Continuation Agreement.

7.10           Severability.  If any provision of this Agreement is held
invalid, such invalidity shall not affect any other provision of this Agreement
not held invalid, and each such other provision shall continue in full force and
effect to the full extent consistent with law.  If any provision of this
Agreement is held invalid in part, such invalidity shall not affect the
remainder of the provision not held invalid, and the remainder of such provision
together with all other provisions of this Agreement shall continue in full
force and effect to the full extent consistent with law.

7.11           Headings.  Caption headings and subheadings herein are included
solely for convenience of reference and shall not affect the meaning or
interpretation of any provision of this Agreement.

7.12           Notices.  All notices, requests, demands, and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if delivered by hand or mailed, certified or registered mail, return
receipt requested, with postage prepaid, to the following addresses or to such
other address as either party may designate by like notice.  If to the Bank,
notice shall be given to the board of directors, Crescent State Bank, 1005 High
House Road, P.O. Box 5809, Cary, North Carolina  27513, or to such other or
additional person or persons as the Bank shall designate to the Executive in
writing.  If to the Executive, notice shall be given to the Executive at the
Executive’s address appearing on the Bank’s records or to such other or
additional person or persons as the Executive shall designate to the Bank in
writing.
 
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7.13           Payment of Legal Fees.  The Bank is aware that after a Change in
Control management of the Bank could cause or attempt to cause the Bank to
refuse to comply with its obligations under this Agreement, or could institute
or cause or attempt to cause the Bank to institute litigation seeking to have
this Agreement declared unenforceable, or could take or attempt to take other
action to deny Executive the benefits intended under this Agreement.  In these
circumstances the purpose of this Agreement would be frustrated.  The Bank
desires that the Executive not be required to incur the expenses associated with
the enforcement of rights under this Agreement, whether by litigation or other
legal action, because the cost and expense thereof would substantially detract
from the benefits intended to be granted to the Executive hereunder.  The Bank
desires that the Executive not be forced to negotiate settlement of rights under
this Agreement under threat of incurring expenses.  Accordingly, if after a
Change in Control occurs it appears to the Executive that (x) the Bank has
failed to comply with any of its obligations under this Agreement, or (y) the
Bank or any other person has taken any action to declare this Agreement void or
unenforceable, or instituted any litigation or other legal action designed to
deny, diminish, or to recover from the Executive the benefits intended to be
provided to the Executive hereunder, the Bank irrevocably authorizes the
Executive from time to time to retain counsel of the Executive’s choice, at the
Bank’s expense as provided in this section 7.13, to represent the Executive in
the initiation or defense of any litigation or other legal action, whether by or
against the Bank or any director, officer, stockholder, or other person
affiliated with the Bank, in any jurisdiction.  Despite any existing or previous
attorney-client relationship between the Bank and any counsel chosen by the
Executive under this section 7.13, the Bank irrevocably consents to the
Executive entering into an attorney-client relationship with that counsel, and
the Bank and the Executive agree that a confidential relationship shall exist
between the Executive and that counsel.  The fees and expenses of counsel
selected from time to time by the Executive as provided in this section shall be
paid or reimbursed to the Executive by the Bank on a regular, periodic basis
upon presentation by the Executive of a statement or statements prepared by
counsel in accordance with counsel’s customary practices, up to a maximum
aggregate amount of $50,000, whether suit be brought or not, and whether or not
incurred in trial, bankruptcy, or appellate proceedings.  The Bank’s obligation
to pay the Executive’s legal fees provided by this section 7.13 operates
separately from and in addition to any legal fee reimbursement obligation the
Bank may have with the Executive under any separate employment, severance, or
other agreement between the Executive and the Bank.  Despite anything in this
section 7.13 to the contrary however, the Bank shall not be required to pay or
reimburse the Executive’s legal expenses if doing so would violate section 18(k)
of the Federal Deposit Insurance Act [12 U.S.C. 1828(k)] and Rule 359.3 of the
Federal Deposit Insurance Corporation [12 CFR 359.3].

