Exhibit 10.1


 


January 16, 2009


 


[Executive]


Yadkin
Valley Financial Corporation


209
North Bridge Street


Elkin,
North Carolina 28621


 


Dear
[Executive],


 


Yadkin
Valley Financial Corporation (the “Company”) anticipates entering into a
Securities Purchase Agreement (the “Participation Agreement”) with the United
States Department of Treasury (the “Treasury”) that provides, among other
things, for the purchase by the Treasury of securities issued by the Company.
This purchase is anticipated to occur as part of the Company’s participation in
the Treasury’s Troubled Asset Relief Program - Capital Purchase Program (the “CPP”).


 


As
a condition to the closing of the investment contemplated by the Participation
Agreement, the Company is required to take certain actions with respect to
compensation arrangements of its senior executive officers. The Company has
determined that you are or may be a senior executive officer for purposes of
the CPP. To comply with the requirements of the CPP, and in consideration of
the benefits that you will receive as a result of the Company’s participation
in the CPP and for other good and valuable consideration, the sufficiency of
which you hereby acknowledge, you agree as follows:


 


(1)                                  No Golden Parachute
Payments. You will not be entitled to receive from the Company any golden
parachute payment (as defined below) during any period in which the Treasury
holds an equity or debt position acquired from the Company in the CPP (the “CPP
Covered Period”) (or during the year following any acquisition of the Company,
to the extent required by the CPP Limitations (as defined below)).


 


(2)                                  Recovery of Bonus and
Incentive Compensation. You will be required to and shall return to the Company
any bonus or incentive compensation paid to you by the Company during the CPP
Covered Period if such bonus or incentive compensation is paid to you based on
materially inaccurate financial statements or any other materially inaccurate
performance metric criteria.


 


(3)                                  Compensation Program
Amendments. Each of the Company’s compensation, bonus, incentive and other
benefit plans, arrangements and agreements , including your Employment Security
Agreement (all such plans, arrangements and agreements, the “Benefit Plans”)
are hereby amended to the extent necessary to give effect to provisions (1) and
(2) of this letter.


 


The
Company is also required as a condition to participation in the CPP to review
the Benefit Plans to ensure that the Benefit Plans do not encourage its senior
executive officers to take unnecessary and excessive risks that threaten the
value of the Company. To the extent that the Company determines that the
Benefit Plans must be revised as a result of such review, or determines that
the Benefit Plans must otherwise be revised to comply with Section 111(b) of
the EESA (as defined below) as implemented by any guidance or regulation
thereunder that has been issued and is in effect as of the closing date of the
Company’s issuance of preferred stock and warrants to acquire common stock to
the 


 

















 


Treasury
pursuant to the CPP (the “CPP Limitations”), you and the Company agree to
negotiate and effect such changes promptly and in good faith.


 


(4)                                  Definitions and
Interpretation. This letter shall be interpreted as follows:


 


·                  “Senior
executive officer” means the Company’s “senior executive officers” as defined
in Q&A 2 of the Interim Final Rule issued by the Treasury at 31 CFR Part 30,
effective on October 20, 2008 (the “Interim Final Rule”).


 


·                  “Golden
parachute payment” shall have the meaning set forth in Q&A 9 of the Interim
Final Rule.


 


·                  The term “Company”
includes any entities treated as a single employer with the Company under
Q&A 1 and Q&A 11 of the Interim Final Rule.


 


·                  This letter is
intended to, and shall be interpreted, administered and construed to comply
with Section 111 of the Emergency Economic Stabilization Act of 2008 (the “EESA”)
and the regulations and guidance promulgated thereunder (and, to the maximum
extent consistent with the preceding, to permit operation of the Benefit Plans
in accordance with their terms before giving effect to this letter).


 


(5)                                  Miscellaneous. To the extent
not subject to federal law, this letter will be governed by and construed in
accordance with the laws of the State of North Carolina. This letter may be
executed in two or more counterparts, each of which will be deemed to be an
original. A signature transmitted by facsimile will be deemed an original
signature.


 


(6)                                  If the Treasury does not
purchase the securities contemplated by the Participation Agreement, then this
letter shall be of no force or effect. In addition, upon such time as the
Treasury no longer holds securities or debt of the Company acquired under the
CPP, this letter shall be of no further force or effect, except to the extent
required by the CPP Limitations. If you cease to be a senior executive officer
of the Company for purposes of the CPP, you shall be released from the
restrictions and obligations set forth in this letter to the extent permissible
under the CPP. If it is determined that you are not a senior executive officer
of the Company as of the date hereof, this letter shall be of no force or
effect.


 


The
Company appreciates the concessions you are making and looks forward to your
continued leadership during these financially turbulent times.


 


[Signature page follows]


 

















 


	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
  YADKIN
  VALLEY FINANCIAL CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:
  

  	
  William
  A. Long

  
	
   

  	
  Title:   

  	
  President
  and Chief Executive Officer

  



 


 


Intending
to be legally bound, I agree with and accept the


foregoing
terms on the date set forth below.


 


	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  [Executive]

  	
   

  
	
  Title:

  	
  [Executive’s
  title]

  	
   

  
	
  Date:
  

  	
  January 16,
  2009