Document:

Exhibit 10.1

Execution Copy

AMENDMENT NO. 2

TO

INVESTMENT AGREEMENT

Amendment No. 2, dated as of November 2, 2011 (the “Amendment”), to the Investment Agreement, dated as of February 23, 2011, by and among Piedmont Community Bank Holdings, Inc., a Delaware corporation (“Investor”), Crescent Financial Corporation, a North Carolina corporation (the “Company”) and Crescent State Bank, a North Carolina state bank and a wholly-owned banking subsidiary of the Company (the “Bank”), as previously amended by that certain first Amendment, dated as of March 24, 2011 (as amended, the “Investment Agreement”).  Capitalized terms used herein and not otherwise defined shall have the respective meanings assigned to them by the Investment Agreement.

WHEREAS, Investor, the Company and the Bank have entered into the Investment Agreement, pursuant to which Investor intends to make an investment in the Company; and

WHEREAS, the Parties desire to amend certain provisions of the Investment Agreement as more particularly described herein.

NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties hereby agree as follows:

1.           The seventh WHEREAS clause in the Recitals to the Investment Agreement is hereby amended by deleting the phrase “(the “Employment Agreements”)” and replacing it with “(as amended, the “Employment Agreements”)”.

2.           Section 6.2(b) of the Investment Agreement is hereby amended by deleting such Section in its entirety and substituting the following in its place:

“(b)           the board of directors of the Bank shall be increased to ten (10), and shall consist of the persons set forth on Exhibit B under the heading “Bank Board of Directors”, plus Scott Custer and an individual designated by J. Adam Abram; and”

3.           Section 6.5(a) of the Investment Agreement is hereby amended by deleting the phrase “Within five (5) Business Days” and replacing it with “Within ten (10) Business Days”.

4.           Section 6.5(d) of the Investment Agreement is hereby amended by deleting the word “midnight” and replacing it with “5:00 p.m.”.

5.           Exhibit B of the Investment Agreement is hereby amended by deleting such Exhibit in its entirety and substituting the following in its place:

 

  

  

  

 

"                                                               Exhibit B                                                                   

 

Director Designees

 

Investor Designees

J. Adam Abram

Alan Colner

Thierry Ho

Steven J. Lerner

A. Wellford Tabor

Scott Custer

 

Agreed Designees

Jon S. Rufty

Charles A. Paul, III

Brent D. Barringer

James A. Lucas, Jr.

 

Bank Board of Directors

Brent D. Barringer

William H. Cameron

James A. Lucas, Jr.

Kenneth A. Lucas

Charles A. Paul, III

Francis R. Quis, Jr

Jon S. Rufty

Stephen K. Zaytoun                                                                                                            ”

6.           Exhibit E of the Investment Agreement is hereby amended by deleting the Name, Entity and Position information relating to Michael G. Carlton.

7.           The Parties acknowledge and agree that the amendments to the Investment Agreement set forth in this Amendment shall be effective upon the execution of this Amendment.  Except as expressly amended hereby, the Investment Agreement shall continue in full force and effect in accordance with the terms hereof.

8.           Binding Agreement.  This Amendment shall be binding upon, inure to the benefit of, and be enforceable by and against the Parties hereto and their respective successors and permitted assigns.

9.           Third-Party Beneficiaries.  Nothing expressed by or mentioned in this Amendment is intended or shall be construed to give any person, other than the Parties hereto, and their respective successors or permitted assigns, any legal or equitable right, remedy or claim under or in respect of this Amendment or any provision herein contained, it being intended that this Amendment and all the provisions hereof are for the sole and exclusive benefit of the Parties hereto, and their respective successors and permitted assigns.

 

  

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10.         Governing Law.  This Amendment shall be governed by, and construed and interpreted in accordance with, the laws of the State of North Carolina applicable to agreements made and wholly performed in such State.

11.         Waiver of Jury Trial.  EACH OF THE PARTIES HEREBY WAIVES TRIAL BY JURY IN ANY ACTION ARISING OUT OF MATTERS RELATED TO THIS AMENDMENT, WHICH WAIVER IS INFORMED AND VOLUNTARY.

12.         Counterparts.  This Amendment and any amendments hereto may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.  Delivery of an executed counterpart of a signature page to this Amendment by facsimile will be effective as delivery of a manually executed counterpart of this Amendment.

