exv10w6





Exhibit 10.6




November 24, 2010




William M. DeMarcus

Yadkin Valley Financial Corporation

209 North Bridge Street

Elkin, North Carolina 28621



Dear Mark,




     Yadkin Valley Financial Corporation (the “Company”) has entered 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 occurred 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 investment under the Participation Agreement, the Company is required to
take certain actions with respect to compensation arrangements of its senior executive officers,
including senior executive officers of its wholly owned subsidiary, Yadkin Valley Bank and Trust
Company. The Company recently 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, as
defined by Section 111(a)(5) of EESA (as defined below) (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)	 	No Bonus, Retention Award, or Incentive Compensation. At any time at which you
are one of the Company’s top five most highly compensated employees, as such term is
defined in Q&A 1 of the Interim Final Rule, you will not be entitled to receive from
the Company any bonus, retention award, or incentive compensation during the CPP
Covered Period, except for certain long term restricted stock payments and previously
determined bonus payments to the extent permitted by Section 111(b)(3)(D) of EESA (as
defined below).
	 
	 	(3)	 	No Tax Gross-Up Payments. You will not be entitled to receive from the Company
any tax gross-up (as defined below), including a right to a payment of such gross-up at
a date following the CPP Covered Period, or other reimbursements for the payment of
taxes during the CPP Covered Period.
	 
	 	(4)	 	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.
	 
	 	(5)	 	Compensation Program Amendments. Each of the Company’s compensation, bonus,
incentive and other benefit plans, arrangements and agreements, including your
Employment Agreement (all such plans, arrangements and agreements, the “Benefit Plans”)
are hereby amended to the extent necessary to give effect to provisions (1)-(4) 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.




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






	 	•	 	“Senior executive officer” means the Company’s “senior executive
officers” as defined under Q&A 1 of the Interim Final Rule issued by the Treasury
at 31 CFR Part 30, effective on June 15, 2009 (the “Interim Final Rule”).
	 
	 	•	 	“Golden parachute payment” shall have the meaning set forth under Q&A
1 of the Interim Final Rule.
	 
	 	•	 	“Gross-up” shall have the meaning set forth under Q&A 1 of the
Interim Final Rule.
	 
	 	•	 	The term “Company” includes any entities treated as a single
employer with the Company under Q&A 1 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”), as amended by the American Recovery and Reinvestment Act
of 2009 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).






	 	(7)	 	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.
	 
	 	(8)	 	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:  	/s/ William A. Long
 	 
	 	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:

	 	/s/ William M. DeMarcus	 	 
	Name:

	 	 

William M. DeMarcus
	 	 
	Title:

	 	Chief Banking Officer	 	 
	Date:

	 	November 24, 2010