7.14           Termination or Modification of Agreement Because of Changes in
Law, Rules or Regulations.  The Bank is entering into this Agreement on the
assumption that certain existing tax laws, rules, and regulations will continue
in effect in their current form.  If that assumption materially changes and the
change has a material detrimental effect on this Agreement, then the Bank
reserves the right to terminate or modify this Agreement accordingly, subject to
the written consent of the Executive, which shall not be unreasonably
withheld.  This section 7.14 shall become null and void effective immediately if
a Change in Control occurs.
 
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7.15           Periodic Review.  The Bank will periodically review this
Agreement for reasonableness of benefits, taking into account benefits provided
under this Agreement and other Bank-provided benefits.  Other Bank-provided
benefits include but are not limited to (x) the Bank 401(k) match and (y) the
Bank portion of Social Security benefits.

Article 8
Administration of Agreement

8.1           Plan Administrator Duties.  This Agreement shall be administered
by a Plan Administrator consisting of the board or such committee or person(s)
as the board shall appoint.  The Executive may not be a member of the Plan
Administrator.  The Plan Administrator shall have the discretion and authority
to (x) make, amend, interpret, and enforce all appropriate rules and regulations
for the administration of this Agreement and (y) decide or resolve any and all
questions that may arise, including interpretations of this Agreement.

8.2           Agents.  In the administration of this Agreement the Plan
Administrator may employ agents and delegate to them such administrative duties
as it sees fit (including acting through a duly appointed representative) and
may from time to time consult with counsel, who may be counsel to the Bank.

8.3           Binding Effect of Decisions.  The decision or action of the Plan
Administrator concerning any question arising out of the administration,
interpretation, and application of the Agreement and the rules and regulations
promulgated hereunder shall be final and conclusive and binding upon all persons
having any interest in the Agreement.  No Executive or Beneficiary shall be
deemed to have any right, vested or nonvested, regarding the continued use of
any previously adopted assumptions, including but not limited to the discount
rate and calculation method described in section 1.1.

8.4           Indemnity of Plan Administrator.  The Bank shall indemnify and
hold harmless the members of the Plan Administrator against any and all claims,
losses, damages, expenses, or liabilities arising from any action or failure to
act with respect to this Agreement, except in the case of willful misconduct by
the Plan Administrator or any of its members.

8.5           Bank Information.  To enable the Plan Administrator to perform its
functions, the Bank shall supply full and timely information to the Plan
Administrator on all matters relating to the date and circumstances of the
retirement, Disability, death, or Separation from Service of the Executive and
such other pertinent information as the Plan Administrator may reasonably
require.
 
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In Witness Whereof, the Executive and a duly authorized officer of the Bank have
executed this Amended Salary Continuation Agreement as of the date first written
above.
 
Executive:
 
Bank:
      Crescent State Bank            
/s/ W. Keith Betts
 
By: 
/s/ Michael G. Carlton
 
W. Keith Betts
 
  
 
 
 
Its: 
President/CEO
                          And By: 
/s/ Ray D. Vaughn 
               
Its:  
COO
 

 
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Beneficiary Designation
Crescent State Bank
Amended Salary Continuation Agreement

I, W. Keith Betts, designate the following as beneficiary of any death benefits
under this Amended Salary Continuation Agreement –
 
Primary:    ”The Walter Keith Betts Revocable Trust” Dated December 12,
2006            
 
                                       .

Contingent:                                                   
 
                                     .

Note:  To name a trust as beneficiary, please provide the name of the trustee(s)
and the exact name and date of the trust agreement.

I understand that I may change these beneficiary designations by filing a new
written designation with the Bank.  I further understand that the designations
will be automatically revoked if the beneficiary predeceases me, or if I have
named my spouse as beneficiary and our marriage is subsequently dissolved.
 