13.         Severability.  If any provision of this Amendment shall be held to be illegal, invalid or unenforceable, that provision will be enforced to the maximum extent permissible so as to effect the intent of the Parties hereto, and the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. If necessary to effect the intent of the Parties, the Parties will negotiate in good faith to amend this Amendment to replace the unenforceable language with enforceable language which as closely as possible reflects such intent.

[Signature Page Follows]

 

  

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IN WITNESS WHEREOF, the Parties hereto have executed this Amendment as of the date first written above.

	
PIEDMONT COMMUNITY BANK HOLDINGS, INC.

	  	  
	
By:

	
/s/ Scott Custer

	  	
Name:  Scott Custer

	  	
Title:    Chief Executive Officer

	  	  
	
CRESCENT FINANCIAL CORPORATION

	  	  
	
By:

	
/s/ Michael G. Carlton

	  	
Name: Michael G. Carlton

	  	
Title:   President and Chief Executive Officer

	  	  
	
CRESCENT STATE BANK

	  	  
	
By:

	
/s/ Michael G. Carlton

	  	
Name: Michael G. Carlton

	  	
Title:   President and Chief Executive Officer

[Signature Page to Amendment No. 2 to Investment Agreement]Unassociated Document

Exhibit 10.2

Crescent Financial Corporation

1005 High House Road

Cary, North Carolina 27513

Mr. Michael G. Carlton

206 Chalon Drive

Cary, NC 27511

November 2, 2011

Mr. Carlton:

This letter amends the employment agreement dated 2/23/11 between Crescent Financial Corporation, Crescent State Bank, and you (“Employment Agreement”).  All capitalized terms used but not defined in this letter have the meanings set forth in the Employment Agreement , and all provisions in the Employment Agreement remain the same except as set forth below.

	
1.

	
Section 1 of the Employment Agreement is amended and restated in its entirety as follows:  “Term.  Subject to, and conditioned upon, the closing of the Transaction, the Company and Bank will employ Executive, and executive accepts employment with the Company and Bank, upon the terms and conditions set forth in this Agreement, for the period beginning on the Effective Date, and ending no later than 90 days, as determined by the Company, following the Effective Date (“Employment Period”).  The expiration of the Employment Period and Executive’s termination resulting therefrom shall be considered a “Termination Without Cause” under this Agreement.

	
2.

	
The first three sentences of Section 2 of the Employment Agreement that follow the heading “Position and Duties” are amended and restated as follows: “During the Employment Period, Executive will serve as an employee in a non-executive position to provide transition services as needed.”

 

	
3.

	
Section 4(e) of the Employment Agreement is deleted in its entirety.

 

  

  

  

 

With your counter-signature below, you accept and agree to these amendments to the terms of the Employment Agreement, as of the date hereof.

	
Sincerely,

	  
	
Crescent Financial Corporation

	  
	  /s/ Bruce W. Elder
	
By:

	  
	
Its:

	
Vice President

	  	  
	
Crescent State Bank

	  	  
	
/s/ Bruce W. Elder

	
By:

	  
	
Its:

	
SVP & CFO

	
Accepted:

	  
	
/s/ Michael G. Carlton

	
Michael G. CarltonUnassociated Document

 Exhibit 10.3

Amendment to Endorsement Split Dollar Agreement

This Amendment to Endorsement Split Dollar Agreement (this “Amendment”) is entered into effective as of this 2nd day of November, 2011 by and between Crescent State Bank, a North Carolina-chartered bank (the “Bank”), and Michael G. Carlton (the “Executive”), and amends that certain Endorsement Split Dollar Agreement effective as of October 1, 2003 among the aforesaid parties (the “Agreement”).

Whereas, as a result of participation in the Troubled Asset Relief Program Capital Purchase Program by Crescent Financial Corporation (“Crescent”), the parent holding company of the Bank, Crescent and the Bank are subject to, among other things, the executive compensation requirements of Section 111(b) of the Emergency Economic Stabilization Act of 2008, as amended by the American Recovery and Reinvestment Act of 2009, and as implemented by guidance and regulations issued by the Treasury Department with respect to the Capital Purchase Program, as such guidance and regulations may be amended from time to time (the “TARP Standards”), with respect to the compensation of certain current and future employees of Crescent and the Bank; and

Whereas, Crescent intends to consummate an investment transaction with Piedmont Community Bank Holdings, Inc. (“Investor”) in which Investor will make a substantial investment in Crescent and will thereby obtain voting control of Crescent and become its majority shareholder through the acquisition of its common stock as contemplated in that certain Investment Agreement dated February 23, 2011 by and among Crescent, the Bank and Investor (the “Transaction”), and the consummation of such Transaction will constitute a change in control under Section 409A of the Internal Revenue Code of 1986 (“IRC”); and

