UNITED STATES DEPARTMENT OF THE TREASURY

1500 Pennsylvania Avenue, NW

Washington, D.C. 20220

 

April 1, 2013

 

Ladies and Gentlemen:

 

Reference is made to both (i) that certain Letter Agreement incorporating the
Securities Purchase Agreement — Standard Terms dated as of January 16, 2009 (the
“Acquired Company Securities Purchase Agreement”) by and among the United States
Department of the Treasury (the “Investor”) and ECB Bancorp (the “Acquired
Company”) and (ii) that certain Letter Agreement incorporating the Securities
Purchase Agreement — Standard Terms dated as of January 9, 2009 (the “Acquiror
Company Securities Purchase Agreement,” and together with the Acquired Company
Securities Purchase Agreement, the “Securities Purchase Agreements”) by and
among Investor and Crescent Financial Bancshares, Inc. (the “Acquiror Company”;
collectively, Acquiror Company and Acquired Company are referred to as the
“Companies”). Further detail regarding both Securities Purchase Agreements are
set forth on Schedule A hereto. Investor and Companies desire to set forth
herein certain additional agreements as a result of the consummation of a merger
transaction pursuant to an Agreement and Plan of Merger dated as of September
25, 2012 by and among Acquiror Company and Acquired Company, effective on April
1, 2013 (the “Merger Transaction”). This letter shall be referred to as the
“Post-Merger Side Letter.” Capitalized terms used but not defined herein shall
have the meanings assigned to them in the Securities Purchase Agreements and the
Certificate of Designations.

 

As a result of the Merger Transaction, the Acquiror Company has assumed the
obligations and responsibilities of Acquired Company with respect to Investor,
in addition to its own. Specifically:

 

1.          Concurrently herewith, the Acquiror Company is paying all accrued
and unpaid dividends on the Acquired Company’s Designated Preferred Shares and
is issuing a new series of preferred shares in exchange for the Acquired
Company’s Designated Preferred Shares; and

 

2.          Pursuant to Section 4.3 of the Acquired Company Securities Purchase
Agreement and effective as of the date hereof, Acquiror Company hereby expressly
assumes the due and punctual performance and observance of each and every
covenant, agreement, and condition of the Securities Purchase Agreement and all
ancillary documents to be performed and observed by Acquired Company.

 

In connection with the foregoing, with the exception of the Securities Purchase
Agreements, Acquiror Company is issuing new documentation to Investor to reflect
the investment that Investor initially made in the Acquired Company, including
the following (all section references below are to the Acquired Company
Securities Purchase Agreement, unless otherwise provided):

 

 

 

 

United States Department of the Treasury

Page 2

 

1.          an officer’s certificate regarding a bring down of the
representations in both Securities Purchase Agreements as of the date hereof,
per Section 1.2(d)(ii), with any exceptions to such representations noted on a
disclosure schedule attached hereto;

 

2.          evidence the Acquiror Company filed a Certificate of Designations in
connection with the New Preferred Shares (as defined below) issued to Investor
as outlined in paragraph 6 below, per Section 1.2(d)(iii);

 

3.          an officer’s certificate regarding compliance with Section 111(b) of
the Emergency Economic Stabilization Act of 2008 as of the date hereof per
Section 1.2(d)(n);

 

4.          a legal opinion regarding the New Preferred Shares and New Warrant
(as defined below), per Section 1.2(d)(vi);

 

5.          a certificate representing a number of a new series of preferred
shares issued by the Acquiror Company to replace the Acquired Company’s
Designated Preferred Shares (the “New Preferred Shares”);

 

6.          waivers from Senior Executive Officers and others in accordance with
the Emergency Economic Stabilization Act of 2008, as amended by the American
Recovery and Reinvestment Act of 2009 (“ARRA”), releasing Investor from certain
claims, dated as of the date hereof, per Section 1.2(d)(v);

 

7.          a warrant to purchase shares of common stock issued by the Acquiror
Company to replace the Acquired Company’s warrant (the “New Warrant”);

 

8.          a side letter regarding compliance with ARRA; and

 

9.          a copy of the articles and bylaws of the Acquiror Company.

 

Acquiror Company hereby acknowledges receipt of each of the closing documents in
connection with each of the initial Investor closings for Acquired Company and
Acquiror Company, with the exception of the Securities Purchase Agreements.

 

This side letter agreement, the Securities Purchase Agreements and the
above-listed documentation constitutes the entire agreement, and supersedes all
other prior agreements, understandings, representations and warranties, both
written and oral, between the parties with respect to the subject matter hereof.

 

This side letter agreement may be executed in counterparts, each of which shall
be deemed an original and all of which shall together constitute one and the
same instrument. This side letter agreement shall be governed by and construed
in accordance with the federal law of the United States if and to the extent
such law is applicable, and otherwise in accordance with the laws of the State
of New York applicable to contracts made and to be performed entirely within
such state.

 

 

 

United States Department of the Treasury

Page 3

 

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United States Department of the Treasury

Signature Page

 

 

In witness whereof, this side letter agreement has been duly executed by the
authorized representatives of the parties hereto as of the date first above
written.

 

  CRESCENT FINANCIAL BANCSHARES, INC.         By: /s/ Scott Custer   Name: Scott
Custer   Title: CEO           ECB BANCORP, INC.         By: /s/ A. Dwight Utz  
Name: A. Dwight Utz   Title: President and CEO         UNITED STATES DEPARTMENT
OF
THE TREASURY         By: /s/ Timothy G. Massad   Name: Timothy G. Massad  
Title: Assistant Secretary for Financial     Stability

 

Signature Page to merger Transaction Side Letter Agreement

 

 

 

 

SCHEDULE A

 

General Information Regarding Acquiror Company Initial Closing:

 

Acquiror Company Name: Crescent Financial Bancshares, Inc.

 

Date of Acquiror Company Letter Agreement incorporating the Securities Purchase
Agreement: January 9, 2009

 

Corporate or other organizational form of the Acquiror Company: Corporation

 

Number and series of preferred stock issued to the Investor at the Acquiror
Company Closing:

 

24,900 shares of Fixed Rate Cumulative Perpetual

Preferred Stock, Series A

 

Number of Acquiror Company Initial Warrant Shares: 833,705

 

General Information Regarding Acquired Company Initial Closing:

 

Acquired Company Name: ECB Bancorp, Inc.

 

Date of Acquired Company Letter Agreement incorporating the Securities Purchase
Agreement: January 16, 2009

 

Corporate or other organizational form of the Acquired Company: Corporation

 

Number and series of preferred stock issued to the

Investor at the Acquired Company Closing:

17,949 shares of Fixed Rate Cumulative

Perpetual Preferred Stock, Series A

 

Number of Acquired Company Initial Warrant Shares: 144,984

 

Terms of the Merger/Acquisition:

 

Effective Date of Merger/Acquisition: April 1, 2013

 

Resultant Acquiror Securities:

 

Number of New Preferred Shares Issued to Investor by Acquiror Company
Post-Merger to Replace the Acquired Company’s Preferred Shares: 17,949

 

Par Value of Such New Preferred Shares: No par value

 

Number of New Warrant Shares Issued to Investor by Acquiror Company Post-Merger
to Replace Initial Warrant Shares: 514,693.2

 

Par Value of Such New Warrant Shares: $1.00 par value per share