Document:

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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left blank]

 

    	 

    	 

    

 

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 shareUnited
States Department of the Treasury

1500 Pennsylvania Avenue, NW

Washington, D.C. 20220

 

April 1, 2013

 

Ladies and Gentlemen:

 

Reference is made to that certain Letter
Agreement incorporating the Securities Purchase Agreements – Standard Terms (the “Securities Purchase Agreements”),
dated as of January 16, 2009, between ECB Bancorp, Inc. (the “Acquired Company”) and the United States Department
of Treasury (“Investor”) and dated as of January 9, 2009 between Crescent Financial Bancshares, Inc. (the “Acquiror
Company”) and the Investor. Capitalized terms used but not defined herein shall have the meanings assigned to them in
the Securities Purchase Agreements.

 

The American Recovery and Reinvestment Act
of 2009, as it may be amended from time to time (the “Act”), includes provisions relating to executive compensation
and other matters that may be inconsistent with the Securities Purchase Agreements, the Warrants and the Certificates of Designation
(the “Transaction Documents”). Accordingly, Investor and the Acquiror Company desire to confirm their understanding
as follows:

 

1.          Notwithstanding
anything in the Transaction Documents to the contrary, in the event that the Act or any rules or regulations promulgated thereunder
are inconsistent with any of the terms of the Transaction Documents, the Act and such rules and regulations shall control.

 

2.          For
the avoidance of doubt (and without limiting the generality of Paragraph 1):

 

(a)          the
provisions of Section 111 of the Emergency Economic Stabilization Act of 2008 as implemented by the Interim Final Rule on TARP
Standards for Compensation and Corporate Governance, 31 C.F.R. Part 30, as amended by the Act or otherwise from time to time (“EESA”),
shall apply to the Acquiror Company;

 

(b)          the
waiver to be delivered by each of the Acquiror Company’s Senior Executive Officers pursuant to Section 1.2(d)(v) of the Securities
Purchase Agreement shall, in addition, be delivered as promptly as practicable by any current or future most highly compensated
employees who are covered or affected by any applicable rules or regulations under EESA;

 

(c)          the
Acquiror Company’s chief executive officer and chief financial officer shall provide the written certification of compliance
by the Acquiror Company with the requirements of Section 111 of EESA in the manner specified by Section 111(b)(4) thereunder or
in any rules or regulations under EESA, including 31 C.F.R. § 30.15; and

 

    	 

    	 

    

 

(d)          the
Acquiror Company shall be permitted to repay preferred shares, and when such preferred shares are repaid, the Investor shall liquidate
warrants associated with such preferred shares, all in accordance with the Act and any rules and regulations thereunder.

 

From and after the date hereof, each reference
in the Securities Purchase Agreements to “this Agreement” or “this Securities Purchase Agreement” or words
of like import shall mean and be a reference to the Agreements (as defined in the Securities Purchase Agreements) as amended by
this letter agreement.

 

This letter agreement will 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.

 

This letter agreement, the Securities Purchase
Agreements, the Post-Merger Side Letter, the Warrant(s), the Certificate(s) of Designation and any other documents executed by
the parties at the Closing constitute the entire agreement of the parties with respect to the subject matter hereof.

 

Nothing in this letter agreement shall be
deemed an admission by Investor as to the necessity of obtaining the consent of the Company in order to effect the changes to the
Transaction Documents contemplated by this letter agreement, nor shall anything in this letter agreement be deemed to require Investor
to obtain the consent of any other TARP recipient (as defined in the Act) participating in the Capital Purchase Program (the “CPP”)
in order to effect changes to their documentation under the CPP.

 

This letter agreement may be executed in
any number of separate counterparts, each such counterpart being deemed to be an original instrument, and all such counterparts
will together constitute the same agreement. Executed signature pages to this letter agreement may be delivered by facsimile and
such facsimiles will be deemed sufficient as if actual signature pages had been delivered.

 

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page intentionally left blank]

 

    	-2-

    	 

    

 

In witness whereof, the parties have duly
executed this letter agreement as of the date first written above.

 

	 	UNITED STATES DEPARTMENT OF
	 	THE TREASURY
	 	 
	 	By: 	/s/ Timothy G. Massad
	 	 	Name: Timothy G. Massad
	 	 	Title: Assistant Secretary for Financial
	 	 	          Stability

 

	 	Crescent Financial Bancshares, Inc.:
	 	 
	 	By:	/s/ Scott Custer
	 	 	Name: Scott Custer
	 	 	Title: CEO

 

Signature
Page to Letter Agreement

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