Whereas, the Agreement is maintained as part of a deferred compensation and death benefit executive compensation program together with a salary continuation arrangement maintained through that certain Second Amended Salary Continuation Agreement effective as of September 10, 2008, and last amended effective as of February 23, 2011, among the aforesaid parties (the “Salary Continuation Agreement”); and

Whereas, Crescent and the Bank have ceased benefit accruals under the Salary Continuation Agreement, and may, in certain circumstances, vest any unvested benefits under the Salary Continuation Agreement, terminate the Salary Continuation Agreement and pay out the “Accrual Balance” under the Salary Continuation Agreement to Executive in accordance with IRC Section 409A and as permitted by the TARP Standards and the parties wish to amend the Agreement in connection therewith.

Now Therefore, in consideration of these premises, the mutual covenants contained herein, and other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree that this Agreement is amended as follows.

1.  Section 2.2 of the Agreement is amended to read as follows:

 

  

  

  

 

2.2 Executive’s Interest. The Executive shall have the right to designate the beneficiary of the Executive’s Interest. If, at the time of the Executive’s termination of employment with the Bank or Crescent, the Executive is or has become entitled to benefits (whether or not such benefits have been previously paid) under the Salary Continuation Agreement, or if the Executive’s termination of employment with the Bank or Crescent occurs because of the Executive’s death (except under Section 5.2 of the Salary Continuation Agreement as in effect on the date of termination of employment or, if earlier, as in effect on the date of termination of the Salary Continuation Agreement), then the beneficiary designated in accordance with the Split Dollar Policy Endorsement shall be entitled to 80% of the Net Death Proceeds (the “Executive’s Interest”). The Executive or the Executive’s transferee shall also have the right to elect and change settlement options that may be permitted for the Executive’s Interest.

2.  Section 8.2 of the Agreement is amended to read as follows:

8.2 Amendment and Termination of Agreement. This Agreement may be amended or terminated solely by a written agreement signed by the Bank and the Executive. However, this Agreement will automatically terminate and the Executive’s Interest shall be forfeited if benefits under the Salary Continuation Agreement are neither paid nor payable because of termination under Article 5 of the Salary Continuation Agreement as in effect on the date of termination of employment or, if earlier, as in effect on the date of termination of the Salary Continuation Agreement. This Agreement shall also terminate upon the occurrence of any one of the following:

(a) Surrender, lapse, or other termination of the Policy by the Bank, or

(b) Distribution of the death benefit proceeds in accordance with Section 2.2 above.

Notwithstanding any provision of this Agreement to the contrary or the termination of the Salary Continuation Agreement, in the event the investment transaction contemplated in that certain Investment Agreement dated February 23, 2011 by and among Crescent Financial Corporation,  the Bank and Piedmont Community Bank Holdings, Inc. (the “Transaction”) is closed, the Bank shall not surrender, terminate or cause or permit the lapse of the Policy and this Agreement shall not terminate or be amended to reduce the death benefit coverage provided to the Executive during such time as the Executive remains employed by the Bank following the closing of the Transaction and shall not thereafter surrender, terminate or cause or permit the lapse of the Policy or amend or terminate this Agreement, without the Executive’s express written consent, other than a termination that occurs under Article 5 of the Salary Continuation Agreement as in effect on the date of termination of employment or, if earlier, as in effect on the date of termination of the Salary Continuation Agreement, or a termination following distribution of the death benefit proceeds in accordance with Section 2.2 above.  In addition, the Bank shall provide to Executive on an annual basis a statement confirming that Executive retains the Policy and death benefit and identifying the intended beneficiary.

  

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In Witness Whereof, the Executive and a duly authorized officer of the Bank have executed this Amendment to Endorsement Split Dollar Agreement as of the date first written above.

	
Executive:

	  	
Bank:

	  	  	
Crescent State Bank

	  	  	  
	
 /s/ Michael G. Carlton

	  	
By:

	
 /s/ Bruce W. Elder

	
Michael G. Carlton

	  	  	  
	  	  	
Its:

	
 SVP & CFO

	  	  	  	  
	  	  	  	  
	  	  	
And By:

	
 /s/ Thomas E. Holder, Jr.

	  	  	  	  
	  	  	
Its:

	
 Senior Vice President

  

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