Signature:
  /s/ W. Keith Betts
   
W. Keith Betts
   
Date:     12/29                  , 2008
       
Accepted by the Bank this  29 day of December, 2008
   
By:
  /s/ Michael G. Carlton
       
Print Name:
  Michael G. Carlton
       
Title:
  President/CEO
 

 
 
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Schedule A
Crescent State Bank
Amended Salary Continuation Agreement

W. Keith Betts
 
Plan
Year
 
Plan Year
ending
December
31,
 
Age
at
Plan
Year
end
   
Accrual
Balance @
6.25% (1)
   
Early
Termination
annual benefit
payable at
Normal
Retirement Age
(2)
   
Disability
annual benefit
payable at
Normal
Retirement Age
(2)
   
Change-in-
Control benefit
payable in a
lump sum (3)
 
2
 
2008
   
52
 
  $ 54,363           $ 11,632     $ 525,487  
3
 
2009
   
53
    $ 92,163           $ 18,528     $ 525,487  
4
 
2010
   
54
    $ 132,394           $ 25,008     $ 525,487  
5
 
2011
   
55
    $ 175,212     $ 31,096 (4)   $ 31,096     $ 525,487  
6
 
2012
   
56
    $ 220,785     $ 36,816     $ 36,816     $ 525,487  
7
 
2013
   
57
    $ 269,289     $ 42,190     $ 42,190     $ 525,487  
8
 
2014
   
58
    $ 320,913     $ 47,240     $ 47,240     $ 525,487  
9
 
2015
   
59
    $ 375,858     $ 51,984     $ 51,984     $ 525,487  
10
 
2016
   
60
    $ 434,337     $ 56,442     $ 56,442     $ 525,487  
11
 
2017
   
61
    $ 496,577     $ 60,630     $ 60,630     $ 525,487  
12
 
2018
   
62
    $ 562,820     $ 64,565     $ 64,565     $ 562,820  
13
 
2019
   
63
    $ 633,325     $ 68,262     $ 68,262     $ 633,325  
14
 
2020
   
64
    $ 708,364     $ 71,736     $ 71,736     $ 708,364  
15
 
2021
   
65
    $ 788,230 (5)   $ 75,000     $ 75,000     $ 788,230  

 
(1)           Calculations are approximations.  Benefit calculations are based
on prior year-end accrual balances for illustrative purposes.  The accrual
balance reflects payment at the beginning of each month during retirement.  For
purposes of this illustration, the accrual balance figures do not take account
of the six-month delay under Internal Revenue Code section 409A and section 2.1
of the Amended Salary Continuation Agreement between Separation from Service and
the date when benefits under section 2.1 commence.
(2)           The Early Termination and Disability benefits are calculated as
the annual amount that fully amortizes the Accrual Balance existing at the end
of the month immediately before the month in which Separation from Service
occurs, amortizing that Accrual Balance over the period beginning with the
Executive’s Normal Retirement Age and taking into account interest at the
discount rate or rates established by the Plan Administrator.  Using a standard
discount rate (6.25%), Early Termination and Disability benefits are shown for
illustrative purposes only.  The Early Termination and Disability benefits shown
assume the Executive’s Separation from Service occurs more than six months
before the Executive’s Normal Retirement Age and that the Early Termination
benefit and the Disability benefit therefore become payable beginning in the
month after the Executive attains the Normal Retirement Age.
(3)           The change-in-control benefit under section 2.4 of the Second
Amended Salary Continuation Agreement is the greater of (x) $525,487 or (y) the
accrual balance when the Change in Control occurs, in either case without
reduction for the time value of money or other discount.
 
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(4)           The Executive becomes vested in the Early Termination benefit at
age 55 on December 2, 2011.
(5)           Projected retirement occurs in December 2021, with the first
monthly normal retirement benefit payment on the first day of the seventh month
after retirement, or July 1, 2022.  For purposes of this illustration, the
accrual balance figure as of December 2021 does not take account of the
six-month delay under Internal Revenue Code section 409A and section 2.1 of the
Amended Salary Continuation Agreement between Separation from Service and the
date when benefits under section 2.1 commence.

If there is a contradiction between the terms of the Agreement and Schedule A
concerning the amount of a particular benefit due the Executive under sections
2.2, 2.3, or 2.4 of the Agreement, the amount of the benefit determined under
the Agreement shall control.

 
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